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Legislative Reform (Renewal of Radio Licences) Order 2020

Volume 808: debated on Friday 27 November 2020

Motion to Approve

Moved by

That the draft Order laid before the House on 2 July be approved.

Relevant document: 20th Report from the Regulatory Reform Committee

My Lords, I am pleased to introduce this statutory instrument. It is a short but important order that will bring clarity and certainty to the UK’s commercial radio sector. In particular, it will allow the holders of commercial analogue—that is, AM and FM—radio licences to renew those licences for a further 10 years. Additionally, it will give smaller stations the ability to renew their licences if they commit to carriage on small-scale DAB multiplexes, where these are available. This provision will have the most immediate effect for the three national licences—Classic FM and the AM licensees, Absolute Radio and talkSPORT—as well as around 100 local licences which are due to expire over the next decade.

The measure meets the tests set out in the Legislative and Regulatory Reform Act 2006. It has been approved by the Delegated Powers and Regulatory Reform Committee, and the Regulatory Reform Committee in another place, as being appropriate for a legislative reform order with the affirmative procedure. Since the launch of the Digital Radio Action Plan in 2010, the Government have supported the listener-led transition of radio from analogue to digital, through measures including the expansion of the digital transmission network to substantially match FM coverage. Digital now accounts for around 60% of listening, having been closer to the 20% mark only 10 years ago.

There is now a need for a new plan to co-ordinate the next phase. In February 2020, we announced a joint government-industry review of the future of digital radio and audio in the UK, which is due to report in March 2021. However, analogue broadcasting —particularly FM—remains an essential part of UK radio, and we expect this to be the case well into the 2020s. Analogue services are valued by listeners and, in some parts of the country, analogue provides the only means of accessing broadcast radio. During Covid, radio has played an essential role in providing reliable and trustworthy communications to the public. With existing licences due to reach their final expiry dates from the end of 2021, and with Ofcom having no authority under existing legislation to extend them further, it was therefore important to clarify the position for analogue licence holders.

In December 2019, we issued a consultation to explore the options for reform: a “do nothing” option, which would involve allowing the licences to be re-advertised; or to legislate to allow the further renewal of licences for either five or eight years. Having carefully considered the responses, our conclusion was to retain the long-standing arrangements for analogue licence renewals that previous Governments have used to support the development of digital radio.

While there are some arguments in favour of opening analogue licences to competition, a full-scale re-advertisement process would, in our view, be disruptive and expensive, and the impacts would outweigh any potential benefits—particularly at a time when commercial radio faces severe disruption from Covid-19 and increased competition from online audio and smart speakers. We reflected carefully on the impacts of Covid-19 on stations’ advertising revenues, which have seen significant year-on-year reductions. In the light of this, we took further views on a longer, 10-year renewal and the responses to this—in particular from Radiocentre, the industry body for commercial radio—were positive. In addition, the extension is likely to take matters towards a natural endpoint for analogue broadcasting by the end of the decade.

I should make it clear, however, that the Government, while supporting the transition, have made no commitments about a future radio switchover. We will of course take account of the findings of the digital radio and audio review that I mentioned earlier, when it is due to report in the spring of 2021. However, I confirm to noble Lords that any switchover decision remains some way off. It would require a clear understanding by broadcasters and others, including groups representing listeners, as to whether it would be an appropriate course of action for radio’s future.

I want to touch quickly on the second provision within the order relating to small stations. The change will allow stations to satisfy the digital carriage condition by broadcasting on an appropriate small-scale multiplex. Following the passage of the Small-scale Radio Multiplex and Community Digital Radio Order 2019 and Ofcom’s recent commencement of the licensing process for small-scale DAB, it will soon be possible for smaller stations to broadcast over digital without needing to do so via local multiplexes, which cover larger, county-sized areas and come with the costs that such coverage implies. The current legislation refers only to local and national multiplexes. The provisions in this order will update the legislation to refer to small-scale multiplexes too. This is a change widely supported by smaller stations and the wider radio industry.

In summary, the order will continue the long-standing arrangement of allowing licence renewal for a commitment from commercial radio stations to DAB. In effect, it is the no-change option. It will provide stability and certainty to the industry during this tough time while continuing the progress of UK radio and audio towards a digital future. I beg to move.

