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Channel 4

Volume 826: debated on Wednesday 11 January 2023

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 9 January.

“Channel 4 is a great British success story. It was set up by Margaret Thatcher and it has done exactly what she wanted it to do: positively disrupting British broadcasting and driving an expansion in the UK’s independent production sector, which is now surging at £3 billion. However, in the last decade, the media landscape has been transformed by technology and the entry of new, rapidly growing streaming platforms. Channel 4, along with all public sector broadcasters, faces unprecedented competition for viewers in terms of both programming and talent.

Channel 4 is uniquely constrained in its ability to respond to those challenges. There are limits on the broadcaster’s ability to raise capital and make its own content. Under current legislation, Channel 4 operates as a publisher broadcaster, meaning that all its shows are commissioned or acquired from third parties, such as independent producers or other broadcasters, who typically retain the rights relating to those programmes.

The challenges faced by Channel 4 are very real. That is why the previous Administration decided to proceed with the sale in order to free the broadcaster from the constraints that were holding it back under public ownership. Over the last few months, I have carried out my own examination of the business case for the sale of Channel 4. I have listened to stakeholders and taken a close look at the broadcaster’s long-term sustainability and the wider economic outlook, and I have decided that pursuing a sale is not the best option to ease the challenges facing Channel 4. However, doing nothing also carries a risk. Change is necessary if we want to ensure that the corporation can continue to grow, compete and keep supporting our thriving creative industries. Anyone who says otherwise is burying their head in the sand.

After discussions with Channel 4, I am therefore announcing an ambitious package of interventions to boost the broadcaster’s sustainability. Under this agreement, Channel 4 will continue to play its own part in supporting the UK’s creative economy, doubling both the number of jobs outside London and its annual investment in the 4Skills training programme for young people. Meanwhile, we will introduce a statutory duty on Channel 4 to consider its sustainability as part of its decision-making. We are working with Channel 4 to agree updated governance structures to support that long-term sustainability.

We will provide Channel 4 with new commercial flexibilities, including by looking to relax the publisher broadcaster restriction to enable it to make some of its own content. In doing so, we will work closely with the independent production sector to consider what steps are necessary to ensure that Channel 4 continues to drive investment in indies, particularly the newest, smallest and most innovative producers. That includes increasing the level of Channel 4’s independent production quota, which is currently set at 25% of programmes, and potentially introducing specific protections for smaller independent producers. Any changes will be introduced gradually and following consultation with the sector. Finally, we will make it easier and simpler for Channel 4 to draw down on its private £75 million credit facility.

Alongside the changes to Channel 4, the media Bill will introduce a wide range of measures to modernise decades-old broadcasting regulations, including prominence reforms. Further details will be announced in due course.”

My Lords, we wholeheartedly welcome the Secretary of State’s decision not to privatise Channel 4. The British public service broadcasting ecosystem is unique and has been built up over many decades. At a time when the market in which it operates has been changing radically and is continuing to change, we should be very careful indeed about making major, radical adjustments that would threaten our successful cultural economy.

I have three questions for the Minister. Can he explain what aspects of the evidence that led the former Secretary of State to the original decision have turned out to be so flaky on review as to engender such an extraordinary policy U-turn? The Statement refers to introducing “updated governance structures” for Channel 4. Given that there is to be no change to the ownership of Channel 4, can he say whether that refers to the role that government currently plays, the board, the executive structure or all of the above? Can he confirm that the proposals will require changes to primary legislation? Finally, does he agree that changing the publisher broadcaster status, enshrined as it is in statute, would be a major change not only for the channel but for the independent production sector and would materially affect the public broadcasting sector ecosystem? I look forward to his comments.

I welcome the noble Lord back to his position on the Opposition Front Bench and wish noble Lords a happy new year. My right honourable friend set out in another place the rationale for her decision: as she said, she looked at the business case and the evidence for doing so. She was very clear, however, that, while not pursuing at this time the opportunity of a sale of Channel 4, doing nothing was not an option either. As the noble Lord rightly said, it operates in a rapidly changing media landscape and, as part of our in-depth analysis, we have established that its long-term sustainability must be addressed. Channel 4 itself has acknowledged that in its own strategy document The Next Episode. The package that my right honourable friend set out addresses that, including through some legislative change which we will be taking forward in the media Bill.

On the publisher broadcaster restriction, the Government will make changes via the Bill to give Channel 4 the freedom to make and own some of its own content—a freedom it does not currently have. That will open up a range of options for it to grow its income, which is important for its sustainability. As we have seen, Channel 4 has done a fantastic job over the last four decades in doing what it was set up to do by the Conservative Government in the 1980s: to stimulate independent production. The cost of that is going up because of a number of competitors, and I am sure we are all interested in ensuring that it has the resources it needs to do that.

