Channel 4

Backbench Business – in Westminster Hall at 11:00 am on 19 July 2016.

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Photo of Graham Jones Graham Jones Labour, Hyndburn 11:00, 19 July 2016

I beg to move,

That this House
has considered the future of Channel 4.

It is a pleasure to introduce this debate under your chairmanship, Mr Stringer; I believe it is my first debate with you in the Chair. This is clearly an important issue. In the post-Brexit politics we are in, a number of issues are not being given the merit they deserve, and one of those is Channel 4, which, like many of our public services, is under attack by the current Government. I feel that we ought to have debates on our public assets and services, and today is an opportunity to have one.

I have initiated this debate on the future of one particular public service that I cherish—Channel 4. It is a public service that is the cornerstone of Britain’s world-renowned broadcasting ecology, but one that the previous Secretary of State for Culture, Media and Sport, Mr Whittingdale, was hellbent on privatising during his time in office. We need to test the Minister on whether he is going to continue along the path followed by the previous Culture Secretary in respect of Channel 4. Although we have since had the reshuffle, in which the right hon. Gentleman was removed from that position, no doubt due to his unpopular desire to wield the royal charter review against the BBC, we cannot be complacent about preventing his ambitions from being realised.

We have good cause. A recent freedom of information request, seen by the Select Committee on Culture, Media and Sport, revealed that the new Culture Minister met the previous Culture Secretary in secret to discuss Channel 4 reform options last September. It is important to put that on the record because we need to know where we are going. This is not a fresh start; there have obviously been conversations in the past and I think Parliament ought to be told what those conversations were about. It is for that reason that I called for this short debate on Channel 4’s future before the House adjourns for recess. I am sorry that it is in the first week of the Minister’s new duties; I congratulate him on getting the job but, for the reasons I have outlined, it is important that we have this conversation before we go into summer recess. I look forward to his comments, particularly on his conversations with the former Culture Secretary, and perhaps we can begin a debate about the future of Channel 4.

To begin with, what is Channel 4 and how does it fit into the UK’s broadcasting ecology? Channel 4’s statutory remit requires it to deliver high quality, innovative and alternative content, and throughout its history it has been incredibly successful in fulfilling that. Its glittering record of airing fantastic programmes has provided the channel with a consistent viewing share of 11% over some 30 years.

Photo of Justin Tomlinson Justin Tomlinson Conservative, North Swindon

On that specific point, we should pay tribute to Channel 4’s commitment to showing more than 700 hours of coverage of the Paralympic games. More than 75% of its presenters will have a disability and will have been trained and they are the best in their profession, which will encourage and entice other media outlets to join Channel 4 in creating more opportunities for disabled people.

Photo of Graham Jones Graham Jones Labour, Hyndburn

That is an intuitive and well-made point. I was going to come to it further in my speech, though not with such eloquence and detail as the hon. Gentleman. Besides the Paralympics, long-term programmes such as “Dispatches” have been highly successful, and Film4 productions have been critically acclaimed so it is of little surprise that Channel 4 has been unfailingly popular since its creation. What is more, as a publicly-owned but commercially-funded broadcaster, it continues to air such innovative content in a sustainable manner. Because Channel 4 is funded by advertising and is financially self-sufficient, taxpayers can watch high-quality programmes at no cost.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

I, too, am a fan of Channel 4, for all of the reasons that the hon. Gentleman and my hon. Friend Justin Tomlinson have already mentioned, and because Channel 4 supports something like 19,000 jobs and spends more—some £600 million—on content from independent producers than any other channel in the UK. Does the hon. Gentleman agree that if it ain’t bust, don’t fix it?

Photo of Graham Jones Graham Jones Labour, Hyndburn

Mr Stringer, I assure you I did not distribute my speech in advance of the debate, but that is a further point I will go on to elucidate. The hon. Gentleman made the point I am going to make about the financial benefits of Channel 4 and the fact that it is an aggregate benefit, operating as now in the public sector but with private funding, and it is an asset to the public.