My Lords, I congratulate my noble friend the Minister on her presentation of the order. I also congratulate the Government on their wise decision to extend these licences. The future scenario for radio services is clearly moving towards digital, but 40% of users still listen on FM or AM. I welcome the order because it ensures that, for those loyal listeners, there will be no interruption to their favourite FM or AM radio stations. I declare an interest as a loyal listener of Classic FM.

I believe that the Government’s decision is commendable, having gone through the exercise that my noble friend explained and taken into account the disruption caused by Covid both to the country at large and to the advertising revenues for these stations. Extending rather than requiring reauthorisation will save these radio stations the cost and hassle of submitting a new application while giving them at least some certainty in the current uncertain environment.

Some 55 local radio multiplex services provide DAB radio stations. I support the extension to small-scale multiplexes; they can be so important for selective audiences with particular interests. I understand that these analogue services are being required to commit to a digital future by being on a national, local or small-scale DAB multiplex, but can my noble friend confirm the investigations being made by Ofcom and the progress reports that may be required over the next few years in terms of that changeover to digital?

I have one further question, which relates to Ofcom’s verification of the technical information in each local radio multiplex licence to make sure that it has the required and expected coverage and that there are no cutbacks in services to certain areas around the country. As my noble friend rightly said, so many people—particularly elderly citizens—are relying on radio during the pandemic. Some cannot see; they can only hear. For them, radio is a real lifeline. I therefore welcome the current measures and I congratulate the Government on their decision to extend these licences.

My Lords, I declare my interests as listed in the register. It is a pleasure to agree with both the previous speakers: the noble Baroness, Lady Altmann, and the Minister. I do not think that I could take issue with anything they said.

To me, this affirmative approval Motion seems an eminently sensible move by the DCMS. We know that there is a considerable audience for commercial radio: as many as 36 million listeners per week. Of course, the Covid-19 pandemic has meant that communication and home entertainment have acquired even more significance.

As a BBC broadcaster for many years, I welcome the scope of the market—and, indeed, making it even larger—and the offering of alternatives, which helps keep the BBC on its toes. Local and national choice can only be good for competition, and therefore enriching for the audience, but, as we have heard, there is another pressing issue that we must consider carefully: largely for topographical reasons, many areas simply do not enjoy digital coverage at all, and sometimes only variable analogue coverage as well. I ask to the Minister to confirm that we will not move to a digital spectrum until we have sorted this out.

I speak from an area here in mid-Wales, in the beautiful Welsh Marches, as a case in point. In order to speak to your Lordships today and to broadcast from here, I have had to invest in a series of booster amplifiers and advanced technology—and it is still variable. I hope that I will not offer an example of that in the next couple of minutes.

I know that the Government want to extend digital and internet coverage to everyone—I applaud that ambition—but until it is realised, we simply must retain the broader spectrum of analogue and AM signals to allow listeners access to information, which is often vital to our general well-being currently, as we have heard. To that end, we need to continue to underpin the strong growth in DAB until everyone has the same access across the country. This is not unlike the need for petrol stations until electric charging points are so plentiful that we are not disenfranchising those people in rural and remote communities, particularly, where transport and digital access are thin both on the ground and in the air.

The other important point, which was made to me by industry representatives and which the Minister also mentioned, is that, should this legislative reform order not be enacted, scores of stations currently living on a financial tightrope might fall owing to the cost of having their licences readvertised. These include prominent stations such as Classic FM—a healthy and complementary alternative to BBC Radio 3, where I hope the noble Baroness, Lady Altmann, might visit us occasionally—but also stations such as Kiss, Heart, LBC and Jazz FM, as well as many much smaller independent stations. The sector contributes to the UK economy £638 million in gross value added and more than 12,000 jobs. In addition, it offers alternative support at the local and national level to broadcasters that the BBC may not be able to retain.

I support this Motion absolutely.

My Lords, let me say at the outset that I of course support the proposals before us, which have come about following much consultation and discussion. I do not intend to comment on the special procedure demanding a legislative reform order in this case; I assume that all the criteria in the 2006 Act, to which my noble friend the Minister referred, have been met.

The proposals throw up a number of issues that, in my view, also require attention if we are to ensure the balanced and fair future development of radio broadcasting in this country. We can all be nostalgic—especially on a Friday morning—but I speak as one who campaigned in the 1960s for the freeing up of the provision of radio services. Radio Caroline, Radio London, Radio 270 and others operated on the edge of law but they were exciting at the time to young people like me. Luckily, I was able to get more involved by advising the Government on the preparation of the White Paper ahead of the legalisation of commercial radio in the Sound Broadcasting Act 1972. In 1973, I was then part of one of the first consortia to apply for a radio licence. I remain part of the community radio movement today.

