House of Lords
Wednesday 8 February 2017
Prayers—read by the Lord Bishop of St Albans.
To ask Her Majesty’s Government whether they will make arrangements through refugee organisations for the Prime Minister and the Home Secretary to visit refugee camps.
While it is not appropriate to discuss future ministerial plans, we welcome the opportunity to demonstrate the UK’s commitment to refugees. Responding to unprecedented need, in 2015-16 the UK spent more than £1.4 billion on humanitarian assistance, including support for refugees. The UK’s pioneering new approach to protracted crises, leading to a shift from short-term assistance to longer-term change, is providing real help to those in need.
My Lords, I am sorry but the Minister has not answered my Question. The Prime Minister should be asked to visit the refugee camps to see the situation for herself. Will the Minister affirm very clearly that there is no diminution at all in our pledge to welcome 20,000 refugees and up to 3,000 youngsters in the course of this Parliament?
I accept that, but also in this context, the Foreign Secretary has been to a refugee camp, and the Secretary of State for International Development was in one of the camps just last week. Perhaps even more importantly, the Prime Minister was at the Valletta summit last week, where she announced an additional £30 million package for the very people the noble Lord and I care so much about.
My Lords, I would be much happier if the Prime Minister spent time writing a full-page article for the Daily Mail explaining why international development is so important and why aid is so important to host nations in the Middle East whose own countries are suffering as a consequence of the influx of refugees. Will he urge the Prime Minister to do that?
It behoves all of us who are strong advocates and supporters of the 0.7%, as I know that the noble Lord and his party are as well, to do everything we can to highlight the benefits that the UK is bringing around the world to those areas most in need. We have been able to help something approaching 20 million people in the region as a result of the generosity of British taxpayers, and our money is genuinely saving lives. That is the point that we need to make loudly and clearly to the British public and the media.
My Lords, how many officials do we have in France to identify adults and children who qualify to seek refuge in Britain? Those people are both in reception centres and outside them. Are our people receiving good co-operation from the French authorities?
Some people from the Home Office have been relocated to France, in particular to their Interior Ministry. More importantly, in a lot of the projects in which we are involved—programmes such as the Syrian vulnerable persons resettlement scheme and the vulnerable children’s resettlement scheme—we work very closely with the UNHCR. That body has established criteria for working out who are the people most in need and who therefore ought to be prioritised to come to this country.
My Lords, how many children have actually come here under that arrangement?
The commitment was for 20,000 in the lifetime of this Parliament. As of December, 4,400 people have arrived, of whom 50% were children, so 2,200. In 2015, some 8,000 children were granted asylum through schemes in this country. Under the other schemes that we have, particularly the vulnerable children’s resettlement scheme, the number is something like 700, and there was a further number under the scheme of the noble Lord, Lord Dubs, which I think we will come to in a minute.
My Lords, the Minister anticipated my question because there are refugee camps in Greece as well, where the condition is dire. Would the Minister care to confirm the news that we have heard about the Government intending to bring to an end the scheme under Section 67 of the Immigration Act, which would have brought unaccompanied child refugees to this country from Greece?
A Written Ministerial Statement will underscore that, far from doing that, Section 67 of the Act—and I pay tribute to the noble Lord’s work on that—stands. Under that scheme, some 200 children have been brought to this country already. I know that the noble Lord also visited the Greek reception area and saw the conditions for himself, but there is also the work that DfID personnel are doing on the ground there, trying to provide help.
My Lords, do the Government recognise that there are many informal refugee camps in Greece and Italy? Will Ministers visit those and familiarise themselves with the huge suffering and plight of those children there? Secondly, will the Minister confirm that of the more than 25,000 unaccompanied refugee children in Italy, only three have been transferred to the UK?
We have schemes for identifying that. Certainly, the noble Baroness is right to identify a major problem, which is that half of those categorised as refugees are not in registered camps. That is often one of the greatest difficulties we have in reaching those people who are in need. The important thing is that the schemes we have committed to in this House are working and delivering benefits. Thousands of people have come to this country, which compares favourably with the EU internal resettlement scheme, which has so far helped only 170.
My Lords, repeated Questions to Ministers here have failed to answer this question. I know that local authorities are given additional funding initially, when communities welcome refugees, but the British people who are prepared to accept refugees into their communities need to know that funding will continue for as long as the refugees need extra funds for all the services they use. Will the Minister assure the House that extra funding will continue as long as the need exists?
I can do more than that. One reason it has taken a little time to respond to the amendment to the Immigration Act of the noble Lord, Lord Dubs, is our requirement to consult local authorities about was needed. So far, 175 local authorities have offered to host refugees and they have people travelling to their regions. They deserve tribute. In recognition of that, we have also announced that the amount they will get per year has increased by an average of 20% over the period to help them to deal with the very needs that the noble Baroness has identified.
To ask Her Majesty’s Government what measures they are taking to improve productivity in the United Kingdom economy.
My Lords, through our modern industrial strategy we are taking steps to increase productivity and drive growth across the whole country. We will support key strengths, including science and research, and invest in technical training and infrastructure, which will sustain productivity over the long term.
My Lords, we are now in our seventh year of productivity famine—of being the worst in the G7 and uncompetitive with our European Union partners, soon to be our competitors, against whom we flounder in our productivity rates. When will the Government rebalance the economy, as promised by the former Chancellor, by investing in people and their skills, and infrastructure in the regions, so that we can return to productivity, along with dealing with the balance of payments deficit, and return to the years of plenty?
The noble Lord raises an interesting point. Since, I think, 2010, our economy has grown by 12%, which is the highest in the G7, yet our productivity growth over that period has been low, as the noble Lord said. The reasons for that are broad and manifold, but he puts his finger on it when he says that, in part, it is to do with a lack of investment in key infrastructure and technical skills. Both those things are absolutely centre stage in our new industrial strategy.
My Lords, will the Minister acknowledge that one of the best ways of increasing productivity is to invest in higher education and research and development innovation? Would he also agree that we underinvest as a percentage of GDP in our higher education, compared with the OECD EU average, and way under America, and yet have the best universities in the world? When it comes to R&D innovation, we invest 1.7% of GDP compared with 2.8% in the United States and Germany. We would have to invest an extra £20 billion a year just to catch up with them.
The noble Lord makes a good point. The fact is that the productivity of our investment in research in British universities is incredibly high and the output of our top universities is fantastically high by any world standards. He will know as well as I do that we are now committed to raising an extra £2 billion a year in research by 2021, which is a very significant increase. He is also right that even after that increase we are still not investing as much on a per capita basis or on a percentage of GDP basis as some of our biggest competitors—Germany and the US, for example. So we are making good progress but the job is not yet done.
Will the Minister say what we are doing to enhance the social status of professional engineers, and can he write to me and say how many professional engineers have received an honour for engineering, as opposed to financial services?
My noble friend raises the profound point that culturally in this country we have tended to encourage people more in the humanities than we have in engineering and STEM subjects. Perhaps the country is being run by too many people who have done PPE at Oxford and too few who did engineering at Cambridge—but there we are. On the honours given to people with a background in engineering, I will look into that and write to my noble friend.
My Lords, one factor that influences productivity is issues of health, particularly mental health. Something like nearly three out of 10 employees are reporting some sort of mental health problem each year, which analysts believe is costing employers something like £30 billion a year. Will the Minister tell the House what the Government are doing to support employers in encouraging high levels of well-being and what is being done to lessen the stigma of mental ill health—in particular, encouraging employees to access mental health services that are already available to them?
The right reverend Prelate makes an important point. Not only is mental ill health a disaster for people individually, it also affects the productivity of the whole workforce. It is hard to answer the question because companies vary so much. There are some great employers who do an excellent job of looking after the well-being of their employees, and there are some who, as we know, do a rotten job. I would like to take away the question the right reverend Prelate asked and write to him in more detail.
My Lords, if we have two short questions, we can hear from the Liberal Democrat Benches and then the Labour Benches.
My Lords, business investment in training is vital to improved productivity. We know that the apprenticeship levy was designed to help in that, yet the Government have missed the January deadline for setting up the online service and the IFS says that it is going to give poor value for money. How is business going to benefit when it is having to cope with this mismanagement of the apprenticeship levy by the Government?
My Lords, the apprenticeship levy is designed to produce another 3 million apprentices over the next four or five years, which will mark a transformation in the number of apprentices we have in this country. The noble Lord referred to the online service. I shall have to investigate that and write to him.
My Lords, sadly, this country has an appalling trade deficit in agricultural and food products, yet agriculture and food argument not included in the industrial strategy at all. Further, our exports of food and other agricultural products have been flatlining for the past 10 years. If we leave the European Union, which is one of the biggest export markets for agricultural and food products this country has, how are we going to make up for the loss of trade which that implies if agriculture and food are not included in our industrial strategy for the future? Before the noble Lord says it, I know that Defra is going to produce its own strategy—but should this not be a prominent part of our national strategy for industrial development?
My Lords, agriculture and food production will be a prominent part of our strategy going forward because they are hugely important to the economy. When we discuss our industrial strategy we sometimes focus too narrowly on manufacturing, which now accounts for only 10% of all employment in the economy. We are not going to get the step change in productivity across the whole economy if we do not have a strategy that includes services as well as agriculture.
International Criminal Court
To ask Her Majesty’s Government what assessment they have made of the composition and effectiveness of the International Criminal Court.
My Lords, the UK is committed to a rules-based international order and strongly supports the International Criminal Court. The ICC plays an important role in global efforts to end impunity for the most serious crimes of international concern by holding perpetrators to account and achieving justice for victims. Some 124 states parties have now adopted the ICC’s Rome statute and we work actively with the court and international partners to improve further its efficiency and effectiveness.
My Lords, I thank the noble Baroness for that reply. Can she tell us what assessment the Government have made of the decision reached only last week by the African Union at its summit in Addis Ababa calling for all African countries to leave the International Criminal Court, and indeed of the negative and disparaging attitude of both the Kremlin and the White House? How do we intend to rally international support in the UN Security Council and elsewhere to stop the unravelling of the court and to strengthen and enhance its efficacy in bringing to justice those who are responsible for war crimes, crimes against humanity and genocide?
My Lords, the short answer would be by continuing to work hard to ensure that other states parties take seriously their responsibilities and by working with colleagues such as the United States to ensure that even when they are not states parties themselves, they support as they have done the work of the ICC.
Perhaps I may address the first part of the noble Lord’s question referring to the decision at the AU summit because it is important. I appreciate what the newspaper reporting has been, but it is our understanding that the strategy being referred to does not call for mass withdrawal, but actually for further research. When I read what was said by Ministers who attended the summit, I see that they voiced strong opposition. The list of those who opposed even the research is long and includes Nigeria, Senegal and Cape Verde—I could go on and on, so there is work that we can do.
My Lords, given that the Government of whom I was a member as Attorney-General played a major role in setting up this court, have Her Majesty’s Government expressed any views to individual countries proposing to leave its jurisdiction?
Yes, my Lords; it is absolutely right that we should do so. I am delighted that the noble and learned Lord asked the question. When I was in The Hague quite recently at the states parties meeting I had a long meeting with the Justice Minister of South Africa and was able to explore in technical detail the reasons why South Africa felt that the way in which the Rome treaty was being interpreted was not in accord with its understanding. Shortly I travel to Burundi and Uganda. Uganda has not withdrawn; it gave its support, although there has been some criticism. Burundi is one of those withdrawing and I shall continue my conversations in person.
My Lords, the United States of America is not part of the International Criminal Court; it fears the politicisation of the process. Are Her Majesty’s Government sympathetic to that position? It seems unlikely to change in the near future. Or do they sympathise with the idea that there should be complete and universal ratification of the Rome statute?
My Lords, we continue to work towards universal and complete ratification of the Rome statute, while understanding that some countries, including allies such as the United States, may be supportive without being signatories to the Rome statute. I can tell my noble friend that since the election of President Trump we have worked closely with the Administration in the United Nations and the ICC in New York and with Nikki Haley, who has been appointed as the US representative to the United Nations, to ensure that United States co-operation with the ICC continues.
My Lords, in April last year the House of Commons resolved that ISIS should be referred to the ICC. What action have the Government taken to raise this at the Security Council in order to secure an investigation?
My Lords, I am sure the noble Lord will be aware that a United Nations Security Council resolution on these very matters was vetoed a while ago. We continue to press the issue of bringing ISIL/Daesh to account and also bringing Assad to account. Therefore I am pleased to say that on 21 December last year we co-sponsored a UN General Assembly resolution to establish a new international, impartial, independent mechanism to assist in the investigation and prosecution of those responsible for the most serious crimes under international law committed in Syria since March 2011.
My Lords, following the visit of Sudan’s President al-Bashir, indicted by the International Criminal Court, to many countries including Kenya, South Africa, China, Nigeria and Saudi Arabia, what discussions have Her Majesty’s Government had with the Governments of those countries about their failure to arrest him? Does the noble Baroness agree that the failure to arrest someone indicted by the International Criminal Court devalues and discredits the work of the ICC?
The noble Baroness raises a very important point. It is the case that countries which are states parties should, indeed, ensure that those who are indicted by them are then arrested. I was able, as I mentioned a moment ago to the noble and learned Lord, to discuss these wide matters with South Africa. The UK and EU partners have conducted demarches in countries which failed to arrest President Bashir. We agree with the noble Baroness that achieving justice for victims should be at the heart of the international community’s response to mass atrocity violence. It is important that fugitives from international justice do not just get away.
My Lords, the substantive decision of the African Union, as I understand it, was not withdrawal but a call for regionalisation of the ICC. Does the Minister agree that one very important issue that arises about that concerns the consequences of regionalisation and the need to ensure continuation of three principles: first, due process of taking evidence; secondly, penalties meeting an international standard; and thirdly, the ability still to make appeals at a global level?
My Lords, as I mentioned a little while ago, I think there has been a little misreporting or misunderstanding of what was decided at the African Union. However, the noble Lord makes an important point. We welcome initiatives, whether at regional or international level, to support international justice and accountability, so we are willing to listen to all ways that can take us forward. The most appropriate forum for discussion of issues that states may have with the ICC is the Assembly of States Parties, which I have attended in the two years for which I have had the justification, as Minister, for doing so. We make our points very strongly there, both in the forum itself and bilaterally.
My Lords, if the African members were to withdraw, 34 of the total membership of 124 would have left, and this sole forum for global criminal justice would be lost. Is not the chief prosecutor, Ms Bensouda, collecting evidence in various countries, including Afghanistan and Iraq—and is there any prospect of further prosecution from such localities?
My Lords, I pay tribute to the work of Fatou Bensouda against sometimes very challenging conditions. We support her in her work. She is independent, and we do not try to influence it; that would be improper. I repeat that this was not a mass withdrawal, and we are not expecting a mass withdrawal of African states. I am certainly working towards ensuring that the ICC maintains its credibility. Changes in government in the Gambia show that there can be ways of ensuring that countries stay members of the ICC.
To ask Her Majesty’s Government what steps they are taking to ensure a guaranteed supply of vegetables in the United Kingdom, in the light of restricted availability from Spain and other European countries.
My Lords, the UK has a highly resilient food industry with effective supply chains providing wide consumer choice. The diversity of food supply from domestic and international sources allows for alternative products to be used when required. Retailers work with suppliers to ensure optimum availability, sourcing from alternative places if availability is restricted from usual suppliers. There are also many other fresh vegetable products fully available from seasonal UK production and international sources.
I thank the Minister for that reply, but he will have seen the news reports of empty shelves in supermarkets, with the crisis expected to last until the spring. Meanwhile prices have trebled, in part because it costs more to fly vegetables from the USA and Egypt than to bring them overland from Spain. Given the public health implications, is the department confident that there are sufficient alternative sources of vegetables, particularly in schools and hospitals? Is the department monitoring the prices to ensure that profiteering is not taking place? Finally, what lessons can we learn for future trade negotiations about the comparative price advantages of importing foods from the EU compared with, for example, importing from the US?
My Lords, my officials have been discussing these matters with retailers and New Covent Garden, and the situation is improving. Climate conditions in Spain and the Mediterranean are enabling the situation to improve, and goods from other sources of supply, such as the Americas, are coming in. But this is a time when we should be reflecting on using our own wonderful nutritious British vegetables. In the last few years, food prices have fallen by 7.4%—I think that may deal with some of what the noble Baroness might have been implying.
My Lords, would not any rational man or woman think that to describe a shortage of lettuces in the supermarket as a crisis shows a lack of understanding of the meaning of the words in the English language?
My Lords, I was seeking to be courteous to the noble Baroness—but there is certainly no crisis. The only shortage will be of iceberg lettuce, which we think will last for a few months, and there is a wonderful variety called cos which is even better.
My Lords, half the vegetables we eat in this country are imported, including native crops such as cauliflowers and onions. Is it not time that the Government’s forthcoming Green Paper on food and farming tackled this decline in home-grown veg?
My Lords, I thoroughly endorse the wish we all have to produce more home-grown veg. That will precisely be at the heart of the forthcoming Green Paper. I was pleased only this morning to hear that cauliflowers from Cornwall are coming on to the market, so we again have a great opportunity to buy some British vegetables.
My Lords, I come from Worcestershire, where the Vale of Evesham was once known as the garden of England. When I was young, field after field was of smallholders growing vegetables. Since we joined the Common Market, they have been outpriced or undercut by imports from the continent. Vegetable growers do not get subsidies like farmers do. Will Her Majesty’s Government look at ways to bring back growing our own vegetables with some sort of support?
My Lords, the intention of the Green Paper, and all that will come through it, is that we want ideas about how we increase production of vegetables. I endorse that we have great nutritious vegetables in our midst, so please let us cook some.
My Lords, it is only fair we hear from the Greens on this particular subject.
I give huge thanks to the Leader of the House. Back in 2008, at the request of the then Mayor of London, Ken Livingstone, I produced a report on how to make London’s food supplies more sustainable. Part of that was shortening supply chains. Would the Minister like me to forward a copy of my report for the Government’s use to contribute to the Green Paper?
I would like to see a copy. I am sure the paper endorses the importance of having lower food miles—which means food comes from this country.
Digital Economy Bill
Committee (4th Day)
Relevant documents: 11th, 13th and 16th Reports from the Delegated Powers Committee
Clause 70 agreed.
It might be convenient to have a short pause to allow those who are not involved in the next business to leave.
214: After Clause 70, insert the following new Clause—
“Evaluation of algorithms
(1) The Communications Act 2003 is amended as follows.(2) After section 134C insert—“Evaluation of algorithms134D Evaluation of algorithms(1) OFCOM may, in the interests of the end users of public electronic communications services, carry out and publish evaluations of algorithms, or of electronic systems embodying algorithms—(a) which are implemented electronically;(b) which impact substantially upon some such users or impact upon a substantial number of such users; and(c) where the details of the algorithm are not freely and publicly available.(2) In undertaking such evaluations, OFCOM may—(a) collaborate with any organisation using and affected by the algorithm in question; and(b) act as a “mystery shopper”, using assumed identities and information, despite any and all conditions that may purport to forbid such behaviour.””
My Lords, I beg to move Amendment 214. We all know that Ofcom has a great interest in traditional media. As we can see, not least from Clauses 70 and 71, we are happy to give Ofcom a panoptic role when this is required. My amendment is designed to give Ofcom a panoptic role in new media.
We are all familiar with algorithms, particularly in such contexts as a Google search. It is just a set of rules and procedures that gets us to where we want to go from wherever we happen to be. I do not know of any great harm currently being done by any algorithms, but we ought to be aware of the power these procedures have in our lives. They govern the choice of what people see on the internet. The potential for this to interfere with news flow is obvious. If you type something into Google, it decides what you get to see. In the context of a referendum or an election, the potential for altering the result is clear. It also has an effect when you are just looking round to see what is there. Google has had trouble recently with its response to people typing in “are Jews”; it was autocompleting that with the word “evil”. This has now ceased, but it shows what influence algorithms can have in directing people to particular sources of information—in this case, with particularly nasty implications.
The function of an algorithm is to discriminate, but how are algorithms discriminating? What do we know about what they are doing in terms of fairness, when it comes to race or gender, in the context of job offers, accommodation or access? Referring again—I am sure unfairly—to Google, there was an episode last year when, if you put “three black teenagers” into the Google image search, you got mug shots of prisoners; but if you put in “three white teenagers” you did not. How do we know the effects of these things on our lives? If people start trying to correct them, what effect will these corrections have?
Most of these algorithms—or at least the big ones—are run by large, dominant, international organisations. Who controls them? We think we have some idea but there is no predictability; there does not seem to be any effective system of governance, least of all by government or institutions. They are a law unto themselves and they will continue to be so, unless something fantastic changes.
Under these circumstances, we ought to know what is going on. We ought to have the ability to take a look and make sure that it is fair and as we wish it to be, as we do in similar areas of the old media and of life. I hope my amendment will enable Ofcom to do just that. I beg to move.
My Lords, I support the amendment. There is a huge amount of power in the hands of search engines regarding the way they influence how people think. This could be used as a form of propaganda, as we have seen with the recent rows about fake news. From the point of view of protecting Britain, there could even be some security implications because of the way they could affect how people think. So it is quite a sensible power to have, just in case.
My Lords, I too support the amendment. I thank the noble Lord for his explanation of what an algorithm is. I always found BBC Bitesize’s explanation rather helpful—a set of rules to solve a problem—along with its corresponding explanation of how an algorithm can go wrong: a set of rules designed for getting dressed that insists on your coat going on before your jumper. This would lead to a great many children arriving at school in sartorial disarray. It helpfully indicates that a set of rules is not benign—it has a purpose and a process, both of which are man or woman-made.
It is not possible to exaggerate the importance of an algorithm. I recently read Weapons of Math Destruction, by Cathy O’Neil, a Harvard PhD and Wall Street quantitative analyst. It goes step by step through the ways in which algorithms—apparently neutral and benign—have the capacity to change lives in huge ways and in an ever-increasing list of scenarios. If wrongly attributed or designed, they can have devastating effects on job prospects, education, financial outcomes or the reputation of an individual, with very little possibility of appeal, correction or compensation.
The amount of data gathered is breath-taking. There are an estimated 4,000 data brokers trading information, largely given up unwittingly or unthinkingly, in a $200 billion business that categorises us into list after list of identifiable groups. How they gather that information, what assumptions are inherent in their analysis and the way in which they use that information is designed into algorithms. To have some public oversight and transparency of the use and abuse of those decisions seems to be a minimum.
This is a very modest amendment and a tiny part of what will surely be a global standard, but it lays down a marker. Although Sharon White is on the record as saying she does not believe that Ofcom should play a part in regulating the internet, I wonder whether her position has as much to do with expertise and capacity at Ofcom as a strongly held philosophical position. It might not be a perfect amendment but I say to the noble Lord that it is a perfect idea because it does not overreach but offers the prospect of transparency and correction. The technology we are talking about brings with it a great deal of creativity and social good but it is, as the noble Lord said, disproportionately powerful and opaque. I urge the Minister to consider what the Government might offer to deliver the intention of the amendment, if not in this form then perhaps in another.
My Lords, I, too, support the amendment. Yesterday, along with many of your Lordships, I attended a meeting with Channel 4 on the subject of fake news. Here we are not talking about opinion, where people can legitimately take one view or another in a democracy, but about things that are demonstrably totally false. Yet there is no mechanism at the moment for screening them out of social media. If in the United States 44% of the population regard Facebook as their primary source of news, there are dangers for democracy.
I do not know whether the noble Lord’s amendment will work. I do not know whether, for example, the companies will regard algorithms as commercially confidential and refuse to release them. I do not know what powers we actually have over these bodies, but it is worth exploring. It would be ridiculous if this massive Bill, which deals very well for the most part with a wide range of subjects, were to leave out the most topical and potentially the most dangerous of all: social media.
My Lords, this is an important amendment because it touches upon the bigger issue of the impact of artificial intelligence on all sorts of aspects of our lives. There is a law called Moore’s law, which says that every two years the power of computers doubles. That has been true over the past 20 or 30 years and we should assume that that power will continue to develop. Artificial intelligence in all its impacting forms will be more and more prevalent in our society and more and more potent in the hands of terrorists in the years to come.
We cannot ask Ofcom to solve all the problems in this area, but I would like to know where the ownership of these risks and the rapid changes in our society falls in the eyes of the Government. Perhaps Ofcom has a role in this regard—search engines or whatever—but it is really part of a bigger picture of how we get ahead of the game with the impact of artificial intelligence. We read in the papers about driverless cars appearing on our streets, and in many other areas of life artificial intelligence will impact upon us. Where is this owned in the corridors of government?
My Lords, I would like to support my noble friend in his amendment. Algorithms are basically mathematical. The power of computers is used to record, classify, summarise and project actions that indicate what is happening in the world around about us. Algorithms can be applied in particular to social media, which other noble Lords have referred to, and to normal internet usage and browsing. They reach decisions about public interest, about you and about me.
According to a recent radio programme, algorithms are used to make individual decisions in the fields of employment, housing, health, justice, credit and insurance. I had heard that employers are increasingly studying social media to find out more about job applicants. I had not realised that an algorithm, programmed by an engineer, can, for example, take the decision to bin an application. If that is true, that is absolutely unacceptable. It certainly explains why so many jobseekers do not receive a response of any kind. There is a very real danger that a person could also be refused a mortgage or a better interest rate as the result of an algorithmic decision. Even now some companies use algorithms based on phone numbers to decide whether a caller is high or low value. Highs get to speak to a person: lows are left holding on until they hang up. Algorithm designers refuse to answer any questions, I understand, about the data that are used or their application on grounds of commercial confidentiality. There are real concerns that if we continue to allow such liberties, there will be an increasing risk of discrimination—intentional or accidental—against people of certain races, religions or ages. One example of algorithm use cited in the programme was that of differential pricing by Uber.
The EU intends that by July 2018 citizens will have the right to an explanation of decisions affected by the workings of these algorithms, such as the online rejection of a bank loan. I do not feel that we should wait until then, and although my noble friend’s amendment might not be perfect, I am really grateful that he has tabled it today and that we are having this worthwhile debate.
My Lords, I also thank the noble Lord, Lord Lucas, for putting down this amendment. Indeed, this amendment has many good aspects to it, but I will adopt a phrase which the noble and learned Lord, Lord Keen, used the other day, which is, “It doesn’t go nearly far enough”. It really highlights—and I declare an interest as the co-chair of the new All-Party Parliamentary Group on Artificial Intelligence—some of the issues that this Bill simply does not deal with. This does need huge consideration: all the ethics involved not only with artificial intelligence, but with the internet of things and the great many regulatory issues which spring from the new technologies. Algorithms are a part of it, of course they are, but we need further consideration.
I agree with those who have said that perhaps Ofcom is not necessarily the best regulator for this—I do not know—and it may be that we need to construct a purpose-built regulator for the world of artificial intelligence and the internet of things in ethical terms. I am not quite sure that Ofcom has got the necessary tools in terms of the ethics aspect of it.
I am very much in spirit with the noble Lord and I am delighted that he has raised it, but we are at the very beginning of a really important debate on a lot of these areas. The essence of all this is trust. We had a continuous debate through Part 5 about the government sharing of data. This is about the private sector and its use of a lot of our data and the way it sorts them and places them in the search engines. Trust is the overwhelming issue of our age, and we are not there yet. If we are going to reassure people who want to use these new technologies, we really do need to come up with a proper regulatory system. I do not think that this new clause quite provides it.
Before the noble Lord sits down, may I just ask him: is it not dangerous to make perfection the enemy of better? In other words, the amendment may not be perfect, but it is moving in the right direction, and to say, “Do nothing”, because it is not perfect is surely very unwise, given all the other stuff that he has said.
My Lords, I know that the noble Earl himself is perfect in almost every way, so I would very much hesitate to argue with him. Still, I feel we need something rather broader than this proposal would provide.
My Lords, I share the view that the noble Lord, Lord Clement-Jones, has expressed, that the amendment probably is not the way to go about this. Algorithms are too ubiquitous, useful and powerful in this case. I do not know what we could do instead, but I note that one of the things we are looking at, together with the problem that the noble Lord, Lord Lucas, has identified, is that the internet service providers and the big media companies are supposedly platforms, not publishers, and they do not have the responsibilities of publishers for that reason. Facebook will say that it merely hosts the material that individuals post. When individuals post material, they ought to think that it reaches an indefinite number of people because the algorithm spreads it through the echo chambers. It is the cyber silos that we are going to have to think about. With the greatest regret, I do not think the amendment would do that, but I very much support the principle of looking into this matter.
My Lords, this has been a very interesting debate. We, particularly those of us of a certain age, often get to a point where we are scared of the technology that we are expected to use. We are in the hands of our children, who shout things like, “It’s intuitive! Just do it!”, but we do not have the faintest idea what we are trying to do. However, we should not be scared of technologies. History should tell us that the reason why Shakespeare’s Globe is outside the city walls of London is that people like us in those days felt that they were dangerous plays that should not be seen by too many people. Video nasties and indeed concerns about some of the issues that are in the Bill are examples of the same thing. We have to be careful that this is not just another “penny dreadful” story but a serious issue.
I was not that concerned about this matter in my own consciousness until I came across it personally and in relation to something that has already been mentioned in the debate. I work with a small charity that relies entirely on a website presence in order to try to help people who suffer from the condition that it serves. For the first seven or eight years of the charity’s life, we were ranked number one on a search engine—let us call it Google—so when you searched for the condition, we came up top. In the last six months, we have gone from top to, I think, 44th in the rankings for this condition, which means that no one now uses our services, rings up or communicates with us. We are now on page four of the search results and that turns out to have been achieved by a change in the algorithm, which prunes out the people who apply. The ISP put in a particular search term that managed to knock down the efficacy of the inquiries that were coming to us at our charity. So the charity, which was doing good work and reaching 2,000 or 3,000 people a year, is now reaching no one, and we cannot change that because the algorithm is behind a commercial confidential situation. So I pick up the points that are being made all round the Chamber about the need for us to get more clued up about this without being scared of it, and I support the amendment for that reason.
The second point that has been picked up, which slightly goes against the wise words of the noble Baroness, Lady O’Neill, is that, where an algorithm is helping to achieve a relatively straightforward systems approach, it is probably not as much of an issue as where it is substituting its judgment for yours. It is not knowing what that judgment is that is the problem, and that is where the points that have been made need to be picked up. That is something that we would all benefit from. Whether or not this is the right amendment, there is an issue here that will need to be pursued, and I look forward to hearing the Minister’s response.
My Lords, I thank noble Lords who have taken part in this very interesting debate. Clearly there is a principle upon which everyone is agreed, and that is that this is a serious and growing issue. It is certainly an issue that the Government take very seriously.
As my noble friend Lord Lucas has set out, the basis of the amendment aims to understand the impact of algorithms on users of digital services. As we have already heard, algorithms play an important role in modern life, from making recommendations for books you might like to read, to more important matters such as credit ratings and detecting fraud. Indeed, there is a real debate here on the extent to which the public are willing to compromise on what is termed privacy for a better service. Transparency itself is incredibly important in terms of knowing how information about oneself is used, for what and with whom it is being shared, and having some control over that.
While the Government are sympathetic to the spirit of this particular amendment, we believe that it would not have the intended effect. The Government recognise that how these algorithms work is increasingly important and have been actively looking at how we can ensure that there is transparency and accountability where algorithms have an impact on people’s lives. As part of this work we have commissioned some very intelligent minds at the Royal Society and the British Academy to review the UK’s data governance landscape—this is a really important step forward. It is clear from listening to the debate this afternoon that perhaps even a further debate in this House on this subject would be helpful. It is something that we must not be afraid of, as the noble Lord, Lord Stevenson, said—it is our future. The review is examining the increasing use of new data technologies and data-driven decision-making and will provide recommendations later this year.
The huge breadth of use for algorithms means that a one-size-fits-all approach would not, we believe, be appropriate. The development of algorithms is a key source of innovation in the digital economy in areas such as cybersecurity—as referenced by the right reverend Prelate the Bishop of Chester when he talked about anti-terrorism—artificial intelligence, medicine and autonomous vehicles. Tech companies have legitimate concerns and legitimate reasons to protect their intellectual property, including how their algorithms work. This was touched on by the noble Lord, Lord Gordon, in relation to commercial confidentiality. This is a difficult and quite complex area, but some protections already exist and more will exist. For example, under the general data protection regulation, which will come into effect from 2018 and provide directly applicable rights, people will have a right to object to how decisions are made by algorithms that are based on their personal data and significantly affect them individually.
