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Broadcasting (Amendment) (EU Exit) Regulations 2019 - Motion to Approve

– in the House of Lords at 5:40 pm on 6th February 2019.

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Moved by Lord Ashton of Hyde

That the draft Regulations laid before the House on 13 December 2018 be approved.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

My Lords, now that we have disposed of the business expected to be brief, I am glad that we can get on to the main business.

These instruments are being made under the European Union (Withdrawal) Act 2018. They make appropriate amendments to correct deficiencies in domestic broadcasting law in a no-deal EU exit scenario. I think we can all agree that, no matter what our respective views on EU exit are, we need to ensure that television services available in the UK are regulated properly and that the public continue to be effectively protected from harmful content after we leave the EU. We also need to make sure that the same laws and rules that are currently in place in the UK continue to apply, providing continuity and certainty.

I have to stress that these draft regulations address only the necessary technical amendments to ensure that the law is operative on exit day, rather than introducing sweeping new powers into law. The Delegated Legislation Committee has been content with these draft regulations and Her Majesty’s Opposition in the other place agreed that,

“this is a necessary measure that has to be taken”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 5.]

As noble Lords may know, the European Union’s Audiovisual Media Services Directive currently underpins several pieces of UK primary legislation, including the Communications Act 2003. We are therefore using Section 8 powers from the European Union (Withdrawal) Act 2018 to fix deficiencies in primary legislation to ensure that Ofcom continues to have jurisdiction over services that are available to UK audiences, or are established in the UK.

Let me summarise the main provisions of the draft regulations and why they are important. If we leave the EU without an agreement in place, the Audiovisual Media Services Directive will no longer apply. The directive—“AVMSD” as it is commonly known—establishes minimum content standards and provides for freedom of reception and retransmission for audio-visual services such as television and video on demand. Crucially, AVMSD provides that a service which is regulated in one member state can adhere to that country’s rules while being available all across the EU. Services are thus allowed to operate with a single regulator’s licence, regardless of where the service is received in the EU. This is known as the country of origin principle.

In the event of the UK exiting the EU without a deal, the country of origin system of authorising services would be deficient, as reciprocal arrangements created by AVMSD would no longer exist. Without the amendments carried out through this instrument, television services originating in EU member states would still be allowed to be broadcast in the UK without a licence, thereby leaving the UK with no possibility of regulating the content of such services and protecting UK viewers from harmful content. The draft regulations remedy this deficiency by introducing the country of destination principle, which will require any television service that is available in the UK, whatever its country of origin, to be licensed by Ofcom.

However, a licence will not be required for television services provided by broadcasters in those countries that have signed and ratified the Council of Europe’s European Convention on Transfrontier Television, known as the ECTT, which the draft regulations would implement into UK law. The ECTT was signed and ratified by the UK in 1993, but it has not been implemented into UK law because of a disconnect clause in the convention which provides that EU member states must apply the relevant EU legislation in their mutual relations instead. The convention provides for a similar system of freedom of reception and transmission between the parties to the convention as the country of origin principle. All but seven of the EU 27 countries are parties to the ECTT.

While the convention cannot be considered a full replacement for the AVMSD, the ECTT sets out some minimum content standards for cross-border services and a system of mutual co-operation to enforce the standards. Furthermore, both the AVMSD and the ECTT provide that a majority of transmission time on a television channel must be reserved for works of European origin. The AVMSD refers to the convention in its definition of European works, and this in turn safeguards the UK’s status as a producer of European works, which is important for content sales and the UK production industry. This has been confirmed by the European Commission.

The draft regulations also ensure that services with Irish language content— RTÉ One, RTÉ 2 and TG4—continue to be available in Northern Ireland. The UK made those commitments in the Good Friday Agreement, and later through the European Charter for Regional or Minority Languages. This is necessary because these services are established in Ireland, which is not a party to the ECTT, so under the changes introduced through the draft regulations, they would now need to be licensed by Ofcom. However, we are making these services exempt from this requirement, to keep within the spirit of the Good Friday agreement.

The draft regulations introduce a new power for the Secretary of State, who will be able to designate regulated electronic programme guides after consulting with Ofcom. This was a necessary change because Ofcom’s jurisdiction depends on whether services are available on UK EPGs. We need the power to amend the list of regulated EPGs if there are new EPG entrants into the market. Being a designated EPG does not in and of itself carry any burdens on the companies who provide EPGs. Rather, creating this category was a necessary change to ensure that the legislation around licencing continues to operate effectively.