I say all this because, to this day, I have retained a list of the then Independent Broadcasting Authority’s requirements, which formed the basis of the grant of a licence for what were essentially regional and local services in 1973. The strict hands-on approach of the then IBA chair, the late Lord Aylestone, included rules about the type of advertising, the level of local content, technical requirements and the mix of directors and shareholders. He also ruled:

“The pursuit of commercial objectives must not become the company’s dominant activity to the detriment of programme standards.”

To some extent this mirrored a similar requirement for ITV, where companies had to reflect the regions where they were based and often where their shareholders were based too.

I say all this in the full realisation that the measure before us is technical and administrative in nature and is of the 21st, not the 20th century, and of course things move on. But that is the problem. The emergence first of FM and then DAB and DAB+ frequencies has changed the quality and nature of the transmission of programmes. Advertising revenue and placement has also changed, and some national stations have been authorised and licensed.

The appetite of the public for radio as opposed to TV is still strong, even though social changes are also changing the way we listen to it. Technical changes have provided massive opportunities for new ideas, but they could and should still concern local and regional communities and provide an even greater diversity of programmes. During the Covid crisis, it is the BBC local radio stations that for many people have been the mainstay for receiving local news and guidance, and in my opinion, no BBC director-general should dare to damage or denude those stations.

Ofcom, the present regulatory body for commercial radio, should also be concerned to continue to protect the mix of news, current affairs and community guidance from commercial stations which are being lost in many parts of the country. The consolidation of programmes and networking of production goes on apace. Well-loved, established local stations that obtain licences after having to demonstrate their community connections are, one by one, being absorbed into the mega-conglomerates that now seem to control the sector. In the region where I live in Yorkshire, a large number of local stations have lost their special identity as their out-of-town owners dispose of local staff and content, and simply hijack the licensed frequency to pump out centrally edited music that is obtainable in various other ways, either from national broadcasters or through web streaming services. That simply should not have been allowed.

I understand the pragmatism of these proposals and the new conditions requiring digital radio multiplexes to be made available, but how are the Government and Ofcom going to make sure that if such conditions are met, this will then allow others, apart from those getting extensions to their licences, to really enter this field and restore some of the services to the communities which Ofcom has allowed to be curtailed by the present licensees? Can my noble friend elaborate on this? In hoping for entrants to such broadcasting, can she say how they will be controlled? Even though I want to see this element of the proposals work out, we must not allow or encourage new community radio operators to work to lower standards, but aspiring broadcasters must also not be deterred by excessive and inappropriate fees and charges imposed by Ofcom.

Ofcom claims that it still demands compliance with such things as character of service, but since 2008, it has allowed more flexibility in the format of licensed stations. What used to be strict requirements are too often now fudged or ignored. Surely the process of networking, which I mentioned earlier, is a fundamental breach of the basic principles to follow an agreed format.

I accept what is proposed in the order. It sounds reasonably sensible, but please will my noble friend give me the reassurance that in the now ongoing major review into digital radio and audio, the consultation will be wide enough to cover all interests, especially those who want to retain truly local services that inform and assist? I understand that the report of the review is due in March. I hope that my noble friend is satisfied that it will be ready by then, but in this case, might it not be better to have a little more time so that we can ensure that the future of radio in the UK is properly and fairly constituted?

My Lords, I support the introduction of this instrument, but in particular, I want to talk about the changes to the radio licences renewal order, which seeks to recognise small, local radio stations. We cannot underestimate the importance of the provision of radio services during the coronavirus pandemic both in sharing information locally and in helping those who would otherwise feel isolated to be connected to the outside world. The instrument helps to recognise the essential importance of small, local radio service providers, and I have no doubt that they will play a key role in the future.

My Lords, I welcome the order and in doing so I particularly welcome, as others have said, the addition to it of small-scale multiplexes and the potential benefit that that could bring. Before I say anything further, however, I want to give huge praise to the Government for achieving something that I have never seen before. I have spoken in a number of debates recently and have had to look through explanatory memorandums that, frankly, I have not begun to understand. The explanatory document, as it is called, that we have been provided with for this debate is exemplary. I praise it and ask the Minister to pass on my thanks to all those in her department who were responsible for its production.