As already expressed this afternoon, another area where algorithms may play an important role concerns the proliferation of so-called fake news. I am aware of concerns on this issue; algorithms can play a role in deciding which search results and news stories are presented on websites and social media platforms. Fake news is an issue that the Government are looking at specifically—and it is complex. There are a number of angles from which this can be looked at. The role played by platforms such as Facebook and Google is undoubtedly one such angle—we want to work with them on this whole issue—and so, too, are the actions and motivations of those content producers developing the fake content and the way in which consumers respond to fake content. This is why the Government are in listening mode, but we believe it is too early to conclude that legislation is necessarily the answer.
Lastly, this amendment is widely drawn, and so— I am sorry—not perfect. It would be an enormous undertaking for Ofcom, or indeed, any regulatory body. Ofcom’s current remit in respect of public electronic communications services relates to protecting end-users in relation to the transmission of communications rather than the content of those communications, which was an issue touched on by the noble Baroness, Lady O’Neill. With that explanation I hope that the noble Lord will withdraw his amendment.
Before my noble friend sits down, can she tell us a little more about the involvement of the Royal Society, when we might hear a result from it and whether it will be shared with this House? Can she in fact bring about a further debate in the light of its findings?
I believe that my noble friend’s idea is very good. We hope to hear from the Royal Society and British Academy later this year and, on the basis of their recommendations, it might then be timely to have a debate in your Lordships’ House.
My Lords, I am very grateful to all who have spoken in this debate. This is something which the Government should have their mind on. I am delighted that my noble friend on the Front Bench says that the Government are paying attention to this, and that we will get something we can get our teeth into later this year. I beg leave to withdraw my amendment.
Amendment 214 withdrawn.
Clauses 71 to 74 agreed.
Clause 75: Appeals from decisions of OFCOM and others: standard of review
215: Clause 75, page 78, line 11, leave out from “appeal,” to end of line 12 and insert “by reference to the grounds of appeal set out in the notice of appeal and taking due account of the merits of the case.”
My Lords, I shall speak also to Amendment 216.
It is common ground that anyone affected by Ofcom’s decisions should have the right to appeal if they consider that Ofcom has got something wrong. Ofcom itself makes the point that there needs to be an appropriate balance between properly holding it to account and enabling it to make timely and effective decisions in the interests of citizens and consumers and the wider UK economy. But in the brief for this debate, it goes on to say that,
“the current merits system for appealing Ofcom’s decisions does not achieve that balance. It results in some appellants effectively asking the courts to become the primary decision-maker in place of Ofcom rather than conduct an appeal which focusses on errors which Ofcom is alleged to have made. This is particularly the case in price control appeals, where appellants have consistently used the system as a second attempt to run arguments they have already made to Ofcom during its extensive consultation processes”.
Those propositions are hotly disputed not only by many telecoms and internet service providers but also by others such as the CBI and techUK. Their position was made clear on this matter as far back as September 2013, when the Government published their summary of stakeholder views on the appeals system.
I will take the House through the fundamentals of Ofcom’s case for the change embodied in Clause 75. First, it says:
“Almost every single decision by Ofcom is promptly appealed in the courts”.
Roughly one in eight decisions have been appealed over the past decade, and this has been declining significantly over the past five years. The potential for merits-based appeals is an incentive for high-quality regulation. Here is another claim:
“This has resulted in lengthy delays in putting through quite important measures”.
Almost invariably, Ofcom’s decisions take effect immediately and stay in place while an appeal is heard. In the case of price controls, no Ofcom decision has ever been delayed in its application while an appeal is heard. Here is another proposition:
“This change will bring Ofcom into line with other regulators”.
Virtually every other economic regulator faces scrutiny of its decisions to establish whether it is in error under regimes not limited to judicial review. I could take your Lordships through energy, water, post, the NHS, aviation, rail, but I will not go into great detail unless I need to respond to the Minister at the end of the debate.
The new approach in Clause 75 would therefore not be in line with almost all other comparable public authorities—that is, the economic regulators. The standard of appeal is not much lower in telecoms than in other sectors. All the UK’s major economic regulators have a form of statutory review that is in law or in practice merits review. All EU telecoms national regulatory authorities make decisions that must stand on their merits.
Here is a further proposition: Clause 75,
“should also free up Ofcom resource to deliver better outcomes for citizens and consumers”.
Far from being good for the consumer, Clause 75 would have denied the court’s ability to implement corrections to bad decisions which have resulted in something like £350 million to £400 million of direct consumer benefit over the past decade. Over a number of cases in the past 10 years—again, I can give the Minister references if he needs them—the tribunal’s decision was that Ofcom’s decision had not gone far enough in the consumer’s favour. This would not have been fixed through judicial review.
A further proposition:
“The big incumbents will no longer be able to use the process to hold-up regulatory decisions through aggressive use of the appeals process”.
Opponents of the change in fact represent the vast majority of the investing industries—small and large, ex-incumbent and insurgent. BT was joined by other industry appellants on most of the cases it appealed. Merits-based appeals work pretty well for SMEs, too, and are disproportionately used by them.
Here is another proposition:
“If material error is present it can be addressed in judicial review”.
Judicial review tests generally relate to illegality, procedural impropriety, irrational behaviour—in other words, has the decision-maker taken leave of their senses? To repeat, JR would have denied consumers benefits of something of the order of £400 million in value. Here is another proposition:
“JRs will be fewer in number and take less time”.
Increased uncertainty for this procedure could be likely to result in an increase in appeals. On average, judicial review takes 10 months from start to finish, versus 11 months on average for a merits appeal. Judicial review requires the decision to go back to the regulator, which can add years to the process, while a merits-based appeal provides powers to the appeals body to fix the problem.
Its final proposition is that:
“Ofcom wins 85% of cases”.
That is rather misleading. Ofcom wins just over 60% of appeals and in the rest it is found to have erred in some material respect. Ofcom’s statistics only tell us that in 15% of cases it lost absolutely every point in an appeal. That is the true 85% figure.
For all the above reasons, the vast majority of telecoms communications providers of the UK’s fastest-growing new fibre networks, the UK’s premier business organisation, the UK’s trade association, providers of internet services and the body which represents the UK’s technology sector, strongly oppose the proposed change. They fear the change will mean that regulation will become unpredictable and prone to risk, with no corrections for inconsistency, error, or lack of rigour in approach.
In summary, a move to judicial review will leave wrong decisions standing. Judicial review, as I said earlier, is solely concerned with whether the decision is unlawful in a technical sense—that is, was the correct process followed? The decision itself is not reviewed. Many decisions that have been found in merits appeals to be clearly wrong and that harm the interests of consumers would have been allowed to stand under judicial review. As I have emphasised above, the existing appeal regime protects the interests of consumers. Ofcom can and does make mistakes, and in the vast majority of cases, these mistakes have meant higher prices for consumers. Correcting those mistakes has delivered benefits of hundreds of millions of pounds.
These amendments steer a different and compromise course. We accept that there may have been some gold-plating of the original framework directive, and have tried to meet some of the criticism through these amendments. Amendment 215 is a direct copy of the European framework directive wording, without any gold-plating. As I have said, this is followed by all other national regulatory authorities in the EU. The tribunal must decide the appeal,
“by reference to the grounds of appeal set out in the notice of appeal and taking due account of the merits of the case”.
This version no longer requires the appeal to be decided on the merits but with “due account” of the merits being taken.
Amendment 216 is an alternative, focused on specific grounds used in appeals in other sectors. The tribunal must decide an appeal by reference to the grounds of appeal set out in the notice of appeal only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the grounds set out in proposed new paragraphs (a) to (f). This version has a narrower scope than the current approach but allows for an assessment of whether the substantive decision is correct, not simply whether the correct decision-making process has been followed.
Clause 75 is a serious change to make to the telecoms regulatory regime. I very much hope that, in the face of these arguments, the Government will change their mind. I beg to move.
My Lords, as I indicated at Second Reading, I am extremely uncomfortable with the proposed shift from a merits-based to a judicial review standard of appeal from Ofcom decisions, and I very much support these amendments moved by the noble Lord, Lord Clement-Jones. Indeed, he has made the case so thoroughly and strongly that I can be extremely brief.
It is inappropriate that in a market as innovative and fast moving—indeed, fast changing—as telecommunications, it should not be possible to test decisions made by the regulator not just on their legality but on their correctness and fairness in terms of the merits of the issues raised. As the noble Lord mentioned, I have received briefings both from Ofcom and from a group representing the bulk of the telecoms industry and industry more widely, through the CBI, as well as from the technological sector through techUK.
I remain slightly baffled at the apparent contradictions between the arguments cited by the two sides. I would encourage the Minister to look very carefully at these arguments to establish as clearly as possible where the evidence points—perhaps one could describe it as the merits of the case—before proceeding towards allowing only judicial review-based appeals.
I will not go through the detailed arguments because there is not a single one on my list that the noble Lord did not cover better that I could hope to do. However, from what I have heard, I am far from convinced that the proposed narrowing of the appeals standard will benefit either consumers or investors—and we need a great deal of investment in this sector—let alone the wider national interest in fostering a fair, competitive and vigorous telecommunications marketplace. I am therefore happy to support either or both of the proposed amendments. I hope the Minister will have another careful look at this issue and consider introducing amendments of his own, designed to ensure that important issues relating to the merits of Ofcom reviews can be properly challenged.
My Lords, I support these amendments, which seem a very good compromise. They ensure fairness and balance and avoid the very narrow approach of judicial review regardless of merit in any circumstances, without going into the substance of matters in a way that would turn the review into a whole general appeal. For those reasons, I am glad that the noble and learned Lord, Lord Keen, is taking part in this debate. He will know a great deal about the subject from his private practice as well as his public practice. This is a good compromise. It may be that the Government can come up with something better, but this is certainly better than Clause 75 as it stands.
My Lords, I am not a lawyer—I feel a bit uncomfortable joining this debate; I am sure there are issues it is much beyond my abilities to deal with. But I say to the Minister before he responds, the point made about the degree of concern in the industry is important. This is a big and complicated Bill with many different aspects. It reaches far into aspects of our digital world. This clause, however, is the one that has generated the largest number of responses and—to judge from the meetings I have had with people—the most anger.
In a sense, so what? If it is the right decision, it should go ahead. However, it is clear that there is a lot of support for the current situation, even though there are arguments against it. The point was made time and again that the existing arrangements seem to work well, so why are we changing them? The industry, as I said, is pretty well united against it. One or two are speaking up for it but they do not represent the majority of voices we have heard.
There is also a real danger that—particularly at a time of uncertainty over technological change and regulatory positioning—having a period when we deliberately create confusion and delay until the new guidelines, or baselines, are established, is probably not the best way of making progress. Uncertainty over a long period will affect investment, which is not what we want. So there are reasons for asking the Government to be very clear that this is the right way forward.
We all share the same wish: we want an efficient and trusted regulator that can deal with this complicated, fast-moving and complex area. But it would be quite improper to have a situation in which there was a very limited right of appeal on any case determined not to have been carried out correctly—not so much about the judicial aspects, but on the merits of the case; in other words, where the evidence does not support the decision that has been taken.
I do not understand quite what the difficulties are. I have looked back over comments made by the noble and learned Lord when he was Advocate-General for Scotland. He is on the record in a number of places and a quick search with an algorithm of some complexity, which I could not possibly describe, reveals him to have said several things about judicial oversight. As it has developed, he says, it has,
“provided us with a flexible standard of oversight, which in many senses is wide-ranging”.
However, judicial oversight is the issue and that is what we have to emphasise. He might like to reflect on that in relation to what has been said. There are other things—I will not quote them as I am sure he is embarrassed enough already, or perhaps not. But the issue needs bottoming out—there is a serious point at its heart. There are issues that will affect the whole nature of the business we are regulating in this manner which need to be resolved.
My Lords, I am obliged to the noble Lord, Lord Clement-Jones, for raising this matter because it has generated a great deal of heat and debate in the context of the Bill. I appreciate the point made by the noble Lord, Lord Stevenson, with respect to the number of responses there have been. I just emphasise that judicial review is a form of judicial oversight, and a very effective one, but I will elaborate on that in a moment.
We are aware that the major telecoms operators in particular, and their agents, have lobbied vigorously and in detail on this point. Indeed, the noble Lord, Lord Clement-Jones, brought out many of the points that have been made by their agents in the course of that vigorous and detailed lobbying. I shall not go into the detail of Ofcom’s position on this. It has expressed its position very clearly and we understand it. What I would say is that there is no single position for all utility sectors, and both judicial review and appeals on the merits may be used in the same sector for different kinds of appeals. It is not a black and white situation.
The Government’s case is not that this change is needed to ensure consistency with other utility sectors but that the public interest will be best served in the communications sector by an appeals regime that focuses on errors which Ofcom is alleged to have made, rather than asking the court to reach a different conclusion. Let us remember that Ofcom is a qualified regulator and its decisions are entitled to respect. They are informed decisions and they are not irrational. They are not determined on the toss of a coin. That is why judicial review is an appropriate approach.
The noble Lord, Lord Clement-Jones, also talked about consumers. I find that interesting. Perhaps I may refer briefly to the Which? response to Clause 75. It sees this measure as one of the most important currently contained in the Digital Economy Bill, saying that it will give the regulator the power and confidence to take the necessary actions to protect consumer interests without fear of costly and lengthy litigation procedures. Introducing a judicial review standard for appeals in telecoms will mean that decisions made by Ofcom in the interest of consumers should be easier to implement and quicker to take effect. That is a reflection of Ofcom’s own view of the matter. This is not necessarily about coming to the aid of Ofcom but about recognising these matters from the perspective of the consumer. That is extremely important.
Currently, appeals brought under Sections 192 to 196 of the Communications Act against Ofcom’s regulatory decisions are decided “on the merits” by the Competition Appeal Tribunal. That exceeds and, as the noble Lord, Lord Clement-Jones, acknowledged, effectively gold-plates Article 4 of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal. That is not quite the wording of the proposed amendment.
The result of this over-implementation is an unnecessarily intensive and burdensome standard of review that can result in very lengthy and costly appeals litigation, which in turn can hinder timely and effective regulation. Some of the appeals that have taken place have done so over extraordinarily lengthy periods. Of course, the very large communications operators are in a position to fund that sort of appeal process. Clause 75 will change the standard of review so that the Competition Appeal Tribunal will decide appeals against Ofcom’s decisions by applying the same principles as would be applied by a court on an application for judicial review and, in particular, judicial review of other administrative actions. This will focus appeals on the key questions of the legality and reasonableness of Ofcom’s decision-making.
The noble Lord, Lord Stevenson, suggested that there might be cases in which there was simply no merit in a decision. If that was so, and if Ofcom proceeded without reliance on the facts of a particular case, that would be amenable to review under a judicial review standard.
Judicial review itself varies according to whether or not there is a European element. If the review is about a case where free speech under the convention is concerned or an EU directive is concerned, then judicial review embraces the principle of proportionality. However, if it is not about a case where European law can be involved—either system of European law—under the deciding case law, judicial review does not apply the principle of proportionality. In other words, it still—in my view, wrongly—does not look at whether the means employed to pursue a legitimate aim are necessary to achieve that aim. Is not what I have just said an indication of the unsatisfactory nature of relying on judicial review as the solution?
With respect to the noble Lord, Lord Lester, I have to say no, because here we are dealing with judicial review in the context of the EU framework directive, which requires that the merits of the case are duly taken into account in any appeal, therefore effectively introducing the issue of proportionality into that process. Therefore, even if there are cases which some might criticise as involving too narrow an approach to judicial review, that does not apply here. This is an incidence in which the issues of proportionality will arise in the context of judicial review. By taking this route, we are applying an appropriate standard to Ofcom’s decision-making.
As has been acknowledged by noble Lords, this is a fast-moving sector, and regulation needs to be able to keep pace with technological and market changes. This is rather difficult when appeals can drag out for a year after a regulatory decision has been made. As the UK’s expert regulator in the telecommunications sector, it is right that Ofcom itself should be given an appropriate margin of appreciation by the tribunals. That is why we have an expert regulator there—so that it can make an informed decision that should be given an appropriate margin of appreciation by the Competition Appeals Tribunal.
A judicial review basis for appeals is intended to be a flexible process that will ensure that those affected by Ofcom’s regulatory decisions can still challenge those decisions effectively within the framework of Article 4 of the EU framework directive. A number of Ofcom’s regulatory decisions are already appealable only on a judicial review basis. I made the point earlier that, with regard to individual regulators, you can find instances in which there is a merits-based appeal for some matters and a judicial review standard in respect of others.
By changing the standard of review to reduce over-lengthy and costly litigation, this clause will enable consumers to benefit sooner from the outcome of decisions made by Ofcom in pursuit of its statutory duty to further the interests of consumers. I emphasise that: one of Ofcom’s statutory duties is to further the interests of consumers. The clause will also remove a significant potential barrier to the participation of smaller communications providers in the appeals process, benefiting smaller, “challenger” communications providers. Again, they are inhibited by the prospect of massive merits-based appeals going before the Competition Appeal Tribunal.
The noble Lord, Lord Clement-Jones, has tabled two alternative approaches. Amendment 215 would replace the existing “on the merits” standard with a requirement for the tribunal to take,
“due account of the merits of the case”.
I acknowledge that the amendment essentially replicates the wording of Article 4 of the EU framework directive, albeit it is not identical to it. While this would in one view remove the gold-plating of the existing standard in a technical sense, the Government consider that it would not lead to any substantive change in approach. That might be why this proposal is being pushed so hard by the major operators in the telecoms sector. It would not, therefore, result in quicker appeals, timelier implementation of regulatory decisions or resultant consumer benefits.
Amendment 216 would alternatively replace the existing “on the merits” standard of appeal with a list of specified grounds. The tribunal would be able to uphold an appeal only where it was satisfied that Ofcom’s decision was wrong on one or more of these grounds. However, as noble Lords may be aware, the previous Government consulted on a similar approach in 2013 and we do not consider that this approach has merit. On balance, we consider that such an approach would risk significant satellite litigation if it were to be introduced—about the nature of the new standard of appeal, for example, which could lead to longer appeals and further regulatory delay. A standard of review based on judicial review principles, including the principles of proportionality in the context of the application of the European directive, which is well understood and used in many other sectors, will minimise this kind of uncertainty. In these circumstances, I invite the noble Lord to withdraw his amendment.
My Lords, I will not disguise the fact that I am not happy with the Minister’s reply. But I would like to thank the noble Lord, Lord Aberdare, for his support and I particularly thank my noble friend Lord Lester, who himself is a master of judicial review. I take very seriously what he has to say on the subject. I also thank the noble Lord, Lord Stevenson, who raised a number of pertinent points. He is obviously a very good client when taken to Chambers. I was hoping that the noble Lord, Lord Faulks, was going to take part in the debate, as then a ruffle or a jabot of QCs would have emerged; I do not know what the collective noun for QCs is.
Quite seriously, I am afraid that the Minister and the Government have bought not just the Ofcom line, but the hook and the sinker as well. We have an interesting conjugation: “I make my case, you lobby”. That seems to be the construction put on Ofcom’s behaviour. So Ofcom’s decisions are entitled to respect and “a margin of appreciation”. We are talking about the appeals process for an immensely powerful regulator. I do not think that that is an appropriate form of words. Of course, decisions are entitled to respect, but the rights of those who are investing in the telecoms industry are entitled to respect as well. This is an argument about the appropriate form of appeal.
I did not touch on whether this new clause is in line with European law. It may be academic because we might be out of the stable, so to speak, before we have to test the proposition as to whether the use of JR in these circumstances conforms to the framework directive. But that is an important matter. Ofcom has clearly been vigorous in its lobbying and certainly vigorous in its lobbying of noble Lords. I am glad to say that many of them have resisted in the circumstances. The Minister went through the nature of the amendments in a perfectly proper fashion, but he did not really make a particularly good case about why they were not appropriate. He did not really address my argument about other regulators. At the outset, I took the Minister through a number of economic regulators, none of which have JR as the fundamental point of appeal, so that requires an answer.
My purpose in tabling the amendment is to make sure that there is an effective challenge to Ofcom. We have swung way too far with Clause 75. We are serving the interests of the regulator far too much. I do not believe that all the propositions that Ofcom has put forward are valid and we need to keep kicking the tyres further on this particular clause until we find a better solution. We may have to make express reference in Clause 75 to the EU framework directive, which might be one way of dealing with this. But I guarantee that we will return to this at a future date. In the meantime, I beg leave to withdraw the amendment.
Amendment 215 withdrawn.
Amendment 216 not moved.
Clause 75 agreed.
Clause 76 agreed.
217: After Clause 76, insert the following new Clause—
“The BBC Charter: timing
(1) The Communications Act 2003 is amended as follows.(2) After section 198ZA (inserted by section 76 of this Act) insert—“198ZB The BBC Charter: timing(1) The first BBC Charter to be granted following the day on which this Act is passed must have effect for a term of 11 years beginning with the day on which it is granted, and each subsequent BBC Charter must have effect for a term of 10 years beginning with the day on which it is granted.(2) In this section “the BBC Charter” has the meaning given by section 362(1) of the Communications Act 2003.””
My Lords, this is a paving amendment for this group of amendments. My noble friend Lord Clement-Jones asked just now what the appropriate collective description of Queen’s Counsel is. I was pondering that; at first, I said to myself, “Avarice”, but then I thought that the true answer would be given by The New Yorker book of cartoons, which had a cartoon of a lawyer looking at his client and saying, “How much justice can you afford, Mr Pitkin?”
The Committee will be deprived of several speakers who cannot be here today, who have supported this amendment and the others in the group. They include the noble Lords, Lord Pannick and Lord Inglewood, who asked me to apologise on their behalf.
I explained in previous debates why I believe that statutory underpinning is needed to protect the BBC’s independence and viability, free from political interference. During the take-note debate on the draft BBC charter on 12 October 2016, I expressed the hope that the drafts would be amended. I pointed out that the central problem with the Government’s proposals for the charter—raised across the House by, for example, the noble Lords, Lord Fowler, Lord Inglewood and Lord Best, former chairs of the Communications Committee, the noble Lords, Lord Stevenson of Balmacara, Lord Burke, Lord Pannick, Lord Colville and the noble Baroness, Lady Deech, and my noble friends Baroness Bonham-Carter and Lord Foster of Bath—is that there are no statutory criteria or requirements that must be met in the charter or the agreement with the Secretary of State.
I noted that the draft charter and agreement did not put the Government under any duty to ensure that the BBC remains independent. They contain no obligation to ensure that the BBC is properly funded to perform its public functions. There is no commitment to avoid further top-slicing of the licence fee after the transfer of the cost of free licence fees for the over-75s, which will have a serious adverse effect on the BBC’s funding and programming—a 20% to 25% cut in licence fee funding. In my view, that was unseemly and deeply regrettable, but it is now too late to reverse it.
I criticised the lack of an independent process for appointing the members of the new unitary board on merit, to prevent cronyism. I warned that Ministers remained able to determine what “distinctiveness” means. There was no protection for the BBC against much richer competitors, challenging the current and future BBC programming. Powerful criticisms to similar effect were made across the House, but the Minister did not give ground on any of those points. The new charter and agreement were brought into force completely unchanged. As the Minister may confirm—I hope that he will—the Government retain the right to make further inroads into the BBC’s revenue by transferring responsibility, including liability and costs, for any public expenditure.
I also spoke during the Second Reading debate on the Bill on 13 December 2016—I am becoming something of a BBC charter bore in this House. I explained that what I meant by statutory underpinning is that Parliament should prescribe the basic principles protecting the BBC’s independence and viability as a public service broadcaster. I concluded by describing myself as an optimist and expressed the hope that the Government will sympathise with our moderate and practical approach. I am still optimistic that we may reach agreement with the Government on a protective framework of principles during the remaining stages of the Bill’s passage. That would be in the Government’s, and the public, interest.
A question raised by these amendments is one of principle, to which I would be grateful for the Minister’s reply. The question is this: is statutory underpinning of a royal charter both possible and legitimate? I hope he will confirm that the answer is yes.
There are several precedents for a combination of legislation and charter, notably the Leveson legislation on the print media and the National Citizen Service Bill. Both provide underpinnings for royal charters, although no doubt civil servants will come up with clever arguments as to why they are different. However, I am not raising that question but the question of principle: is there any reason in principle why statutory underpinning is incompatible with the idea of a royal charter?
In his letter to me of 4 January, for which I am grateful, the noble Lord, Lord Ashton of Hyde, claimed that the Government had increased the BBC’s freedom, “to use its money as it sees fit”. I should be grateful for his confirmation that the BBC’s revenue from the licence fee is indeed the BBC’s and not the Government’s money, and for his assurance that there will be no further raid by this Government on the BBC’s revenue. Will he also confirm that without legislation, a future Government would be free to make further raids: in other words, that the most he can do is give an assurance about this Government? The Minister went on to say in his letter that the Government remain of the view that any statutory underpinning to the charter which would expose the BBC to party political pressures would not be in the interests of an independent BBC. There is a whiff of the Brexit debates about that statement. Ministers exercising monarchical prerogative powers claim to be better able to protect the interests of the BBC than Parliament. I agree that the BBC needs to be protected against politicians, whether in or out of office. Ministers are as susceptible to party political pressures as other MPs, and the BBC needs to be protected against both. If the amendments are agreed to, they will give protection and can be abolished or weakened only by a future Act of Parliament. I submit that Parliament’s use of its legislative powers provides better protection than ministerial assurances, which in any case are outlived when the Government change.
I turn now to the specific amendments and hope that the Minister will be able to reply to each of them at the appropriate point. I introduced them in some detail in my speech at Second Reading, so I will not bore the Committee by going through them again. I simply wish to explain to those who are interested what the amendments are designed to. Your Lordships will see that Amendment 217 on the Marshalled List is simply a paving amendment to provide the statutory underpinning that follows. Amendment 218 deals with the independence and funding of the BBC. I am not going to read out the whole amendment—some of it can be found in the royal charter, but in my view all of it ought to be in legislation. If it can be in the royal charter, I am puzzled as to why the Government believe it should not find its way into the Act of Parliament. For example, subsection (2) would insert proposed new section 198ZC, in which new subsection (1) states:
“The BBC is to be independent in all matters concerning the content of its output, the times and manner in which its output is supplied, and the governance and management of its affairs”.
Does the Minister agree with that? I am sure that the answer is yes. Proposed new subsection (2) goes on:
“The Prime Minister, the Secretary of State, the BBC, OFCOM, and all other persons and bodies with responsibility for matters relating to the governance and establishment of the BBC must ensure that the BBC is able to operate independently from Ministers and other public authorities in the United Kingdom”.
Again, does the Minister agree with that? I would expect him to say yes.
Proposed new subsection (3) states:
“In carrying out the duty … the Secretary of State and other Ministers of the Crown must not seek to influence the BBC’s decisions; and … must have regard to the need to defend the BBC’s independence; and the need for the BBC to have the financial and nonfinancial support necessary to enable it to exercise its functions”.
Does the Minister agree? Surely, he does. Then, in carrying out the duty, the Minister,
“must have regard to the need for the public interest to be considered in regard to matters relating to the BBC”.
Again, I see no cause for controversy.
Proposed new subsection (4) states:
“The Secretary of State must make available to the BBC sufficient funds, through the licence fee and otherwise”—
because there are other ways of funding apart from the licence fee—
“to enable the BBC to perform its functions and public purposes as a public service broadcaster”.
I cannot see any conceivable controversy about that notion.
Proposed new subsection (6) states:
“The licence fee is to be for the exclusive benefit of and use by the BBC to fund the performance of the BBC’s functions and public purposes”.
Again, I should have thought that was obvious. Then there is indexation, but I do not need to pause for that.
Proposed new subsection (7) states that,
“the Secretary of State may not transfer to the BBC responsibility, including liability and costs, for any public expenditure”.
That, I think, would be resisted by Her Majesty’s Treasury, which is delighted to be able to claw back anything it can in order to transfer liability from the taxpayer to the BBC, but it is very important that the legislation protects the BBC against topslicing.
Amendment 219 deals with the governance of the BBC. I will not go through it in any detail. It is our attempt to make sure that the BBC’s new unitary board is appointed not on the basis of political cronyism, but by a proper, independent, merit-based process and on the basis of proper competition. Again, I would hope that these days, that would be acceptable to a modern, responsible Government.
Amendment 229A deals with governance and appointments. Again, I do not need to read that out because everyone in this House is just as able as I am to read all the material.
That is the thrust of the amendments, and I beg to move.
I declare my interests in broadcasting as set out in the register. I support this group of amendments. I think it is about time that we seriously considered statutory underpinning to protect the independence of the BBC so that it can operate free from the influence of Ministers and other public authorities in the UK.
The last two charter negotiations have both ended up being a smash and grab by the Government on the BBC’s funding and independence. In my view, the negotiations for the 2017 charter have been the most egregious attack by Ministers in the history of the corporation. The new charter has been portrayed as a great victory that has not only saved the licence fee but also extracted an annual inflation-linked increase in the fee. However, the director-general and the strategy team at the BBC spent a great deal of the last three years constantly anticipating and fending off attacks by Ministers—surely a serious distraction at a time when public service broadcasting has been under unprecedented attack by satellite and internet rivals.
I particularly welcome the new clause that would be inserted by Amendment 218, which states that the BBC should be independent in all matters concerning,
“the content of its output, the times and manner in which its output is supplied”.
There is a groundswell of opinion among many politicians that the BBC needs to concentrate on content that cannot be provided by the market. Noble Lords have only to look at PBS in America to see that, although its programmes are very worthy and wholesome, they are watched by a tiny minority of the audience and are not really relevant to national discussion.
What was most extraordinary about the most recent negotiations for the charter was the level of interference attempted by the Government in BBC content provision. Your Lordships should know that the rumours in the press that the Government wanted to interfere not only in the content but even in the scheduling of BBC programmes were true. They wanted to force the BBC to move the “Ten O’Clock News” to another time. Surely that really is none of their business—even if many noble Lords who like to go to bed early might have appreciated the move.
I also welcome proposed subsections (3) and (4), safeguarding the BBC so that it can “exercise its functions” by providing,
“sufficient funds, through the licence fee and otherwise”.
“Otherwise” is an important word for me. As part of the charter negotiations the Government quite rightly demanded that the BBC find sources outside the licence fee to raise revenues. BBC Worldwide, the corporation’s sales arm, has been doing just that—and very well indeed. It promises to return over £1 billion to BBC content provision over the next five years.
As a former BBC programme maker myself, I know that the uplift from worldwide funding for a programme budget can transform its content. The extra money allows an increase in the number of days’ filming, the locations to be used and the ability to work with a craft film crew—all of which means that viewers can see the money on screen and have a better viewing experience. Yet in the last negotiations the Government very nearly managed to privatise BBC Worldwide. I believe that these proposed subsections would stop such a threat in future.
Many attempts to reduce the independence of the BBC were eventually successfully fought off this time round. But the existing charter mechanism allows similar interference by the Government in the BBC in the future. The risk of placing the future of the BBC on a statutory footing is that there are plenty of politicians from all parties who would like to do the corporation harm, or even to interfere directly in how and where the BBC spends its money. Amendments could be made by Peers and MPs which would atomise the BBC so that its content served their own interests or constituency, which would damage one of the great unifying institutions in our country.
However, if noble Lords look at Channel 4 and its statutory underpinning, they will see that it has made public ownership of that organisation more secure. Last year’s threat to privatise Channel 4 was only too real, but in the end it would have needed a very controversial Act of Parliament to carry out that threat. And what did we see? No such Bill was presented to Parliament, and Channel 4 remains in public hands. I am convinced that this group of amendments would give the BBC powerful protection from future government attacks on its independence. I urge the Minister to give them serious thought.
My Lords, I cannot work up the same sort of enthusiasm for the statutory underpinning of the BBC. Although I deplore interference with the running of the BBC and the licence fee, and welcome the promises of better behaviour in future in the recent licence settlement, it seems to me that statutory underpinning creates a platform for statutory interference as well, which could be a lot more dangerous. Things are run quite well and we now have a royal charter that will last for 11 years. That gives us time to reflect on possible changes at some point in the next 11 years—but certainly not at the moment.