To conclude, I believe that the draft regulations are necessary to ensure that the UK statute book works on exit and that audiences are protected from harm, and I commend them to the House.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee 5:45 pm, 6th February 2019

My Lords, the Minister will be pleased to hear that it is not my intention to oppose to this instrument. As he indicated, in the event of a no-deal Brexit, we need to ensure that those companies that provide at least linear television services in the UK are properly licensed—whether they are based here or elsewhere—and that viewers are protected. However, I take a very different view from the Minister in describing this instrument, particularly the description we find in the Explanatory Memorandum. Paragraph 12.3, for example, explains and justifies the lack of an impact assessment on the grounds that,

“the instrument will maintain the status quo as far as possible”.

It also suggests that the only inconvenience broadcasters with services available in the UK will face is the,

“need to familiarise themselves with new licensing system and guidance as proposed by Ofcom”.

Both lines show significant complacency on the part of the Government and are a massive oversimplification of what will happen if the instrument is needed.

The Explanatory Memorandum states explicitly that,

“no, or no significant, impact”, on the private or voluntary sector is foreseen. Frankly, this is nonsense. When this instrument was debated in the other place on 29 January, the Minister there, Margot James, was forced to admit that at least 50 or 60 channels will for the first time be required to be licensed by Ofcom—hardly evidence of no, or no significant, impact.

Even more significantly, the Minister appeared to acknowledge that the loss of involvement with the AVMS directive regime, including the country of origin principle, should be of concern to us in this country, noting that the UK currently has a sizeable share of the entire European television market. As noble Lords will be well aware, we have something like 1,200 of the 3,000 channels across the whole of the EU. She said:

“A sector that grows at 25% more than the average rate of the economy is certainly a success. In part, that success is indeed down to the very beneficial regime, the AVMSD”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 7.]

So the loss of that “very beneficial regime” can surely be expected to have rather more than,

“no, or no significant, impact”.

The reason, of course, is that owners of the 600 or so channels currently licensed in this country but shown in other EU countries will now need to make new arrangements, not least by seeking licences elsewhere in the European Union. As I am sure noble Lords are well aware, to achieve that, they will either have to move their headquarters from the UK to another EU 27 country, or at the very least move some of their editorial staff to ensure that they have what is known as a “meaningful presence” in a different European country.

We already know that Sony is moving its headquarters to the Netherlands. We have already heard about Discovery Channel, Turner and NBC planning the movement of staff. Even the BBC is planning the movement of staff. Hardly surprisingly, Ireland, Germany and the Benelux countries—Belgium, the Netherlands and Luxembourg—are all actively targeting UK-based countries to persuade them to move to their country so that they can benefit from the AVMS directive and the current country of origin regime.

Given that we do not know yet which companies are likely to move their headquarters or their staff, and we do not know where they are likely to go, or how many staff are likely to go with them, it is difficult to be clear about precisely what the impact will be. However, I would argue strongly that there should have been a detailed assessment of the likely impact. We should have had, for example, detailed discussions with each of the potential receiving countries about what is meant in their country by a “meaningful presence” to ensure that a company would be allowed a licence in that country. Indeed, it is somewhat unclear what a meaningful presence in this country would be. Could the Minister give us a definition of what would amount to a meaningful presence here, enabling a company to get a licence here?

We know that some UK-based companies already have staff in other countries. I am not suggesting that there will be a total flood of people leaving, which would be catastrophic for the industry, but it will certainly make a significant dent in our world-beating broadcasting sector. Does the Minister believe the words in the Explanatory Memorandum—that there will be,

“no, or no significant, impact”?

Can he justify why we have not had an impact assessment for this instrument?

I am aware that when the Minister responds to my query he may refer to the convention on transfrontier television—the ECTT. He may argue, just as the instrument does, that implementing the ECTT—which, as he rightly pointed out, we signed and ratified as far back as 1993—provides a similar system of freedom of reception and transmission between the parties to the convention as the AVMS does between EU members. If the Minister uses that to justify the claim that,

“the instrument will maintain the status quo as far as possible”,

I suspect he will be in significant difficulty, because there are major problems in making that claim.

The Minister said that “only seven” of the EU member states are not members of the ECTT. However, only seven is more than 25% of the EU 27, so that means that UK companies that wish to have their channels shown in Belgium, Denmark, Greece, Luxembourg, Sweden or—especially important in this regard— the Netherlands or Ireland, will have no choice but to move HQ, as I said, or at least to move some staff, to another EU country. So will he acknowledge that describing the ECTT as a “similar system” is not a widely shared view?

