Digital Economy Bill - Committee (4th Day)

– in the House of Lords at 3:37 pm on 8th February 2017.

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Relevant documents: 11th, 13th and 16th Reports from the Delegated Powers Committee

Clause 70 agreed.

Photo of Lord Fowler Lord Fowler Chair, House of Lords Commission, Lord Speaker

It might be convenient to have a short pause to allow those who are not involved in the next business to leave.

Amendment 214

Moved by Lord Lucas

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.””

Photo of Lord Lucas Lord Lucas Conservative

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.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

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.

Photo of Baroness Kidron Baroness Kidron Crossbench

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.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour 3:45 pm, 8th February 2017

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.

Photo of The Bishop of Chester The Bishop of Chester Bishop

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?

Photo of Baroness Byford Baroness Byford Conservative

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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.

Photo of The Earl of Erroll The Earl of Erroll Crossbench

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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.

Photo of Baroness O'Neill of Bengarve Baroness O'Neill of Bengarve Crossbench

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.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

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.

Photo of Baroness Buscombe Baroness Buscombe Baroness in Waiting (HM Household) (Whip)

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.

Photo of Lord Elton Lord Elton Conservative 4:00 pm, 8th February 2017

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?

Photo of Baroness Buscombe Baroness Buscombe Baroness in Waiting (HM Household) (Whip)

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.

Photo of Lord Lucas Lord Lucas Conservative

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

Amendment 215

Moved by Lord Clement-Jones

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.”

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.

Photo of Lord Aberdare Lord Aberdare Crossbench 4:15 pm, 8th February 2017

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

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.

Photo of Lord Keen of Elie Lord Keen of Elie The Advocate-General for Scotland, Lords Spokesperson (Ministry of Justice)

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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 be 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?

Photo of Lord Keen of Elie Lord Keen of Elie The Advocate-General for Scotland, Lords Spokesperson (Ministry of Justice)

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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat 4:30 pm, 8th February 2017

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.

Amendment 217

Moved by Lord Lester of Herne Hill

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.””

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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 protect 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.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench 4:45 pm, 8th February 2017

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.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

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.

Photo of Lord Birt Lord Birt Crossbench

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.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport 5:00 pm, 8th February 2017

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.

Photo of Lord Birt Lord Birt Crossbench

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?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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—

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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.

Photo of Lord Birt Lord Birt Crossbench

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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.

Amendment 220

Moved by Lord Best

220: After Clause 76, insert the following new Clause—“Duty of OFCOM to make a recommendation on BBC fundingIt 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.”

Photo of Lord Best Lord Best Chair, Communications Committee

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”, and:

“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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat 5:15 pm, 8th February 2017

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.

Photo of Lord Birt Lord Birt Crossbench

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.

Photo of Baroness Bonham-Carter of Yarnbury Baroness Bonham-Carter of Yarnbury Shadow LD Spokesperson (Culture, Media and Sport), Liberal Democrat Lords Spokesperson (Culture, Media and Sport)

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.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

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.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench 5:30 pm, 8th February 2017

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.

Photo of Lord Berkeley of Knighton Lord Berkeley of Knighton Crossbench

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Lester of Herne Hill Lord Lester of Herne Hill Liberal Democrat

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Best Lord Best Chair, Communications Committee

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.

Amendment 222E

Moved by Lord Stevenson of Balmacara

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.’’

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education)

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.

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (Education) 6:00 pm, 8th February 2017

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.

Amendment 224

Moved by Lord Wood of Anfield

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.””

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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)

Moved by Lord Gordon of Strathblane

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.”

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

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 seeks 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.

Photo of Lord Addington Lord Addington Liberal Democrat

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.

Photo of Lord Wigley Lord Wigley Plaid Cymru 6:15 pm, 8th February 2017

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.

Photo of Lord Puttnam Lord Puttnam Labour

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

I think the noble Lord misunderstood me. I was trying to reassure him by saying that we will not let it be under threat.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

I am sorry to keep interrupting the noble Lord; what I said was that the regime is not under threat at this time.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Amendment 225

Moved by Lord Borwick

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,”.”

Photo of Lord Borwick Lord Borwick Conservative

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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.

Photo of Lord Wigley Lord Wigley Plaid Cymru 6:30 pm, 8th February 2017

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.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour

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 House endorses what the noble Lord is trying to do.

Photo of Lord Grantchester Lord Grantchester Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Amendment 226A

Moved by Lord Wood of Anfield

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)”.”

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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 time 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.

Photo of Baroness Bonham-Carter of Yarnbury Baroness Bonham-Carter of Yarnbury Shadow LD Spokesperson (Culture, Media and Sport), Liberal Democrat Lords Spokesperson (Culture, Media and Sport) 6:45 pm, 8th February 2017

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?

Photo of Lord Low of Dalston Lord Low of Dalston Crossbench

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.

Photo of Lord Wigley Lord Wigley Plaid Cymru

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.

Photo of Viscount Colville of Culross Viscount Colville of Culross Crossbench

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.

Photo of Baroness Benjamin Baroness Benjamin Liberal Democrat

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.

Photo of Lord Hain Lord Hain Labour 7:00 pm, 8th February 2017

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.

Photo of Lord Puttnam Lord Puttnam Labour

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.

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Lord Puttnam Lord Puttnam Labour

Before the Minister sits down—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?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

No, what I am saying is that we do not see that there is compelling evidence of harm to PSBs.

Photo of Lord Wood of Anfield Lord Wood of Anfield Labour

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.

Amendment 227

Moved by Lord Ashton of Hyde

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.”

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Photo of Baroness Benjamin Baroness Benjamin Liberal Democrat 7:15 pm, 8th February 2017

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.

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Environment, Food and Rural Affairs)

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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Culture, Media and Sport

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.

Amendment 228

Moved by Baroness Buscombe

228: After Clause 84, insert the following new Clause—“Communication devices used for drug dealingPrevention or restriction of use of communication devices for drug dealingAfter 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.””

Photo of Baroness Buscombe Baroness Buscombe Baroness in Waiting (HM Household) (Whip)

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, 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.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat

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.