My Lords, I accept that I have a special interest, but I have yet to be bored by the noble Lord, Lord Lester, on this matter. Indeed, I applaud his tenacity and hard work. The day this House discussed the royal charter was the lowest day in all my time in the House. It was a particularly distinguished debate, and there was a wide consensus on all sides that the charter was inappropriate. I do not plan to rehearse the arguments that I made on that day again, but there was wide agreement that, although we had all long believed that the charter was the right way of governing the BBC—I certainly believed that when I was the director-general—we had learned the hard way that it was not.
The royal prerogative is simply archaic; it flows from our history, with its origins in medieval times. Its shortcomings have just been unfolding in the Supreme Court; it has been found wanting there. That was a low day for me because, despite consensus across the House, the Government did not give an inch. I do not expect them to do so today. However, the good thing about this debate and about what the noble Lord, Lord Lester, and his colleagues are doing is that it puts this issue firmly on the agenda. If it is not won today, I predict that it will be won one day. The BBC simply has to be put on a statutory basis.
My Lords, I should declare that my wife works at Ofcom, so I have an interest of some relation to the BBC. These amendments are crucial to an issue we all care about: the independence of the BBC and ensuring it is not compromised. The Government may protest that they have no intention of compromising the BBC’s independence—I am sure they do not—but I know from the debate and from many conversations over the past few months that I was not alone in being alarmed by the initial proposal floated last year that the Government would appoint a majority of members of the new BBC unitary board, replacing the BBC Trust. I am pleased to say that the Government seem to have moved away from that proposal in response to concerns expressed in this House and elsewhere.
But concerns remain. For one thing, we discovered last week just how close the Government intend still to remain to Rupert Murdoch’s companies, whose hostility to the BBC is well known. Senior executives from Murdoch-owned companies met the Prime Minister or Chancellor 10 times last year—more than any other media organisation. In the past 18 months, News Corp executives had 20 meetings with senior government representatives, 18 of which were with the Prime Minister, Chancellor or Culture Secretary, seven involving Rupert Murdoch himself, whose views on the BBC are very clear. Quite what was discussed in these meetings we do not know, but I would be astonished if complaints about the BBC were not raised repeatedly.
As the noble Lord, Lord Lester, eloquently set out, threats to the BBC’s independence come in much more subtle forms. The combination of financial constraint plus extra responsibilities has been a long-standing part of the Government’s relationship with the BBC. I worked for Gordon Brown as Prime Minister; we did a bit of that as well. But, as the noble Lord mentioned, in this new charter the Government have raised their sights and shifted more than £500 million-worth of responsibility for licence fees for the over-75s without allocating a single penny to support it. This process of shifting responsibility for government policy on to the BBC while tightening the purse strings even further, and, presumably, reserving the right to complain when the BBC revisits the viability of these commitments, is a serious threat to the autonomy of the BBC. We should be on our guard against it.
When it comes to the new unitary board, I agree with the spirit and content of the amendments. It is important that we have a transparent process to ensure a genuinely independent board. The Government’s current proposal on composition risks lining up a slate of government appointees against a slate of BBC appointees, aiming for some kind of internal balance rather than ensuring real independence for the board as a whole. It is also vital, as the noble Lord, Lord Lester, set out, that we have clarity on the terms of appointment to the new board.
We need only look at other countries in the European Union to see the dangers that can quickly arise when the independence of public broadcasters is compromised. For example, last year the Polish Government assumed the right to appoint the heads of state broadcasting authorities and removed the guarantees for independence of public service TV and radio, in breach of Council of Europe norms and the Polish constitution. We are a long way from being Poland in this respect, thank goodness, but the combination of governance change, political pressure from rival organisations, financial pressure and the temptation to offload policy commitments on to the shoulders of the BBC provide a real threat to autonomy and independence. It is right to err on the side of vigilance and caution in the spirit of this group of amendments.
I look forward to hearing the Minister’s response. We on these Benches will then take a view about how to work with others across the House on the issues raised, including this debate, which, as the noble Lord, Lord Birt, just said, will become more and more live, about whether it is time to put the BBC’s independence on a statutory basis.
My Lords, I am grateful to all noble Lords who have taken part in this debate and in particular to the noble Lord, Lord Lester. He mentioned that he remained optimistic. When he spoke to me outside the Chamber, he said that he was “pathetically optimistic”. I would prefer to say that he is “characteristically determined”. He has produced argument after argument, not only in the BBC charter renewal debates, but also at Second Reading. I fear I may disappoint him yet again. I am sad that some of his supporters are not here.
We return to an issue which we have debated at length as part of the recent discussions on the BBC’s royal charter which were completed last year. The new royal charter was sealed on 8 December. Amendments 217, 218, 219, 229A and 234, in the name of the noble Lord, Lord Lester, seek to constrain future BBC royal charters through statute. I note and acknowledge that the noble Lord has made a number of changes to his amendments in the areas of parliamentary votes over future charters and governance. I appreciate the thought he has put into this and the dialogue we have had so far. In a skilled way, he has set a number of questions, some of which I will try to answer. He is right to say that whether we should have statutory underpinning for the royal charter is an issue of principle. He asked whether statutory underpinning was possible and legitimate. As he knows full well, because he almost answered my question for me, I agree that it is possible, and sometimes legitimate—but not always.
There remain some very serious, potential dangers associated with the noble Lord’s amendments and we cannot, therefore, support them. These amendments restrain future royal charters and funding settlements. Let me talk about two specific examples where this is problematic. On the subject of appointments, these amendments hardwire a unitary board into legislation. While we may now believe that we have found the best solution to the BBC’s governance, it is not guaranteed that we will still believe this in 10 years. As the last 10 years have shown, while governance arrangements can be drawn up with the best of intentions, these can prove unsatisfactory in practice. The new charter replaces the BBC Trust, which has been widely regarded as a failed model, and it is right that we should be able to address this in future.
The noble Lord, Lord Wood, and other noble Lords, talked about the independence of the board. I cannot see that the structure that we have reached in the royal charter can be criticised in this respect. At the moment, there are 14 members of the board, including five non-execs appointed by the BBC, four executives appointed by the BBC and four members, one for each nation, who need to be approved by the devolved assemblies. The Government have hardly got undue influence there. They are all appointed following a fair and open competition. Candidates for the chair must have a pre-appointment hearing by the Culture, Media and Sport Committee. If a change in this composition were required, an Act of Parliament would have to be amended, with the party-political debate, tactical pressure and uncertain legislative timetable that this would entail. This is not the right vehicle to make sure that the BBC can be governed effectively. Charter review remains the right vehicle—one that affords ample opportunity for debate and consultation, but also one that allows for effective decision-making and, crucially, a negotiated agreement with the BBC.
The second serious problem concerns the part of the noble Lord’s amendment which specifies that the licence fee needs to rise in line with inflation, or at a rate greater than inflation if the board recommends this, in perpetuity. This provision is not in the licence fee payer’s best interest: it sets the wrong incentives for the BBC to continue to strive to be efficient and to provide the high-quality programming that audiences expect and deserve. The BBC should continue to make efforts to increase efficiency and value for money for its audiences. This is something that the licence fee payer should be able to expect. A guaranteed income which keeps on rising is not the way to ensure this.
Furthermore, we must remember that the licence fee is a tax. It should therefore be possible for the Government of the day to ask the BBC, as is the case for every other public body, to contribute to lightening the pressures on public spending or the taxpayer’s purse, if the circumstances require it or when public spending priorities change. The noble Viscount, Lord Colville, and the noble Lord, Lord Wood, referred to the so-called raid and the cut in the licence fee income. The licence fee has been frozen at £145.50 since 2010. We will end this freeze and increase the licence fee in line with inflation to 2021-22.
Does the Minister agree that in future, in the event that the Government interfere, as they have done twice in recent years, and require the BBC to spend its licence funding in some other way, it would be appropriate for Parliament to discuss that before the measure goes forward?
I will come to that. Of course, future Governments will have to make their own arrangements in negotiations with the BBC. The BBC licence fee is a tax. Of course, the Chancellor of the Exchequer and the elected Government have a say in how taxes are raised and spent.
The Minister has twice said that the licence fee is a tax. What is the basis of that? I would have thought that the licence fee is a service charge for a service provided to those who pay the licence. That does not sound like a tax. It is not imposed by the Treasury. It is a service fee. When I watch television, because I am old I no longer have to pay, for some reason—that is another matter—but I cannot understand how it can be regarded as a tax. By calling it a tax, surely the Minister is making a threat about future inroads into the BBC’s revenue.
I certainly do not intend to make threats and I am hardly in a position to do so. I called it a tax because it is so classified by the Office for National Statistics. It is regarded officially as a tax.
The funding agreement announced last July included a number of measures which will increase the BBC’s income—for example, the closure of the iPlayer loophole and the increase of the licence fee with inflation. In combination with the transfer of funding for the over-75s concession, this means that the BBC will have a flat cash settlement to 2021-22, not a 20% cut. Indeed, the director-general said in July last year:
“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC”.
The amendments in the name of the noble Lord, Lord Lester, would endanger the effectiveness with which the BBC can be governed, and weaken the incentives for the corporation to strive for excellence and efficiency, as well as public support for the BBC’s funding.
As noble Lords know, both Houses had many opportunities to shape the future of the BBC throughout the charter review, and the Government appreciate that valuable input. But we remain of the view that the royal charter in its current form has served the BBC extremely well over many decades. The BBC agrees. The BBC’s director-general, Tony Hall—the noble Lord, Lord Hall—has welcomed the new charter, saying that,
“we have the right outcome for the BBC and its role as a creative power for Britain. It lays the foundation for more great programmes and journalism”.
With that, I hope the noble Lord will withdraw his amendment.
I am grateful to the Minister for his reply. I am not at all surprised and I remain optimistic. What I shall now do is read very carefully all the points he has made, look at the amendments that we have been discussing, strip out anything which can reasonably be objected to in the opinion of the Government and those taking part in the debate, and come back to the matter on Report—
If it is helpful, I am very happy to meet and discuss this.
What I am hoping will happen is that Lord Hall of Liverpool—the director-general—will meet Ministers himself. He has been quoted in particular ways now and I will not attribute any views to him, because that would jeopardise the independence of the BBC, but I very much hope that he will meet the Secretary of State and explain privately what he thinks about these issues. From my point of view, as a would-be midwife, all I am trying to do is create a framework of principles which do not have any of the detrimental effects that the Minister has pointed to. I will seek to do that, and I hope that it will not be necessary on Report to divide the House. I am optimistic enough to believe that a thinking, open-minded Government in discussion with the BBC could come up with some statutory underpinning that would give a framework of principles without these detrimental effects. On that basis, I shall withdraw this amendment and will not pursue others in the group.
Before the noble Lord sits down, I wonder if I might remind him that it is “Lord Wood of Anfield” and “Lord Birt, of Liverpool”, but “Lord Hall of Birkenhead”. It is very much on the other side of the Mersey.
I apologise to the places, their populations and to the noble Lord, Lord Hall, himself. I beg leave to withdraw my amendment.
Amendment 217 withdrawn.
Amendments 218 and 219 not moved.
220: After Clause 76, insert the following new Clause—
“Duty of OFCOM to make a recommendation on BBC funding
It shall be the duty of OFCOM to make a recommendation to the Secretary of State regarding appropriate levels of BBC funding in respect of the settlement from 1 April 2022.”
I shall also speak to Amendments 221 and 222 in the names of the noble Lord, Lord Inglewood, the noble Baroness, Lady Bonham-Carter of Yarnbury, and myself. I declare my interest as chairing your Lordships’ Select Committee on Communications, and this amendment encapsulates one of the principal recommendations from that committee’s report on the renewal of the BBC’s charter, Reith not Revolution.
Most of the recommendations in our report, which did not cover matters of governance and management, have been taken forward by the Government in the BBC’s new charter, which the Select Committee appreciated. In particular, the Government accepted our recommendation for an 11-year period for the new charter: this provides stability and security for the BBC, enabling proper forward planning. We were also very pleased with the line taken by the Government, following our subsequent representations, that the mid-term review of the charter would not reopen the debate on the purposes, scale and scope of the BBC, but would concentrate exclusively on reviewing the new governance arrangements for a unitary board and an extended role for Ofcom.
However, one crucial ingredient has remained unresolved, since it was not a matter that had to be settled within the charter itself. This was the issue of how the BBC’s licence fee should be set—ie, what process should be followed when establishing the charge made to all the users of the BBC’s services, now including those delivered online through the internet. Of course, the licence fee represents the vast bulk of the BBC’s income and therefore determines its scale and scope. How that fee is set is obviously of the utmost importance to the future of the BBC. This is a much narrower point than the question of statutory underpinning for the BBC, but it relates to the independence of the BBC. Although the charter will cover a full 11-year period, the next setting of the licence fee, upon which so much depends, is only five years away.
Our Select Committee discovered universal condemnation of the way in which the licence fee had been determined on the last two occasions. The 2010 fix, achieved after what were described as frantic negotiations in little over three days, led to a freeze on the licence fee for seven years at £145.50 per annum, cutting spending in real terms by perhaps 25%. There was also the raid on BBC funding to switch resources for the World Service from the Foreign Office to the licence fee payer. In addition, the BBC was obliged to pay for a chunk of the costs of rolling out broadband around the country. The Culture, Media and Sport Committee in the other place, then chaired by John Whittingdale MP, concluded in its report Future of the BBC that:
“The 2010 settlement demonstrated that the BBC’s independence can be compromised by negotiations with the government of the day that lack transparency and public consultation … No future licence fee negotiations must be conducted in the way of the 2010 settlement”.
In 2015, with John Whittingdale as Secretary of State for Culture, Media and Sport, an announcement was made on the new licence fee, again following behind-the-scenes discussions hidden from public view, this time with the fee set to rise in line with the consumer prices index over the forthcoming charter period but with the BBC having to absorb the cost of the licence fee for those over 75 years old. Rona Fairhead, chairman of the BBC Trust, responded:
“We accept this decision is a legitimate one for the Government to take, although we cannot endorse the process by which it has been reached”.
Our committee received overwhelming evidence that this process for setting the level of the licence fee was entirely unsatisfactory. A number of options were put to us for improved arrangements. We noted that in considering the way forward the BBC Trust supported measures for:
“A more regularised and formal process for setting the level of BBC funding … Giving the public more say in future licence fee settlements”,
“Should the BBC be governed by an independent regulator in future, for that regulator to have a specific role in assessing the BBC’s funding requirements and in advising the Government on the level of BBC funding and the level of the licence fee”.
In place of the discredited arrangements of the past, your Lordships’ Communications Committee recommended a format for achieving a transparent evidence-based process for future licence fee reviews. We fully recognise that the final decision on the licence fee should be taken by the Secretary of State, and Amendment 222 clearly states:
“The Secretary of State shall determine the final settlement for BBC funding for the period from 1 April 2022”.
The difference from previous settlements would be that a clear, independent, evidence-based recommendation on this would go to the Secretary of State prior to his or her decision, and if the Secretary of State rejected the recommendation then he or she would be required to publish the reasons for that rejection. We also wanted the decision by the Secretary of State to be taken after proper consultation with the wider public, as happens with the charter itself, and after debate here in both Houses of Parliament. Getting this matter out in the open, with proper independent advice and consultation, would surely make the process more credible and acceptable to all those who pay the licence fee.
My committee took the line adopted by the BBC Trust for a regulator to be the body that should provide the independent guidance and make the specific recommendation to the Secretary of State. That would mean asking Ofcom to take on this role. The committee has developed considerable respect for Ofcom over many years, and we believe it is capable of assembling the facts, drawing on surveys from the public and handling the financial costings and value-for-money arguments, and of course Ofcom is able to draw on its unique access to and knowledge of the BBC’s performance and spend. However, I note that Amendment 222A, in the name of the noble Lord, Lord Lester of Herne Hill, and Amendments 222B, 222C and 222D, in the name of the noble Lord, Lord Stevenson of Balmacara, would give the role of making a recommendation not to Ofcom but to a new body with this task as its sole responsibility. This alternative has the advantage of sparing the hard-pressed Ofcom of an extra job in addition to its other duties in respect of BBC governance and would allow a separate agency to concentrate exclusively on this one responsibility. I can certainly see the merits of this approach.
The adoption by my committee of the Ofcom route—rather than going for a new body—was pragmatic. We thought that the use of an existing regulatory agency, and one with an excellent track record, would be most acceptable. But if the Government were attracted by the proposal in the alternative arrangements, I am sure that the Communications Committee would be delighted. We would of course want the Secretary of State influenced not only by the external independent recommendation but by the outcome of public consultation and parliamentary debate. The process that we wish to replace is of the Secretary of State simply imposing a funding settlement on the BBC without any checks or balances. Having this sword of Damocles hanging over the BBC’s board and management, and the knowledge that in the relatively near future the Secretary of State could exercise unfettered life-or-death authority over the BBC’s funding, would have a chilling effect on the freedom of the BBC to act independently of government. This amendment to bring to bear independent judgment, transparency and a proper consultative process would end a serious deficiency. I beg to move.
My Lords, I am very grateful to the noble Lord, Lord Best, for his amendment. I agree with the object, but not the means. In fact there are not three but four options open to the Minister. The first, and most pathetically moderate, is of course my original one in Amendment 219, where I borrowed from the way that we deal with judicial salaries and revenue by proposing in new subsections (9) and (10) that “the board”—that is to say, the BBC board—
“must publish a recommendation to the Secretary of State on the amount of funding that the Secretary of State should make available”.
This is on the basis that the BBC should know best what it needs. Then the Secretary of State publishes,
“a response to each recommendation made under subsection (9)”.
If this is rejected, we are in a completely hopeless position so far as this subject is concerned.
My problem with the amendment of the noble Lord, Lord Best, is that it is a bit odd to give the regulator the function of recommending an increase in the licence fee. That is why I have produced Amendment 222A to create an independent body—the licence fee commission. The disadvantage of this is that we do not like creating a whole lot of new bodies unless there is some very important reason. Then the noble Lords, Lord Stevenson of Balmacara and Lord Wood of Anfield, have a more modest way of achieving the same thing: they would have a BBC licence fee commission to do it. Those are, I think, the four options. My own view is that the Government should now accept one of them or come up with a formula of their own that we can agree on Report. I am optimistic that this will happen, so I am now watching this space with great enthusiasm—and suspense.
My Lords, I support the drift of the amendment of the noble Lord, Lord Best; I think that we need a proper, open, rigorous and transparent means of setting the level of the licence fee.
A little bit of history is that we did have a commission in the late 1990s, when the then Government appointed Gavyn Davies, a very distinguished economist and later chairman of the BBC, to do just that. As you would expect, he produced a searching, rigorous report. A further little bit of history is that he made a recommendation, and the Secretary of State, as you expect in politics, lowered the recommendation; as you do not expect, it went to No. 10, and the then Prime Minister not only upped his Secretary of State but recommended a level for the licence fee which was higher than that which Gavyn Davies recommended. It was the famous RPI plus 1.5% for seven years settlement, which allowed the BBC fully to enter the digital age. It was the process that Gavyn Davies led that enabled the Prime Minister to make a considered judgment.
However it is done, that body needs to look at the total environment. The most important issue in British broadcasting today, barely discussed at all, is the long-term decline of UK production. It is not going up; it is going down. It is going down because of the economic position of ITV and Channel 4. Any discussion of the level of the licence fee should look not only at the BBC but at the totality of the broadcasting production environment in the UK.
Some suggest that the licence fee should be linked to the RPI. There can, from time to time, be good reasons for that. I think that, strategically, it should be linked to GDP. The BBC performs a fundamental role in society, like the Armed Forces. We have a view of GDP and the investment we should make in the rest of the world; we should have a view in relation to GDP of how much we invest in our most important public service broadcaster. When GDP is stretched, as it has been over the past 10 years—though, thankfully, it is going up again—and if the country’s economy is suffering a reverse, then the BBC’s revenues should go down. If the country is prospering, so should the BBC—so should society’s investment in its most important public service broadcaster.
I add my support to these amendments and also pay my respect to the noble Lord, Lord Best, who so ably chaired the Communications Committee, of which I was a member, and produced this report. As everyone in this debate has said, a greater level of transparency must be introduced into the setting of the licence fee. Never again can there be backroom deals.
What these amendments seek to achieve is that in future there will be clarity and public scrutiny. The public, after all, pay the licence fees. These are moderate proposals which will rightly leave an elected Government with the final say in determining the BBC’s revenue, but introduce an important element of accountability into the process, which is surely appropriate for such a vital national institution. There is obviously room for debate as to which body oversees this process, but I hope that the noble Lord agrees that there should be a more open and transparent process.
My Lords, I was a member of that licence fee commission under Gavyn Davies in 1998. It may interest the House to know that we had a subcommittee under the late Lord Newton looking at the issue of possibly funding a licence fee for over-75s and making it free. The unanimous conclusion of the committee was that that was a very bad idea and wholly inappropriate for the BBC.
My Lords, I wish to speak to Amendments 222B, 222C and 222D, which go together and which draw on the spirit of the excellent arguments from the noble Lord, Lord Best, and share many of the features of what the noble Lord, Lord Lester, set out. The idea is to reinforce the credibility of the licence fee, to ensure the BBC receives the resources it needs to fulfil its responsibilities under the charter. These amendments go together because, logically, the problem is that the process of negotiating the charter and setting a licence fee level do not always sit easily together.
At present, the connection between the charter process and the licence fee process is, at best, an indirect one. Each has its own political dynamics, so in setting the licence fee Governments have a range of considerations and pressures to contend with. One of those is the interests of the BBC to fund what the charter says it has to do, but it also includes the interests of other broadcasters, the politics around the headline licence fee rate—which is a huge thing for Ministers, proving to the public that they have got more for less out of the BBC and the overall settlement—and, as we discussed earlier, financial pressure to offload government responsibility on to the BBC without extra cost. So the temptation always exists for government to inflate the ambition of the charter and to put a lid on the increases in the licence fee simultaneously. That not only threatens the BBC’s autonomy but risks casting the Government with the suspicion of unwarranted interference.
Our proposals—without going into too much detail—suggest a three-stage process. First, an independent BBC licence fee commission would make recommendations to the Secretary of State on the appropriate levels of the licence fee. Secondly, the Secretary of State would have a duty to consult on the commission’s recommendation and to lay a report before Parliament outlining its results, with a recommendation on what the levels should be. Thirdly, in the event the Secretary of State does not follow the independent BBC licence fee commission’s recommendation, it would have to publish reasons to explain why it has not.
This process would remove the licence fee process from the suspicion of undue political interference, ensure the licence fee is set with regard to what the charter demands, and introduce new transparency through the independent commission. It would be a significant change, but it would serve the interests of licence fee payers, the Government and the BBC at once. Like others, I am optimistic that the Government will share the principles that motivate this group of amendments: increasing transparency, operational independence, and credibility of the settlement. I therefore look forward to the Minister sharing the optimism that other noble Lords have expressed in his reply.
My Lords, I too add my voice to say that it is important that the BBC’s funding should be transparent and inclusive. I listened carefully to my noble friend Lord Best on his Amendment 220, which argues for Ofcom as a possible way of looking at this. However, I read Sharon White’s evidence to his committee, in which she said that she was already going to be fairly stretched with taking on the new regulatory powers and looking after the BBC. I also listened to the noble Lord, Lord Lester, and his concerns that it is rather odd to have a body that is both regulating the BBC and has the additional power to recommend the setting of licence fee levels. I rather prefer the suggestions made by the noble Lord, Lord Wood, for an independent commission which would make a recommendation to the Secretary of State.
Even if the Minister is not prepared to accept any of these amendments, serious thought needs to be given to the future process for funding the BBC. The constant arrival of new technologies means a shortfall in the number of licence fees being paid, and I doubt that the new digital licence fee is going to provide adequate compensation. The digital age is throwing up an extraordinary array of alternative funding models. An independent body should not only investigate the level of funding for the BBC but the manner in which the public contributes to that funding.
I urge the Minister to think very seriously about facilitating legislation which would enshrine the financial independence of the BBC. Without adequate funding, this great British institution will wither and may even become irrelevant to our national life.
My Lords, I will make one brief point as a broadcaster who works for the BBC. When we speak about transparency, I completely agree with what I heard about transparency from the point of view of the public. However, I make a plea for transparency from the point of view of the BBC over being able to budget. That means knowing in good time what it will get. More and more, we have heard about digital technology, and buying rights and planning broadcasts depends on knowing what kind of budget you are going to have. That is all I need to say, but I make a strong plea for giving the BBC the chance to know what it will have to spend, even if it is going down.
My Lords, I am grateful to the noble Lords who tabled these amendments today, and in particular to the noble Lord, Lord Best, and the Communications Committee, which he chaired. I am also grateful for the contributions of the noble Lord, Lord Birt, and the noble Viscount, Lord Colville, on the future of the licence fee itself and how it may be arranged in the future, which is slightly separate from the debate we are having today about the process for doing it. I accept that, as technology changes, the way it is structured may have to be changed in the future. I hope we can have debates on that separately at some stage in the future. I am also grateful to the noble Lords, Lord Lester and Lord Stevenson, for their amendments.
Today we are debating a new nuance regarding the BBC licence fee. On a number of occasions, Members of the House have been clear that they would like to see an end to what some have called “midnight raids” on the BBC licence fee, and we have listened to that. The BBC’s new charter regularises the BBC’s future financial settlements for the first time, and the next one will be in five years’ time. In the meantime, there will be an inflation-linked increase.
The current charter also requires the BBC to provide data ahead of each licence fee settlement to inform the Government’s decision. It is, therefore, explicitly clear that the BBC will be able to make its case and the Government of the day will be able to consider that. It also follows that anyone with valuable views and thoughts on the subject, including noble Lords—many of whom I know have experience in these matters—can share these views with the Government when the time comes.
The noble Lord, Lord Best, suggests that Ofcom should recommend what the level of funding for the BBC should be, and he proposes further that there should be a public consultation on the appropriate level of funding. It is entirely appropriate that the assessment of the BBC’s funding needs and the subsequent level of the licence fee should remain a matter for the Secretary of State. As I said before, the licence fee is a tax paid by the licence fee payer, and taxation is a matter for the elected Government rather than an unelected regulator. It is right that the Government should have some responsibility for decisions that affect the tax bills of UK citizens, as I have set out before. We would be setting potentially odd incentives for the BBC’s regulator if—as the noble Lord, Lord Lester, pointed out—it would now also be called upon to make funding recommendations. The now-abolished trust model showed that mixing regulatory and strategic functions breeds confusion and conflicting incentives. The consensus has been that this has not worked and we do not want to recreate this model.
Ofcom needs to concentrate on regulating the BBC effectively. The noble Lords, Lord Lester and Lord Stevenson, have both proposed the establishment of an independent licence fee commission to make recommendations to the Secretary of State. We agree with the sentiment of independent advice. The Government stated in their White Paper, published last May, that they would consider taking independent advice at the next settlement should it be appropriate. However, that is a matter for the Government of the day. As with Ofcom, it would not be appropriate for an independent commission to make recommendations on level of taxation.
As I listen to the noble Lord, the problem arises when he says, “That would be a matter for the Government of the day”. All this is very interesting and relevant, but none of it is binding. Effectively, the Minister is putting forward perfectly reasonable ideas for the future, but none of them has any bite. None of them is binding unless Parliament makes it so. I am afraid it is a question of wriggling to find ways of avoiding any parliamentary underpinning at all. It is that which everyone who has spoken in this House, but one, believes to be wrong. Therefore we will have to come back to it on Report.
I understand the point the noble Lord is making; he illustrated it right at the beginning of his speech in the previous debate. This is a matter of principle: whether we think statutory underpinning is the right mechanism for the royal charter for the BBC. I acknowledged to him that in some cases it might be, but I did not agree that it was appropriate for the BBC. I take his point and his due warning about Report. I agree it is relevant to this, but we have established that we have a disagreement on that point of principle. As for binding future Governments, of course we do not want to do that, and, in fact, we cannot.
The next question is that of public consultation on the settlement or the level of the licence fee. As noble Lords will appreciate, funding a public service is not a straightforward topic for public consultation. For example, the recent charter review found that almost 75% of the public consider the BBC’s programming to be of a high quality, but just 20% said that they would like to see the licence fee rise in line with inflation, thus helping the BBC maintain these high standards. Public consultation, therefore, needs to be approached with due sensitivity.
The BBC’s funding needs are a very complicated and technical issue, as we have seen at every licence fee settlement. The judgment about the overall package is a fine one. It should therefore remain for the elected Government to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. As I have said, this resulted in a position that the director-general has said is a strong deal for the BBC that gives it financial stability.
Finally, Amendment 223 seeks to remove the ability of the BBC to set age-related licence fee concessions in the future. I have already explained that the licence fee is a tax and it is right that the Government should retain the ability to determine the outline priorities of what it should be spent on. The BBC explicitly sought responsibility for the age-related licence fee concession. Removing the BBC’s ability to determine this policy—for which it will pay—simply prevents the BBC being the master of its own destiny. I believe it is particularly arbitrary to withdraw the BBC’s ability to set this concession without knowledge of what the overall funding package for the BBC will be at that future point. I do not believe that that is in the BBC’s interest, now or in the future. With those explanations I hope that, for the time being, the noble Lord will feel able to withdraw his amendment.
My Lords, I am extremely grateful to all noble Lords who have spoken, all of whom spoke in support of a change. I get the very strong impression that the Ofcom route, which is the one proposed in my amendment, would not find so much favour with your Lordships as the creation of a separate new licence fee commission. The independence of that body would be assured. I can see that some regulators do take an interest in the fees and charges made by the bodies that they regulate—it would not be entirely unheard of for Ofcom to have a view. However, I take the point that Ofcom is fully stretched with the duties that it already has. On balance, although everyone who spoke accepts that the current arrangements have been entirely unsatisfactory and that change is needed, the idea of a new body—which does not always find favour—might be the preferable route.
In response to the Minister, there is absolute agreement that the Secretary of State must take the final decision—that is not under dispute. It also should be clear that this should not be confused with the statutory underpinning of the royal charter, which we debated earlier. This is a one-off, separate issue relating to the licence fee. I am glad the Minister accepts that independent advice might be required. However, I think it is possible to bind future Governments, in the sense that putting a process in the Bill would ensure that the transparency that everyone seeks comes to pass and that proper public consultation and parliamentary scrutiny whenever the licence fee is reviewed, which will be five years from now, happens. It might be useful to come back to this later. For the moment, I beg leave to withdraw the amendment.
Amendment 220 withdrawn.
Amendments 221 to 222D not moved.
222E: After Clause 76, insert the following new Clause—
“Impact of Royal Charter and Agreement on radio production
The Secretary of State must report, within a year of the passing of this Act, on the impact of the BBC Royal Charter and Agreement, on—(a) the balance of in-house and independent production of programmes for BBC radio broadcast;(b) the extent to which training and development of production staff may have been affected;(c) the numbers of staff active in radio production compared to 2016, including details of gender and other indicators of diversity; and(d) the impact the changes have had on the salaries and conditions of radio production staff.’’
My Lords, I was slightly surprised at the way the Minister rebuffed concerns about the way in which Parliament engaged with the royal charter process last time. It might be because he joined us halfway through, to a little bit of shock but quite a lot of pleasure. Looking back on it, I do not think it can be said that Parliament was as engaged as it wished to be in the process. The ability to speak on two occasions when Statements were graciously made by Ministers, and to speak in one debate focusing, at that stage, on the draft charter, with the agreement as yet not finalised, can hardly be described as participating actively in the process. I think we can agree to differ on that point. I am sure that noble Lords who spoke in the earlier debate had a very different version of how that might have gone, including involvement by Select Committees and involvement in the detail, which would have resulted in proper and effective scrutiny of the Government’s proposals and the eventual outcome.
This amendment, by serendipity, actually deals with some of the fall-out of the rather deficient process we are going through. When charters are drafted, considered and debated, they are never alone: there are lots of other things going on. Many people present will be able to give witness to that effect. One of the things that sometimes gets missed out is the detail in the agreement. The agreement, of course, is really the mechanics of how the arrangement between the Government and the BBC works in practice. One was brought in in such a way and at such a time that it was never discussed in your Lordships’ House or in the other place. It only really became an issue once the charter was about to be sealed. The issue was the changes to the way national radio output was to be operated in future, which were being imposed on—although not necessarily resisted by—BBC management. That is the subject of this amendment.