Indeed, PACT—a trade organisation representing, among others, UK television companies—notes that the enforcement regime of the ECTT has nothing like the same ultimate recourse to a body such as the EU Court of Justice. COBA, the Commercial Broadcasters Association, describes the ECTT as having significant limitations. Our own House of Lords EU Select Committee, in HL Paper 135, said that,

“neither the Transfrontier Television Convention nor coproduction treaties are viable alternatives for trade”.

In the other place, the House of Commons DCMS Select Committee concluded just last month that the ECTT was “severely limited”.

Even the former Digital Minister, Mr Matt Hancock, was forced to admit when giving evidence to the EU Select Committee, that the ECTT was agreed in 1993, and that,

“in this space, that is a long time ago”.

No doubt because of that huge distance, another difference appears, in relation to how the ECTT handles advertising, compared with the AVMS directive.

If the Minister needs any further convincing, he should surely note what the creators of the ECTT itself said. What did the Council of Europe say about it? It published a paper very recently—its 2018 report, Brexit: The Impact on the Audiovisual Sector—which says:

“In the absence of the COO principle, UK-based companies would face new barriers when broadcasting to Europe and could choose to relocate their headquarters to another member state, with the consequent direct negative effects on employment in the UK, and additional indirect losses for the UK creative economy”.

Even the creators of the ECTT do not appear to think of it as the solution to the problem. Faced with all this, does the Minister stick to the view that the ECTT is a similar system to the AVMS directive, that if we implement it there will be no, or no significant, impact, and that the status quo is being maintained? Surely he cannot agree with any of that.

I turn now to another aspect of the instrument that definitely does not meet the Government’s claim to be maintaining the status quo. By waiving any UK licence or notification requirements for on-demand services other than UK-based ones, they will intensify rather than mitigate the already uneven playing field between linear and the increasingly popular on-demand services. It is already bizarre that, in relation to non-EU so-called third countries, we rely on the host country’s regulator to provide a licence, and no UK licence is required, even if the services are being made available here in the UK.

Of course, I am prepared to admit that, in a sense, under the AVMS directive that is also true for on-demand service providers coming from the other EU 27 countries. But there is a major proviso: there is no formal legal dispute mechanism through the European Commission in the alternative arrangements. We will suddenly deny ourselves any formal dispute mechanism, at least for on-demand services coming to the UK from the EU 27 countries.

The instrument makes a major change to the status quo. COBA gives an excellent example of why this is a problem by considering what would happen if we in the UK wished to introduce new rules for on-demand services over and above the standards required by the EU 27 under EU rules. It suggests considering what would happen if, for example, we in this country wished to place further restrictions on the advertising rules for foods high in fat, sugar and salt—something I believe we are very likely to do in the near future. In such a case, we would be reliant on the EU, which we will have just left, to enforce those new rules for us. That seems highly unlikely, not least when the EU 27’s on-demand services are already meeting arrangements in line with EU requirements. Why would they want to accede to our wishes in those circumstances?

More generally, this instrument could have provided a vehicle to address the uneven playing field between linear and on-demand services. I regret that it did not but, to be fair, the Government acknowledge the problem. In the other place the Minister, Margot James, said:

“We recognise that after exit we may need to consider a long-term and future-proofed approach to video-on-demand regulation”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 8.]

It is a widely held view, which I share, that this issue needs to be addressed as quickly as possible. Will the Minister go just that little bit further than Margot James and tell your Lordships’ House that, after exit, the Government will develop plans for a long-term and future-proofed approach to video on demand?

It is clear that this instrument does not live up to the claims made for it in the Explanatory Memorandum. That said, it is still needed to provide protection for UK citizens and a degree of certainty for the providers of broadcasting services here, but I hope I have made clear that exiting the EU will be accompanied by additional burdens for our hugely successful broadcasting sector and the wider creative industries. I hope the Minister will acknowledge that this will be the case and commit the Government to doing all they can to protect our creative industries by, for example, maintaining a strong copyright regime and the existing very successful production incentives of tax breaks. Above all, would the Minister be at least willing to pick up the recommendations from my noble friend Lord Clement-Jones and many on these Benches who have been calling for a rethink on some of the elements of the proposed new immigration system so that broadcasters and others in the creative industries can continue to access highly skilled talent from the EU 27 after Brexit?

Photo of Lord Liddle Lord Liddle Labour 6:00 pm, 6th February 2019

My Lords, I support that excellent speech from the noble Lord, Lord Foster of Bath. It was extremely well argued and well researched and brought out a series of very real concerns. I have sat patiently through these discussions. We are seeing how Brexit will potentially destroy some of the jewels in the crown of Britain’s industrial and economic capacity. There is no more striking case of this than in broadcasting, which is one of Britain’s great success stories.