I have only two things to say about the order. The first is that the Minister referred to the announcement made back in February that there will be a review of digital radio. I believe that this is long overdue. The Government promised that when certain criteria of radio listenership were met, there would be a review. Those criteria were met in May 2018. In May 2019, the Government announced that they intended to have a review, but it took them until February 2020 to announce that review. We will not get the results until March 2021, and no doubt several months after that before we get a response from the Government on what they intend to do.

This will not be a pleasure for the noble Baroness, Lady Altmann, to hear, but I have long argued that we should be more urgently looking to have the same sort of radio switchover as we have had so successfully in relation to television. I am firmly convinced that were the Government to invest money in improving the digital infrastructure, there would be huge benefits not just in terms of radio listening, but so much more; that funds would be saved for the operators in that they would not have to have dual transmission; and that there would be an enormous benefit to the Treasury through the auction that could then take place of the analogue spectrum that had become available. I am disappointed that the Government have adopted what they call the “listener-led” approach, and I note that the Minister has said that she “reasonably thinks” it is likely that analogue will come to an end by the end of the current decade—another 10 years—which I personally believe is a wasted opportunity.

The other thing I want to remark on is the comments made by the noble Lord, Lord Kirkhope, and the noble Baroness, Lady Gardner of Parkes. Both referred to the vital importance of local radio. In my view, local radio has been diminished by the reduction of the requirements being placed on it. Now, far too often, as the noble Lord, Lord Kirkhope, pointed out, they are putting out the same music that you can hear on any other station. We need to look at ways of regaining genuine local radio that covers local news issues, holds local politicians to account and tells the stories that involve local people. That, sadly, is being diminished in this country. The addition of the small-scale multiplex and the possibility that that brings for new entrants is of course very welcome. It is one of the reasons I support this order, but of course there are other huge benefits in the order in that it will save the readvertising costs that would be incurred.

My Lords, I thank the Minister for a very clear introduction to this order and echo the comments made by the noble Lord, Lord Foster, on the very good explanatory document, as he rightly called it, which accompanied it. It was easy to read and gave us a lot of information that we would otherwise have had to root around for.

Like some other noble Lords who spoke in this debate, I recall the 2015 statutory instrument, which gave existing licence holders a five-year renewal of their licences. A key point that emerges from today’s debate is how the arguments have changed over those five years. The key debate then, as the noble Lord, Lord Foster, has said, was whether and when digital switchover would take place.

The case was made pretty convincingly—I am sorry that the noble Lord, Lord Vaizey, is not speaking today, because he would recall saying this—for a two-tier test: the Government wanted to make sure that audiences would lead the way, with more than 50% of listening being digital, and that, perhaps ironically given later policy changes, new cars would be sold with digital radios. I have never managed to buy a new car, but I gather from friends who have that that has now happened, and all new cars have digital radios. We know that audience figures have moved ahead, so there should be no question, as the noble Lord, Lord Foster, has said, that we should be discussing when, and in what way, the Government are going to announce a digital switchover. But as he said, we now have fudge. There is a natural end-point to analogue at the end of the decade, but no commitment—I repeat, no commitment—being made here today by the Minister that that will happen or how.

The problems raised by other speakers, including the noble Baroness, Lady Altmann, and the noble Lord, Lord Berkeley, about reach, and the need to ensure that the quality that comes with digital is available to all who wish to use it, are being solved by the small-scale digital multiplexes. I very much welcome that section of the statutory instrument. It is the answer to a lot of the problems we have.

Seen in this light, it is probably inevitable that existing licences need to be extended, but it is a bit ironic that the consultation was on a five-to-eight-year period and we are getting 10. Whatever happened to competition in the radio world? I appreciate the severe difficulties that companies are going through at the moment, but I thought that this Government believe that competition is the way to raise standards and make sure that public services are properly organised. When she comes to respond, perhaps the Minister could talk more about the role of Ofcom in promoting competition among existing services.

Inevitably, we want to support this. Radio provides a source of comfort and companionship through difficult times. It plays a valuable role in supporting mental well-being, which is often underplayed, enabling listeners to feel connected during a period of enforced isolation, particularly in this pandemic. It is also one of the most trusted sources of news and information, which is again important during the pandemic. It is not surprising to discover that listening numbers have been raised and now nearly 40% of people are listening to more radio than before the lockdown.