Amendment 222E is a probing amendment, asking the Government to conduct a review of an important sector of the creative economy. It does not specifically relate to the BBC—although it is cued into something that is happening there—but it would provide useful information and detail that would be of interest to the Committee. If the review were carried out in the way I suggest, with a report covering a range of topics related to radio production, I hope it could be brought to your Lordships’ House and generate a good discussion.
In short, about 60% of BBC national radio output is going to be put out to competitive tender over the next few years, to 2020. Over the past 20 years, BBC radio has actually increased its external commissioning from zero to around 20% of output. That is quite a slow rate of progress, but that is not unconnected with the fact that we are talking about a very fragile sector of the creative industries. Radio production does not involve a very large group of people. The independents are usually quite small and not in the habit of operating on a scale that would enable them to take over the huge increase in the proportion of radio that we are talking about.
The proposal would mean an extra 3,000 hours of national radio output being put out to tender every year. That, of course, does not come free of charge, but with the cost of a commissioning process in-house at the BBC. Therefore, it is not all a one-way process: there will be additional costs. Those costs will not be funded by any additional funding from the licence fee or any other process, so there is bound to be a squeezing of radio budgets, and neither external nor in-house producers will be able to rely on getting any increase. It is going to be a rather difficult situation, affecting the people involved. Current in-house BBC radio producers will find that their jobs are largely going to disappear, because, although a significant number of programmes will be retained in-house, the 60% figure means that the majority will be produced externally.
The question of how the BBC will continue to operate as a major trainer in this area must be raised, because without the numbers, that training might well be at risk. Who else is going to do the training to ensure that radio has a flow of qualified people coming forward? Smaller independent production companies might not be able to scale up either quickly enough or with sufficient range to compete against those that will, perhaps, sweep the pool.
This is a really big change in an important part of our national life—a real adjustment—and it has not been given sufficient scrutiny. Given that it was not discussed in Parliament as far as I am aware and was hardly raised externally, the Government have a duty to think harder about the issues arising. The allegation was made that this proposal did not emerge from any consideration of the needs and purposes of BBC radio production, or indeed the independent radio production sector. In meetings I had with those involved, I was told that the ask for the independent sector was to get from the current 20% of output to 25% by 2020—in other words, a marginal increase on the existing arrangements. To go from 20% to 60% reflects what I think must have been external pressures. That rather makes the point that we need to know more about what is going on, and transparency would help.
The main purpose of the amendment is to focus on the situation that will emerge after 60% of national radio output is put out to competitive tender, and the benefits that will flow from that. I beg to move.
My Lords, I have much sympathy with the amendment moved by the noble Lord, Lord Stevenson, although I have some disagreements with it as well, which I will come to. As the noble Lord said, the new charter obligation commits the BBC to extending competition for radio production. It was my understanding that that proposal came directly from the BBC—that it was not, as the noble Lord suggested, imposed on but not necessarily resisted by BBC management. As he said, it may or may not have been rather more than the independent radio producers were expecting or had requested. The Committee would benefit from hearing from the Minister a little about the background to this part of the charter and agreement.
What is clear is that it has been agreed that from April 2017, over a six-year period, the BBC will open up 60% of relevant hours—that is non-news, news-related current affairs or repeats—to competition both from in-house and indie producers. That represents about 27,000 hours of programming per year being open to competition. Although it will not go as far as what is happening in television, it is a further development of the process that began right back in 1992, when the BBC voluntarily made 10% available to independent production. That has developed over a number of years. The 10% voluntary figure was made compulsory, we then saw further developments and eventually the “compete and compare” framework was introduced, designed to drive up standards, reduce costs and ensure continuous improvement in all areas of operation.
Of course, the 60% available for competition does not guarantee the independent sector extra commissions. Independent companies will obviously have to have sufficiently good ideas and be able to demonstrate a track record of producing sufficiently high-quality content. The independent sector, of about 150 relatively small companies spread right across the country, has a growing track record of producing high-quality content and helping to increase the range and diversity of content available to BBC radio services. They produce some great programmes that win awards, and since the guide price for radio production is the same for both in-house and external producers, there is no increase in the production cost to the BBC.
It is good to hear that the independent sector is increasingly involved in training the next generation of producers through training programmes and mentoring schemes, helping to improve diversity: around 60% of learners are women, 15% are from BAME backgrounds, and 5% are people with a disability. But we have to be alert, as the noble Lord, Lord Stevenson, suggested, to the impact these changes may have on the BBC and its own staff. They will certainly need increased levels of training and skills to negotiate, so that they can compete on a level playing field with the independents.
The review that is called for in the amendment is of course sensible, but we question whether it should take place quite as early in the process as recommended by the noble Lord, Lord Stevenson. The 60% target for competition does not come into full effect until the end of 2022, which should provide the independent sector with plenty of time to develop the scale and expertise to pitch to make more programmes. It also allows time for the BBC to retrain and restructure. But the BBC acknowledges that while greater competition should deliver greater efficiency in programme costs, increasing the number of commissions open to competition threefold will require a larger in-house commissioning team, and there is already a potential impact on other in-house staff. I understand that the BBC is already in discussions with staff and trade unions about that.
It would make sense to have a review, but it should perhaps take place at the midway point between Royal Assent and 31 December 2020. If we are to have such a review, we need to look at some other issues that may form part of it, not least the BBC’s commissioning process, to ensure that the developing competition between in-house and independents is truly fair. However, we support the broad principle of the proposed review.
My Lords, I am grateful to the noble Lords, Lord Stevenson and Lord Foster, for their contributions. I start with something that has nothing to do with this. I point out to the noble Lord, Lord Stevenson, who said that I did not realise quite what was going on with the BBC because I only joined halfway through, that the BBC was debated 19 times before the BBC charter review in various different forms—so it certainly had an outing if not in quite the way that noble Lords might have wished.
Moving on to the amendments in this group, the amendment in the name of the noble Lord, Lord Stevenson, concerns the impact of the BBC’s new royal charter on radio production. There has been a lot of misinformation and confusion about this change, so I hope to set the record straight. In answer to the noble Lord, Lord Foster, the proposal for change originated from the BBC. It was well received by the Radio Independents Group, which had for a number of years been seeking to have more opportunities to bid for commissions from the BBC. Following negotiations between those two bodies, it was announced by the director of BBC Radio in June 2015. That agreement predated the publication of the BBC Green Paper.
Under the agreement, the BBC agreed to move from the current very limited quota-based arrangements to a new commissioning structure, opening up 60% of eligible hours to competition by 2022. This is a change that we strongly support, since it gives significant new opportunities to the growing independent radio production sector and gives BBC radio audiences access to the best ideas out there. But increasing the competition between independent and in-house productions does not guarantee, as the noble Lord, Lord Foster, reminded us, that the independent sector will receive more commissions. Companies will have to bid for work and BBC in-house staff will still be capable of winning. Unlike TV, there will still be, in effect, an in-house guarantee of 40% of all programmes, which reflects the BBC’s continuing importance to radio.
The new BBC charter sets a firm timescale for the implementation of this change. However, the timescale for the transition—by 2022—was set by the agreement between the BBC and the RIG in June 2015. It has to be for the BBC to consider the transitional arrangements in consultation with the independent production sector and to report on them as appropriate. These are operational matters for the BBC and it is not for us to have to report on them. The BBC already reports on a number of its production and commissioning outcomes across TV and radio and I am sure that it will continue to strive for transparency here. I do, however, acknowledge the concerns that the noble Lords, Lord Stevenson and Lord Foster, raised about the implications for BBC staff.
The changes are being introduced with a long transition and both the BBC and RIG are taking steps to ensure that the transition is as smooth as possible. The noble Lord, Lord Foster, talked about training. There is a strong ethos of training and diversity in the independent sector. For example, the next RIG offers a training programme that so far has provided training days to 1,089 individual learners, including a diversity mentoring scheme. Of the learners, 60% are women, 15% are BME and 5% are disabled. The RIG encourages its members to recruit from a diverse pool of candidates and also liaises with the BBC’s diversity team. It encourages its members to match the BBC’s employment conditions.
I am sure that both the BBC and the radio industry will pay close attention to the points raised by noble Lords today and take steps to ensure that the transition is handled as sensitively as possible. Fundamentally, though, this is about giving commissioners greater choice and ensuring that listeners have access to the best possible radio shows.
With that explanation, I hope that the noble Lord will be able to withdraw his amendment.
I thank the noble Lord, Lord Foster, for his not unqualified support. It was useful to have another voice in the debate and he raised good points, which I broadly support. He is right that, on reflection, one would perhaps want to look at the issue of timing in more detail.
I would like to depart from the Minister’s comments on one issue: the focus of the amendment. The amendment is not really about what is happening in the BBC; it is an attempt to focus on what might happen in the broader ecology of radio production. In that sense, I was not straying into encouraging him to interfere in what must be an operational matter for the BBC—I absolutely agree with that. I do think, though, that there will be consequential waves of impact across the whole of radio production, which ought to be of interest to the Minister and to the department.
I still think that there will be strong changes here in matters such as conditions of service for staff. It is nice to hear that the RIG group is encouraged to match BBC conditions, but the likelihood of it doing so is very slim. That in itself may not be the biggest issue, but it is still going to have an impact and we should know about that. For all the reasons previously given, I still think that this would be a good idea.
However, the underlying point that will cause us the greatest concern as we go forward is that this seems to signal a change of approach. I think the Minister said that he strongly supported what was being proposed by the BBC in these measures—I will check in Hansard. Whether or not it was something that originated in the BBC or something it picked up in the negotiations and felt that perhaps it ought to do is a matter we can talk about later. The point is that, as a result of these and other changes, the BBC is moving inexorably from being a producer and broadcaster to a broadcaster that largely commissions work. That in itself has to be of concern. It may or may not be the right thing to do in the circumstances; it may be inevitable, given the way that technology is moving; but it is a change. Unless we mark and measure that in order to assess what is happening, we will all be the losers. That is perhaps for another day; in the meantime, I beg leave to withdraw the amendment.
Amendment 222E withdrawn.
Clause 77 agreed.
Amendment 223 not moved.
Clauses 78 and 79 agreed.
224: After Clause 79, insert the following new Clause—
“Listed events qualifying criteria
(1) The Broadcasting Act 1996 is amended as follows. (2) For section 98(2)(b) substitute—“(b) that the service has been watched by at least 90% of citizens in the United Kingdom in the course of the preceding calendar year.”(3) After section 98(2) insert—“(2A) The Secretary of State may by Order amend section (2)(b) by substituting a different percentage for any percentage for the time being specified there.(2B) No order under subsection (2A) shall be made unless a draft of the Order has been laid before and approved by a resolution of each House of Parliament.””
My Lords, Amendment 224 is designed to protect the so-called listed events regime, the rules designed to ensure that major sporting events in the UK remain universally and freely available. The listed events rules have enjoyed cross-party support for well over 30 years, and have succeeded in preserving live coverage of certain major sporting events on free-to-air TV—such as the Olympics, the World Cup, the Grand National, the Rugby World Cup Final—while also ensuring that a second category of sporting events is guaranteed to have highlights available on free-to-air TV, such as the Six Nations rugby and the Commonwealth Games. Those rules have successfully managed to combine two competing sets of considerations: the desire of the public to be able to access, without extra payments, the major sporting occasions that define our culture and bring us all together; and the need for sporting bodies to maximise their commercial revenues to invest in both their professional sportsmen and sportswomen and to develop their grass-roots activities.
The audiences for these major sporting events testify to the success of the listed events rules. In 2015, over 40 million people watched the Rugby World Cup on ITV. Some 45 million people watched the Rio Olympics and Euro 2016. England’s disastrous performance against Iceland in the Euros last summer was the most watched sporting event of the year, with 15 million—which I am sure will cheer us all. The men’s final at Wimbledon and the final of Euro 2016 attracted more than 13 million viewers. Some 80% of the public say that listed events are important to our country and 25% say that the BBC’s Olympic coverage during the London Olympics inspired them to take part in sport themselves.
In recent years the listed events regime has come under some moderate threat, largely from competitors to PSB broadcasters, which want to undermine the privileged position of free-to-air channels. So far, all political parties—and all parties—have resisted the lobbying to reform those rules, and I trust that the Government have no intention to revisit the principle behind the listed events regime. However, this amendment is not about protecting the rules against calls for repeal of the regime; it is specifically to protect the regime from falling into obsolescence in the face of technological change and changing viewing habits.
The aim of the rules is to guarantee that major sporting events are available universally, irrespective of the ability to pay. I hope that we all share that ambition. The current rules express that in statute by restricting what counts as a qualifying service to channels which, first, are free and, secondly, are received on TV sets by 95% or more of the UK population. The problem is that despite the ambition of those rules, the criteria they adopt are becoming outdated as the number of households in which programmes are watched on devices other than TV sets rises. As a result, for the first time, the major free and free-to-air broadcasters share the fear and expectation that before this Parliament is over, no TV channel will qualify for the 95% criterion—not one. That leaves the regulator unable to guarantee the continued availability of listed events to audiences across the UK, and in the long term risks collapsing the credibility of the listed events rules altogether.
The rules for listed events need therefore to be updated. The amendment we propose, backed by all five free-to-air PSB providers, would replace the 95% reception criterion with a requirement that any qualifying service must have had programmes that have reached or been viewed by at least 90% of the public in the last calendar year—where the definition of a “viewing” is at least 15 minutes consecutive viewing a year. That measure would serve as a good proxy for “free to air” continuous availability. It maintains the spirit of the existing regime, is simple to implement, not tied to any particular distribution platform and, crucially, it is open to any service that is free and committed to maximising access.
Of course, there is a genuine debate to be had about the nature of the rule that is introduced to replace the existing rules that are at risk of becoming obsolescent. However, it cannot be right for anyone committed to maintaining the listed events regime to deny that there is a big problem brewing or the need for reform to keep major sporting events universally available. I hope that when the Minister replies he can agree at least with the principle that the rules need to be updated, and suggest a process for taking this revision forward. I beg to move.
Amendment 224A (to Amendment 224)
224A: After Clause 79, leave out inserted paragraph (b) and insert—
“(b) that the service is a service which, in the opinion of OFCOM, is capable of reaching the vast majority of the population and likely to achieve a significant audience.”
My Lords, Amendment 224A has the same objective as Amendment 224 but takes a marginally different approach. I will not go over the statistics because my noble friend Lord Wood has done that admirably, but I would add that PSBs are responsible for only 5% of sports output on television but 60% of the viewing. Their role in sports coverage is absolutely vital and I fully endorse the need to protect the listed events regime against the risk of becoming obsolete.
I must apologise to the Committee because the language I used in drafting Amendment 224A is more than sloppy. In an age that regards a majority of 52% in the EU referendum as overwhelming and a 55% majority in the Scottish referendum as equally overwhelming, the phrase “vast majority” is wholly inadequate to reflect what I really mean, which is as close to universal coverage as is humanly possible. However, the main point of my amendment is to get rid of fixed targets because they can become obsolete. My noble friend may be right when he says that it might happen to all five PSBs within the next Parliament, so why substitute 95% with 90% which may become equally obsolete in the ensuing two or three years? Why not leave it to the judgment of the regulator, Ofcom? It should reach a decision on which broadcasters could qualify.
The other point on which I slightly disagree with my noble friend is going for 90% in the preceding year. First, that could be overly restrictive, and secondly, it could lead to a situation where an organisation deliberately becomes free to air but hides its main sports coverage behind a paywall. It would be much better to leave this to the judgment of Ofcom. It can determine what coverage is going to be required and who can qualify as a free-to-air broadcaster. Apart from those points, I endorse entirely the need to protect the listed events regime and I beg to move.
My Lords, I apologise for not having spoken at Second Reading. Free-to-air broadcasting is something that is very good because it helps the entire sporting structure by encouraging people to watch sports events, which in turn may make them actually get out there and play some sport, a point that has not been mentioned yet. The fact is that if you have not seen something you cannot get involved in it, and equally, unless it is culturally acceptable you do not get involved. This is an odd and imprecise correlation that everyone knows about. The effort to build a healthier nation is helped by broadcasting. Oddly enough, being able to watch sports while sitting on the sofa encourages people to go out and try them, and thus makes them likely to spend slightly less time on that sofa.
The most important part of Amendment 224 moved by the noble Lord, Lord Wood, is that the affirmative procedure would have to be used to make any changes. That, along with a commitment to ensuring that Parliament takes an interest in this issue and monitors it carefully, is probably most important in terms of reflecting the spirit of the amendment. If we were to leave this to some sort of outside structure, as we heard from the noble Lord, Lord Gordon, it is going to be difficult to pin down in a fast-changing world. Unless we have something that states that PSBs must continue with this provision, it will come under pressure and people will always be sniping at it. The fact is that sport seems to be something which people want to pay to access and view, so there will always be pressure. Representatives of the big five who came in to talk to my colleagues about this issue said that they are happy with the situation as it is at the moment, but there will always be someone who will think, “We can get so much more money and could do so many wonderful things if we restricted viewing”. As I say, there is always that bit of pressure.
We owe it to the public to make sure that any change that is made to something like this, which is a very good thing, is done in the full glare of public scrutiny. I hope that my comments are taken in the spirit in which they are intended, which is that this regime is bigger than the sports events themselves. It is part of our current fabric and we should take an interest in it. Whichever criteria are used, making sure that Parliament, to which the public have democratic access, is involved in the discussion is essential. If any changes are made, we will want to know why, because a price will have to be paid no matter what benefits are gained for certain sports.
My Lords, I intervened briefly on these points at Second Reading and I support at least the principle of Amendment 224, although I would like to query some aspects of the detail. However, it was moved very well by the noble Lord, Lord Wood of Anfield, and I welcome the fact that it brings forward an issue related to the listed events regime that most certainly needs our attention at this point; namely, when the situation is changing so rapidly. If we do not adopt a system that is flexible enough, there is no knowing what difficulties we could get into over the coming years. The amendment offers a straightforward solution to a simple problem, which as I understand it is that by the end of this Parliament there is a real possibility that no PSB will meet the qualifying criteria set out in the listed events regime. The solution lies in this amendment which will update those criteria to ensure that the PSBs are still eligible.
It is no secret, notwithstanding our success in the European soccer cup, that the Welsh are still very big rugby fans. Some 1 million of us enjoyed the Wales-England match in 2015 and indeed 1 million of us watched the Welsh beat the Scots last year. No doubt another million people will be watching on Saturday when Wales plays England. The listed events regime, also known as the sporting “crown jewels”, ensures that some of the most high-profile sporting events can be watched by all for free—from rugby finals and highlights of other rugby matches through to football finals and Wimbledon. I have one slight reservation with regard to using 90% of citizens as a criterion. The public broadcasting channel S4C transmits by agreement a number of listed events, but it certainly does not reach 90% of the population. I wish it did, and no doubt we will get there at some point, but not quite yet.
The point is this: should a PSB suddenly become ineligible to bid for the rights to these great sporting events? It is inevitable that millions of people, particularly those on low incomes such as pensioners, will not be able to afford the pay channels. They will be shut out of the shared experiences that mean so much to everyone in all the four nations of these islands. It is an important issue and an amendment along these lines is needed, if not at this stage, then perhaps one could be drafted for the Report stage. Something ought to be forthcoming so that we can safeguard the position of this regime.
My Lords, I rise to make two observations, one of which makes me feel very old. I worked with the then Prime Minister, Sir Harold Wilson, on looking at the whole issue of free-to-air sporting events in terms of where they penetrated and where they had to be retained. It is interesting to note that last week it was announced that the Six Nations competition is broadcast free to air not only to all the countries involved, but also has the largest live audience for any sport anywhere in the world. So there is no, as it were, collision between the appeal of a sport, the size of the arenas and the number of people attending the events, and the fact that these events are also available on free-to-air television. I sense that sometimes it feels like it might be a trade-off: you have to get the money in or you will not get a sufficient audience. The Six Nations competition is a classic example of something that succeeds at every level.
My Lords, I thank the noble Lord, Lord Wood of Anfield, for moving this amendment and I hope that I can provide some reassurance to noble Lords. Indeed, I fear we may all be in danger of violently agreeing with each other. Listed sporting events is an issue we have discussed before. As the Minister for Culture made very clear in the other place, the current listed events regime is not under threat at this time and I confirm that we will not let it be under threat. I hope that that directly answers the question put to me by the noble Lord, Lord Wood, and I therefore do not believe that these amendments are needed at this time.
I submit that it would be particularly undesirable to act in the way that Amendment 224 suggests, because it would lock in the incumbents’ position, since the requirement to be watched by 90% of the population would narrow considerably the number of channels that could ever qualify. It would narrow it to channels which had already achieved mass appeal to audiences—and that is not a step we should take rashly. The requirement in Amendment 224A that channels qualify if they are capable of reaching the vast majority of the population and likely to achieve a significant audience is, I respectfully suggest—I would certainly never use the word “sloppy” of the noble Lord, Lord Gordon—perhaps too vague to provide a workable system. Ofcom would be forever subject to challenge by channels arguing over its assessment. It would create enormous flux in the regime, meaning that sports federations could not be sure whether the channels they were negotiating with met the qualifying conditions.
However, I assure the Committee that we are keeping this area under review and we will consider how we can best ensure that any risks can be managed successfully in future. To that effect, we will consider carefully before Report the issues raised and the contributions made by noble Lords today. With that commitment, I hope that both noble Lords will withdraw their amendments.
Amendment 224A (to Amendment 224) withdrawn.
My Lords, I thank noble Lords for that excellent short debate. I agree with much of what the noble Lord, Lord Gordon, said about the risks of a target—such risks definitely exist—but I also agree with other noble Lords that leaving it to Ofcom is probably not the best solution. There is definitely a need for some parliamentary clarity. Ofcom wants statutory clarity so that it can be a regulator in virtue of clear rules, rather than be thrown into the contentiousness that the judgments that this would require would embroil it in. So I think that the Ofcom route is not the best route forward.
I also agree with the noble Lord, Lord Wigley, that there are certain tough cases with any rules, in particular with the Welsh and Gaelic language carrying of live sporting events. In response to the Minister, I suppose I am 10% reassured and 90% not reassured at all. To say that noble Lords can be reassured that there is no threat is not really a reassurance, because the threat does not come from the Government’s intentions being in doubt.
I think the noble Lord misunderstood me. I was trying to reassure him by saying that we will not let it be under threat.
I appreciate that and I am grateful for it, but I fear that it is under threat by virtue of technological change and changes in viewership—not because of changes in government policy. There is a threat emerging—one can see it in the graphs and the numbers—and it requires some pre-emptive thinking. There was a hint that maybe some pre-emptive thinking is going on behind closed doors on this, but it is just not true to say that there is no threat when all five PSB channels line up and say that the numbers suggest that not one of them will qualify under the existing rules by the end of the Parliament. They are either right or they are wrong—and if they are right, there is a problem.
I am sorry to keep interrupting the noble Lord; what I said was that the regime is not under threat at this time.
Well, I take “this time” to be this Parliament: that is the one I am in, and by the end of it there seems to be a big problem brewing. So I suspect that we will come back to this later. But for the moment I beg leave to withdraw the amendment.
Amendment 224 withdrawn.
225: After Clause 79, insert the following new Clause—
“On-demand programme services: accessibility for people with disabilities
(1) The Communications Act 2003 is amended as follows.(2) After section 368BB insert—“Accessibility368BC Accessibility for people with disabilities(1) The Secretary of State may by regulations impose requirements on providers of on-demand programme services for the purpose of ensuring that their services are accessible to people with disabilities affecting their sight or hearing or both.(2) The requirements that may be imposed include—(a) requirements for programmes included in the services to be accompanied by subtitling;(b) requirements for such programmes to be accompanied by audio-description for the blind;(c) requirements for such programmes to be presented in, or translated into, sign language.(3) Before making regulations under this section, the Secretary of State must consult— (a) the appropriate regulatory authority, and(b) (where they are not the appropriate regulatory authority) OFCOM.368BD Enforcement of regulations under section 368BC(1) Where the appropriate regulatory authority determines that a provider of an on-demand programme service is contravening or has contravened regulations under section 368BC, they may do one or both of the following—(a) give the provider an enforcement notification under this section;(b) impose a penalty on the provider in accordance with section 368J.(2) The appropriate regulatory authority must not make a determination as mentioned in subsection (1) unless there are reasonable grounds for believing that a contravention of the regulations is occurring or has occurred and they have allowed the provider an opportunity to make representations about that apparent contravention.(3) An enforcement notification under this section is a notification which specifies the determination made as mentioned in subsection (1) and imposes a requirement on the provider to take all such steps for complying with the regulations and for remedying the consequences of the contravention of the regulations as may be specified in the notification.(4) An enforcement notification must—(a) include reasons for the appropriate regulatory authority’s decision to give the enforcement notification, and(b) fix a reasonable period for taking the steps required by the notification.(5) It is the duty of a provider to whom an enforcement notification is given to comply with it.(6) That duty is enforceable in civil proceedings by the appropriate regulatory authority—(a) for an injunction,(b) for specific performance of a statutory duty under section 45 of the Court of Session Act 1988, or(c) for any other appropriate remedy or relief.(7) If a provider to whom an enforcement notification has been given does not comply with it within the period fixed by the appropriate regulatory authority in that enforcement notification the appropriate regulatory authority may impose a financial penalty on the provider in accordance with section 368J.”(3) In section 368C (duties of the appropriate regulatory authority), omit subsection (2).(4) After that section insert—“368CA Code on accessibility for people with disabilities(1) It is the duty of the appropriate regulatory authority to draw up, and from time to time review and revise, a code giving guidance as to—(a) the steps to be taken by providers of on-demand programme services so as to meet the requirements of regulations under section 368BC, and(b) other steps to be taken by providers who are subject to requirements under the regulations to ensure that their services are made progressively more accessible to people with disabilities affecting their sight or hearing or both.(2) The appropriate regulatory authority must publish the code drawn up under this section, and every revision of it, in such manner as, having regard to the need to make the code or revision accessible to—(a) persons who are deaf or hard of hearing,(b) persons who are blind or partially sighted, and (c) persons with a dual sensory impairment,they consider appropriate.”(5) In section 368J(1)(financial penalties), after “368BB” insert “, 368BD”.(6) In section 368K(1)(suspension or restriction of service for contraventions)—(a) in paragraph (a), after “368D” insert “, or of regulations under section 368BC”,(b) in paragraph (b)—(i) after “368D” insert “or the regulations”, and(ii) for “or 368I” substitute “, 368I or 368BC”.(7) In section 368O(2)(a)(power to demand information), after “368D” insert “, or of regulations under section 368CA,”.”
My Lords, I declare my interests in the register, and as a trustee for more than 20 years of the Ewing Foundation for deaf children. It is a great charity which works in schools to help deaf children make the most of their education; partly by helping the teachers to ensure that their hearing aids and cochlear implants are working well and by giving teachers advice on how to get the most out of the equipment and how to help the children.
Many trends are apparent in the field of deafness, not least the rapid rise of cochlear implants, the rise in literacy rates in children and, of course, the rise in late-onset deafness as the population generally ages. The vast majority of deaf people speak and read perfectly, as most are elderly people who learned their language and how to read as children. I thank Action on Hearing Loss and the Bill team in the Department for Culture, Media and Sport for their help in drafting this amendment and their support in its passage. They have helped to clarify my thinking on this important issue.
This is an enabling amendment, permitting the Secretary of State to bring forward statutory instruments to require those who transmit television programmes to provide subtitles, then audio description for viewers with poor eyesight and, lastly, British Sign Language interpretation for people who find that easier. I am told that all terrestrial television programmes now carry subtitles and a growing number of pay-to-view programmes are already having subtitles added. Sky has told me that about 60% of its entire output will carry subtitles by September this year; it should be applauded for voluntarily doing the right thing. Thank you. However, the advance of audio description and sign language does not seem so good. The latter two aids to understanding are far more expensive than subtitling and it is possible that technological advances will play a part in solving the problem of deaf people who can communicate only with other sign language users.
Already, in America, I have seen demonstrations of software that will enable simultaneous translation from American Sign Language to text. If that is available, translation from text to British Sign Language on an iPhone will not be far behind. When the statutory instruments come through, we must bear in mind the speed of technological change and not be too prescriptive in the manner in which subtitles are delivered. We should instead seek a statutory instrument that merely says that subtitles should be available on all programmes. A swift statutory instrument will serve as encouragement to the broadcasters to continue and expand their good work. If we are in a position where the broadcasters and the Government are competing with one another to seek the broadest and quickest implementation of subtitles across channels and services, I would say that that is great.
We should remember that TV companies are simply responding to demand. It is not just the hard of hearing: think of TVs in noisy venues, football fans who want to read the half-time match analysis over the din in the pub, or people watching television in a noisy gym. All will appreciate this change. This sort of measure will also help to solve the biggest problem of sensory deprivation: that of isolation. If subtitles enable a deaf person to be on an equal footing with those in the hearing world, then we and the Government will have done one more thing to put disabled people in a position to thrive in society. I beg to move.
My Lords, I think that many of us responding to the amendment in the name of the noble Lord, Lord Borwick, find ourselves in something of a cleft stick. He has introduced the subject matter superbly, and in principle the amendment is entirely correct. The noble Lord has a very good track record on physical access for the disabled and this is a continuation of that, in a sense, in a different sphere. He also has the courage to wear a House of Lords tie, so he cannot be all bad. The trouble is that this amendment does have flaws. I am sure that the noble Lord, Lord Grantchester, if he speaks on this, will pick up on them. The Delegated Powers and Regulatory Reform Committee has commented on this.
All of us want the amendment to succeed but it does need a further look. We have all had briefings from the public service broadcasters and the platforms, including Sky, who say that they can live with this in principle but are rather concerned about the fact that there is no parliamentary approval built in. There are a number of flaws; they recommend that the affirmative procedure should be applied to the first regulations; they recommend that the appropriate regulatory authority is specified; and they recommend that the Secretary of State should have a duty, before making the regulations, to consult on-demand service providers and other stakeholders—which, of course, would be the platforms. So I am very much in sympathy in spirit, but I hope that we will have a chance before Report to perfect the amendment so that the campaign of the noble Lord, Lord Borwick, will proceed as intended in due course.
My Lords, I am delighted to add my support to the amendment, and to thank the noble Lord very much for the work he has put into this. As one who has campaigned on disability issues over the years in another place, alongside certain other colleagues who are in the Chamber tonight, I know that it is vital, in line with the social definition of disability, to make sure that handicap is not caused by the failure of those who can control our environment, whether that be the social, the physical or the psychological environment.
We are talking about creating a social environment in which it is possible for people who could depend so much on, and enjoy so much, the benefits of broadcasting to get that full benefit—provided that the necessary adjustments are made. I was for some years a member of the S4C authority, and I am acutely aware of the challenges of meeting the necessary standards. It is not a cheap option—but, as the noble Lord rightly said, technological changes are taking place that make it possible for translation, both between languages and with sign languages and other means of conveying information, to be done almost automatically, at low cost. Undoubtedly this will be much more available in the future. I hope that we will look at this amendment with an eye to that future, and that we will harness all the technology that may be available, so as to prevent—as I am sure we all wish to do, where we can—a disability becoming a handicap.
My Lords, there is a general air of unanimity and approval for this amendment: I think the noble Lord has backed a winner. Any changes that I have in mind I can discuss with him at some point between now and Report, and I am confident that he would probably agree. Reference has already been made to the difference between the linear services—which are already up to speed and are becoming more and more effective, and cost-effective—and some of the online platforms, which are quite complicated. We might need to insert the word “proportionate” into the amendment, but apart from that, I think that everybody in the Committee endorses what the noble Lord is trying to do.
I support Amendment 225, tabled by the noble Lord, Lord Borwick, and thank him for introducing it. We on this side of the House would claim that it has our fingerprints all over it, as it was introduced and spoken to in the other place by our honourable friend Louise Haigh MP. We agree that people with hearing or sight disabilities should be able to watch catch-up or on-demand services in the same way as they can watch standard linear TV, whether on a traditional television or on a computer, tablet or mobile phone.