The model is unique within the UK’s broadcasting ecology. Unlike other organisations, Channel 4 operates as a publisher-broadcaster, meaning that it does not produce its in-house programmes. Instead, it commissions all of its content from independent production companies from across the UK private sector and works with more independent producers than any other channel. As a result, Channel 4 supports a vast network of small and medium-sized enterprises. Since its creation in 1982, it has spent £12 billion on content and, as the hon. Gentleman said, it spent a record £600 million on content last year alone, of which £455 million was spent on British programming. While other public service broadcasters have cut their investment in UK content, Channel 4’s model has enabled it to weather market forces and increase its investment, and it therefore makes a huge contribution to the wider economy. Indeed, its own analysis has found that it adds over £1 billion to the UK’s gross added value and supports 19,000 jobs per year, as the hon. Gentleman said.

Just as Channel 4 occupies a crucial space in the UK’s broadcasting ecology, it also play a vital role in ensuring that the ecology is representative of our society. According to Trevor Phillips, a former chair of the Equality and Human Rights Commission, Channel 4 has been at the forefront of promoting minorities within our national media. Its news has a higher proportion of young and black, Asian and minority ethnic viewers than any other public service broadcaster. It is the only public service broadcaster whose overall viewership is getting younger, and its transformative impact on social attitudes, by presenting the viewpoints of BAME and lesbian, gay, bisexual and transgender people, as well as people with disabilities, has been remarkable.

Photo of Kelvin Hopkins Kelvin Hopkins Shadow Secretary of State for Culture, Media and Sport

I absolutely endorse everything my hon. Friend has said. Does he agree that Channel 4 has a great record of standing up to the political establishment—a role that is an essential part of our democracy?

Photo of Graham Jones Graham Jones Labour, Hyndburn

I could not agree more with my hon. Friend about standing up for democracy and for minorities against those at the top. That is an issue that we are both going through at the moment, in that we must have that conversation and support those within a pluralistic environment who wish to express a minority view. Of course, I am referring not only to Westminster and to the broadcasting ecology but to my own party. We must support pluralism, and Channel 4 does that. As mentioned by Justin Tomlinson, the Paralympic games this summer is a fantastic example of just what Channel 4 achieves; 66% of the on-screen talent and 15% of the production team will be people with disabilities. The coverage will be more accessible than ever for disabled viewers, and Channel 4 has even set aside £1 million to encourage advertisers to make their commercial airtime more inclusive of people with disabilities.

Channel 4’s success in representing people across the UK is no more evident than in its engagement with regional talent. Apart from the BBC, it is the only broadcaster with a specific commitment to invest in production outside England. Indeed, in the past five years Channel 4 has invested £720 million in content outside London. Last year alone saw Channel 4 spending £149 million on production in the nations and regions and broadcasting over 50% of its hours from those areas. It runs a dedicated nations and regions team in Glasgow and operates a growing sales team in Manchester, and it works with a range of production companies across the north of England and Scotland. Channel 4’s direct investment in those areas is equally impressive. From the Northern Writers’ Awards and its creation of regional hubs to its funding of the Leeds-based company True North, Channel 4 is at the forefront of promoting regional talent.

Photo of Kevin Foster Kevin Foster Conservative, Torbay

I congratulate the hon. Gentleman on securing this debate. I wonder what impact people watching “Eurotrash” 20 years ago had on the referendum, but we will park that for one minute. He rightly referred to Channel 4’s work in the regions. What does he think of suggestions that the headquarters should move out of London?

Photo of Graham Jones Graham Jones Labour, Hyndburn

Any decisions specific to Channel 4 need to be thought through. I am not for immediately saying, “Oh yes, that’s a good idea,” but as an MP from the Manchester region, I would welcome investment in my region and taking the headquarters out of London, as was done with the BBC. Of course, every MP would want industry to be relocated to their constituency from somewhere else. If we are to move the centre of Channel 4 out of London, it has to be done in a reasonable, organised and logical way, but I am not averse to that argument.