My experience of this is as a member of your Lordships’ Internal Market Sub-Committee of the European Union Select Committee, which did a thorough report on non-financial services and took evidence from broadcasters. At the time I was really shocked by the concerns expressed about the viability of their activities in this country. There is no doubt, whether to a greater or lesser extent, that what we are talking about will destroy opportunities for hundreds of young people who would otherwise have the chance of really fulfilling jobs in the media and broadcasting sectors.

No one I recall coming across in this field believes that the European convention is a full substitute for the EU directive. I would like to hear on what basis the Minister thinks it is. It clearly is deficient in that it is not comprehensive and does not have any means of enforcement through the Commission and the court. The fact is our industry is showing that it has no confidence in this poor substitute by the fact so many companies are relocating to the continent.

One thing about the statutory instrument really worries me. What we are doing with it—I can see why from the point of view domestic regulation—is saying that from now on we will no longer have the country of origin principle, but the country of destination principle. That will be used against us by commercial interests on the continent that want to prevent full UK access to the market. They will say, “You want to switch to a country of destination arrangement. That means we insist on the right to regulate your right to broadcast in our country”. This is very bad news for the British entertainment and broadcasting sectors. The Minister has many difficult questions to answer.

Photo of Lord Pannick Lord Pannick Crossbench

My Lords, I share the concerns so powerfully expressed by the noble Lord, Lord Foster. His speech demonstrates that these regulations, like so many of the exit regulations we are debating, raise fundamental policy questions. They are being presented under Section 8 of the withdrawal Act and other powers as merely transitional provisions designed to tidy up loopholes, but they are not. They raise fundamental issues of policy.

I have a specific question for the Minister concerning those broadcasters based in EU states that are not parties to the Council of Europe’s European Convention on Transfrontier Television. As the Minister and the noble Lord, Lord Foster, have explained, there is currently no need for Ofcom to license them because they are based in another EU state. As I understand these regulations, and the Minister will correct me if I am wrong, broadcasters based in non-convention states, including Belgium, the Netherlands, Luxembourg, Ireland—apart from for Irish-language programmes—Sweden and Denmark will now need to be licensed by Ofcom. Is it right that they will have to apply for a licence on 30 March or before then, or will there be a transitional provision by which they will be granted one automatically by reason of the fact they were previously covered by the EU directive?

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I thank the Minister for introducing the instrument before the House this evening. I should declare my interest: I was the Shadow Minister in the other place for the Conservatives when the Ofcom Bill was taken through. I was an adviser to the Conservatives on the committee that covered film policy, and also devised a film policy for the Conservative Party that did not go very far but concluded that it was in their most favoured interest to have a tax break. I have been a beneficiary as a modest investor in films of which I am very proud—not many have been released in the cinema, but they have been broadcast.

The noble Lord, Lord Pannick, asked the very same question on procedure that I would have asked, but I have a very specific question for the Minister that I hope is relevant to this directive. Broadcasters and film producers have benefited from a very specific budget line, which is a legal instrument empowering finances for co-productions throughout the European Union, from which British producers and others have benefited. A number of Danish and Swedish co-productions have been shown on British television, which have been of huge interest to viewers in this country. Going forward, will we benefit from that budget line to the same extent and will co-productions still be viewed as a positive development? It will be of great interest, I am sure, to the film and broadcasting industry to know if that is the case.

Photo of Lord Adonis Lord Adonis Labour

My Lords, I have a very short question for the Minister again on this issue of consultation. The broader issues were raised in the excellent speech made by the noble Lord, Lord Foster. On consultation, in paragraph 10.1, it says:

Ofcom, as the audiovisual regulator, were consulted in drafting this instrument”.

Was Ofcom the sole body consulted in the preparation of this instrument? In light of the speeches that have been made in the House, I find that extraordinary, given the range of interests, companies and organisations affected. Will the Minister say why Ofcom was the only body consulted, given the broader themes that have come out? It is extraordinary in light of the speech made by the noble Lord, Lord Foster, to read paragraphs 7.2 and 7.3 in the Explanatory Memorandum. You would think that you were talking about two entirely separate sets of proposals. Paragraphs 7.2 and 7.3 make it sound as if these changes from country of origin to country of destination are the purely technical and unavoidable dotting of commas and crossing of “t”s as a result of leaving the European Union. Only as the speech made by the noble Lord, Lord Foster, unfolded did we realise that these are fundamental changes to the whole broadcasting regime in Europe that could have extensive consequences. In that case, why was Ofcom alone consulted?