My Lords, I too welcome the return of the noble Lord, Lord Stevenson. He is like the noble Lord, Lord Parkinson: he goes and he comes back, and it is excellent that we have both of them back on the Front Bench. Given that the Government’s approach has supposedly been driven by their concern for the sustainability of Channel 4, can the Minister tell us what plans the Government have to act urgently on bringing forward legislation on prominence, which Ofcom recommended two years ago, which the Government have been promising for months and which will make a huge contribution not just to Channel 4’s sustainability but to other PSBs? Can he confirm that there will be a media Bill imminently?

I look forward to more questions on other aspects of the media Bill’s work than perhaps we have had in recent months. Yes, it is our intention to bring forward the media Bill when parliamentary time allows, so that we can carry forward important reforms that will benefit the whole of our public service broadcasting system.

My Lords, I declare an interest as the chairman of your Lordships’ Communications and Digital Select Committee. I welcome the Government’s decision on the future of Channel 4, not least because it reflects so much of what the committee recommended in the report that we published just over a year ago on the future of Channel 4—although it is worth reminding your Lordships that, as a committee which represents all sides of this House, we did not object in principle to the sale of Channel 4.

I was also pleased that the Government recognised, none the less, that the status quo was not an option for the future of Channel 4. Bearing in mind what my noble friend has just said about the media Bill, which will be necessary to introduce the legislative changes and address some other needs of public service broadcasters to ensure their sustainability, perhaps I may push him further. If he will not give us a precise timetable for when the media Bill will come, can he tell us in which order the Bills that the DCMS has on the slate are going to come? The Online Safety Bill is about to come but we are also waiting for the digital competition Bill.

My noble friend will know, as a former leader of your Lordships’ House, that that decision is above my pay grade, but it is our intention to bring the media Bill forward when parliamentary time allows. I am grateful to her and the other members of your Lordships’ committee for their thoughts, which have been part of the evidence that my right honourable friend and colleagues at the department have weighed up.

My Lords, I declare my interest as a series producer for an independent television production company. Like many other noble Lords, I welcome the Minister’s Statement. I heard him say that the Government have now given Channel 4 the freedom to produce its own content in order to stimulate the independent sector. At the moment, Channel 4 commissions over 55% of its content from small qualifying production companies and is a major customer for many of the larger producers. Can the Minister explain how he can ensure that setting up the in-house production base will not adversely affect the independent content producer ecosystem?

We know how important our independent production sector is, not just to British television but to our creative industries more widely. We are absolutely committed to ensuring that Channel 4 plays its part in supporting what is a £3 billion sector. We will increase the level of Channel 4’s independent production quota, and, in doing so, we are looking at the potential for introducing specific protections for smaller independent producers.

My Lords, while the Minister must not let all those congratulations go to his head, I too certainly welcome the Statement. In particular, the reference in the document to increased investment in skills is to be welcomed, but can the Minister give some reassurance that he is bearing in mind that the recruitment of people into this sector should not come so much, as it has done in the past, from a relatively narrow section of the community? It needs to be broadly based, so that people come into it who do not necessarily have a background in broadcasting and do not see that as a career opportunity. On the other question about jobs outside London—which, again, I certainly welcome—it is not clear, when it says “from 300 to 600”, whether that is referring to a net increase in employment in Channel 4 or simply to a movement of staff from London to the other parts of the country.

The noble Lord is absolutely right about ensuring that all of our public service broadcasters faithfully represent the country that they serve. We want Channel 4 to increase the opportunities that it offers young people, from all parts of the country and from all sorts of backgrounds, to get a foot in the door of our creative industries. It will be doubling its investment in its 4Skills training programme from £5 million to £10 million in 2025, and that includes new job opportunities and doubling its number of roles outside of London to 600 in 2025.

My Lords, like the noble Viscount, Lord Colville, I am very concerned about the future for independent production companies in light of the Government’s plans, but, like others, I welcome the fact that there are no proposals to sell Channel 4. Can the Minister say how much taxpayers’ money has been wasted on those fruitless plans?

My Lords, in answer to a Parliamentary Question, the Government set out that, in the last financial year, we spent £600,000 on plans for privatisation.

My Lords, I unequivocally welcome this decision and recognise that it took some political courage to make it. In effect, the Government are again supporting public service broadcasting. I express a hope that the same attitudes and considerations that brought this sharp reversal will apply when they consider the future of the BBC over the next few years.

Without wanting to interrupt the harmony that has broken out at the start of the new year, the Government have always had the best interests of the public service broadcasters, including Channel 4, at heart when looking at that issue. As we have noted, the media landscape is rapidly changing. Unlike other public service broadcasters, Channel 4 has limited ability to diversify its revenue or to raise money through borrowing or equity capital. That is why we have looked at a range of options and why we have been very clear that doing nothing is not an option.

My Lords, will my noble friend the Minister join me in giving a big shout out to Channel 4 for the number of European and global productions that it makes available free to view? While we were members of the European Union, we used to qualify for the MEDIA programme co-production scheme. Is that still the case?

I will have to check that and write to my noble friend. I certainly echo her congratulations to Channel 4 on bringing a range of global content to viewers in this country and for sharing excellent British content with viewers around the world.