Channel 4’s promotion of regional investment is impressive, and its model has produced a history of fantastic northern TV. As programmes such as “This is England” or “Phoenix Nights” testify, it represents a rare example of the Government’s so-called northern powerhouse at work. The nub of the issue is that privatisation would threaten Channel 4’s contribution to the economy and its success, and would certainly represent a threat to its model of promoting all these things.

Selling off Channel 4 would naturally transform its operational model from not-for-profit to for-profit. Its content would suffer as a result, since Channel 4 would have to cut its expenditure on programming by £280 million per year if, like ITV, it was to return a 28% profit margin to its shareholders. Channel 4 has a turnover of £1 billion—a 28% reduction would mean a huge cut in its commitment to regional programming, talent, supporting not-for-profit programming and all the good stuff that it does. Since the broadcaster is essential for sustaining the independent production sector, that would result in a reduction of funding for small and medium-sized enterprises and reverse Channel 4’s success in job creation.

A Channel 4 dictated by the needs of profit would also undermine its promotion of diversity. Under the current model, Channel 4 balances socially valuable but loss-making programming such as the Paralympic games with its more commercially successful broadcasting. However, under privatisation, programmes would be not only squeezed financially but determined by the shareholder, rather than societal value, as representatives from Sky and ITV have recognised. Channel 4 is distinct and different. That privatisation would be both economically nonsensical and socially irresponsible is made even clearer if we consider the country’s recent vote to leave the European Union, since Brexit has increased economic uncertainty and revealed stark divisions between our regions and nations.

Given that the UK requires economic stability and regional representation now more than ever, will the Minister press on with the privatisation of Channel 4, effectively destroying the organisation as we know it—one that has repeatedly weathered economic storms and helped to bridge the gulf between the capital and our regions—or will he put to rest rumours of privatisation and end a period of uncertainty that is having such a negative effect on Channel 4’s commercial activity? If he is going down the privatisation route, I will be very interested to know how he is going to do that.

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy) 11:14, 19 July 2016

It is a great pleasure to serve under your chairmanship, Mr Stringer. I am very grateful to Graham Jones for his contribution and for bringing me to Westminster Hall on day two of my new job. As he mentioned, I have had discussions about this issue with the previous Secretary of State for Culture, Media and Sport, and we decided as a Government to ensure that we would look at all options on the following bases.

Like the hon. Gentleman, I cherish Channel 4. It was introduced by a Conservative Government and we are proud of what it has achieved over the past 34 years. I want to see Channel 4 continue to thrive and have a sustainable future. The question is, how do we best do that? I am focused on the challenge of ensuring that the public service broadcasting system, with Channel 4 at its heart, can continue to play a leading role in the UK’s cultural life for many years to come.

We are committed to public service broadcasting in the UK, which is a key driver of one of the most successful TV markets in the world. Ofcom reviews consistently show that public service broadcasting is valued by the public. Its 2016 review, which was published only last week—I am sure the hon. Gentleman has seen it—found that last year, 84% of the TV population aged over 4 watched some of the main five PSB channels in a typical week; 86% of viewers believed PSB news programmes were trustworthy; and 83% of viewers felt PSB channels helped them to understand the world.

Channel 4 is a fundamental part of the PSB system because of the range of programmes it broadcasts, its reflection of the UK’s cultural identity and its distinct and different offering. As the hon. Gentleman said, it performs a role in challenging the establishment. That is something I have had direct experience of, and I have always enjoyed the rigours of the challenge that Channel 4 provides. It stands up to authority through, for instance, “Dispatches”. I also endorse the comments of my hon. Friend Justin Tomlinson on the coverage of the Paralympics in 2012, which was outstanding.

Channel 4’s commitment to diversity in all its forms—in terms of not only gender or ethnic background but also, for example, LGBT diversity—is a valuable and important part of its remit. Channel 4 has developed a unique character since it was established under the then Conservative Government 34 years ago. From “Countdown” to “Gogglebox”, “Father Ted” and “Unreported World”, Channel 4 is known for its innovation, originality and outspoken nature. It has also played a key role in the development of the independent production sector, which is now a huge sector that exports around the world and is worth more than £3 billion to the UK economy.