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Conservative

I rise briefly to support my noble friend the Minister. It is a difficult situation in broadcasting, and I think it is sensible and creative of DCMS to make use of the Council of Europe treaty. Whatever your views on Brexit, we need to be ready for exit day. This ensures that 50 or 60 channels that will continue to come in from the EU can be regulated against Ofcom standards from 29 March, or at the end of the transition period. Along with the noble Lord, Lord Adonis, I would be interested to hear who has been consulted about the detail of this. There will be scope in the future to look at the longer-term arrangement. As an ex-Minister and ITV director, I look forward to that, including looking at the future of new broadcasting methods, video on demand, the effect of social media, and so on.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales) 6:15 pm, 6th February 2019

My Lords, this is an interesting debate and many points that we will be wrestling with well beyond 29 March have been raised in the course of it. I want to begin my remarks, as I will every time I stand on such an occasion, by bemoaning the fact that so many man and woman hours, by able civil servants, have been necessary to plough their way through successive Acts of Parliament to disentangle and extricate details that can be strung together in order to release them from a perceived enslavement to European legislation—a freeing of them, a “Fidelio” moment, that brings them into the light of day—so that they can then stand on their own feet as part of a self-defined and perfectly functioning legal system in this country. It is very regrettable that all this has had to happen. I used to do textual analysis as a favourite aspect of my studies. I promise that this would defy any of even the most complicated pieces and puzzles that I have wrestled with in the past. We are where we are, but I feel the need to say that. Again and again, hundreds of times, we are going to have to express regrets that all this energy, vitality and brilliance of mind has been tied up into producing what are effectively a strung together set of proposals that get us over the line at the end of March in the event of there being no deal.

Having said that, the second rather general thing that I want to say, which echoes things that have been said by others, relates to consultation. Again and again, that is where my eye goes first when I get these Explanatory Memoranda. Once again, I wonder that only Ofcom has been consulted, when many other bodies have been mentioned in the course of this debate as being stakeholders in all that is about to happen. Surely there might have been consultation in those cases. We are working under pressure, and impact assessments and consultations are both reduced almost to nothing, and we can only regret that. In a previous debate which I was sitting in your Lordships’ House for, I overheard the discussion between my noble friend Lord Adonis and the noble Lord, Lord Warner, who is not now in his place, about what we might have expected in such pieces of secondary legislation, according to the rule book, as it were—12 weeks of consultation, a published account of the results of that, and all part of the debate going forward. Even though I stand here wanting to narrow the considerations that I address to the particular point of keeping something legitimate on the law book to allow us to take that step, I feel it necessary to express regret about the levels of consultation and openness. I do not know what my noble friend Lord Adonis thinks about those who are trustees and on the inside circle who were consulted, but I know there are people in the industry, as far as this one is concerned, who have things to say and whose voices would have been very legitimate in bringing us to this point.

When the matter was debated in the other place, there was a lot of reference to the fact that meaningful presences were beginning to appear in countries on the other side of the Channel. The Minister was asked if she could put a figure on them. She could not and did not. At the same time, we have heard that Sony has already done this, and others look as if they are going to. It is a legitimate thing to ask, regarding the impact of this proposal, to what extent we feel this is going to continue and to be a worrisome factor.

This is a way of coping. The memorandum is my main interpretive document, because while I can read complicated things, these wretched SIs are beyond complicated. No doubt the noble Lord, Lord Pannick, takes them in his stride, with his paracetamol in the morning or something. I thought it was an honest attempt, at the level of getting us from here to there, to look at all the angles that need to be looked at—in a perfunctory manner, yes. I am not an expert in picking up the details of difference between the AVMSD and the ECTT, for example, but it seems to me that the countries that are not in the ECTT, in so far as they are given six months to look at how they are going to harmonise themselves with the proposals being made, have been offered something, anyway, and Ireland seems to have been treated very properly indeed, with the reference to the Good Friday agreement thrown in.

I did not find, granted the narrow concern in front of us here, that there was much I wanted to quarrel with, but in terms of the issues we are bound to go on wrestling with when this particular dust has died down, we can only note what the noble Lord, Lord Foster, and others have said and recognise that this will not be the last word.

Photo of Baroness Crawley Baroness Crawley Labour

My Lords, I have a very short question for the Minister. What would his advice be to UK broadcasters when it comes to working with those countries that are not party to the ECTT? I know that many broadcasters are concerned that these new regulations will not cover the areas that at the moment they just take for granted as far as European-wide broadcasting is concerned. What about those countries, other than Ireland, that are not party to the ECTT?