We agree that broadcasters have not made sufficient progress—with the exception of the BBC, which has 98% accessibility on iPlayer. I understand that 76% of the UK’s 90 on-demand providers still offer no subtitles at all, that 85% of Sky’s on-demand content via its set-top box is inaccessible, and that only 5% of Virgin Tivo on-demand services have subtitles. I understand that on linear TV 16% of content is watched with the subtitle option switched on. The noble Lord, Lord Borwick, may well be correct to say that other broadcasters are moving in the same direction as the BBC.
This service provision is critical for people with sight or hearing disabilities, who can feel isolated and socially excluded from family, friends and society in so many ways, especially with this new way of watching TV. In the other place the equivalent amendment was withdrawn following the Minister’s commitment to take action.
We are content that this amendment would enable the Government to introduce a statutory instrument to give Ofcom the powers to fix the exact level of the quota necessary, balancing the need to make content accessible with the cost to the industry. Following consultation, Ofcom can replicate the mechanisms used for linear TV, which works on a sliding scale that requires large broadcasters to provide access services on a higher percentage of their content than the smaller ones. Furthermore, Ofcom may cap the total cost of meeting those requirements at 1% of a broadcaster’s relevant turnover.
Two issues remain, both of which the noble Lord, Lord Clement-Jones, mentioned. Both were also raised by the Delegated Powers and Regulatory Reform Committee. First, the “appropriate regulatory authority” should be named on the face of the Bill. My understanding is that the 2003 Act has Ofcom as the default regulator unless an alternative is specified, and that Ofcom has the power to designate an alternative regulator. If the Minister can confirm that this is the position, and that the custom and practice of most modern enabling legislation is similar, we would understand that the recommendation of the Delegated Powers Committee might fall away.
Secondly, we would support that committee’s recommendation that the statutory instrument should be enacted through affirmative resolution, and not by the negative procedure. There are significant reasons why that should be so, which are not limited to mere detail and technical content.
The appropriate regulatory authority, Ofcom, will have significant powers to impose substantial financial penalties for any contravention. The regulations will impose important new statutory duties on broadcasters, which may be required to increase their provision over time. Of course, all this will attract significant public interest, and the interest of both Houses of Parliament. I am sure the Minister will also confirm that Ofcom will consult widely, most notably with organisations representing people with sight or hearing difficulties.
We understand that the Minister will be minded to accept the amendment, for which we are grateful to him. Has he had discussions with Ofcom, and can he give an indication of when Ofcom might undertake, and conclude, its consultation process? I would be grateful if he could tell us when he might expect that this provision could be enacted.
My Lords, I too thank my noble friend Lord Borwick for tabling such a worthy amendment, which the Government are pleased to support. I also pass on the Government’s thanks to the Ewing Foundation and Action on Hearing Loss for bringing this important issue to our attention.
In recent years technology has changed the way we do things. Long gone are the days of a fixed phone line being the only way to make or receive a call, or having to sit in front of the square box in the corner to watch your favourite television show. In 2016 Ofcom reported that 93% of UK adults use a mobile phone; similarly, it is quite normal to watch TV at a time and on a device that suits. However, given the limited provision of subtitles, signing and audio description for on-demand services, a significant proportion of society is unfairly excluded from doing so.
The current statutory targets for subtitling, signing and audio description, collectively known as access services, on domestic linear broadcast TV channels cover 83 channels. That is over 90% of the audience share for broadcast TV. However, these targets are not duplicated for on-demand services. Over the years there has been an increase in the provision of access services—most notably, the number of service providers reporting subtitles increased from seven channels in 2013 to 22 channels in 2015—but there is room for improvement. Similarly, provision levels for audio description and sign language have remained disappointingly low, with little increase over the years.
The amendment will address this shortcoming, and the 116 on-demand service providers in the UK will be required to provide access services on their on-demand content. Through consultation with Ofcom, the industry and other stakeholders, the Government will determine the requirements that providers of on-demand programme services will be required to meet. We need to make sure that the requirement maximises the benefits to consumers while not presenting undue burdens to providers of on-demand services. Consultation will enable us to strike the correct balance. I can tell the noble Lord, Lord Grantchester, that officials are engaged in discussions with Ofcom. The aim is for statutory instruments to be put in place later this year.
In reply to the noble Lord, Lord Clement-Jones, I say that the Government have noted the three recommendations of the DPRRC on my noble friend Lord Borwick’s amendment. If the House agrees the amendment, the Government will consider any further changes that are necessary and will respond to the committee in time for Report. We will get back to the DPRRC on the second one on the appropriate regulatory authority to explain that Part 4A of the Communications Act 2003, into which the proposed new sections will be inserted, is already clear that Ofcom is the regulator unless it has appointed a separate body for that purpose. Accordingly, as it has not appointed any other body, it is the regulator, but the original drafting was simply intended to fit in with the existing structure of the Communications Act, which uses the phrase “appropriate regulatory authority” and defines that separately. This maintains consistency across legislation. We are following the advice of parliamentary counsel on that.
I accept that there are two other points. I expect to be able to respond to the committee in time for Report. We commend the amendment to the Committee.
Amendment 225 agreed.
Clause 80 agreed.
Amendment 226 had been withdrawn from the Marshalled List.
226A: After Clause 80, insert the following new Clause—
“Public sector broadcasting prominence
(1) The Communications Act 2003 is amended as follows.(2) In the title of section 232, at end insert “and “electronic programme guide””(3) After subsection 232(5) insert—“(5A) In this section “electronic programme guide” means a service which consists of a— (a) linear electronic programme guide; or(b) qualifying connected electronic programme guide.”(4) In subsection 232(6) for “electronic programme guide” substitute “linear electronic programme guide”.(5) In paragraph 232(6)(b) after “for” insert “finding, selecting or”(6) After subsection 232(6) insert—.“(7) In this section “qualifying connected electronic programme guide” means a “connected electronic programming guide” which is used by a significant number of its intended audiences as a means of receiving television programmes or TV-like content.(8) In this section “connected electronic programming guide” means a service which consists of—(a) the listing or promotion, or both the listing and the promotion, of some or all of the programmes included in any one or more programme services the providers of which are or include persons other than the provider of the guide; and(b) the listing or promotion, or both the listing and the promotion, of—(i) some or all of the programmes included in any one or more on-demand programme services, or(ii) some or all of the on-demand programme services, the providers of which are or include persons other than the provider of the guide; and(c) the facility for finding, selecting or obtaining access, in whole or in part, to the programme service or services and the on-demand programme service or services listed or promoted in the guide.(9) The Secretary of State may by order amend the definition of an electronic programme guide in this section.(10) Before making an order under subsection 9 the Secretary of State must consult OFCOM.”(7) In subsection 310(1) for “from time to time” substitute “on 1 December 2017 and at intervals of no more than three years thereafter”.(8) In subsection 310(2) omit “such degree of” and “as OFCOM consider appropriate”.(9) In paragraph 310(4)(a) after “BBC” insert “, including on-demand programme services,”.(10) After paragraph 310(4)(h) insert—“(i) any on-demand programme service provided by a public service broadcaster.(4A) A service is an on-demand programme service provided by a public service broadcaster for the purposes of paragraph 4(i) if it —(a) is provided by any of the following—(i) a person licensed under Part 1 of the 1990 Act to provide a Channel 3 service;(ii) the Channel 4 Corporation;(iii) a person licensed under Part 1 of the 1990 Act to provide Channel 5;(iv) the Welsh Authority; and(b) provides access to programmes broadcast on a licensed public service channel.”(11) In paragraph 310(5)(a) after first “service” insert “, including on-demand programme services,”.(12) After subsection 310(5) insert—“(5A) In making any order under subsection (5) the Secretary of State must have regard for the desirability of investment in original productions.(5B) In this section “original productions” means programmes commissioned by or for the provider of a service for the purposes of subsection (5) with a view to their first showing on television in the United Kingdom on that service.”(13) After paragraph 310(7)(a) insert—“(b) if the service is a public service channel dedicated to children, persons under the age of 16;”(14) Leave out subsection 310(8) and insert—“(8) In this section “electronic programme guide” means a service which consists of the programme service or services listed or promoted in the guide.”(15) In subsection 311(2) for “310” substitute “232(5A)”.”
Once again, I am pretending to be my noble friend Lord Stevenson. Amendment 226A concerns rules ensuring the prominence of public service broadcasting content on on-demand services.
The Communications Act 2003 provides a code of practice to ensure electronic programme guides give priority and prominence to PSB channels. For traditional viewing these rules, in the main, continue to work pretty well. But the Act was passed 14 years ago, before the age of digital switchover, the iPlayer, the iPad, a range of catch-up services and connected TV. Recent data show that 70% of adults in the UK say they have watched programmes via catch-up services. About 15% of total programme viewing is now, to use the horrible jargon, time shifted—more than double the amount from 2010. Yet, at the moment, on-demand menus and connected TV homepages that are portals for TV guides are not within the scope of prominence rules, so there is a pressing need for the rules around PSB prominence to be updated to keep up with new technology. In addition, new services with significant PSB content, such as the new BBC iPlayer Kids, are also out of scope of these rules.
A good example of PSB programming that suffers from the absence of prominence rules for catch-up and on-demand menus is Welsh and Scottish Gaelic language services. With connected TV services it can take a very long time even to find these programmes. More generally, if you have Sky, as I do, and press the programmes button, you will see the programme guide in the top left corner, but in the bottom half of the screen—more than twice the size—you will see a “top picks” box tempting you to delve in. In my experience, you would struggle to find any PSB content in that box. PSBs continue to try to negotiate prominence for their output, but they are increasingly finding themselves outbid and outthought by commercial broadcasters that pay for promotion of their own services.
Guaranteeing the prominence of PSB in this new age is in the interest of licence fee payers, who after all pay for PSB and are therefore entitled to ensure it is accessible across platforms and viewing habits. It is also popular: 70% of the public continue to want BBC channels at the top of their listings. Ten times as many viewers want the TV guide at the top of their screen, rather than platform operators’ recommendations to be prominent.
Both Ofcom and this House’s Communications Committee recommended updating the prominence rules by extending them to on-demand services and online menus. The TV licencing laws were updated to cover BBC on-demand services. The amendment would do the parallel work for PSB prominence rules. In addition, we have a specific reference to strengthen the rules around prominence on programme guides for PSB children’s content. I know that we will discuss quality TV children’s programming later, but, for example, at the moment CBeebies and CBBC—the most trusted children’s channels, whose content is funded by us all—sit behind 12 US network cartoon channels on the Sky platform.
Surely the Government would agree with Ofcom and this House’s Communications Committee that the rules guaranteeing PSB prominence need to be updated. We should not tolerate a situation in which people are paying for PSB content but, as viewing habits change, it is getting harder and harder to find it. I looking forward to hearing from the Minister whether he agrees that there are gaps in the existing rules and what steps he would recommend to fill them. I beg to move.
My Lords, I put my name to this very important amendment. The noble Lord, Lord Wood, has said most of what I was going to say, so I will be brief, but I add that we live in such a rapidly changing world, in which the existence and preservation of public service broadcasting is ever more crucial.
As the noble Lord, Lord Gordon, mentioned, we were at a breakfast yesterday hosted by Channel 4. The topic for discussion was fake news—a frightening phenomenon that threatens to undermine democracy as we know it and to distort people’s understanding of the world. It is still the case that the main source of news, and the most trusted, is TV. Given the rise of fake news, PSB content—impartial, well regulated and fact based—is more important than ever.
Alongside being universally available, what is crucial is that PSBs are easy to find. As the noble Lord, Lord Wood, said, this is increasingly difficult—the number of clicks you need to get to BBC Alba is, I believe, 15 on Sky Q. Then there is the specific matter of children—children’s content lurks below numerous foreign cartoon programmes.
Change is needed. Ofcom and the Lords’ Communications Committee have argued it and these amendments provide it. Will the Minister not agree that the Bill offers the opportunity—dare I say an historic one—to ensure changes that are essential if public service broadcasting is to survive, in a time in our history when its survival is more important than ever?
My Lords, I put my name to this amendment, so I shall speak briefly in support of it. It simply seeks to modernise the prominence regime for our digital age, expanding the existing legislation to cover on-demand services, such as catch- up television, on-demand TV menus and electronic programme guides.
At Second Reading, I shared my own and others’ experience of how frustrating electronic programme guides and user interfaces can be. Navigating them and finding a particular channel can be a particular challenge for people with a sensory impairment. Finding BBC News on electronic programme guides or finding the iPlayer on smart and connected televisions can take a considerable time. Likewise, finding BBC Parliament to allow people to take in your Lordships’ proceedings can be quite difficult—I am assured that people do still attempt to do this.
The Commercial Broadcasters Association has argued that giving public service broadcasting children’s channels extra prominence would create problems for investment in UK children’s content by their members. Moving public service broadcasting channels to higher electronic programme guide positions would mean displacing commercial broadcasting channels, with a detrimental impact on audience share and revenues. This, they say, would ultimately damage investment in children’s content. However, I am advised that greater prominence for public service broadcasters’ channels has a cross-promotional value which ultimately redounds also to the benefit of commercial channels. As I see it, there is no real threat to commercial broadcasters from this amendment.
This is a straightforward amendment which simply seeks to update the letter of the legislation for an increasingly digital age and bring it in line with the spirit in which it was originally conceived. I trust that the Government will see their way to accepting it.
My Lords, I am delighted to follow the noble Lord, Lord Low, and to support Amendment 226A, relating to public sector broadcasting prominence, about which I spoke during the Second Reading debate. This Bill presents an excellent opportunity to update prominence rules so that they work as they should in our digital world. Given the amenable response from the Minister on earlier amendments, I hope there will be an equally forthcoming response on this one.
The current legislation, from 2003, places a requirement for PSBs to have appropriate prominence to ensure that the flagship PSB channels, such as BBC1 and BBC2, are prominent on electronic programming guides. However, as I raised at Second Reading, the BBC’s children’s channels, referred to earlier, do not enjoy this prominence and sit below 12 commercial children’s channels on some electronic programming guides. As a former member of the S4C Authority, I know from experience that this is a particular issue for both S4C and BBC Alba. S4C is a vital service for hundreds of thousands of people in Wales who speak Welsh and who want to be able to watch programmes in their own language. This content must be easily available on electronic programming guides and—as I will touch on in a moment—on demand. I believe, quite simply, that PSB content must be prominent, whether it is “Y Gwyll”—an excellent Welsh detective drama series known outside Wales as “Hinterland”, which has been sold to almost 200 countries and shows what it is possible to achieve—or great children’s dramas such as “Wizards vs Aliens”, filmed at Roath Lock in Cardiff.
Perhaps a more recent issue, but nevertheless one which must also be tackled, is the need to modernise prominence rules to ensure that they cover on-demand services, such as catch-up TV and connected TV on-demand menus. As I raised at Second Reading, young people in particular are increasingly watching public service content this way and spending less time watching linear TV. At the same time, finding the iPlayer on connected and smart TVs is getting to be a longer and more arduous process, making it harder to watch programmes—including S4C. I am told that there are more than 100,000 requests for S4C programmes on iPlayer every week, showing just how popular this content is.
Both S4C and MG Alba have stated their support for extending prominence to cover on-demand and catch-up TV. They have issued a statement which I should like to quote:
“The extension of the PSB prominence principle to include the PSBs’ on-demand players is of great and growing importance. Its significance is not only for the future of public service media content and how it is consumed by the public, but it is also particularly vital for the availability of Welsh language content as S4C is the only Welsh language PSB available—serving Welsh speakers throughout the UK”.
It also has a considerable following in parts of the UK outside Wales.
Although this is certainly an incredibly technical area of legislation, I see it as another simple problem with a straightforward solution. Had smart TVs and the iPlayer been common when the original legislation was devised, I have no doubt that they would have been included at that stage. We now have an opportunity to do something about this and I hope that the Government will take it.
My Lords, I support Amendment 226A. This is an important attempt to future-proof the prominence of PSB channels on electronic programming guides, which is essential if we are going to bring younger audiences to PSB output. As Sharon White, the chief executive of Ofcom, said:
“Public service broadcasting continues to deliver TV that is enjoyed and valued by millions of viewers across the UK.
More people are watching online or on demand, and this presents challenges as well as opportunities for public service broadcasters. They must continue to find new ways of connecting with audiences, and the PSB system needs to evolve to ensure it remains effective in the digital age”.
The prominence of PSB online services has to be safeguarded in the face of what I see as a determined effort by commercial rivals and some manufacturers to downgrade them. These services need to be easily accessible to viewers and, as many other noble Lords have said, they are not covered by the Communications Act.
I draw your Lordships’ attention to two services provided by the BBC online which show how important it is that they should have prominence on any EPG in the future. BBC iPlayer has been an astonishing success, especially for younger viewers and listeners. In June 2016, there were 290 million requests for radio and television programmes to be downloaded—a 9% increase from the previous year. I know, from when I worked on “Horizon”, the BBC science strand, that the overnight ratings would almost double in the following months from people downloading the programme on iPlayer. At the moment, in some cases, it is hard to find this service on the EPGs.
We also have no idea what other on-demand channels will be launched in future by the PSBs. An example of what these might include is the service that is being mooted by the BBC, which it hopes to be able to launch in 18 months’ time, called BBC Ideas. It will bring together the BBC’s output across all platforms—radio, television and online—in arts, culture, science and history. It will place them alongside interesting new ideas from partners in leading arts, science and cultural institutions. The hope is that the audience will have their minds stretched and even thrilled by the interchange of ideas in a place where art meets medical science or where history meets theatrical performance. As things stand, there are many smart TVs and set-top boxes which will not give prominence to services such as these. In some cases, this is because the platform providers are also the content providers. I am sure that in the fast-growing area of smart televisions there will be relationships between television manufacturers and content providers which will favour the latter.
If public money is being spent on PSB online content provision, we have a duty to ensure that, in future, viewers should be able to access this content easily. I urge the Minister to accept this amendment.
My Lords, I support this amendment. I too am concerned that it is becoming more and more difficult to find BBC programmes on new, connected televisions, particularly, as we have heard, programmes for children. On one new platform, it takes 22 clicks on the remote to get to the home screen of CBBC. Parents know that BBC content for children is both high quality and educational but, worryingly, it is not easy to find on many platforms and televisions, especially for new parents. I agree with other noble Lords that the legislation is out of date. On one platform, CBBC and CBeebies, broadcasting UK-produced content, are buried beneath 14 commercial children’s channels in the guide. Many of these show American content. I hope that the Minister will commit to updating the legislation to ensure that children’s BBC content is prominent on all platforms.
My Lords, I appeal for some leeway from the Committee in that I am popping in to support this amendment and then leaving your Lordships to it. I support the spirit of the prominence regime and the amendment in particular, which I hope the Government will accept.
As we have heard, the prominence regime was originally intended to ensure that the high-quality programming of our public service broadcasters was easily accessible to everyone, especially in the case of the BBC, which of course is funded by the licence fee paid by the vast majority of households. Unfortunately, the legislation as it stands is more suited to an analogue age than the digital world in which we now live. Understandably, when the original television legislation was enacted in 2003 we did not imagine how our viewing habits would change over the following decade or how quickly the legislation would fall behind technological progress. Smart and connected televisions, with their instant access to on-demand content, were only a dream in 2003, while the iPlayer would not be launched for another four years.
I am concerned by how increasingly difficult it is, as has been said, to find some content on smart and connected television menus. The iPlayer in particular is watched by millions of people who pay their licence fee and it should be much more easily accessible. As we heard from my noble friend Lord Wigley, S4C produces some outstanding Welsh dramas, watched by people right across Wales, where I still live in the constituency that I once represented. Many viewers watch those Welsh programmes on the iPlayer. I am worried that, as smart and connected television menus increasingly promote their own and other commercial content, people are struggling to access the iPlayer and, therefore, these excellent Welsh programmes, which I find it very difficult to believe will be replicated by any other broadcaster or company. “Hinterland”, which my noble friend mentioned, among others, should be on network BBC. It really is an excellent and gripping drama, equivalent to “Silent Witness” or any of the other excellent network programmes. So I make that appeal to the BBC, if I may.
Even electronic programme guides are becoming harder to find and much harder to navigate. I believe that on one new connected television, getting to S4C takes 10 clicks on the remote control, while finding the BBC’s children’s channels, as the noble Baroness, Lady Benjamin, said, takes more than 20 clicks, forcing parents—and in my case, grandparents—to scroll through roughly a dozen commercial channels; most of them are rubbish, by the way. It is a problem for me to find CBeebies or CBBC when my six grandchildren are over. This surely does not fit within the spirit of the original legislation. Amendment 226A is simply technical in nature. It updates existing legislation for the digital world in which we now live, and I hope the Government will support it.
My Lords, I support the amendment but come at it from a slightly different angle. The noble Baroness, Lady Buscombe, will remember that she and I discussed ad nauseam the issues of the EPG and we were very much on the same side. There is blame on both sides here. We failed at the time to persuade the then Government that common sense should make an organised EPG easy to use and that the public service broadcasters should be high on it. Today, if you go across the top bar, find sport and click on it, you will not find any sport on the BBC. You have to go back to the “all channels” menu. It is an absurdity.
We are here to discuss what will become the Digital Economy Act 2017. The notion that in 2017 we are not able to have a personalised programme guide in the same way as we would have on our iPhones, is daft. I am afraid that the blames lies with the then Government, who were persuaded by Sky that it had invested significantly in the EPG and had the right to amortise its investment. Honeyed words were given from the Front Bench that of course this would be reviewed quite quickly. It never has been reviewed and the absurdity of this so-called amortised investment has gone on now for 14 years. I suggest, and hope the Minister will sympathise, that this is the time to get real with this. It is 2017. An EPG should be able to be personalised very easily by the individual consumer and that is the way it should work.
My Lords, clearly there is a lot of agreement about your Lordships’ Communications Committee’s recommendation that we have a new, up-to-date, fit-for-purpose EPG regime, which may also take on board the suggestions of the noble Lord, Lord Puttnam. We desperately need it.
Many examples have already been given: the difficulty of finding CBeebies and CBBC under a large number of cartoons; the difficulty of finding the iPlayer or the ITV Player on the first page of an on-demand screen on a smart TV; the difficulty of finding indigenous language channels such as S4C or BBC Alba; and even not being able to find the EPG itself on a smart TV.
There is very clear evidence that EPG positioning really matters. I will give just one example to illustrate it. If you look at the percentage of viewership of CBeebies on Virgin, where it is high up on the EPG, the share is much higher than the viewership of exactly the same programmes on Sky, where it is much lower on the EPG.
However, the real reason for my intervention is simply, as the Minister is about to respond to the debate, to draw his attention to what one of his right honourable friends—the former Secretary of State for Culture, Media and Sport—said just in 2011:
“Position on the EPG will probably be the Government’s single most important lever in protecting our tradition of public service broadcasting”.—[Official Report, Commons, 8/9/11; col. 543.]
When the Minister responds, I hope he will bear in mind what his right honourable friend said.
My Lords, I thank all noble Lords who contributed to the debate. I have to warn the noble Lord, Lord Wigley, that despite his very kind remarks I may not be so amenable. My speech may contain some upsetting content—we broadcasters have to issue warnings.
Amendment 226A would extend the prominence provisions that currently exist for linear channels to on-demand electronic programme services, which are the lists of on-demand services available for selection on television interfaces. This issue was debated at length in the other place, although I note that this amendment goes further in integrating new provisions into the existing statutory framework for both EPGs and the PSB prominence regime. But I believe that the key issue remains as it was.
The Minister reassured Members in the other place then—and I reassure the Committee today—that the Government gave this issue considerable thought during last year’s balance of payments consultation, the response to which was published in August last year. Our conclusion was—and we remain of the view—that we have not seen compelling evidence of harm to PSBs to date. Creating a new regulatory regime that defines the user interfaces or submenus that should be caught, particularly in a fast-moving technological landscape, is likely to be complex. At the time of consultation, Ministers were not convinced of the benefit of regulation that might extend to, for instance, smart TV manufacturers’ user interfaces, which are developed with a global market in mind. We therefore decided not to extend the EPG prominence regime for PSBs to on-demand.
When PSBs make excellent content, generally audiences will find that content. This is true of both catch-up and live content. For example, the BBC’s award-winning children’s services are much viewed by children throughout the UK. We do not believe that further protections are necessary to ensure that children find these services. A recurring theme in the debates on the Bill has been how much more competent children are than many adults in the digital world.
Furthermore, acting in this area is extremely complicated and the fact that the amendment spans more than a page demonstrates some of the difficulties inherent in legislating in this area. The technological landscape is shifting quickly and, with it, the business models of those who seek to cater to changing audience tastes. Detailed regulations about how exactly audiences need to be guided through menus cannot be the answer here. Regulations would be outdated as soon as they came into force.
Moreover, this amendment would give prominence to the PSBs’ on-demand programme services, which include not only the PSB content of the commercial PSBs, but also content originating from their non- PSB channels. If the intention was to put on-demand EPG prominence on the same footing as linear EPG prominence, this amendment goes far beyond what we have in place for linear TV. It is therefore, in our view, not justifiable.
With that explanation—and I appreciate that the noble Lord may not be happy—I hope that tonight he will withdraw his amendment.
I am looking at the general duties of Ofcom and I am failing to understand in whose interests the Government are taking this position. It is very clear to me that the general duties of Ofcom are to further the interests of citizens and to further the interests of consumers. They do not include furthering the interests of manufacturers. Is the Minister saying that in fact the interests of manufacturers and suppliers are trumping the interests of the consumer and the citizen?
No, what I am saying is that we do not see that there is compelling evidence of harm to PSBs.
My Lords, we have had various contributions across the House of excellent quality. We have the noble Lord, Lord Low, and the noble Baroness, Lady Benjamin, talking about children’s content; the noble Lord, Lord Wigley, and my noble friend Lord Hain talking about Welsh language provision; various comments about innovation and the future from the noble Viscount, Lord Colville, and the noble Baroness, Lady Bonham-Carter, and my noble friend Lord Puttnam.
For the sake of brevity, I will respond to the Minister directly. I am slightly confused by the logic of the Minister’s response. Either electronic programming guides work in pointing people towards PSB—and the general view is that they are absolutely crucial for audience share in traditional TV—or they do not. I find it difficult to know why the logic that has traditionally held for intervention to ensure that PSB content paid for by the public has pointers towards it should no longer apply in an age when viewing habits are changing. I totally accept that it is more complicated, but I do not understand why we should throw our hands up and say, “People will find good content”, when up to now, with linear TV, we have taken great strides to ensure that people are pointed towards the content that is funded by licence fee payers. I find that discrepancy between the two worlds quite baffling.
Secondly, it is not a new set of regulations that noble Lords are asking for; it is updating the existing set of regulations—which has pretty much worked okay, with the exception of children’s TV and a few other areas—into a new age. That will require some imagination and collaboration and thinking, but it is not ripping up everything and starting again that it is being asked for. So I am disappointed that the Minister has closed the door on thinking this through further. I will definitely think more about what to do and where to take this, but for the moment I beg leave to withdraw the amendment.
Amendment 226A withdrawn.
Clauses 81 to 84 agreed.
227: After Clause 84, insert the following new Clause—
“Internet filtersInternet filters
(1) A provider of an internet access service to an end-user may prevent or restrict access on the service to information, content, applications or services, for child protection or other purposes, if the action is in accordance with the terms on which the end-user uses the service.(2) This section does not affect whether a provider of an internet access service may prevent or restrict access to anything on the service in other circumstances.(3) In this section—“end-user” means an end-user of a public electronic communications service, within the meaning given by section 151(1) of the Communications Act 2003;“internet access service” has the meaning given by Article 2(2) of Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25th November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union.”
My Lords, my right honourable friend the Minister of State for Digital and Culture announced on Report in the other place that we would bring forward this amendment on internet filters. As noble Lords are aware, EU regulation 2015/2120 on open internet access, or net neutrality, has created some uncertainty as to whether family-friendly filters currently offered by internet service providers and mobile network operators are compliant. The Government are clear that such filters are indeed compliant with EU regulation. However, for the avoidance of doubt, this amendment provides reassurance for UK ISPs and mobile network operators on this matter.
The amendment clarifies that internet service providers may restrict access to information, content, applications or services where that is in accordance with the terms of service agreed by the end user. The approach that the main providers of internet access services have taken towards filtering has been a huge success. The effect of this amendment is to support the current agreements and practice between users and their providers in respect of filtered services, whether at home, on mobile or on public wi-fi.
This amendment will underpin our commitment to keeping children safe online, by providing reassurance to providers that their filters are compliant with the EU regulation. Our objective is to support the current excellent voluntary system for family filters, and to ensure that it can continue in the most effective way to protect minors online. This amendment achieves that aim and I beg to move.
My Lords, this amendment is of crucial importance because, unlike the age verification provisions that we have considered in Part 3, which provide protection for children only from 18-rated pornographic material, the filtering provisions engaged by this amendment help to protect adult content in the round, including gambling, violence, self-harm and so on.
We should be in no doubt about the importance of adult content filters. However, I have a question for the Minister. This amendment effectively says to an ISP that if it wants to provide adult content filters it can do so legally in the UK. This is helpful for the 88% of the market that is covered by the agreement between the big four ISPs to provide unavoidable choice or default-on adult content options. So what is the Government's policy in relation to the remaining 12%? If it is really important that the big four provide unavoidable choice or default-on adult content options during the set-up, why is it not equally important that the smaller ISPs do the same?
I am not interested in whether or not it is strictly necessary under EU law. I am simply concerned that we should have the best protections in place for all children—those whose parents use one of the four largest ISPs and those whose parents do not.
My Lords, I support these two amendments. As the noble Lord knows, they have been the subject of considerable discussion and debate in the past. We all share the objective of allowing family-friendly filters to remain on internet services and mobile networks in the UK. As the noble Lord set out, the arrangements we currently have in the UK were brought into question by the EU net neutrality rules introduced last year, which appeared to ban individual countries from restricting access in this way. Since then, there have been a number of different interpretations of how the EU rules would affect the UK—perhaps complicated by the fact the Ministers themselves were not able to clarify the situation with their usual adeptness. Indeed, it still appears that the EU open access regulations and our commitment to family friendly filters are in some ways in contradiction.
The Minister will know that many of the internet companies have taken the view that the less said about this issue the better. Their argument is that if attention is not drawn to the contradiction, they can carry on with the previous practice—under the wire, so to speak. Of course, for a lot of reasons this is not a very attractive proposition, and we accept that it would make the status of family-friendly filters more vulnerable as time went on.
So, instead we have the amendments tabled by the Minister today. When I asked at a previous meeting with the Minister whether the amendments had been checked out legally, I was assured that this was the case. We have not seen that legal advice and therefore have to take it on trust that what is before us today is legally watertight and does not contravene EU rules.
To some extent we are taking all of this on trust. While it would be easy to demand more evidence, I accept that it would not help the case of those committed to family-friendly filters—I suspect that the more we probe, the more the robustness of the proposals before us could unravel. We support the intent behind these amendments and it is certainly not our intention to bring them into question in any way. I hope that they achieve the outcome to which we are all committed. I hope therefore that noble Lords will support the amendment.
My Lords, both my noble friend Lady Benjamin and the noble Baroness, Lady Jones, are far more authoritative on this subject than I could possibly be. I just want to add our support from the Front Bench for these two amendments. The noble Baroness made an important point, which is that we very much hope that the amendments are effective in clarifying the situation. There is no absolute guarantee of that but they have a fair wind because of the nature of the voluntary system of family-friendly filters that they underpin. I very much hope we do not do too much “probing”—I think that is the word that the noble Baroness used—as we are just happy that we can continue with the same system as we had before. I also think my noble friend Lady Benjamin asked an important question regarding where the gaps are in terms of the smaller players.
My Lords, I am grateful for the support from all noble Lords on this. I assure the noble Lord, Lord Clement-Jones, that I feel well and truly probed after this Committee stage.
We have a voluntary system that is going well, but I accept that the noble Baroness, Lady Benjamin, has a point in asking about the remaining amounts that are not covered. We might query the numbers that she is talking about. My information is that the latest figures from Ofcom and the industry indicate that around 95% of the UK fixed broadband market offers free network-level or device-level parental filters to their customers. The numbers are important but the principle is there—what are we doing about the providers that are not covered?
