The department laid Channel 4’s annual report before Parliament on 13 July with no changes to its content from Channel 4’s draft. The timeline for the department receiving the draft annual report from Channel 4 and laying it before Parliament follows last year’s timetable. It is usual practice for departments to review annual reports ahead of publication.
My Lords, rather than trying to sex up Channel 4’s annual report to suit the privatisation agenda, is now not the time for the Government to do a bit of a Lynton Crosby, “scrape the barnacles off the boat” and finally admit that neither the public—nor, for that matter, the parliamentary Conservative Party—want Channel 4 flogged off?
My Lords, given that Channel 4 is currently publicly owned, the Government are fully entitled to comment on the contents of its annual report. As I say, it is usual practice for departments to review annual reports. We cannot direct a public body to change what it says but it is quite proper for us to make representations. The Government are clear that we have the long-term interests of Channel 4 at heart in want to ensure that it continues to access the capital and funding it needs to continue doing the brilliant work that it has done for 40 years.
My Lords, is my noble friend the Minister aware of something that struck me as quite a striking feature of this report, which is that the chief executive of Channel 4 has had a 20% pay increase? Obviously, I look forward to the day when this is none of the Government’s business but, as long as we have the current arrangement, perhaps he would like to comment on the disparity between many viewers of Channel 4 dealing with real-terms pay cuts and what strikes me as an extreme level of high remuneration in this instance.
My noble friend is correct. The chief executive of Channel 4 received a 20% pay rise last year, taking her total salary to £1.2 million. That is twice the salary of the director-general of the BBC and more than the chief executive of ITV. Salaries are a matter for Channel 4 but I think this shows that the company is in rude health, one of the many things that make it an attractive asset to a potential buyer.
My Lords, the Minister says that the Government are happy with the Channel 4 report, which he will know shows that Channel 4 has significantly exceeded the quotas set for it. In the unnecessary privatisation plans, the Government say they want the new owner to
“deliver outcomes in line with those we see today”.
Can the Minister explain whether those are the outcomes that the channel is actually achieving, the ones we see today, or the much less ambitious outcomes laid out in the remit?
My Lords, we want Channel 4 to continue what it is doing in terms of commissioning from the independent sector. The difficulty is that, because of the global streaming giants driving up the costs of our thriving and very successful independent production sector, Channel 4 needs access to larger sums of money in the decades to come. That is why we want to ensure that it is able to raise that private capital and continue to compete in the global market.
My Lords, I refer to my entry in the register of interests, including my work with LionTree. When I was Minister, I would regularly review the reports and accounts of the bodies that I oversaw and we regularly had huge rows, mainly because there were not enough photos of me or sections detailing my excellent work as a Minister. Is it not the case that while the Government own Channel 4 they are perfectly entitled to see a draft of its report and accounts and perfectly entitled to have a grown-up discussion with Channel 4’s very grown-up board, which of course includes my wonderful noble friend Lord Holmes?
My noble friend is right. I have been looking through the annual reports of many arm’s-length bodies that it is my responsibility to lay before Parliament. The Government are entitled to make representations to Channel 4 as its current owner. Of course, if it were privately owned, we would not have that role. We cannot force it to change things but we are perfectly entitled to disagree. In this instance, Channel 4 laid the annual report it had originally drafted.
My Lords, Parliament was involved in the setting up of Channel 4. Indeed, it was an Act of Parliament that created it. In that sense, we in this House and the other House have an interest in the arrangements under which Channel 4 is supervised. The Minister did not give a very explicit Answer to the original Question from my noble friend. Could he sketch out for us, very briefly and perhaps later in writing, what the points were that the Government wished to raise with Channel 4, so that we are better informed about the debate?
My Lords, I am happy to say that we wrote to Channel 4 on 9 June, three weeks, I believe, after receiving the draft copy of the report, outlining our concerns relating to some of the language in the report, which we believed to be at odds with commitments, given to the department at official and ministerial level, to work collaboratively on this issue of its future ownership. As I say, we may have disagreements with some figures at Channel 4 about that, but the Government’s intention is to ensure that Channel 4 has a secure future and the access to capital it needs to continue to entertain and inform audiences in the decades to come.
My Lords, the Government very rightly supported the headquarters of Channel 4 moving to Leeds. Those of us from Yorkshire are particularly proud that we now have that Channel 4 presence in Leeds. I think some Ministers indicated that it was part of the so-called levelling-up process. Can my noble friend confirm that whatever decision the Government might take, they will do their very best to ensure that the headquarters of Channel 4 remains in Yorkshire?
We are very proud to see the benefits that Yorkshire and other parts of the country have accrued from Channel 4 moving its headquarters. Under private ownership, we will maintain Channel 4’s existing obligations for regional production across the whole of the UK. That is one of the things that is so distinctive about the channel, and which would make it an attractive asset to a buyer.
My Lords, if the Government have decided that Channel 4 is doing well, which apparently it is, and they would like it to carry on with some of the things it has been successful with, where is the Conservative principle of “if it ain’t broke don’t fix it”, or have we dumped that?
It is not about this year’s results; it is about securing the long-term sustainability of Channel 4. Channel 4 is particularly dependent on advertising revenue. Fewer people are watching live advertising. The cost of independent production is rising because of the entry into the market of global streaming giants, so we want to make sure that, in the decades to come, Channel 4 is able to raise the capital to continue doing what it is doing so successfully now.
My Lords, is the Minister at all concerned that privatisation might mean that artistic innovation is sacrificed? Very often, that is where money can be lost, simply in terms of views, as the Minister has just outlined. Therefore, that is the first thing that tends to go.
No, I am not. According to PACT, only 7% of the total independent production sector revenue came from Channel 4 commissions. Channel 4 spends less on commissioning than ITV, which is of course privately owned. We think the things that Channel 4 does are what make it so successful. We are convinced that any future owner would want to continue to build on those things.
My Lords, the Government continue to say that they do not like to interfere with board decisions, and here is a board that has been very successful. The reason members had that salary increase was that it was linked to the company’s productivity, yet this Government think they know better than the board about the future of the Channel.
As I say, this year’s report shows that Channel 4 is performing well. It is doing well in the current climate but, as the responsible owners of Channel 4, the Government are looking to the decades to come to make sure that it can continue to do that for the next 40 years and beyond.
My Lords, the Government do not own the BBC. It is set up in a particular way to make it a state broadcaster, not a government broadcaster. We benefit from having a range of different channels with different ownership models. We are focused on making sure that Channel 4 can continue to thrive in the market, which is fast evolving.
My Lords, we had a referendum and the noble Baroness’s party did not listen to the latter. We received 56,000 responses to the consultation, 40,000 of which were organised by the campaign group 38 Degrees, which is perfectly entitled to make its views known. We looked at all the consultation responses, but the Government have set out their thinking and their rationale for safeguarding the future of Channel 4.