Photo of Lord Puttnam Lord Puttnam Labour

My Lords, is there anything in the Ofcom response to indicate that any of these changes will benefit the UK production economy, or indeed the UK economy in general? Is there anything in the Ofcom response that suggests this is not negative?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

My Lords, I am very grateful for all those interesting points and particularly for the speed at which they were delivered. We might set a record on this SI, with any luck.

Photo of Lord Adonis Lord Adonis Labour

Does the noble Lord think we are going too fast? We can certainly slow down.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I cannot always keep up with the noble Lord, but I will try. I am very grateful, as I said in our last outing, for his interest in DCMS matters, which is fairly new.

I shall start in a fairly random order with answers to some quick questions before we get on to some of the points that the noble Lord, Lord Foster, made. The noble Lord, Lord Pannick, asked whether non-ECTT EU countries would be required, therefore, to be licensed in this country. The answer is yes: we have identified 50 to 60 channels which may need a licence from Ofcom in order to continue to be received in the UK. These are mainly specialist minority channels, religious channels and adult services.

Photo of Lord Pannick Lord Pannick Crossbench

May I ask a question in relation to that? Would it not be more sensible, given that these broadcasters have been broadcasting into this country already and have been licensed in an EU member state, to grant them a licence automatically, rather than their having to apply? Then, of course, Ofcom would regulate them thereafter. If there is a problem, Ofcom may impose conditions or sanctions on them.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

If I am allowed to continue, those services that now need to apply for a licence so that they can continue to be available to UK audiences will have a grace period of six months, so they will continue to broadcast into this country. They will have six months to apply for a licence. It is necessary for them to apply for a licence because they should still be regulated by Ofcom in this country; otherwise we cannot control what they produce because we will not have recourse to the EU dispute resolution services. Of course, the six months is not a difficult problem for them because they start on the same basis—today, they are regulated by the AVMSD. We will start on equal footing for Ofcom to begin to regulate them after the grace period of six months.

Photo of Lord Pannick Lord Pannick Crossbench

I am grateful to the Minister, but that does not address my point. Why should these broadcasters, who are already broadcasting into this country with, presumably, no difficulty at all, have to go through the administratively burdensome task of applying for a licence after six months? Why should Ofcom have to consider the details of their case and grant them a licence? Would it not be more sensible to say, “Let us continue the status quo, let us deem them to have a licence and, thereafter, Ofcom can regulate them”? Why a new licence? That is my question.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

Effectively, that is what is happening after six months. They are being allowed to continue for six months, after which they will have to have a licence. The reason Ofcom is licensing them is so that, in the future, we can make sure that the content they produce is in accordance with the licensing conditions, which we would not be able to do if we were relying only on the AVMSD.

The noble Lord, Lord Puttnam, asked about the Ofcom response and whether there was anything positive or negative. First, there was not a response per se, so it was not asked that question. It was, of course, consulted and the basis of this SI—here I have to disagree with the noble Lord, Lord Pannick—is not trying to create new policy, because all it is trying to allow is for television channels that would otherwise not be regulated to be regulated, because the method by which Ofcom regulates channels is using the AVMSD, and that will not apply any more. Where the noble Lord, Lord Puttnam, is correct is that he gets to the crux of the problem, which is that leaving the EU is the issue that may or may not create a problem for broadcasters, not the actual details of this SI.

The noble Baroness, Lady Crawley, asked what advice I would give broadcasters. My advice to them would be to read the technical notice that we published in September: it precisely answers the question of what they should do and gives such things as the order of priority for being recognised in EU countries, whether it is establishment criteria or technical criteria such as satellite uplink. That is explained there and it makes the point, which I shall come to later, that ECTT may not be the answer in every case and that they should take advice and will possibly be required to have a licence. I shall come to that in a minute. I was foolish to think this would be quick.

The noble Lord, Lord Foster, mentioned video on demand. It is true that one of the differences is that the ECTT does not cover video on demand because, as noble Lords mentioned, it is a relatively old convention. I have to echo my friend in the other place: we are aware of the need to consider a long-term approach to regulating those video on-demand services that are available in the UK, but we cannot do it in this statutory instrument. It would be new policy, to take the point of the noble Lord, Lord Pannick, if we started regulating video on demand. There are some video on-demand channels today, for example, that come from America and are unregulated. We accept that it is a problem and we will have to deal with it in the future, but not through this SI.