The remaining 5% are generally small internet service providers offering business-to-business or niche specialist services to more tech-savvy customers. Some small ISPs have a business model based very transparently on not filtering, for open-rights reasons. However, many of them already provide guidance to customers where appropriate on free device-based or network-level filter tools. Still, we recognise the concern to do everything we can to protect children online, and I am happy to say that after discussions with my officials last week or the week before, the Internet Services Providers’ Association has agreed to take further action to encourage its smaller members to consider online safety and filters. It is updating its code of practice and new member sign-up process to ensure that members consider offering filters to their customers, and issuing a guidance note to members on filters, signposting them to further help and support. So we have addressed that point. It is still on a voluntary basis so far, and we will continue to monitor how that is going.
Amendment 227 agreed.
228: After Clause 84, insert the following new Clause—
“Communication devices used for drug dealingPrevention or restriction of use of communication devices for drug dealing
After section 80 of the Serious Crime Act 2015 insert—
“80A Prevention or restriction of use of communication devices for drug dealing(1) Regulations may make provision conferring power on a court to make a drug dealing telecommunications restriction order.(2) “Drug dealing telecommunications restriction order” means an order requiring a communications provider to take whatever action the order specifies for the purpose of preventing or restricting the use of communication devices in connection with drug dealing offences.(3) Without limiting the action that may be specified, it includes—(a) action that relates to a specified device;(b) action that relates to a specified phone number or something else that may be used with a device.(4) In this section “drug dealing offence” means an offence under section 4(3) of the Misuse of Drugs Act 1971 or section 5 of the Psychoactive Substances Act 2016; and a communication device is used in connection with a drug dealing offence if it is used by a person (“the user”) in the course of—(a) the user committing a drug dealing offence,(b) the user facilitating the commission by the user or another person of a drug dealing offence, or(c) conduct of the user that is likely to facilitate the commission by the user or another person of a drug dealing offence (whether or not an offence is committed).(5) Regulations under this section must provide for drug dealing telecommunications restriction orders to be made only on the application of—(a) the Director General or Deputy Director General of the National Crime Agency, or(b) a police officer of the rank of superintendent or above.(6) Regulations under this section must—(a) specify the matters about which the court must be satisfied if it is to make an order;(b) make provision about the duration of orders (which may include provision for orders of indefinite duration);(c) make provision about the giving (by a communications provider or any other person) of notice of the making of an order; (d) make provision about variation (including extension) and discharge of orders;(e) make provision about appeals.(7) Regulations under this section must provide—(a) for applications for drug dealing telecommunications restriction orders to be made and heard without notice of the application or hearing having been given to persons affected (or their legal representatives), subject to subsection (9)(a);(b) for applications to be heard and determined in the absence of persons affected (and their legal representatives), subject to subsection (9)(b);(c) for applications to be heard and determined in private.(8) Regulations under this section must provide for a court hearing an application or an appeal to have power to restrict disclosure of information submitted in connection with the application or appeal if satisfied that it is necessary to do so in the public interest.(9) Regulations under this section may—(a) make provision for a communications provider affected by an application to be given notice of the application or hearing;(b) make provision for a communications provider affected by an application to be present or represented at the hearing and determination of the application;(c) in connection with any provision under paragraph (b), make provision for a communications provider to have a right to make representations;(d) make provision for a drug dealing telecommunications restriction order to specify that a requirement of the order is not to apply in particular circumstances;(e) make provision authorising a court to include in an order a requirement for the person applying for the order to pay any or all of the costs of complying with it;(f) make provision about time limits for complying with orders;(g) make provision about enforcement of orders (which may include provision creating offences);(h) make provision about costs (or, in Scotland, expenses) in respect of legal proceedings;(i) make provision about compensation;(j) make different provision for different purposes or areas;(k) make incidental, consequential, supplementary or transitional provision, including provision applying any enactment (with or without modifications).(10) The power to make regulations under this section is exercisable by statutory instrument made by the Secretary of State.(11) A statutory instrument containing regulations under this section is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(12) In this section—“communication device” means an item specified in section 1(3) of the Prisons (Interference with Wireless Telegraphy) Act 2012 (mobile telephones etc);“communications provider” means a person providing a telecommunications service;“court” means—(a) in relation to England and Wales, the county court;(b) in relation to Scotland, the sheriff;(c) in relation to Northern Ireland, a county court;“enactment” includes— (a) an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;(b) an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament;(c) Northern Ireland legislation;“telecommunications service” has the meaning given by section 261 of the Investigatory Powers Act 2016.””
My Lords, Amendment 228 introduces a new clause with a regulation-making power that will enable the police and the National Crime Agency to apply to the courts for an order compelling communication providers to take whatever action the order specifies to prevent communication devices being used in connection with drug-dealing offences. Such action may include blocking mobile phone handsets and SIM cards and preventing particular phone numbers from porting between networks, as well as preventing access to wi-fi networks. This is an enabling provision that provides for the Secretary of State to set out in regulations details of how applications are to be made and dealt with in the courts. The amendment broadly mirrors Section 80 of the Serious Crime Act 2015, which provides for a similar power to prevent the use of mobile phones in prison.
The amendment responds to an operational requirement of the police, who require support in tackling the issue of county lines—the police term used to describe gangs in large urban areas who supply drugs, especially class A drugs, to suburban areas and market and coastal towns. To support their market expansion, gangs recruit and exploit children and vulnerable adults through deception, intimidation, violence, debt bondage and/or grooming. They are used to carry drugs and money.
County lines gangs’ criminality relies on the unrelenting recruitment, coercion and systematic exploitation of the most vulnerable including looked-after children, young people reported as missing and children from broken homes. Vulnerable adults are also exploited and can lose control of their home to gangs who use it as a base to distribute drugs, in a practice known as cuckooing.
The phone line is central to this model and to the gangs’ ability to deal drugs out of area in this way. When establishing a new county lines market, gangs will promote a number locally as the number to call to buy drugs. That “deal line” is therefore at the very core of this criminal model. Dealing drugs is a serious criminal offence and the police are committed to securing prosecutions wherever possible. However, as the deal line is held well away from local street-level drug-dealing activity and it will be an anonymous pay-as-you-go line, both those factors make it hard for the police to achieve prosecutions against an individual for the activity on that line.
Each deal line has the potential to interact with hundreds of customers and facilitate thousands of deals 24 hours a day. Disrupting these lines will have a significant impact in disrupting the gang-related drug supply and associated exploitation. There is currently no legal power in place to compel communication providers to disconnect phones used in county lines drug-dealing activity. We must ensure that the police have the powers they need to tackle this issue.
This legislation is part of a wider ongoing multiagency response, including safeguarding partners, to tackle county lines gangs, but this new order is a critical tool that will render this operating model ineffective and unattractive through the disruption of it. Amendments 236 and 241 are consequential. I beg to move.
My Lords, we are broadly supportive of the amendment. We want to put on record that we have our doubts about the efficacy of the provisions, but obviously if they work then we will be thoroughly delighted. We are slightly doubtful about whether these measures will ultimately be effective, though, and I am sorry that my noble friend Lord Paddick is not here to add his experience to the debate.
Amendment 228 agreed.
House resumed. Committee to begin again not before 8.15 pm.
Competition and Markets Authority
Question for Short Debate
To ask Her Majesty’s Government whether they will review the extent to which the Competition and Markets Authority, in meeting its objective of promoting competition, is doing so “for the benefit of consumers”, as required under Section 25(3) of the Enterprise and Regulatory Reform Act 2013.
My Lords, I thank the Minister for giving up his dinner to be here to answer what is clearly not the top question on everyone’s lips. That is a shame because consumers matter and are being short-changed, both in the Brexit talks—their interests do not even get a mention in the 12 principles in the White Paper—and, as I will argue, in the work of the CMA. Yet, as the Question before us sets out, the CMA’s role in promoting competition is not as a good in itself but for the benefit of consumers, so we should judge the CMA’s work on whether it has indeed benefited consumers.
I first queried the obsession with competition in itself, regardless of consumer detriment, with the CMA’s predecessor, the OFT, when working on estate agents. It quite solemnly told me that what was needed was “more providers”—that is, more estate agents—and perhaps some relaxation of the rules on the accurate advertising of homes. I have to say that that is not how house buyers or indeed house sellers saw it.
Sadly, my dealings with the CMA have left me wondering whether it has yet put itself in the shoes of consumers to act as their champion in the marketplace. Certainly, a number of us across the House had our run-in with the CMA over secondary ticketing—ticket touts—as my noble friend Lord Stevenson will set out in due course. If we look more broadly, we see the CMA reluctant to take action, relying time and again on consumers to make markets work better, even in markets where the tiny individual consumer is up against the “big six”, whether in energy or banking. Indeed, so obsessed is the CMA with expecting consumers to regulate markets by “switching” that, in an unfortunate speech, the CMA chair said that the “major problem” in banking and energy,
“is a large number of inert consumers”,
“to make just one effort to get off the sofa”.
That is no way to speak of consumers, and it is not what will make large, unaccountable industries treat their customers fairly. The whole point of the CMA is to take action in global markets where the individual user can have little effect.
If banking, for example, were consumer-centred, everyone would have access to a comprehensive package of appropriate and affordable services and products. That is not the industry we see today. Rather, banking is highly concentrated—and highly uncompetitive. It is complex, opaque, hard to negotiate and expensive. Indeed, today’s Metro suggests that some bank overdrafts are more expensive than loan sharks. The CMA’s reliance on switching will not drive change when all the banks are essentially the same and offer the same poor service. It is the tiddler versus the giant. Reliance—even onus—on individuals to drive competition is inappropriate in these markets. Asymmetry of information, long-term outcomes, lack of transparency about fees and charges, lack of plain English terms and conditions—we all know the problems that prevent meaningful shopping around, which is of course the precursor to switching.
The CMA was accused of complacency regarding banking reform by MPs on the Treasury Select Committee, which questioned why it,
“had not done more to break the stranglehold of the current account market”.
Even the FCA thought that the CMA had not done enough on overdraft fees and decided to look at the issue itself, while Which? said that the CMA’s Retail Banking Investigation Order,
“simply allows banks to continue to set their own level of exorbitant fees”,
and called on the FCA to take action as the CMA proposals seemed,
“unlikely to transform the market”.
Regrettably, the CMA rejected the calls by Which? for customer challenge groups, leading Which? to question the CMA’s heavy reliance on switching, which puts the onus on the consumer.
Turning to energy, the CMA’s failure to intervene effectively even appears to be recognised by the Prime Minister who, over the weekend, threatened to intervene over npower’s “shocking” price rise, which will push up the energy bills of 1.4 million households by over £100 a year. I welcome the Prime Minister’s intervention, but where was the CMA when it was needed?
There is also the example of Volkswagen. American customers have been compensated some £7,000 each for buying supposedly “low-emission” cars when, in fact, Volkswagen was cheating. No compensation has been secured by the CMA for the 200,000 car owners affected. Instead, the CMA wastes time warning local authorities not to charge higher prices for high-strength alcohol, which they of course do to reduce harm. Where was the interest in public health, parents or the public in that extraordinary guidance?
Returning to where I started, what is the CMA doing about the newest story about estate agents? We read on Saturday that some estate agents are issuing home buyers with demands for hefty payments. Not only does this give rise to a glaring conflict of interest if an estate agent is working for both the buyer and the seller; it takes advantage of desperate house buyers at a vulnerable point in the purchase process.
Going forward, consumers risk being squeezed out and their interests forgotten, as the country prepares for Brexit. The CMA is meant to be their champion. Indeed, since the Government—very sadly—abolished the National Consumer Council, there is no one else to speak for consumers across all markets. I wrote to ask the CMA what it was doing in preparing for our exit, but I was referred only to a voluntary initiative, the John Vickers group, rather than getting the advice I would expect the CMA to be preparing. Since then, indeed on Friday, the CMA’s acting chief executive finally spoke on the subject—albeit in Miami rather than in answer to my letter, despite her description of its role as assisting and advising Ministers and other public bodies, which I assume includes Parliament. In her speech, she failed to indicate whether the CMA wanted to remain, even as an associate, in the European Competition Network, which is a vital source of co-operation as it comprises the European Commission and national competition authorities; or to remain in the European consumer enforcement network, known as Consumer Protection Cooperation.
When the CMA was created, I and my noble friends Lord Stevenson and Lord Whitty pushed for a consumer panel such as that of the Financial Conduct Authority and Legal Services Board, and we were right to do so. Had there been such a panel, the issues that I have raised tonight would have been raised time and again at the CMA board. It would have heard these views at a time when it could have taken them into account in its work programme.
Will the Government review whether such a consumer panel is needed—or, at the very least, dialogue, which does not require legislation—noting the view of Which? that the CMA’s inquiries appear to come from a predominantly economic background and approach, which rather excludes the consumer point of view? Indeed, in the pack helpfully prepared by the Library for today’s debate, there was virtually no commentary on the CMA’s record—testimony to the absence of proper scrutiny and accountability, particularly regarding consumers. Will the Government ensure that consumers are at the table for Brexit discussions, since there is some doubt that the CMA can represent them adequately, if at all? Will the Government publish their or the CMA’s thinking on Brexit, including on continued participation in those vital European networks, the ECN and CPC? Lastly, will the Government publish any impact assessment that they have undertaken of how to replicate current EU-wide competition activity, for the benefit of consumers?
My Lords, I thank my noble friend Lady Hayter for her very fine introduction to this debate. It is of wide interest and it is a pity that we do not have either a longer list of speakers or a larger audience to whom we could appeal—but those who are here are, I am sure, actively writing down everything that has been said, to study it for later consumption.
I do not wish to go over the ground that my noble friend covered so well, but it is interesting that she made several points that I also want to make. I will therefore cover some of the ground, but not quite from the same direction. The first question is how the existing structure perceives its responsibilities in relation to consumers, given we are told that the primary purpose of the CMA is to make sure that consumers are dealt with fairly and appropriately in the market. The truth, as my noble friend said, is that, without satisfactory representation and active dialogue with consumers, it is very difficult to see how they would be able to be in that position.
I think, however, that it goes deeper than that. She touched on something that I want to stress. The change in the way Government themselves have dealt with the consumer interest in the past 15 years is extraordinary. In 2010 there was a fully active department within BIS, as it then was, dealing with consumers’ interests and making sure that consumers were represented in all decisions taken by that business-facing department. Now there is virtually no involvement in the interests of consumers. It is entirely a producer-led department with only producer interests at heart.
It is not surprising, therefore, that the public interest, on which my noble friend spoke, is not being treated well. As she said, consumers are not constantly searching for ways in which they can maximise their situation in the market; they are living their life and getting on with it. They do not expect to have to make all these complicated trade-offs and decisions. Certainly, if they did try, they would not have the information. Some change has happened in recent years in terms of MyData, although that seems to have run out of steam, and in terms of trying to encourage switching.
Switching itself, however, is not the issue. The issue is knowledge, the ability to understand how action could work in a policy frame in order to change attitudes and approaches and action, not just sitting around waiting to switch in the hope that that will work. Her description that this was tiddlers playing with giants rang true. The asymmetry of information and the way in which big business ever since the time when Adam Smith identified it will always conspire against the consumer means that we do not have a very satisfactory or fair situation.
The second point is whether the regulatory system that has been created in recent years has consumers’ interests at heart. It does, as my noble friend said, look more like an economic regulator than it does a regulator in support of those who are being affected by decisions of business. One issue that I have raised before in your Lordships’ House is this question of what would be seen as a result in some of the cases that are being discussed. They always seem to revolve around the question of whether the market is working well in terms of price and whether the firms involved are getting a reasonable return on capital invested. It is not about whether consumers are being ripped off and whether harm is being done.
I recall an earlier regime, but I am afraid some of the thinking has moved forward to this one, in which I was involved in the film industry. At the British Film Institute we were concerned about the apparently monopolistic behaviour of the American film distributors. There was virtually no UK-based distribution and therefore no market in which they could operate. On three occasions submissions were made to the then Competition Authority about this issue. Each time it found that there was a complex monopoly operating, so there was no question that harm was being done. On each occasion, however, it said that it lacked the ability to interrogate that on behalf of consumers because the foundation Acts did not deal sufficiently with the issue concerned in the way that was wanted.
So I think that this is a long-term solution. I do not think that the Government should be picking up the blame for everything, but I think the basic, underlying point—I think this was the point of my noble friend’s original argument—was that we need to rethink what is required of the sort of market arrangements that are being set up in terms of both initial concern for consumer rights and how that can be expressed in a change of policy as we go forward.
I will take three short examples and end with a proposal. The first, as mentioned by my noble friend, is the question of secondary ticketing arrangements. She and I and others were involved in trying to change the Consumer Rights Bill that was going through Parliament in 2015. The incident that caused us the most concern was that, as is normal with many of these Bills, we were receiving lobbying from a number of people, including many of the companies involved in the secondary ticket market.
What was extraordinary about the meetings that we held with these bodies was that they were incredibly unconcerned by the prospect of the amendments that we were considering and the campaign and the coalition that we were building up across the House. We were pretty confident that we could get changes to the Consumer Rights Bill, as it then was, because we felt that we had made the arguments in Committee and we were approaching Report with a real chance of getting some change. We knew that this would also have support in the other place. They were not concerned at all. They were completely insouciant about the prospect of action being taken in Parliament, and indeed were extraordinarily challenging about some of the basic assumptions we made about how the market might be transformed. Of course, it turned out that they had reason for that. In parallel to the discussions that they were having with us, they were talking to the CMA about a series of undertakings which, when they were produced, were less burdensome on them than anything that we were proposing to do in our amendments. They knew, and we did not know, what was going on and what was going to happen as the result of the discussion.
I find that unacceptable, and I hope that when the Minister responds he might reflect on whether there is an issue here that needs a bit more ventilation about the operations of the competition authorities as we currently have them when an issue of public interest is being discussed and legislation is being considered. Although it is right and proper that the CMA, in its present constitution, is independent of government, I do not think that it is right that we should be in the position of possibly making bad law as a result of lack of knowledge and understanding of what is going on.
My second point is topical. We are considering in Committee, and are about to go to Report on, the Higher Education and Research Bill. Within that, the Government are proposing to set up a new body called the Office for Students, which they consistently, in all the debates and discussions, refer to as a regulator of higher education. When they are asked, however, to respond to amendments on that, it is very difficult to see whether it is a regulator. It is not, apparently, to be part of the Regulators’ Code. It will not have economic requirements, as do all other regulators, as required by previous Acts discussed in your Lordships’ House, to take account of growth and economic well-being. It would not have those responsibilities. It is apparently a regulator without a regulatory superstructure. It can operate in a regulatory mode but it will not have the responsibilities or, indeed, the fall-back or the ability to be queried and appealed against as a regulator.
This is complicated by the fact that, in the Consumer Rights Act 2015, the CMA is given responsibility for assessing competition issues in relation to consumers accepting places at universities. This is turning out to be quite interesting in the sense that the CMA seems to have no problem saying that some of the practices it is seeing are not acceptable. It is now apparently obtaining undertakings from a range of institutions that it has been involved with—it has done a study of about half a dozen—which will involve changes to the ways prospectuses are published and what they say. It will change the nature of conditions placed on some students when they graduate. There is quite a significant range of issues which would, I think, probably, in most people’s minds, be more appropriately applied by OfS if it was a regulator. My question to the Minister, therefore, is: is there a possibility that we might look at the boundary issues relating to when you have a generic regulator and when you have a specific sector regulator? I am not expecting a full answer today—I am not going to get one, clearly—but I think this is a matter for further debate, possibly after the Bill is finished. I register it as being an important issue.
Finally, I think my noble friend is right. I think now it is appropriate to think in terms of reviewing where we are in terms of where the public interest is in how consumers are protected. The existing bodies, as I said, seem to be broadly inhabiting an economic and not a policy world, but there does not seem to be any mechanism because there is nothing left in government that could take that forward. Even having a consumer panel, as my noble friend said, would be a step forward, but we do not have one in the CMA.
The other question is whether additional duties might be responsible. My noble friend did not mention this, but I know she bears the scars of attempts over the years to try to get mainly the financial regulators but also those in a broader range to have inserted into their main mission statement a fiduciary duty. I think that is something to be looked at. Again, we also should think about how all this is carried out in terms of bodies such as the Chartered Trading Standards Institute because, at the end of the day, you cannot have effective consumer action unless there are people checking what happens to consumers. With the cuts made in local government affecting the number and the activity of Trading Standards, there is a perfect storm there—again, something that we might return to at a later point.
My Lords, I thank the noble Baroness, Lady Hayter, for enabling me to respond to this interesting debate. Some important points were made both by the noble Baroness and by the noble Lord, Lord Stevenson.
I agree with the noble Baroness that it is important that markets work in the best interests of consumers. That issue is at the heart of what the Government believe. My right honourable friend the Prime Minister has said:
“Where companies are exploiting the failures of the market in which they operate, where consumer choice is inhibited by deliberately complex pricing structures, we must set the market right”.
The UK’s independent watchdog for competition, the Competition and Markets Authority, along with the economic regulators, is a key player in making sure that we achieve this goal.
My department is in the front line of making markets work for consumers. Empowering consumers is critical to delivering the department’s aims and objectives. The departmental vision includes a commitment to secure better outcomes for consumers by creating a more competitive business environment. I recognise that it is important that we live up to that vision. That is why, in the Autumn Statement, my right honourable friend the Chancellor announced that the Government will produce a Green Paper that will closely examine markets which are not working fairly for consumers.
The Government are working up proposals to step in to strengthen competition where markets fail and consumers may not be getting a good deal. This provides support to the CMA’s statutory objective to make markets work in the best interests of consumers. As Her Majesty’s Government we are keen to give the CMA the right resources and the right incentives to help it deliver on its statutory goal. This is why we have set the CMA the target of achieving £10 of consumer benefit for every £1 it spends.
The Government continue to challenge the CMA to deliver more for consumers. Through the Government’s strategic steer to the CMA we have made clear where we think it should focus its efforts to ensure that competition thrives for the benefit of consumers. It is important, though, that the CMA remains free to use its resources as it considers most appropriate, to get the best deal for consumers. To help achieve this goal, the CMA uses a set of prioritisation principles to decide which work it should undertake to have the biggest impact. The principles include impact and strategic significance.
Every year, the CMA consults on and publishes its annual plan, which sets out its strategic goals for the year. In the annual plan on which it has recently consulted, the CMA commits to,
“continue to prioritise work that has the greatest impact on ensuring a good deal for consumers—including the most vulnerable”.
This approach has led the CMA to tackle some key markets in recent years. It has recently concluded two of the largest and most complex market investigations that the United Kingdom has seen—into the energy and retail banking markets, as mentioned by the noble Baroness and the noble Lord. It has also undertaken important market studies into higher education and the provision of legal services, and it recently announced a new study looking at the operation of the care homes market. The CMA continues to assess mergers to make sure that they do not create market conditions which could lead to poor consumer outcomes or a lack of choice or competition. It has also upped its game on cartel and anti-trust enforcement, concluding high-profile cases—for example, in the pharmaceutical sector—and issuing substantial fines.
It is clear that this work is not a purely academic exercise and it is important that the CMA and the Government assess and measure the impact of the CMA’s work. To this end, the CMA assesses its total impact on consumers as part of its annual report. Between 2013 and 2016, the CMA demonstrated that it delivered on average £687 million-worth of benefit to consumers per year on an annual budget of £65 million, exceeding its 10:1 target. The NAO has also recently looked at the operation of the UK competition regime. It found that overall the regime is working well. However, it identified that the CMA could do more. The CMA is keen to build on its success and has committed to review the way that it conducts market investigations to ensure that they are as efficient and effective as they can be and improve the CMA’s brand. That review will conclude in the next financial year, and the CMA hopes to use it to develop this important tool to help make the greatest difference to the largest number of consumers and businesses.
The Government also take very seriously their obligation to review the operation of legislation to ensure that it is achieving its objectives in the best possible way. We consulted on a number of measures last year to improve the regime. A response will be issued in due course. That is why we are committed to review the operation of the parts of the Competition Act 1998, the Enterprise Act 2002 and the Enterprise and Regulatory Reform Act 2013 which give the CMA its powers. These reviews must be concluded by April 2019. Over this Parliament the Government will continue to keep under review whether the CMA has the right powers and whether it is using them to achieve its statutory goal.
The noble Baroness mentioned the connection between the CMA and Brexit. On 4 February the CMA’s chief executive outlined its role as the UK exits the European Union. This speech is published online and, if it would help, I can give information about where the noble Baroness can find it.
I referred to it; it was the one given in Miami, which I read with great care.
To continue with the Brexit theme, we fully take the point that the effects of Brexit on consumers must be an important part of the Government’s planning. Ministers had a consumer round table before Christmas, and there is a lot of engagement at official level.
The noble Baroness also mentioned the CMA’s energy market investigation, as did the noble Lord, Lord Stevenson. The Government are continuing to consider their response to the CMA’s report and will respond soon. Following npower’s announcement that the cost of annual dual fuel bills was to increase by 9.8% on average from 16 March, the Government repeated their commitment to getting the best deal for households. Suppliers are protected from the recent fluctuations in the wholesale energy prices in which they are buying up to two years in advance. The Government therefore expect energy companies to treat all their customers fairly, not just those who switch. We want to see suppliers come forward with clear actions to treat their customers fairly.
The noble Baroness raised the point about ensuring that the CMA undertakes its work for the benefit of consumers. The CMA is the independent, expert competition body. It is the body best placed to assess the likely impacts on competition and business behaviour. Consumer advocacy groups have a valuable and vital role to play in helping to identify markets that may not operate in the best interests of consumers. To ensure that its voice is heard, the CMA works closely with consumer advocacy groups, including Which? and Citizens Advice. The CMA is also an active member of the Consumer Protection Partnership, which brings together publicly funded consumer enforcement, advocacy and advice organisations to share, compare and interpret intelligence to identify trends in the causes of consumer detriment.
The noble Baroness also mentioned bank overdrafts being more expensive than loans. The Government will continue to engage closely with the FCA to understand the issues in this market and to ensure that it has the appropriate tools to take action where problems are identified. The FCA’s current review will examine the rest of the high-cost credit market, including overdrafts, and will enable the FCA to assess whether there is evidence of consumer detriment.
The noble Baroness, Lady Hayter, also mentioned the 2010 OFT study into house buying and selling. As well as the open letters to the sector, the CMA has produced materials tailored for SMEs to emphasise competition as an essential part of doing business and that companies can themselves be victims if their rivals or suppliers flout the law. Obviously, we must not forget the consumers in this equation.
It was suggested that the CMA’s retail banking market investigation did not address the real problems. The Government welcome the CMA’s final report on that investigation as an important step towards the goal of a highly competitive banking system. Taking forward this kind of high-impact work is exactly why we have created this authority. The noble Lord, Lord Stevenson, asked what the CMA was doing on ticketing. The CMA announced on 19 December last year that it is launching an enforcement investigation following a review of compliance with the Consumer Rights Act provisions and the undertakings it had received from the major secondary ticketing platforms.
The noble Lord, Lord Stevenson, referred to the Higher Education and Research Bill. I will, of course, pass all his comments on to my noble friend Lord Younger. He mentioned in particular the Office for Students. The Bill requires the Office for Students to have regard to the principles of the best regulatory practice. This will include taking account of requirements such as the Regulators’ Code, and the Bill requirements are consistent with the code. Once the OfS is established, the Government can decide to make it formally subject to the Regulators’ Code by making an order under the Legislative and Regulatory Reform Act but, whether it is applied formally or not, the OfS must operate under the same principles.
The noble Baroness asked a number of other questions. If she will excuse me, I shall arrange to write some answers. I shall also arrange for them to copied to the noble Lord, Lord Stevenson, and for copies to be put in the Library.
I reassure the House that the CMA has consistently acted in line with the statutory duty to improve competition for the benefit of consumers. The CMA’s published prioritisation principles put consumer impact at the centre of its decision-making about the way that it uses its resources. While it is right that the CMA is independent of government, it is also right that it is held accountable for the way that it uses public money. The CMA routinely assesses its competition and consumer work to establish its impact on consumers. It publishes an annual impact assessment, judging its performance against its statutory duty and against the target set by the Government to realise £10 of consumer benefit for every £1 spent.
The NAO has also recently published a report into the operation of the UK competition regime, which found that, in the most part, the regime operates well. The CMA is now assessing its market investigation processes to see whether it can build on its current, effective approach to competition issues.
Finally, the CMA’s powers to investigate mergers and markets will be reviewed before the end of March 2019 to assess whether they are appropriate and are achieving their aims and objectives.
Digital Economy Bill
Committee (4th Day) (Continued)
229: After Clause 84, insert the following new Clause—
“Original programmes for children and young people
After section 289 of the Communications Act 2003 (regional matters in the public teletext service) insert— “289A Original programmes for children and young people(1) The regulatory regime for every licensed public service channel must include the conditions that OFCOM consider appropriate for securing—(a) that the programmes included in the channel include high quality original programmes for children and young people;(b) that the programmes for children and young people included in the service are of a suitable range;(c) that the programmes for children and young people so included are broadcast for viewing at appropriate times.(2) The regulatory regime must also include conditions that OFCOM consider appropriate for securing that, in each year—(a) the time allocated to the broadcasting of programmes for children included in the service, and(b) the time allocated to the broadcasting of programmes for young people so included,constitute no less than what appears to OFCOM to be an appropriate proportion of the time allocated to the broadcasting of all the programmes included in the channel.(3) Before determining for the purposes of this section the proportionate time to be allocated to the broadcasting of programmes for children and young people, OFCOM must consult the provider of the channel, or, as the case may be, the person who is proposing to provide it.(4) The requirement to consult is satisfied, in the case of the imposition of a condition by way of a variation of a license, by compliance with section 3(4)(b) of the Broadcasting Act 1990 (licences under Part I).””
My Lords, I will speak to my Amendment 229, which aims to move children’s content on public service broadcasting from tier 3 back to tier 2. The amendment is also in the names of my noble friend Lady Bonham-Carter and the noble Baroness, Lady Jones. I declare an interest as per the register.
My amendment seeks to underline the fact that we are at a pivotal point in the future of the children’s production industry and quality UK-produced content for our children. This is without doubt the best opportunity in a generation to make a legislative change that could revive and strengthen a successful industry that not only nurtures our nation’s youngsters but projects Britain around the world.
Yes, we have over 30 dedicated children’s channels, but the majority do not show UK-produced programmes. They usually show acquired animated cartoons, made abroad. This means that our UK children’s production industry is in decline. Thank goodness for the BBC, with its successful CBeebies and CBBC channels. However, we cannot expect the BBC to bear the burden of producing the majority of British-made children’s programming. Some might point out that there has been a slight increase in the investment from commercial broadcasters for children’s productions, but it is just a drop in the ocean considering the large profits they have made over the past year.
To be clear, this amendment is not relevant to all commercial broadcasters, such as Disney, Nickelodeon or Cartoon Network. It is relevant only to public service broadcasters, especially commercial broadcasters, which each have been allocated PSB status and the benefits that go with that. Therefore, public service broadcasters should be producing content for everyone, and that includes children.
The amendment I have introduced has cross-party support and is timely. It aims to do two things: first, to give Ofcom the ability to require public service broadcasters to commission more original British-made Nickelodeon children’s content in the future; and, secondly, to give flexibility to the commercial PSBs, in consultation with Ofcom, around the level of their future investment in children’s content. This is a common- sense approach that could easily be embraced.
As I have said many times in this House, PSB investment, in particular from commercial PSBs, has reduced drastically over the past 10 years—by an overwhelming 93% since 2003. This decline started when the Communications Act 2003 reversed the Ofcom requirement for PSBs to commission a certain level of children’s content, by moving it from tier 2 to tier 3. Recent tax reliefs for animation and children’s live action content have provided a welcome boost for the sector, but they have not brought the commercial PSBs back to the table, which was expected. The Government’s pilot contestable fund over the next three years will work only if PSBs are required to commission more content.
The Save Kids’ Content UK campaign, supported by the whole industry and PACT, is very clear that requiring PSBs to commission a certain level of content is the only way to secure the future of this sector and Great British content in the future. All other options proposed are merely a short-term fix. Ofcom has repeatedly reported that it does not have the legislative tools to change the current situation. It pointed out during its last PSB review that there is a substantive risk that PSB requirements in this area will not be met in the future for our children. This is so distressing that it breaks my heart.
