Scotland: Public Service Broadcasting — Question for Short Debate

Part of the debate – in the House of Lords at 7:33 pm on 25 February 2009.

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Photo of Lord Macdonald of Tradeston Lord Macdonald of Tradeston Labour 7:33, 25 February 2009

My Lords, I hope that this debate will highlight some immediate concerns about public service broadcasting in Scotland and outline some of the options to secure its future. I declare my interests as an adviser to Macquarie Capital, whose funds invest in and manage Arqiva and Red Bee, companies supplying transmission and other services to UK broadcasters. In addition, until joining your Lordships' House in 1998, I worked for more than 30 years in ITV, first with Granada and then with STV, from which I receive a pension.

Most of the regional licences for broadcasting and Channel 3 are now consolidated into ITV plc, based in London. The three remaining independent companies include STV with its two licences to broadcast on Channel 3 to the north and to central Scotland. For these commercial broadcasters, this is undoubtedly the most difficult time since the launch of the ITV network back in the 1950s. Satellite and cable channels compete strongly for viewers and advertising revenue is migrating to the internet. Share prices have fallen steeply, and programme budgets and staff numbers are being cut back ever further by the current economic crisis.

Sadly, but understandably, ITV plc wants to shed the cost of key public service obligations by reducing quotas for regional programming and independent production. In Scotland, ITV plc also wants to renegotiate the programme supply contract it has with STV. However a deal done on ITV plc's terms could impoverish STV and undermine its ambition to restore to its schedules some of the specifically Scottish programming lost in recent times.

The other threat to STV's viability is the warning from ITV plc that it might be forced to hand back its Channel 3 licences and relaunch itself as a purely commercial digital channel, free of all public service obligation. If this happened, and Ofcom took the warning seriously, STV would be cut adrift from the network schedule of ITV plc on which it currently depends. The existing contracts between STV and ITV plc are protected by the network undertakings imposed when Granada was allowed to merge with Carlton to form ITV plc in 2003. These could only be removed with the consent of the Competition Commission.

My noble friend Lord Carter of Barnes knows more about these contractual matters than any of us, having been chief executive of Ofcom around the time these undertakings were given. Would the Minister now encourage his successors at Ofcom to broker a fair settlement which ensures the continuing viability of the Scottish licences, along with the measure of public service commitment appropriate to a nation with its own distinctive traditions and politics—obligations also expanded ideally to deliver a better service to the Scottish border region?

Another service that Ofcom might do for network programme-making in Scotland is to reclassify the separate production arm of STV as an independent producer. This would remove an obstacle to its winning commissions from UK broadcasters which must satisfy independent production quotas, such as the BBC and Channel 4.

The importance of broadcasting and programme-making to the Scottish economy is perhaps best demonstrated by the BBC, with its 1,300 permanent staff in a dozen production sites across Scotland. The Highlands and Islands got a welcome boost with the recent launch of the Gaelic channel, BBC Alba.

However, the BBC is also planning a policy change of historic proportions for Scotland. Noble Lords will be aware that public service broadcasters spend most of their network programme budgets on their peak-time evening schedules, which attract by far the biggest audiences. These network budgets total several billion pounds a year and fund high-quality drama, entertainment, comedy and factual series—programmes that help define how the people of Britain see their society, tell their stories, share their cultures and shape their identities. Yet, remarkably, after half a century of state-regulated television in Britain, the overwhelming proportion of peak-time, networked programmes is made only in England.

Viewers in Scotland, Wales and Northern Ireland make up about 17 per cent of BBC licence-fee payers and advertisers' audiences, yet barely 1 per cent of UK peak-time programming is commissioned from the three smaller nations. This arithmetic has denied Scotland the investment of tens of millions of pounds a year which would have supported a critical mass of talent, underpinned other creative sectors, and enhanced Scotland's reputation for quality through a heightened presence on screens in the UK and abroad.

However, the BBC is now committed to giving Scotland a fairer share, a due proportion of its network programme budget: 8.6 per cent of about £850 million, which represents an increase from just over £30 million a year at present to more than £70 million a year. That is a huge increase for which all credit is due to the director-general of the BBC, Mark Thompson. My only concern is that the 8.6 per cent target will not be hit until 2016—surely too long a transition. Could the Minister please encourage the BBC to speed things up? While doing so, could he also invite Channel 4, which Ofcom suggests will be the core of a new, more robust public service entity, to adopt a new, more reasonable policy by commissioning a significant share of its future programming from Scotland?

Lastly, I come to the most radical proposal. The Minister, having published a bold and purposive vision in his Digital Britain report, will be aware of the equally well received vision of a new digital network for Scotland. The Scottish Broadcasting Commission was set up by the Scottish Government in 2007. Its choice of Blair Jenkins as chairman brought industry experience and ensured political impartiality, as did its well balanced membership of Scots distinguished in their own fields, none more so than the noble and learned Lord, Lord Fraser of Carmyllie, whom I am pleased to see in his seat.

The commission's report, Platform for Success, has won the endorsement of all parties in the Scottish Parliament—indeed, I believe that its main recommendations are now Conservative policy north of the border. The key proposal is for a Scottish network, based around a linear digital channel and online platform. It would broadcast only high quality or innovative Scottish programming, becoming a secure source of competition for BBC Scotland and, one hopes, STV for many years ahead.

The unresolved question is obvious: how to pay for a new Scottish digital network that is estimated to cost between £50 million and £75 million a year. In its recent review, Putting Viewers First, Ofcom floated the idea of so-called contestable funding. This funding could come from the sums at present reserved inside the BBC licence fee pot for digital switchover. Another source might be a share of the income to the Treasury from the sale or lease of the analogue spectrum, which will be made available by the switch of broadcasting to digital. Ofcom suggests that producers and broadcasters might bid for this "contestable funding" to reinforce endangered areas of public service provision such as regional news on Channel 3, including Scotland, or programming for older children. Does the Minister think that a Scottish digital network could also be funded from these sources? Does he foresee any problems if the Scottish Government offered direct funding to support a new channel, as was done by the previous Scottish Administration to launch BBC Alba? In these hard times, of course, funding better broadcasting will not be the top priority of any Government. But it does seem to me uncommonly odd that a nation such as Scotland, after half a century of public service broadcasting, still does not have a television network it can call its own.

A broadcasting summit is being hosted in Glasgow next month by the Secretary of State for Scotland, Jim Murphy, and the Secretary of State for the Department for Culture, Media and Sport, Andy Burnham. It is potentially a pretty valuable event, which I hope the Minister, with his unrivalled expertise in broadcasting policy, will also attend. I hope, too, that the noble Lord, Lord Carter, will also see the potential of the proposals made in this debate to contribute to his ambitious strategy for a digital Britain.