The noble Lord, Lord Foster, and my noble friend Lady McIntosh talked about support for the sector: I think they were talking about the creative industries in general rather than just broadcasting. There is no change in the direct impact on such things as creative sector tax relief, which will still apply because they are established in UK legislation and the cost is entirely borne by the UK Exchequer. We have provided reassurance that the Government will underwrite the payments of awards for programmes such as Creative Europe, and have entered into a number of bilateral film and television co-production agreements with other countries, including Canada, Australia and China. I think my noble friend was talking about co-production in particular. We are also party to the Council of Europe’s Convention on Cinematographic Co-production, which will continue to operate after exit. There is a new version of that convention which we are intending to sign.

Lastly, and very importantly, this SI means that, by implementing the ECTT, UK content will continue to qualify as European works. The EU Commission has confirmed that will be true, even if we leave with no deal.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 6:30 pm, 6th February 2019

Presumably this is potentially one of the measures in the £39 billion package that we will agree if we have a deal on leaving, because that particular line of the European budget, to which we will have been subscribed in this seven-year period, relates to co-productions. It was very specific, and has brought benefits to this country. I do not expect my noble friend to have the answer at his fingertips, but I would be grateful if he could write to me.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I thank my noble friend. I do not have it at my fingertips—mainly because this is a no-deal SI, and that is the basis on which I have prepared—but I will write to my noble friend with that answer.

The noble Lord, Lord Liddle, mentioned in a rather pessimistic way that this was the end of the jewel in the crown of broadcasting. I was not sure whether he was talking about broadcasting or the creative industries. I have mentioned that we will continue to support the creative industries. I agree that they are a jewel in the crown. We are, of course, aware of some reports in the media about broadcasters relocating their licence to other countries. But the reports also suggest that companies are relocating only a minority of their workforce, in order to comply with the licensing requirements. There are no signs of a mass exodus from the UK. It is too early to tell, but the technical notice spells out clearly that it is not always necessary to transfer even the head office or the editorial elements of a company to qualify for an EU licence under the AVMSD. Most broadcaster satellite uplinks are in France or Luxembourg, so, if you can use technical methods such as the satellite uplink, technically you can get a licence in one of those two countries because that would bring you under the jurisdiction of the AVMSD.

Photo of Lord Berkeley of Knighton Lord Berkeley of Knighton Crossbench

My Lords, on the question that the Minister has just addressed, have the Government made any assessment of the likely impact on the creative industries, a sector whose income they broadly welcome on a regular basis?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

This SI does not relate specifically to the creative industries; it is more to do with the broadcasting industry. There is a link between the broadcasting industry and the creative industries, but this deals with things such as production, which have historically tended to follow broadcasting. We have not made that assessment yet, because it is too early to tell, but clearly there is the possible danger that, if all broadcasters move their editorial and head offices to an EU country, production might go with them. Obviously, that would depend on where they go. It is too early to tell on that specific point, but the tax credits and other things I talked about will specifically help the creative industry, rather than broadcasters.

Photo of Lord Liddle Lord Liddle Labour

I am grateful to the Minister for answering the points I raised, but I am concerned about two things. First, I am a bit disturbed to hear that the Government are reading about what is happening in the newspapers, rather than being in constant consultation with this important sector of the industry. Secondly, if there were good will, the European convention might be an adequate substitute for European regulation; but in this situation we are talking about no deal, where there will be no good will.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

We are not—as noble Lords might have realised—reading about this only in the papers, although we do read them. We have had extensive consultation—not perhaps the public consultation where all pros and cons are publicised, as the noble Lord, Lord Adonis, would prefer. But noble Lords should be under no illusions: we have had extensive consultation on this situation and this specific SI, not only with Ofcom, which has been instrumental in drafting the SI to address the problems of regulation of television services—how they should be construed and defined—but with the sector. We have organised round tables at ministerial and official level. We have included AETN, AMC Networks, BBC Studios, Channel 4, Discovery Channel, Disney, ITV, NBCUniversal, Nordic Entertainment Group, Sky, Sony, WarnerMedia, Viacom and Viasat. We have met these and further broadcasters on a bilateral basis, because a lot of these discussions are commercially sensitive, depending on what they are going to do with their establishments to meet the problems of Brexit. I reiterate that this is an issue about Brexit, not about this SI, which is about the regulation—making sure that a regulatory system exists if we have no deal.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales)

I say simply that to have mentioned in the memorandum that this impressive list of people had been consulted in various ways might have allowed us to finish in record time, as the hope for that had been expressed.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I take that point, although I would not bet on it myself. On that point, I emphasise that the ministerial round tables took place not just once but regularly between August 2016 and March 2017, led by the Secretary of State, and in March and July in 2018, led by the Minister. But I take the point about explaining that. The difference between this and the SI we talked about the other day is the commercial sensitivity of the decisions that have to be made in moving head offices, the effect on the workforce, and so on.