I understand that we have to be realistic and not demand that the commercial PSBs commission or compete with what the BBC is already doing. We know that children are viewing content in all sorts of ways, but the important word here is “content”. No matter how children view content, it must be relevant and reflect their culture and surroundings. Having said that, a recent Ofcom review showed that television viewing was still by far the most popular way of watching content.
It is also important to remember that, although investment in original British programming for children is in serious decline, television still remains a huge influence on young people today. According to research by the London School of Economics, 96% of children aged five to 15 use a TV set to watch television and 87% of viewing among 14 to 15 year-olds is on broadcast television. So it is absolutely vital that children have access to UK-made content that is not only entertaining and informative but also that our children can identify with.
As I said before, my amendment is a common-sense approach to the problem. The key element is that broadcasters will be consulted on the level of investment appropriate to each channel. It is definitely not a quota system, nor does it only apply to commercial PSBs; it also applies to the BBC, which already has good levels of investment, but the amendment would ensure that this investment is maintained into the future.
ITV has made recent investments, but what happens if it gets taken over? There is no legislation in place to ensure that new owners should provide any adequate children’s productions at all. Channel 4 has specific obligations for older children. Because of successful lobbying, it has recently committed to invest in children’s. Their production of “We’re Going on a Bear Hunt” was one of the most watched programmes over Christmas, which shows that there is an appetite for that type of content which, I am sure, will be sold worldwide. Channel 5 has “milkshake!”, an established, successful strand for pre-school, but it spends very little on new, original UK content. Most of its programmes are acquired.
All of the commercial PSBs do a bit, but there are areas where children’s provision is lacking, and they all need to do more to serve our children’s cultural appetites. The latest figures from Ofcom show that UK children’s programming decreased yet again in both spend and output in 2015. Spend on first-run UK-originated children’s programming stood at £77 million in 2015, a year-on-year decrease of 13% in real terms. This cannot go on indefinitely.
We understand that PSBs may well have concerns about the imposition of requirements or how the amendment is able to accommodate the changing viewing habits in this digital world. This is why the flexibility that has been built into this amendment is crucial. The amendment strikes a balance between giving Ofcom the muscle to require children’s content from PSBs, which it does not have at the moment, and allowing the level of investment to be determined through consultation between Ofcom and each broadcaster, and coming to a reasonable agreement. The amendment will require a variation of each broadcaster’s licence.
There is also flexibility around the genres that Ofcom could choose to include in any requirements. The amendment refers to a “suitable range” of content. This can be tailored appropriately to each channel and would take into account content broadcast on a main channel, on a subsidiary channel or online. Surely this should allay any fears or doubts. This amendment has deliberately built in the flexibility to allow broadcasters to use digital and interactive content across all platforms. It is not intended to dictate how, where or what children should watch. It is about ensuring that there is a range of quality British content available on all platforms.
Some may say, “How do we know Ofcom will decide what is reasonable?”. I was on the advisory board of Ofcom for three years, and I know from experience that Ofcom has always erred on the side of caution when it comes to avoiding anything that would damage the industry. Over the last 14 years of its history, its reputation has been exemplary.
As I mentioned earlier, the Government have announced the introduction of a contestable fund, and children’s programming will be in line to receive some of the funding. At the moment the fund is time-limited to three years. I strongly believe that my amendment could ensure that that money is used in the most productive and constructive way. The fund could be used to develop programme ideas for children which the PSBs could then commission, having had all the development work funded.
The UK children’s production sector has always had a strong international presence, which adds to the UK’s economy, and it is proud of that. At the moment, however, our UK children’s production sector is facing many challenges because the market for producing children’s UK original content is shrinking rapidly, while the demand for quality children’s programmes remain vigorous. There are many opportunities for global partnerships through co-productions, so we desperately need commissions for those partnerships to work. It would be short-sighted to cut the cord of a continuing British success story, but more importantly we need UK creative original content to be produced to influence our children’s imagination and thinking as well as their emotional, mental and inspirational well-being. We owe it to them and must not let them down, so we must use this opportunity to provide the means to fulfil their needs.
This is why my amendment is asking the Government to take another look at the issues and change legislation to secure the long-term future and sustainability of the UK children’s content production sector. I firmly believe that only a change to primary legislation will give Ofcom the necessary tools to require commercial PSBs to provide British-made children’s programming and give PSBs the opportunity to show their commitment to the nation’s children by saving UK kids production content. We must not let this great opportunity fall by the wayside. The future of Great British content for our children that will last long into the future is now in the hands of the Government. I beg to move.
My Lords, I support my noble friend Lady Benjamin. It is clearly of paramount importance that our children have access to British-made television content. As I mentioned before when talking about the electronic programme guide—and I am afraid the Minister will have to appreciate that the issue is not going away—easy access is important. As my noble friend said, children need to see programmes that reflect their lives and our diverse, vibrant nation. It is my experience that children do actually watch television, certainly the ones I know. That is one reason why they love their step-grandmother, because she encourages it. Importantly, as my noble friend mentioned, flexibility is built into this amendment. It includes consultation with Ofcom about how it should be implemented in practice and around genres. It is important that this sector is not just left for the BBC to carry.
The Minister recently responded to a Liberal Democrat debate on the importance of the creative industries. That is another reason why the children’s independent television sector should be encouraged. We have only to look at the Harry Potter films to see what the children’s market can contribute to our economy and to Britain’s soft power. Let us support this sector and unlock its great potential and, in particular, not break my noble friend’s heart.
My Lords, I support Amendment 229 in the name of the noble Baroness, Lady Benjamin, who I congratulate on formulating the amendment and for moving it so comprehensively with her usual chutzpah. I declare an interest on two levels, first as the Opposition Front-Bench spokesman on children and families, although I am clearly not speaking in that role today; and secondly, I have a more direct interest as the parent of a five year-old.
It is a source of both regret and concern that there is a dearth of UK original content in children’s television. Less than 1% of television hours available for UK children are original, first-run British programming. I very much doubt that the average parent would appreciate that, and I suspect that they would be both surprised and disappointed when told. I know that I certainly was. While Ofcom requires public service broadcasters to offer a minimum number of hours of original productions—70% for CBBC, 80% for CBeebies—they can include, and invariably for the most part consist of, repeats and spin-offs. Evidence presented last week on Welsh broadcasting to the Welsh Affairs Committee in another place suggested that the effects were particularly felt by regional public service broadcasters, where the number of repeats broadcast has increased exponentially since the Communications Act 2003. The example was given of the Welsh language channel S4C, where the share of broadcasts comprising repeats has risen to 57%. That decrease in original content threatens seriously to impoverish UK children’s cultural exposure, in particular to local and regional identities and experiences to which they can relate.
Reduced funding has been both a cause and an effect of that. The latest figures from Ofcom show that UK children’s programming decreased again, as the noble Baroness, Lady Benjamin, said, in both spend and output in 2015, the last year for which figures are available. Spend on first-run UK-originated children’s programmes showed a year-on-year decrease of 13% in real terms. That is a real worry. Recent tax reliefs for animation and children’s live-action content have provided a welcome boost for the sector. However, they do not ultimately increase the size of the funding pot available or incentivise the commercial public service broadcasters to return. The Government’s pilot £60 million contestable fund over the next three years will work only if public service broadcasters are compelled to commission more content, but of course the fund is not just restricted to children’s broadcasting; religious and other cultural programming is covered by it as well.
An increasing reliance on licensing revenue means that quality is not being maintained, because it has reduced in importance. Licensing plays a significant part in the commissioning of new children’s shows because so little money comes from broadcasters. The global TV brand licensing industry is reckoned to be worth around $190 billion and the ability of a programme to generate merchandise in the form of DVDs, books, branded clothes and toys now tends to determine its future. That is a concern because it creates a financial incentive to tick all the right boxes to produce a brand that can be easily licensed. As we all know from experience, box-ticking is rarely a positive driver, in any situation. Children are now spending more time online than in front of the television. My son increasingly wants access to the iPad to watch varying content of variable quality on YouTube. Fortunately, his mother is well qualified to ensure that he does so safely, but for his generation, watching a small screen is already second nature.
Although television remains a huge influence on young people, children’s programmes are competing not only with other genres for space on public service broadcasting but with online content for children’s attention. An Ofcom report in 2015 came to that conclusion, and unsurprisingly, online streaming providers such as Netflix are exploiting this market. While support of independent children’s production by online service providers is to be encouraged, public service broadcasters have a responsibility to carry at least equal weight in the provision of enriching children’s programming.
Such original children’s programming has the potential to be a thriving industry and an exporter of high-quality British product. That product in particular is digital, interactive and produces some of the most innovative content, generating huge revenues overseas with many iconic programmes. “Teletubbies”, which first aired on the BBC in 1997, has been shown in 120 countries and in 45 different languages. It generated a reported £200 million in revenue and some £50 million in merchandising. Those are impressive figures by any standard. I have moved through the age-appropriate levels with my son and have enjoyed almost as much as he has CBeebies productions such as “In the Night Garden”, “Show Me Show Me”, “64 Zoo Lane”, “Charlie and Lola”, “Grandpa in My Pocket”, with the inimitable James Bolam, “Octonauts”, “Katie Morag” and “Nina and the Neurons”. Those and many more children’s productions combine entertainment, play and learning; surely one of the fundamental purposes of public service broadcasting. They do so in a manner unimaginable when I watched “Andy Pandy” and “The Flower Pot Men” with my mother a very long time ago.
In the uncertainty of the post-EU world, maintaining and even increasing this strong international presence will be vital to supporting the UK’s economy and cultural currency. As the noble Baroness, Lady Benjamin, said, between 2003 and 2013 commercial public service broadcasting participation plummeted by 93%. Without a vibrant market the industry is in danger of dying out, and without that industry the nation’s children will not grow up with the programmes that the adult population took for granted. That is why, last September, I was one of the signatories to a letter to the Secretary of State for Culture, Media and Sport on behalf of Save Kids’ Content UK, setting out the current position on the decline of the independent children’s TV production industry in the UK and asking what the Government would do to support it. I regret to say that it took five weeks for a reply to arrive, and from a junior Minister at that, which told the sector nothing it did not already know, and concluded with the patronising words:
“Thank you for taking the time to share your views on this issue”.
However, that letter was a cry for help, not a sharing of views. To be dismissed in such a manner was unacceptable. The Government need first of all to understand the nature of the problem—which, as that letter demonstrates, is a position at which they have not yet arrived—and then they need to work with the sector to seek solutions. Amendment 229 would be a first step and I hope that the Minister will take the opportunity offered by this short debate to begin the process, with a sympathetic response and a commitment to return to the issue on Report with a suitable amendment.
My Lords, I am in the awkward position of being unable to give this my full support, which I very much regret. I am now a grandparent, with four grandchildren who watch children’s programming avidly. Inevitably, I watch it with them; I greatly value the British content and want it increased. The question is, how do we do that? We cannot in fairness ask ITV to do children’s programming while at the same time this Parliament has legislated that no advertising in children’s programming will be allowed. A service that depends on advertising for its funding has been denied funding to do the sort of programming somebody wants to do—so we have got to find another way round it.
That is why the Government have come up with the idea of the contestable fund. I would agree that this is a higher priority than local television, for example. If I were in the Government, I would allocate all the contestable fund to children’s programming. It would then be possible, through contestable funding, to get some programmes made. The difficulty then would be to find a platform that will air them, given that—as has been rightly recognised—nowadays nobody puts children’s programming on their main channel. The BBC does not do it; it is not on BBC1 or BBC2, but CBeebies. If ITV were to do it, it would have to be on CITV. The question is how one gets people willingly to commission children’s programming that is not going to make them any money, unless it is an absolute winner. If there were “Teletubbies” round every corner, everybody would be making children’s programmes every day. The fact is, though, that it is extremely difficult to get right: “Teletubbies” is 20 years old. “In the Night Garden” is wonderful, but children grow out of that quite quickly. Children are quite demanding. It becomes almost a rite of passage; they are almost proud of growing out of things. “That’s for little people; I’m a big boy now”.
We have got to find some way of helping the sector to get the exposure on British television and then launch it internationally. I think one idea might be to invite ITV and Channel 4 to have a say in the selection of the recipients of the contestable fund. If they had helped to commission the programme they would then be in a less strong position to refuse to accept it once it was completed. That might be a way forward. I find it very difficult to find another way, because ITV faces more competition now than it did in 2003, when Ofcom took the decision that it was reasonable to downgrade children’s programming from tier 2 to tier 3. The position has not improved since then. Netflix, Amazon and so on are all producing programmes in a way that was not even thought of in 2003, so the position is even more difficult. We have got to find a way of getting enlightened self-interest to lead broadcasters to do children’s programming and screen it. I think that the contestable fund is a way forward.
My Lords, I am very pleased to speak in support of Amendment 229, to which I have added my name, which aims to secure the future and sustainability of original TV children’s programmes. I pay tribute to the campaign Save Kids’ Content for its diligence in championing this issue over a long period. I am sure it will continue to do so. I also pay tribute to the work of the noble Baroness, Lady Benjamin, who has been a great figurehead for this campaign. As the noble Baroness and others have said, it is incredibly frustrating that the quantity and quality of children’s programmes have suffered such a rapid decline over the last 15 years. It feels as though it is the result of policy neglect rather than a deliberate plan to let the provision deteriorate, but whatever the reason, the outcome is still the same. As we have heard, there has been a reduction in spending of more than 50% on children’s programmes, and a drop of 93% by commercial public service broadcasters. As the noble Baroness said, the heroic exception is the BBC, whose investment in CBBC and CBeebies has provided a crucial creative flow for children’s entertainment. But it cannot be right that the responsibility in the longer term remains on the BBC’s shoulders. Ofcom itself recognised in its 2015 review of public service broadcasting that there is an issue:
“In children’s content, there is very limited provision of non-animation programming beyond the BBC”,
and went on to say that this represented a substantial risk to Parliament’s objective of strengthening public service broadcasting to this group. I would argue that we have a responsibility as Parliament to address this shortcoming.
We should all care about what programmes are available for children to watch. They have just as much right as adults to expect high-quality entertainment and the knowledge that will enrich and inspire their lives. In a sense, what people watch as children develops the habits and interests they will have as they move on to programmes and entertainment for teenagers and adults. Our great expectation that public service broadcasters will provide very good quality programming for adults is wasted if we do not provide for the next generation as well, so that it can recognise it and create that demand for it. Children also have as much right to see UK-made content.
We all squirm when we see reality TV programmes in which children have been somehow dumped in front of an endless diet of American cartoons, but we are complicit in making that a reality. It does not need to be like this and our amendment is a practical and balanced approach to reversing the decline. It would introduce powers for Ofcom to set quotas for broadcasting original children’s programmes as a condition of a PSB licence, and it would require PSBs to report to Ofcom annually on how they are meeting those targets.
As has been said, inherent in the proposals is flexibility for Ofcom and the PSBs to agree how the targets can best be met. This would allow each PSB to take a separate approach to delivering the expanded children’s programme output, including access to the contestable fund. I agree with my noble friend Lord Gordon that the money from local TV could be put to much better use by making quality children’s programmes, so perhaps that is one of the factors that could be put in the mix.
Only an initiative on this scale will reverse the decline. We have in the UK the programme makers with the skills and the creativity to produce programmes and build an expanded children’s TV offer. Moreover, the demand is there because each new generation brings with it its own demands, so I do not agree with my noble friend that people pass through and that is the end of the story. New generations come forward and we want them to be able to recognise what quality programming really is, and we will do that only if we reach out to them when they are children.
It was never the intention of Parliament to let children’s TV fall into such disrepair, and this is our chance to do something about it. I hope the Minister will listen to the strong case that has been put forward and that he will see the proportionality of our proposals. I hope also that he will feel able to support the amendment and to work with us to make the changes we are proposing a reality.
My Lords, Amendment 229 addresses the important issue of children’s television, something that I know the House and this Committee rightly feel strongly about. I thank noble Lords for their speeches, in particular the noble Lord, Lord Gordon of Strathblane, for pointing out some of the problems, particularly that of advertising revenue for commercial PSBs. Children’s programming has been and remains a very important aspect of the UK’s public service broadcasting system. The provision of a range of high-quality children’s programming must be a priority for public service broadcasting. Ofcom has an oversight role for the system as a whole, and indeed has found that more than eight in 10 people think that the PSB system,
“provides a wide range of high quality and UK made programmes for children”.
The BBC, as has been mentioned by many noble Lords, remains a particularly strong provider of UK-originated children’s content. That is why the new BBC charter and framework agreement make it clear that Ofcom must have particular regard to setting requirements for key public service genres like children’s programming. But as many parents will know, children now consume content via an increasing range of platforms and providers. Ofcom has found that children are watching 25% less broadcast TV than they did five years ago. The Government therefore want to support the provision and plurality of children’s content.
As the noble Baroness, Lady Benjamin, has reminded us, we are going to pilot a contestable fund for underserved public service content, with children’s content a potential key area. We expect to see the commercial public service broadcasters work closely with the contestable fund and commission more children’s content. If this does not happen, the Government will be prepared to consider whether further action is needed. It is a pilot and we will have to see where it goes. Beyond that, the Government have also extended tax relief for animation and high-end TV programmes to UK children’s programmes because, as the noble Baroness, Lady Bonham-Carter, pointed out, we recognise the tremendous benefit to the economy of the creative industries. There are also other positive developments led by the market. An example which has been mentioned is that this year, Netflix will make its first British children’s programmes. I therefore believe that additional regulation in such a fast-developing area at this time is not in the interests of a diverse and vibrant children’s TV landscape in the UK.
With that explanation, I hope the noble Baroness feels able to withdraw her amendment.
My Lords, I thank the Minister for his response. I also thank all noble Lords who have supported this amendment, or partly supported it. I am especially grateful to my noble friend Lady Bonham-Carter and the noble Baroness, Lady Jones, for putting their names to the amendment and supporting it so strongly. However, I am rather disappointed with the line the Minister has taken, as this is an opportunity to put in place a robust piece of legislation that would guarantee the future of original content made in Britain, not just on the BBC but on commercial PSBs. They are doing their bit, yes; but I want to see that being sustainable and this amendment would ensure that that happens.
We do not need more cartoons and imported programmes, which is what the majority of commercial broadcasters are offering. What we need, what the children need, are quality, UK-produced programmes. Children’s productions have always made a huge contribution to the UK economy from their international sales. We need that to continue. We are not looking for huge amounts of investment from the commercial PSBs, just what the broadcasters feel, after discussion, that they can afford. They are doing so; I want them to continue to feel that they can afford to invest in children. I want a guarantee from them, but there is no guarantee—there is no framework for them to guarantee such a thing. As I said, Ofcom often finds itself in an impossible position on this issue and can sometimes look ineffective and inadequate, because even though it proves through research that more provision for children is needed from commercial PSBs, they cannot do anything about it, as the legislation prevents them doing so.
Throughout the passage of the Bill we have talked about safeguarding and protection. Well, this amendment is about safeguarding and protecting our children’s production sector and ensuring that it continues. The sentiments behind the amendment, which I believe are sensible and reasonable, are transparency and trust—it was in that spirit that I kept the Minister regularly informed. I also engaged with Ofcom and the commercial PSBs to discuss my amendment and I have been waiting anxiously to see how the Government would respond. I am rather disappointed with what the Minister has just said.
We do not know who might own public service companies in the near future or whether they will feel obliged to provide British content for our children. Therefore, I feel that we cannot and must not leave anything to chance. Also we cannot afford to waste precious time waiting to see how the market beds in and develops, as the Minister said, because it is highly unlikely that there will be another opportunity like this to return PSB children’s programming to tier 2 where it belongs and secure homemade programming for our children in the foreseeable future, rather than leave it languishing in tier 3 where we have seen it continue to decline over the past 10 years.
Throughout my 40 years working in children’s television I have personally witnessed the lasting legacy that British-made programmes have had on the nation’s children, who discovered themselves and their world. They knew they were loved, they felt special, because the programmes reflected their lives. We owe it to the generations to come to feel and experience that same thing. I am passionate and determined not to abandon our nation’s children and I hope that the Minister and the Government will walk that path with me by rethinking and reconsidering my amendment in more depth, as I cannot give an undertaking that we will not return to this issue on Report. However, at this stage, with a heavy heart, I beg leave to withdraw the amendment.
Amendment 229 withdrawn.
229ZA: After Clause 84, insert the following new Clause—
“Mergers: specified considerations for mergers involving broadcasting media enterprises
(1) Section 58 of the Enterprise Act 2002 (specified considerations) is amended as follows.(2) After section (2C) insert—“(2D) The need for those who, as a result of a merger, have increased control of media enterprises (excluding newspaper enterprises) which require a broadcasting licence, under section 3(3) of the Broadcasting Act 1990 or the Broadcasting Act 1996, to be fit and proper to hold such a licence having regard in particular to—(a) the extent of any criminal wrongdoing that has taken place by companies and other organisations under their control; and(b) the extent of any failures of corporate governance and management in such companies and organisations.(2E) The need for there to be, in the governance arrangements of any relevant media enterprise (excluding newspaper enterprises), which provides news services, sufficient safeguards for unrestricted editorial freedom in the provision of full and accurate news services by such media enterprises.(2F) The need to prevent a media enterprise (excluding a newspaper enterprise) from—(a) exercising undue influence over distribution of, and access to, rights, talent and other forms of cultural expression;(b) promoting its own business interests through its editorial outlets, to the detriment of competitors where this is against the wider public interest;(c) exercising undue pressure in the regulatory and political environment, to the detriment of competitors where this is against the wider public interest.”
My Lords, in speaking to the two amendments that stand in my name, I should first declare my interest both as a content owner and as president of the Film Distributors’ Association. A number of factors encourage me to take up what is in effect the unfinished business of 15 years ago, when I was closely involved in the 2003 Communications Bill. The most recent was something that the noble Baroness, Lady Warsi, said on the “Today” programme 10 days ago. In response to a question regarding the ramifications of the immigration controversy raging across the Atlantic, she said:
“It all comes down to the type of country we want to live in”.
Of course, the noble Baroness was right. Pretty well every decision we make in this House sooner or later comes down to the type of country we want to live in. What we have just heard from the noble Baroness, Lady Benjamin, is about precisely that. What kind of country do we want to live in, and how far are we prepared to push ourselves to get there?
As I am sure the noble Baroness, Lady Buscombe, will confirm, this was repeatedly discussed during the passage of what became the Communications Act 2003. At that time we were by turns both amused and concerned by the antics of the then Italian Prime Minister Silvio Berlusconi and his attempts to muzzle, or better still own, the Italian media. This House was at one in agreeing that the provision of a free, fair and plural media ecology, in all its many and varied forms, was fundamental to the health of any democracy worthy of the name.
As a result, and after a great deal of debate, the general duties of Ofcom in carrying out its functions were finally legislated in this way:
“It shall be the principal duty of OFCOM, in carrying out their functions—
(a) to further the interests of citizens in relation to communications matters; and
(b) to further the interests of consumers in relevant markets, where appropriate by promoting competition.
The wording of those two general duties, and the order in which they fall, along with the public interest test that accompanied them, were hard fought for, and they were won by an overwhelming vote on the Floor of this House—two-thirds to one-third—against the wishes of both Front Benches.
Fifteen years later, we find ourselves looking anxiously across the Atlantic at a new and democratically elected kind of Berlusconi on stilts—and we are jolted into reminding ourselves how very much ownership of both the media and the message matters. The true architect of the public interest test was the noble Lord, Lord Crickhowell, and the engineer who created the double lock that gave it teeth was the now noble Lord, Lord Lansley.
As the House may know, a public interest intervention notice is issued by the Secretary of State, and specifies a media interest. The grounds for referral are listed in Section 58 of the Enterprise Act 2002: the media interest grounds for referral are listed in Section 58 (2A) to (2C). The Secretary of State may specify further grounds for referral by laying an order before Parliament. Ofcom then carries out a report based on the grounds specified by the Secretary of State.
That is what is supposed to happen—but, as we discovered during the misadventures of the then Secretary of State, Jeremy Hunt, there is far too much wriggle room, and a lack of clarity as to the precise grounds on which a referral is based. In this respect, I supplied the Minister with a copy of the five-page letter I sent to Jeremy Hunt on 11 March 2011, setting out the reasons why I believe that the UILs he proposed to set in place prior to waving through the then News Corp—now 21st Century Fox—bid for what was then called BskyB were hopelessly inadequate. Milly Dowler’s death made any response to that letter wholly unnecessary.
Following a meeting that the present Secretary of State kindly agreed to, I recently sent her a copy of that letter, for the consideration of her officials. In my note to her I included a few additional reasons why I felt reference to Ofcom was the only sensible way in which any new bid for Sky could be transparently dealt with. Given that the Government have the world’s most highly regarded media regulator at their service, it is extremely hard to see why they would not be eager to distance themselves from the well-documented suspicions of favours given and favours returned that now, sadly, dog their predecessors.
The purpose of my amendments is to buttress the referral process by adding further and easily understood grounds directly to the Bill. Specifically, they would add a fit and proper persons test, which, somewhat bizarrely, exists only as an ongoing test for licence holders, not bidders, and is thus to be conducted only after the fact of any merger. I say “bizarrely” because I ask: how sensible does it seem to judge the ongoing fitness and propriety of a licence to a higher standard than the one sought at entry? Possibly when she comes to answer the Minister might help me understand what I see as an extraordinary anomaly.
The amendments also suggest an additional test to underpin the safeguards of editorial independence to ensure against the slow “Foxification” of the at present altogether excellent Sky News service. Anyone who has ever read Sir Harold Evans’ chilling book Good Times, Bad Times will know only too well what can happen to the overeager and gullible politician who seeks a simple answer to a complex issue. Fox News may have been a significant success in the United States, but I am certain that few in this House would wish to see the results of that particular success replicated in this country.
We also suggest a slightly wider plurality test—one that takes account of and acknowledges the impact of rapidly changing market power in the acquisition of content and its consequential distorting effect on the advertising marketplace. The second of these amendments would add greater clarity to Ofcom’s existing and ongoing “fit and proper” test for licence holders. It does so by using the language of the terms of reference of Leveson 2, drafted by the previous Prime Minister. Such an amendment would make clear that, for the bid to go through and for Ofcom effectively to carry out its scrutiny of the fitness and propriety of the ownership of Sky, Leveson 2 should go ahead without delay.
As we have all discovered to our cost, these are very serious issues, which, in their impact on every aspect of public life, could have enormous and unexpected consequences. I cannot have been the only person on these Benches who experienced a brief flutter of hope when, following the nightmarish divisions of Brexit, on the morning of 13 July I heard the newly installed Prime Minister say:
“The Government I lead will be driven not by the interests of the privileged few, but by yours … When we take the big calls, we’ll think not of the powerful, but you. When we pass new laws, we’ll listen not to the mighty but to you. When it comes to taxes, we’ll prioritise not the wealthy, but you. When it comes to opportunity, we won’t entrench the advantages of the fortunate few”.
Her Government’s first pledge to this nation was not to be at the beck and call of the powerful, the mighty or the wealthy, or to entrench the advantages of the fortunate.
I want with all my heart to believe that the Prime Minister believed what she said that day and that she and her colleagues in government are prepared to live by it. When she used the words “you” and “yours”, I assumed that she meant the public—those citizens referred to on the very first line of Ofcom’s duties. By accepting these amendments—or, far better still, coming back with wording that clarifies while offering the same intent—the Government will prove that, where media ownership is concerned, they have no intention of following the dismal example of so many of their predecessors, including, I am sad to say, the Government of whom I played a very small part, who entrenched the advantages of the fortunate few. Should they fail to do so, they will have fallen at the very first hurdle they set themselves, and possibly never recover the public’s trust. I beg to move.
My Lords, my name is also attached to these amendments, and I support the noble Lord, Lord Puttnam. They add the necessary extra scrutiny needed for media mergers and ensure that Ofcom’s fit and proper test is effectively applied.
These amendments specify further grounds for the Secretary of State to refer media mergers to Ofcom. As the noble Lord, Lord Puttnam, mentioned, the existing plurality safeguards are no longer adequate. They do not deal with market dominance and they are not sufficient for protecting editorial independence of media outlets. It is vital for the media environment that no company possesses disproportionate power to influence public opinion or the political and policy-making process. Plurality safeguards are an essential part of protecting the public and decision-makers from media organisations which are allowed to expand without proper scrutiny.
Then there is the matter of Ofcom’s fit and proper test. As many noble Lords will know, Ofcom must supply a test of fitness and propriety to owners of broadcast licences. At the moment, this test is not spelled out. What we propose would add definition to the test, using the recommendations of Leveson 2. Taking the current Sky-Fox bid as an example, I believe that this would ensure that the present chief executive of 21st Century Fox, James Murdoch, would undergo proper scrutiny if he were to retain a senior position at Sky.
I echo the noble Lord, Lord Puttnam, in one of the letters to which he referred. How we deal with the concentration of power decides the kind of country we are. I, too, understood that that is what Theresa May said when she became Prime Minister. Now it is for her Government to follow the logic, evidence and facts, and accept these amendments. They do not bind the Government; they simply strengthen the merger and plurality regime already in place. They put appropriate and proportionate power in the hands of an independent regulator, Ofcom, in order to protect the interests of citizens and consumers.
To quote my friend, Sir Vince Cable:
“The public interest centres on plurality and fitness”.
These are beneficial proposals which have been carefully agreed through cross-party consideration. I hope that the Minister will recognise this and respond positively.
My Lords, I support this amendment. I remember well—and the noble Lord, Lord Puttnam has reminded us of it—that, in 2003, we had quite dramatic discussions in your Lordships’ House about the dual duties of Ofcom to the citizen and to the consumer. There was a bit of a wobble after Ofcom was set up, but since then it has properly seen itself as defending these two separate interests and not, as was initially suggested, merging them into the interests of a fictitious character called the citizen-consumer. That was an unfortunate, but brief, episode.
I believe the noble Lord, Lord Puttnam, hit the nail on the head when he said that this pair of amendments is highly congruent with the Government’s policy. Not merely has the Prime Minister spoken about acting in the interests of “you rather than the few”, she has also started to refer to “issues of corporate governance”. This is basically what this is about—the standards that we think are relevant in corporate governance.
This has been a very unhappy decade in which there have been failures of corporate governance in many sectors. I am a member of the Banking Standards Board, looking at the culture of the banks. I read every day about this culture and realise how vital is the requirement that only those who have passed fit and proper person tests come into positions of leadership and influence in the banking sector. I realise how important this also is for the media sector—indeed, it is perhaps more important.
As we have seen clearly in the last few weeks, with the presidential campaign in the United States, the media have changed hugely in this decade. We can get spiralling misinformation that is extremely difficult to stem once it gets a hold in social media; once it spreads with the rapidity which the greediest of proprietors could never have imagined. In this world, more than ever, serious corporate governance has to take account of the ethics, as well as the law, of the fitness and propriety of leadership, as well as the adequacy of regulation. I support the proposal that Ofcom get a clear grip on the fitness and propriety of those who lead the broadcasting industries.
My Lords, this has been a very important debate on a very big issue. Its sharpness has been reinforced by the fact that we are currently in a process involving all the issues that have been referred to. Obviously, this will be reflected in the fact that the response will not be made by a Minister in the department which might have to deal with some of the results of the current proposals for a merger, and we respect that and understand the reasons for that.
The wonderful speech by my noble friend Lord Puttnam, which took us back to the origins of the Ofcom regime that we now have and reflected on points along the way, including the dark shadows cast by the events of 2011, gave a texture to this that makes it much more important. The noble Baroness, Lady O’Neill, spoke about the need to think about how all this interfaces into descriptions of the sort of country we want to live in and the sort of society that we can enjoy. The necessary handles on both policy and the implementation of that policy are very important.
At heart, the amendments are simple. They draw out in more detail and focus on issues which have been live ever since they were first introduced. Indeed, I recall discussions in your Lordships’ House on two Bills which dealt with issues that bore on this and for which we had debates of this type. That does not mean to say that this is ground that no longer needs to be tilled. It does, because in thinking about this we have to recognise some of the issues that have already surfaced in Committee today and throughout the Bill—that when we are talking about the media, particularly but not restricted to the digital media, we have to think very carefully about the pace of change and the adjustments that have to be made to the policy framework in order to achieve what will be proportionate and appropriate regulatory functions later on down the line.