So this is a good story, but unfortunately there are sustainability consequences, because the difficulty facing companies is that the advertising that supports many radio services is collapsing. There needs to be thought about that. When she responds, could the Minister talk about other ways in which radio might be supported? Are there any other plans that might be brought forward to support the arts more generally? Radio is, in some senses, part of that community and needs support. Would she comment on the ongoing consideration of an advertising tax credit for UK media, which might stimulate demand and boost economic recovery?

The key question is whether the companies that currently hold licences will continue to do as they have in the past, which is to invest in DAB and make sure that we are ready for the switchover, as and when it naturally occurs. Saving costs by reducing the need to apply for new licences is a sensible way forward, but we need to think harder about competition and how services can be improved, if there is not going to be a change of licence and churn in that way. That will be the way that listeners stick with the radio that they love and know, carrying forward the need for investment in it.

My Lords, it has been a pleasure to debate this order with your Lordships, and I thank all noble Lords for the warm welcome they gave it. I will bask for a short moment in the huge praise from the noble Lord, Lord Foster of Bath, for the Explanatory Notes, which was echoed by the noble Lord, Lord Stevenson of Balmacara. I absolutely support that and thank all those involved in preparing the notes for their clarity and ease of use.

A number of your Lordships, including my noble friend Lady Gardner and the noble Lord, Lord Berkeley, emphasised the importance of local radio during the recent difficult months of the pandemic and the critical role that those stations have played in communicating messages, particularly on public health and Covid, in many parts of the country and in many community languages, which is of such critical importance.

My noble friend Lady Altmann and the noble Lord, Lord Stevenson, highlighted the significant impact that the radio sector has suffered as a result of the pandemic, with falls of 40% to 50% in advertising revenue. The noble Lord, Lord Stevenson, asked what else the department has done to support the sector. We have had the wider economic support packages, but DCMS has also negotiated a significant package of support for commercial radio stations, ensuring that smaller stations benefited from a six-month waiver of transmission charges, and we repurposed the Community Radio Fund to provide small grants to community stations that are facing financial challenges as a result of the pandemic. The fund has made a total of 112 grants, worth a little over £400,000, in two rounds. Finally, Ofcom has relaxed some regulatory requirements on the production of content to support radio stations to develop ways of working to cope with the lockdown and movement restrictions.

In response to my noble friend Lady Altmann’s question on how we are working with Ofcom on small- scale DAB rollout, we are working very closely with the regulator. The closing date for the first round of applications was this week. Ofcom has been carefully testing small-scale stations, with trials running since 2015.

I also thank the noble Lord, Lord Berkeley, for his generous words. The Government, the BBC and commercial radio have all invested in the expansion of the DAB network. We recognise that more investment is needed in Wales, which is one of the issues that the digital radio and audio review will look at.

Concerns were raised by my noble friends Lord Kirkhope and Lady Gardner, and the noble Lord, Lord Foster, about the risk of the reduced availability of local radio and loss of local content. As I have already said, the Government recognise the important role that radio plays in the provision of local news and information. However, the context in which it operates is clearly changing dramatically, as a result of structural and technological factors. We all know that there is a proliferation of ways to consume audio content, a shift from local to national listening, and greatly increased competition for advertising spend from the expansion of digital media and the rapid growth in online advertising.

However, Ofcom, which issues guidance on localness, has made no changes to the local news or information requirements for local stations, and those requirements will not be affected by this order. Indeed, following the consultation on future commercial radio regulation in 2017, we committed to strengthening local news and information requirements, which are the key public service aspects of local commercial radio, and to extending them to digital radio stations. We hope to bring forward legislation on commercial radio reform when parliamentary time allows.

The noble Lord, Lord Stevenson, referred to a “fudge” regarding the digital switchover dates. The specific issue of whether a formal managed switchover should take place, and if so when, will be considered as part of the review, as I mentioned, and we will get that report by the end of March 2021. Again, and to reassure the noble Lord, Lord Berkeley, no decision has been made to date as to whether or when a switchover should take place.

To return to the provisions of the order, we believe that it will allow commercial radio stations to focus their efforts at this difficult time on continuing to deliver the vital news and entertainment that listeners value most, while supporting the ongoing transition to a digital future for the radio sector. I commend it to the House.

Motion agreed.

Sitting suspended.