I will address the general issue of whether we are being complacent about relying on the ECTT. We acknowledge that it might be possible that some services will require two licences—one for the purposes of the AVMSD, and one for Ofcom—because this is the case for services which are available in both ECTT and non-ECTT countries. In the way that these services are received—by satellite—it is difficult to exclude some countries from the distribution. There are about 500 Europe-facing services out of the 1,200 that Ofcom currently licenses. To date, we are aware of about 130 licences moving. It is fair to say that broadcasters are concerned about the risk of dual regulation, and are reluctant to rely on the ECTT—it is considered an untested convention, as EU law has been in place for so long. Nevertheless, I am sure noble Lords would agree that we should not ignore conventions and international agreements that we have signed up to, nor should the other countries which have signed them.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee

If we follow the Minister’s logic, he said earlier that there are about 50 or 60 channels that are currently not EEA members but which are based there, and which will need a licence. They will get a six-month period, a point raised by the noble Lord, Lord Pannick. In view of what the Minister is saying, is it not quite likely that the number of channels that are in EEA EU countries will themselves decide to get an Ofcom licence? What assessment has he made of the number that may well choose to do that, and in considering that, is he aware that the latest information I have received is that only one company is considering basing all of its planning on the ECTT? Following from that, presumably there will potentially be a large number of people wanting licences from Ofcom, so can he also tell us how long it will take Ofcom to deal with each licence and whether it will be able to get through the requisite number in the six-month period?

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I do not agree with that premise. We have said that we will apply the ECTT, and in fact, this SI brings it into law.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee

That was not the point I was making. The point is that I understand that it is quite likely that a number of companies that are providing services to the UK, which could rely on the ECTT to not require a licence, will, none the less, make the decision that it is in the best interests of their protection to seek such a licence from Ofcom. Presumably, they will be required to do it within the same six-month period, so there is a potential problem with the number of licences that Ofcom can handle.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I am still not clear why, given that we have explained that we will accept ECTT countries, they think they should have to take the precautionary approach of getting a licence as well.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee

I will give a specific example: it could be in relation to the differences that exist in the advertising regime, to pick up the point I raised earlier in my initial contribution about any changes that we might make. Given that there is not a formal legal redress system under the ECTT, they may feel it better to have a licence here and simply stick to the rules that we impose.

Photo of Lord Ashton of Hyde Lord Ashton of Hyde The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

Of course, that is a possibility that was not available to them under the AVMSD, and it may be of benefit to them. It is impossible to say. I agree with that they may do that. I think it is unlikely, but the noble Lord is absolutely right that it is possible.

Very few services would be able to rely solely on the ECTT. First, the main broadcasters already have a physical presence in the EU, which brings them into EU jurisdiction. As I said, it is also extremely difficult to limit services being available in purely ECTT countries because of the way that satellite transmission works. One of the problems with the AVMSD is that it does not set down any hard and fast rules about which services fall to be regulated; it talks about services receivable on standard consumer equipment, which is a benefit that the new Ofcom definition will address.

To date, we are not aware of any companies currently licensed in the UK which intend to rely on the ECTT. The smaller companies based in the UK which provide an EU-facing service only would be able to access the AVMSD market under the technical criteria, based on their satellite uplink. Therefore, I do not think we are being complacent about relying purely on the ECTT. The evidence for that is the fact that in the technical notice, we specifically said:

“If the service is available in the EU and only available in one or more of the 20 ECTT countries noted above, freedom of reception should be permitted in accordance with ECTT. However, you should seek local legal advice to check how national law deals with ECTT obligations to permit freedom of reception of the service and what action (if any) needs to be taken … You should be aware that you may need to have two licences”.

We have been clear on that.

Finally, I confirm to the noble Lord, Lord Foster, our commitment to regulate video-on-demand services. Just to reiterate, a letter that my honourable friend the Digital Minister wrote to Kevin Brennan in the other place says that the Government are aware of the need to consider a long-term approach to regulating video-on-demand services in the UK but that such changes cannot be introduced under the draft regulations.

I hope that I have covered most of the points that noble Lords raised. I am grateful for them. I beg to move.

Motion agreed.