The good thing about the amendments is that they make us think about the words that were used, which seemed appropriate at the time, in relation to the twin requirements: that we look at plurality in relation to media but also at control. If this were a simple case of looking at how a monopoly might influence outcomes and how consumers are treated, it would not be necessary, perhaps, to delve so deeply. The issues that are currently addressed by the CMA, for instance, are largely economic. They deal with prices. They deal with the way in which consumers are treated, but they are basically around whether or not the price has been artificially moved in order to favour the producer against the citizen. In that sense, we do not need to think too hard about some of the issues, although we can regret them, as we did in the debate in the dinner hour, which I was able to participate in, which focused almost exclusively on why consumers have disappeared from government, consumer interests are rarely referred to and there are not even consumer panels on the CMA. But that debate can be read in Hansard, and I am sure it will be of much interest to those who are interested in this point.
The amendments would go back over the grounds on which a PIIN is issued and make it clearer than it is currently that simple questions of plurality, which are readily gamed in terms of corporate structures these days—this issue was perhaps not so resonant at the time that the legislation was drafted—need to have a little bit more bite if they are to look at some of the detail that we want in this area. We have to look not just at the question of ownership and control in relation to a market-facing issue but at the way in which such an agglomeration can distort and change that market, which is not in the public interest. It is very important that we do that. There may well be a way of dealing with this under the existing legislation, but it would be so much easier if the amendment was accepted because it would take us down a line that was more focused on the particularity of the media arrangements.
Then there is the question of the fit and proper person test for those who have broadcast licences. The basic structure is there. Again, on reflection, it could be argued—and I think it has been demonstrated today—that without more concern about the issues which arise out of the merger, without more concern about how the operation will work in terms of who activates it, what exactly the issues are that will be looked at, what the proprieties are that we are concerned about, and where the ethical concerns are and all that, then it will not be as effective. I look forward to hearing from the Minister.
My Lords, I thank all noble Lords who have taken part in this important debate. It is good to have this debate.
This group of amendments seeks to make extensive changes to the broadcast media public interest considerations that may be relied upon to intervene in certain media merger situations and the fit and proper test that Ofcom has a duty to apply to all those who hold a broadcasting licence in the UK.
Before I get into the detail, the debate has included views from across the House about the parties to the Fox/Sky merger. There is a proposed merger currently in train, which it is very likely the Secretary of State will need to consider under her existing powers. As the Secretary of State noted in her written statement of 10 January, any decision will be a quasi-judicial one. It is important that she is able to act independently and that the process is scrupulously fair and impartial. As a result, neither I nor any Minister can comment on the merits of this specific case. I will have to restrict my comments to the substance of the amendments themselves.
I have noted carefully the views of noble Lords, and of the noble Lord, Lord Puttnam, in particular. I have a transcript here of some of the debate of the then Communications Bill, in 2003. Of course, the noble Baroness, Lady O’Neill, remembered the key issue about citizen and consumer. Indeed, Lord Puttnam and I met outside this Chamber to try to come to terms with our approach to this issue—I was part of Her Majesty’s Opposition in those days. A lot was achieved. Of course, it was a government amendment on Third Reading which created the plurality and public interest test. It was my noble friend Lord Lansley, who is unfortunately unable to be in his place tonight, who sat on the draft legislative committee on that Bill, and who retains that interest.
Drawing all the contributions together brings us to a single question: do the Government believe they have the necessary powers to allow them to deal with complex media mergers and a concentration of ownership that would be damaging to media plurality?
In our view, the tests introduced in 2003 are wide-ranging and provide the Secretary of State for Culture, Media and Sport, who is responsible for media mergers, with a wide discretion to intervene. For example, in cases where there are concerns about media plurality, or where a bidder does not have a genuine commitment to the UK’s well-established rules on content standards and cross-promotion, which are overseen by Ofcom, the Secretary of State can consider those concerns as part of her deliberations as to whether to intervene in the proposed merger.
Turning to the amendments themselves, given the discretion to intervene based on the existing media public interest considerations, we do not believe it is necessary to add the additional requirements set out in Amendment 229ZA and would argue that these are matters that can already be considered under the existing tests. In addition, the matters set out are considered by Ofcom on an ongoing basis in its regulatory role.
There are three existing broadcast media public interest considerations that the Secretary of State can take into account in deciding whether or not to intervene in a merger. The first is the need for a sufficient plurality of persons with control of media enterprises—I stress, plurality of persons. The second is the need for a wide range of broadcasting which is both high quality and appeals to a wide variety of interests. In other words, the focus must be on content and plurality of content. The third is the need for persons carrying on media enterprises to have a genuine commitment to broadcasting standards. Together, these powers give the Secretary of State discretion to consider a wide range of matters in deciding whether the specified public interests may be relevant, and whether or not to intervene in a particular merger.
Amendment 229ZA, which inserts new Section 58(2D) into the Enterprise Act, would allow the Secretary of State to intervene in a media merger based on the need for those holding broadcasting licences to be a fit and proper person, as noble Lords have said today. The issue of who is a fit and proper person to hold a broadcasting licence is a regulatory matter for Ofcom. Ofcom is under an ongoing duty to remain satisfied that those holding broadcasting licences are fit and proper to do so, under Section 3 of the Broadcast Act 1990 and Section 3 of the Broadcast Act 1996. Ofcom’s assessment of these matters will consider the conduct of those who have material influence or control over broadcast licensees and will consider a wide range of factors in assessing who is fit and proper, including the matters set out in the amendment.
The amendment also proposes a new Section 58(2E), which is aimed at allowing intervention on the basis that the governance of broadcast media enterprises providing news needs to include sufficient safeguards for editorial freedom in the provision of full and accurate news services. I entirely accept—and the Government entirely agree with noble Lords on this—that the issue of governance is crucial, although we discussed in earlier debates today that the issue of accurate news is becoming a very difficult one and will exercise all our minds in the coming months. It is a long-established condition of broadcast licences in the UK that news is reported with due accuracy and impartiality, as set out in Ofcom’s broadcasting code. Ofcom, as the regulator, governs compliance with this requirement of the code.
The matters set out in the amendment at proposed new subsection 58(2F) would be dealt with by licence conditions and Ofcom’s broadcasting code, including provisions on fair and effective competition and the cross-promotion code, as well as matters that would be considered as part of the fit and proper person test.
I thank the Minister for going through this in so much detail. The issue raised in the first part of the amendment on the fit and proper person test was not whether the powers exist but how they would be triggered. The worry is that they would be triggered post hoc rather than anticipatorily with regard to a merger. Do the Government accept that there is a difficulty here?
The Government do not accept that there is a difficulty in this. The important issue is that the powers remain broad in their application. To the best of my understanding, though, there is no difficulty regarding when they are triggered.
What I believe the noble Lord, Lord Stevenson, is saying, and it is very important, is that there is an accidental anomaly in the Bill. As someone who, like the Minister, pored over every word of it, I take some responsibility for this, but it is extraordinary— I even referred to it as bizarre—that the bar that is set for an ongoing licensee is higher than the bar for a bidder. Surely common sense requires that someone bidding has to reach the same standards of honesty and probity that are required of an ongoing licensee. There is an anomaly, and I am trying to help the Government to get rid of it because it should not be there. Obviously there should be a bar, but it should apply to anyone applying for a licence just as it does to anyone who has an ongoing licence that is being looked at.
I am going to wait for a reply on that. I would like to be able to respond tonight, rather than saying that I will write to noble Lords; if the Committee will bear with me, let us just wait and see. I understand what the noble Lord is saying about bidders meeting the same standards as those who already have a licence.
It is a long-established condition of broadcast licences in the UK that news be reported with due accuracy and impartiality, as set out in Ofcom’s broadcasting code. Ofcom, as the regulator, governs compliance with this requirement of the code. The matters set out in the amendment at proposed new subsection 58(2F) would be dealt with by licence conditions and Ofcom’s broadcasting code, including provisions on fair and effective competition and the cross-promotion code, as well as matters that would be considered as part of the fit and proper person test. I have been informed that the fit and proper test can be looked at by Ofcom only once they hold a licence, but we believe that the provisions on genuine commitment to broadcasting standards give the Secretary of State the powers she needs in this regard.
I think that we all deserve to be very clear about this: can we be sure that the Secretary of State will apply exactly the same standards to a bidder as she would require of an ongoing licensee?
There is nothing coming from the Box—I think that I will have to come back to this point.
Ofcom’s role as a regulator is to have ongoing oversight of these matters. The important point, however, is that the Secretary of State’s power to intervene in media mergers provides an additional layer of protection for media plurality in the UK. In the case of Amendment 229ZA, the very fact that these matters are part of the regulatory broadcasting framework with which licence holders must comply means that they can be taken into account by the Secretary of State in deciding whether or not to intervene, particularly in terms of the impact that such matters have on the need for persons holding broadcast licences to have a commitment to broadcasting standards. In addition, any merger must also be judged on competition grounds by the relevant competition authority, and the existing competition law. The Government believe that the existing provisions in the Enterprise Act 2002 already give the Secretary of State wide and proportionate powers in relation to proposed media mergers. While we understand the intent behind this amendment, we do not judge that it is necessary.
Amendment 229ZB would similarly seek to add unlawful acts or corporate governance failures as specific matters that Ofcom could take account of when determining, on an ongoing basis, whether an individual or a corporate body satisfies the fit and proper person test, which will include an assessment of those with material influence or control over such bodies. Ofcom can and does take into account such matters and this amendment is therefore unnecessary. There is also a risk that this amendment may potentially narrow Ofcom’s discretion here, although I acknowledge that that is not the noble Lord’s intention.
From a legal standpoint, there is always a danger in seeking narrowly to define the parameters of the law. Indeed, I sought to do just that during our debates on this issue back in 2003. I was seeking to limit the scope—the boundaries—of the Government’s intended plurality test; I wanted the law to be narrowly defined and to target specific circumstances in which the plurality and public interest test could apply. The noble Lord, Lord Puttnam, disagreed with me, saying that breadth is very important. Of course, it was he who won the day. So I do think it important to take care when trying to narrowly define what does and does not apply, thus narrowing the scope, as that can constrain the whole approach. It is important to take this into account when considering these amendments overall.
The Government therefore believe that the powers introduced in 2003 are sufficiently wide to deal with complex media merger cases which raise public interest concerns and, for this reason, we ask the noble Lord to withdraw his amendments.
I thank the noble Baroness for an extremely full response. Perhaps I may say several things. First—I probably should have made it clearer—the noble Baroness was extraordinarily helpful and generous to me during the very painful passage of that Bill. On every occasion when I sought some form of compromise, she always came up with a constructive solution. She knows I feel this, because we have discussed it, but I am very happy to pay public tribute to her.
I think that some mistakes were made in 2003. We could not look into the future, and there were things that we were not even allowed to do under our terms of reference. However, it is worth recalling that, yes, it was a government amendment that was passed at Third Reading, but it was passed, as the noble Baroness will remember, because of a crushing defeat on Report.
I have no desire whatever to go through that process again, I promise you. On the other hand, I think I have a sufficient understanding of this House to know that when it comes to the issue of media ownership and any suspicion of undue pressure, this House will again vote overwhelmingly in favour should I press these amendments. I do not think that my amendments as they stand are good enough. The noble Lord, Lord Stevenson, has already hinted at that. I would infinitely prefer the Government to come back and offer the sense of security that I seek. I very much liked the Secretary of State on the one occasion I met her. She is clearly an honourable, decent woman. It would be very helpful for her to be able to say that the standards that she would require of a licensee are exactly the same, and as exacting, as those of a bidder. I think it would be good for the Government.
I was not being silly when I discussed Theresa May’s speech. I found it a very remarkable speech from an incoming Prime Minister. I think she did lay out her stall. I think we have every reason to have expectations that are higher than we had of recent predecessor Governments. I am quite ashamed of some of the things that my own Government did in respect of cosying up to and colluding with media owners. That has got to stop.
There is a wonderful line of Mark Twain’s: “A lie can run around the world while the truth is still trying to put its boots on”. We are living in that world. We are living in a post-truth society. We can no longer afford an over-cosy relationship between the Government of the day and media owners whose job is simply to tell the truth as they see it. That is all I am seeking.
I am very grateful to the Committee. I will happily withdraw this amendment, but I am certain that we will be returning to this subject in the hope that the amendments put forward by the Government will be acceptable to the entire House. I beg leave to withdraw.
Amendment 229ZA withdrawn.
Amendment 229ZB not moved.
229ZC: After Clause 84, insert the following new Clause—
“OFCOM: regulation of digital publications
Within one year of the passing of this Act, the Secretary of State must report to each House of Parliament on the arrangements that would need to be made by OFCOM if it were to assume the responsibilities of an independent regulator for digital publications.”
My Lords, this amendment deals with the preparations that will need to be made should we be in the unfortunate situation that was animadverted by Sir Brian Leveson when he finished his part 1 report, if the press self-regulation proposals made in it are not fulfilled.
The current situation is complex, and it may be slightly premature to assume that everything is going to fail, but I think that, of the two types of problem that he identified, the first—that no recognised regulator was appointed within a year of the recognition panel’s being established—has not come through. We have a recognised regulator, and it was approved very recently, within a year of the recognition panel’s being established. That is a good thing, and we should bank on that.
The second problem, however, remains. His feeling was that there would be no value in the self-regulatory proposals he was advocating if significant news publishers remained outside the recognised regulator. That has happened in spades. There is a body established by the industry and largely for the industry, IPSO, which is not seeking recognition under the existing procedures. Therefore, that would, I think, represent a failure in terms of Leveson’s original proposal. We also have a situation in which the recognised regulator is not attracting significant support from the press which might be regulated by it, although it does have some support, and that is good, and we support that. It is not, however, operating at the scale or encompassing sufficient of the broad press, which was the focus of the original report, to be considered a success.
We are facing a problem. The problem was anticipated, and the solution proposed by Lord Justice Leveson at that stage was a backstop regulator. Therefore this amendment—which is limited in terms of the exact wording to the digital media, although it could, I think, be read as more appropriate for the wider situation—is almost certainly going to be required because of the situation I have outlined. Obviously, we regret that. We wish, as we always have, that a properly self-regulatory system could be established. However, it is extraordinary that the press, as Lord Justice Leveson says, benefits from considerable support in statute for the activities that it wants, including a provision in an amendment to this Bill to protect journalists who wish to break stories that were in the public interest and who might otherwise be caught by concerns about data leakage. That is an example of the sorts of ways we have often legislated for and supported the press because everybody believes in a free press and believes that the press should be able to operate within the law and without any constraint. However, we also believe—this is particularly true of those who have been victims of press intrusion into their private lives—that the public will not settle for a situation in which the press escapes standards regulation altogether.
We will therefore face a situation within a few months where it is likely that it will not be possible that the Leveson proposals have been brought in and there is a need for a standards regulator. The standards regulator proposed by Leveson in his report is Ofcom, and there is much in the report which shows and explains why that would be a good thing. My amendment, which I hope the Government will accept, says that it is time to start to think about how this will impact on Ofcom’s work and to bring forward proposals under which that should operate. I beg to move.
My Lords, it is four years after the Leveson inquiry, and I certainly believe that Section 40 of the Crime and Courts Act 2013 should be implemented, and should be implemented now. I voted for it in your Lordships’ House last October and I certainly support the amendments today, which have much the same effect. I also support the fail-safe amendment moved by the noble Lord, Lord Stevenson, although I hope that it is not necessary and that Section 40 will be brought in.
Some incredibly misleading statements have been made about the impact of Section 40. Most of the newspapers, as we know, do not support its implementation and have featured some quite amazing one-sided editorials. To the best of my knowledge, none of them has permitted a right of reply. I am the former Member of Parliament for the wonderful city of Bath, which is included in my title, so I am sure that noble Lords will not be surprised that I take a particular interest and am an avid online reader of the Bath Chronicle. Three weeks ago it published one of these anti-Section 40 diatribes. I wrote a rebuttal and asked the Bath Chronicle to publish it. I have not even had an acknowledgement so far—so much for a free press.
Perhaps to explain why I support these amendments, and to ensure it is published—albeit in Hansard rather than in the Bath Chronicle—I will read what I wrote, because it sums up exactly where I stand:
“I am a strong supporter of local newspapers and the Bath Chronicle in particular. But I was surprised by your recent editorial suggesting that measures being considered by parliament will mean that ‘Any investigation in the public interest could be silenced by anyone with a vested interest’. This is a complete misreading of the proposals made by Lord Justice Leveson after the Public Inquiry which followed the appalling phone hacking scandal.
Few could deny that in the past the press had a shocking track record of setting up its own toothless regulators which failed to protect the public. Leveson has proposed that the press should now establish a truly independent regulator whose independence is checked and then ‘recognised’ by a body which is itself impartial and independent from government or the press.
This is what the public want as shown by a YouGov poll just last week. When asked ‘Do you think it is important that any newspaper self-regulator undergoes an audit to ensure it is effective and that it is genuinely independent of both politicians and the press?’ nearly three-quarters (72%) said yes and just 6% said no.
The ‘regulator’ under which the Bath Chronicle operates—called IPSO—doesn’t meet this test. It is not only funded but controlled by the newspapers it regulates.
Were the Chronicle to join a ‘recognised’ regulator, or were IPSO to demonstrate through getting recognised that it met proper standards of independence and effectiveness, the funding issues you describe would not happen. Moreover, the public would be protected and you”—
that is, the Chronicle—
“would receive protection from wealthy and powerful local figures if they tried to bully you into withholding stories about them by threatening you with unaffordable court costs”.
My article ended:
“I hope Parliament will agree to support the public and back Leveson’s proposals”.
I certainly hope the Government will accept the amendments before us today.
My Lords, I am obliged to the noble Lord, Lord Stevenson, for expressing this amendment and also to the observations of the noble Lord, Lord Foster of Bath. I would say, with respect to his most recent comments, that the test of a free press is not whether or not they publish a letter. Indeed, the fact that they do not publish your letter is itself an expression of freedom.
Amendment 229ZC would require the Government to report to Parliament about the arrangements that would need to be made should Ofcom assume the responsibilities of an independent regulator of digital publications. I acknowledge the care with which the noble Lord, Lord Stevenson, has drafted this amendment. He was quite candid in saying that his real concern is the regulation of the press, but he was equally candid in indicating that, in order to come within scope for the purposes of this Bill, he was not really concerned with all publications by the press but only digital publications.
I see in his amendment an expression of concern—and, indeed, of frustration—over the lack of progress being made towards a viable avenue for press regulation. I am sure that in a sense that, in part, has prompted this amendment. However, he said himself that it might be slightly premature. With respect, I would concur with that observation. It is perhaps too soon—and people will say in response, “Four years after Leveson, is anything too soon?”—but we have to remember that the press landscape has altered quite dramatically over the last four or five years. That is reflected in the fact that certain matters have gone out for consultation—particularly with regard to Section 40, which is going to be raised in a later amendment—albeit that the consultation process has been somewhat stymied by an application for judicial review.
I move on to the core of the present amendment, which is the idea that we should move towards—and this was a backstop of Lord Leveson’s report—Ofcom as a regulator. The idea that Ofcom should regulate digital publications—albeit with “digital publications” not being a defined term, and I make nothing of that—has behind it the real push that Ofcom should become the regulator for the press. As I understand it, that is essentially what lies behind the amendment.
Let us remember that Ofcom already has huge responsibilities as a regulator, many of which we have debated over the last week. Among other things, it has to ensure that we have fast broadband connections, competition decisions, such as the current consideration of the future of Openreach, which has been referred to, and spectrum management, including forthcoming auctions. We have also discussed today its new role in respect of the BBC and its function in managing listed events, and we have heard from my noble friend Lord Borwick in respect of Ofcom’s regulatory functions and in respect of subtitles and the accessibility of on-demand services. There is plenty more, over and above that, that Ofcom does, and that is without even going into the question of postal regulatory functions.
We have the greatest respect for Ofcom as a regulator, but the question arises about how much more we can put on its plate. This amendment seeks to pile on more. For the first time, it would be setting a regulatory requirement on Ofcom, in statute, in relation to internet content, which is not TV-like, if I may use that rather crude term. As my noble friend Lady Buscombe has already made clear, moving to a situation in which Ofcom is a regulator of a broad range of online content would be an enormous undertaking for Ofcom, or indeed for any other regulatory body.
Following the Leveson inquiry, the Government set up a new self-regulatory framework for the press. The self-regulator Impress was granted recognition in October last year. I hear the expressions of concern about how far it has actually managed to attract the press. However, in addition, we also have IPSO. I accept that it has stated that it will not seek recognition, but the majority of large publishers have voluntarily joined the self-regulator. Providers of news-related material in an online format, such as newspaper publishers that have an online product, are already able to join either of these regulatory organisations. We have publications that are in newsprint and online, and it would be unfortunate if we were to divide the regulatory functions according to whether we were dealing with paper or online publications. Both IPSO and Impress have members which publish in both digital form and hard copy. I understand that IPSO in particular is investigating the question of how, going forward, it should regulate online material.
With respect, if the Government wish to explore whether Ofcom would make a suitable independent regulator for digital publications, and report on this to Parliament, they already have the power to do so without legislation. However, we do not believe that Ofcom is the right body to regulate digital publications or publications as a whole. Given that the Government already have the power to consider this approach, we wish not to be put in the position of having to report to Parliament in this way. Indeed, if such a statutory obligation was placed upon us, we would be in the invidious position of having to give serious consideration to making Ofcom the regulator in circumstances where we do not consider that to be appropriate.
That may not meet all the concerns that have been expressed on the matter, and I appreciate in particular the concern that centres on the implementation of Section 40. However, as I said at the outset, it respectfully appears to us that it would be premature to go down this road at this stage. I respectfully invite the noble Lord to withdraw his amendment.
I thank the noble and learned Lord for his full response. I am sorry that he guessed the plot rather early on in the game: I am guilty as charged. It was very hard to get anything on this into the scope of the Bill. There seems to have been a change of management upstairs in the Public Bill Office and they are much tougher than they used to be, and we will have to have a think about that.
Anyway, the reason for including the amendment was to have the debate that we have just had to find out a little more about the Government’s thinking, and to flag up that it is worth thinking about how we can recapture some of the cross-party spirit that informed the process leading up to the original Leveson proposal and, out of that, the statutory position we are now in. However, as the noble and learned Lord says, we may be a bit premature on that. You can never plan too far ahead, but it is cautious optimism to think that the department has begun thinking about these things. That is as far as we want to get on this. Following this good exchange, which can be read in Hansard, and the sense that we are at least on the same page, if not the same sentence, I beg leave to withdraw the amendment.
Amendment 229ZC withdrawn.
Clauses 85 and 86 agreed.
Amendments 229A and 229B not moved.
Schedule 4 agreed.
Clause 87 agreed.
230: After Clause 87, insert the following new Clause—
“Offence of using digital ticket purchasing software to purchase excessive number of tickets
(1) A person commits an offence if he or she utilises digital ticket purchasing software to purchase tickets over and above the number permitted in the condition of sale.(2) A person commits an offence if he or she knowingly resells or offers to resell, or allows to be resold or offered for resale on a secondary ticketing facility, a ticket that the person knows, or could reasonably suspect, was obtained using digital ticket purchasing software and was acting in the course of a business.(3) For the purposes of subsection (2) a person shall be treated as acting in the course of a business if he or she does anything as a result of which he or she makes a profit or aims to make a profit.(4) A person guilty of an offence under this section shall be liable on summary conviction to—(a) imprisonment for a period not exceeding 51 weeks,(b) a fine not exceeding level 5 on the standard scale, or(c) both.(5) In this section—“digital ticket purchasing software” means any machine, device, computer programme or computer software that, on its own or with human assistance, bypasses security measures or access control systems on a retail ticket purchasing platform that assist in implementing a limit on the number of tickets that can be purchased, to purchase tickets;“retail ticket purchasing platform” shall mean a retail ticket purchasing website, application, phone system, or other technology platform used to sell tickets.”
My Lords, before I introduce the amendment, I wonder whether we could reflect on the fact that we are missing rather an important person from the debate. The noble Baroness Heyhoe Flint was a keen and active Member of your Lordships’ House. She had several special interests apart from cricket and a wonderful raconteur’s skill of telling stories of her exploits at the crease. She was rather good at it. Whatever it was, it was always a delight to hear. She had a special interest in secondary ticketing, and in many of the debates held in your Lordships’ House on this issue, she was present and often contributed. She was responsible, along with the noble Lord, Lord Moynihan, whom I see in his place, for getting changes made to the Consumer Rights Act 2015, which brought in the first of what we hope will be a series of measures to improve and clear up this issue.
The amendment to the Consumer Rights Bill that we inserted in 2015 raised from a secondary legislation provision to a primary legislation provision a series of measures to improve and clear up the secondary ticketing market. It was done primarily to ensure that those who buy tickets for sports, arts and music events can do so in the sure and certain knowledge that their tickets are valid, that they will be able to gain access to what they want to see and that they are not being ripped off in the process.
It is fair to say that we got this only after a considerable struggle—and the noble Lord, Lord Moynihan, might wish to share with us some of the difficulties that he experienced—but one of the things that was necessary in order to achieve that victory was to agree to a report on secondary ticketing to be carried out by a distinguished person. That person was Professor Waterson. He has now done that and the report has come out. Those involved are entitled to take a moment to reflect on the fact that what we were saying in Committee on the Bill and what we did in moving amendments and getting them inserted into what became the Act was brought out by the professor’s report, which was a comprehensive piece of work that showed that the scale of the issue was as we described it and that there was a need for further action.
The Bill before us is an opportunity to do more work, and the group of amendments that I am introducing—and for which I am hoping to get support from the noble Lords, Lord Moynihan, Lord Clement-Jones and Lord Foster of Bath, and others as we go through it—is a mixed bag because there are still things that need to be sorted out. An issue that arose in the other place and which was very nearly accepted by the Government was the question of an offence caused by using digital ticket-purchasing software—so-called bots. They are a scourge of many people who organise and run events—particularly in the music industry, but they apply right across the piece. Automated software operated by a number of individuals creates a situation where virtually no tickets are available on the first release of an event, but they then appear very quickly at very much higher prices through secondary ticket outlets. This amendment would, we hope, stamp this out. It has been tried in a number of territories, including New York very recently, and it does seem to work, so we recommend that.
The other amendments deal with changes that we would like to see to improve the broader approach taken in the Consumer Rights Act which, in practice, needs to be taken to another stage. They are basically to do with greater transparency and accountability in how the secondary ticket market works. It is really important, however, that we get clear at the start that nothing in these amendments would stop the resale of tickets once purchased by an individual who wished to sell them because they could not attend the event or that they wanted to sell them on to other people in a closed circle. This is not about private purchases or operations. It is about those who go into the ticket market on a commercial basis, very often making huge amounts of money by exploiting people who do not understand and cannot get to the heart of the issue and therefore pay ridiculous prices. It also would help stamp out what is clearly a fraudulent activity that has been partially stopped by the changes made in 2015 but has not stopped completely. People buy what look on the surface to be valid tickets, but when they turn up at the venue they discover that they are not valid and are refused entry. This is fraud on an industrial scale, and probably the source of much money laundering and illegal activity, which was referred to by the police in their Podium report prior to the 2012 Olympics.
These amendments should be taken as a batch; they build on work in which this House has already been involved and they are the right changes to make this stage. I beg to move.
My Lords, I support the seven amendments in this group spoken to by the noble Lord, Lord Stevenson. I echo that it is particularly appropriate in many ways, albeit very sad, that we debate the often malicious and pernicious use of bots on the sad day of the funeral of my very close friend Lady Rachael Heyhoe Flint. One afternoon, she was purposefully striding down the Corridor outside the Peers’ Guest Room, and said, “I need you”. I jumped to attention and we headed off to the Department for Business, Innovation and Skills. I was totally unaware of why I was accompanying her on that occasion, or indeed the matter proposed for discussion. Rachael launched into a thinly veiled, front-foot attack on those in and around the secondary market, who fleece consumers to no benefit to cricketers, musicians, sportsmen and sportswomen, who are the ones who entertain them. Through her hard work and persuasive skills, I was galvanised into action. I thank the Government for the progress that we made in the Consumer Rights Bill at the time, as well as the Opposition and noble Lords from all sides of the House.
That was just a first yet important step. Today is the second opportunity to make further progress. I was very sad not to be at Rachael’s funeral today to pay my close personal, political and sporting respects, but she would have been the first to admonish me. She would have said, “Why on earth are you not down in Westminster putting on your pads, your gloves and picking up your bat, and going into the centre of the parliamentary wicket to hit those bots for six?”. I will do my best, captain. I will do my best. In paying tribute to her, because she was absolutely instrumental in the work that we undertook during the passage of that Bill, I must also pay tribute to Nigel Adams, Member of Parliament in another place, who has taken this to his heart and has done so much good work.
The whole issue of bots goes right to the heart of the disappointment of thousands of music and sporting fans who have on occasion faced the reality of having their credit card ready in their hand with minutes to go before the sale of tickets for a particular gig or match but no sooner do they go on sale than they sell out. Minutes later, tickets can be spotted on reselling websites. The new, hidden threat that is snatching tickets from under the noses of genuine fans is ticketing bots.
Music and sports fans have always battled against touts buying up tickets to make a quick buck by selling them on again at inflated prices. But now touts have a new cyberweapon that allows them to step up their game. These ticketing bots are software; they buy up huge numbers of tickets for events as soon as they go on sale. Buyers then use the secondary websites to sell them on. Reg Walker, who has done an enormous amount of good work on this at the O2, stated:
“They then harvest tickets at high speed and that effectively blocks out genuine fans from being able to purchase tickets at face value. These tickets are then immediately resold on secondary ticketing platforms”.
What then happens is that those who are sitting in their garages using bots programmed with all this information press the button immediately and get their 200 tickets, and sell them on to one of the four secondary platforms where nearly 80% to 90% of resale now takes place. In so doing, they do not necessarily always get all the tickets they want. Their preferred status and good relationship with the platform is critical to their next sale. So, if necessary, they will have the income on a very high-price ticket with a high margin to go out and counterfeit tickets to make up the gap between those they have committed to supply and the actual number that they have. That is why the wholesale harvesting of tickets by touts not only incentivises these individuals to create relationships with the main providers of the secondary market tickets, the providers even develop power-seller programmes to encourage the delivery of mass tickets.
This is all at the same time that you are trying to type in your name in order to get a couple of tickets, as the true fan of a music show at the O2 or a sporting event. The reality is that you have no chance. We have all tried it; I have tried it on many occasions and cannot believe that they have sold out before I have got down my name, address, credit card number and so on. It is no surprise, though, when bots are available purely for the benefit of the profit of the individual. No artists, no sportsmen and no fans benefit. That mark- up goes straight into the pocket of the individual who has got the ticket and the secondary sales platforms that provide those tickets at inflated prices to consumers.
As a result of that, not surprisingly, the number of counterfeit tickets significantly increases. It was interesting that Reg Walker, who works on security at the O2 and has to deal with people with counterfeit tickets and turn them away, confirmed and attested that in the period 2013-14, approximately 1,100 invalid or counterfeit tickets were presented for entry at the O2, where the victims alleged that they had been purchased from just one of these platforms, Seatwave. In one instance, a couple who had purchased invalid tickets for entry at the O2 returned to the Seatwave office and were given two further tickets, which were also invalid.
Although in the main the victims appear to have secured refunds or charge-backs on their credit cards, there was no compensation for the air fares, travel expenses or accommodation—and, above all, no compensation for missing the experience. Yet these bots continue to cause a huge problem for the true fan. It is vital that the Government—with, I hope, the support of the whole House—recognise that it is time now to follow the example that has been made, not least in the United States recently, where in New York and a range of other states legislation has been implemented to tackle the issue of bots, since we had the earlier debates on the consumer protection Bill.
The National Fraud Authority report, which we alluded to during our debates on that Bill, highlighted that this is not a small problem or a minor issue. Some 2.3 million people fall victim each year to online ticket fraud; it was estimated that that resulted in losses of £1.5 billion and, as I have mentioned, considerable personal stress.
The first part of this group of amendments focuses on that. I do not think it is appropriate to go into all the details that we would need in order to persuade the Minister, because I hope that he will follow the lead he showed yesterday when convening a meeting, where I had an opportunity to learn a great deal of important background information for the debate today. I saw that the Minister was really keen to listen and take note, and I hope that if we can persuade him to consider some of the issues set out in the following amendments, we will not have to stay here longer this evening.