We need to think about this more broadly than just the channel. Through Film4, the Channel Four Television Corporation has played a role in some of the British film industry’s biggest successes—“Slumdog Millionaire”, “Four Lions” and “12 Years a Slave” come to mind, but there are many others. The importance of Channel 4 is recognised across the industry and across the House.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

I congratulate the Minister on his new appointment. In his first week in the job, may I suggest that this is an opportunity to preserve the innovative legacy of Mrs Thatcher when she created Channel 4 in the 1980s, and to make a name for himself by creating certainty for what is, as he and other hon. Members have commended it for, the most successful, diverse, creative, youth-engaged and innovative British-backed broadcaster, by saying once and for all that Channel 4’s future in its current form is safe in his hands?

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy)

My hon. Friend tempts me, but the broadcasting market is changing rapidly. That is why the previous Secretary of State decided to look at all the options. It would be a bit previous of me, on day two in my job, not to consider where that work has reached in our goal of a sustainable future for Channel 4.

Photo of Graham Jones Graham Jones Labour, Hyndburn

I accept and respect that this is day two of the Minister’s current job, but he had previous conversations about Channel 4 with the former Culture Secretary in his previous ministerial post, so it is not necessarily day two. Is he ruling out or ruling in privatisation and a sell-off?

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy)

It is also day two for my Secretary of State. The issue needs to be considered realistically in the face of the facts. Channel 4 acknowledged the risks facing its business model in its 2015 submission to Ofcom’s PSB review when it said:

“Channel 4 believes the potential downside risks associated with…factors, such as a faster shift to on-demand viewing, the emergence of new disruptive entrants, faster fragmentation of audiences, production cost inflation outpacing funding, and structural changes to the licence fee of TV, outweigh the potential opportunities. Moreover, Channel 4 is arguably the PSB most likely to face the future first, given its focus on risk-taking and trying new things, and also its targeting of young audiences, who are the most avid users of new technologies and platforms.”

That must be true. Some 94% of its total revenue comes from TV advertising, and with so much of its revenue coming from advertising, an open question remains about how Channel 4 is affected by shocks to the economy, such as Brexit. It is our duty to make Channel 4 sustainable.

Photo of Kelvin Hopkins Kelvin Hopkins Shadow Secretary of State for Culture, Media and Sport

I congratulate the Minister on his new appointment. Will he, at the very least, take back to his colleague in the Government and to the Secretary of State the strength of feeling that has been conveyed from both sides of Westminster Hall this morning?

Photo of Graham Jones Graham Jones Labour, Hyndburn

I want to follow up on this interesting exchange. I recognise the passage that the Minister read from Channel 4, but it would be disingenuous to suggest that its position going forward is that it wants to change its model. Channel 4 executives are happy with the current ecology and want it to remain. They respect and see the challenges going forward, but at the moment their preferred option, by a considerable margin, is as we are, not for change.

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy)

As a Conservative, I understand the arguments against change. They exist in almost any circumstance, but that does not mean we should not look to the future and at the risks and opportunities it provides, and the way things are organised so that they make the most of the opportunities and mitigate the risks. That is what we are doing. I hope the hon. Gentleman has heard in the tone of my response that it is our approach to do that in a way that supports public service broadcasting and some of the unique attributes that Channel 4 brings to that broadcasting.

Photo of Mims Davies Mims Davies Conservative, Eastleigh

I reiterate the point about the executives being happy both with being scrutinised and with wanting surety for the market. I agree with my hon. Friend Tim Loughton that we would like to hear that Channel 4 is safe in our hands. Its achievements include issues such as transgender, and it is making its future safe with “Come Dine with Me”, which I think is funding most of the opportunities for diversity that the company is bringing forward. I absolutely applaud the Minister for continuing to look at all the options, but I hope he comes back to the option that we are already at.

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy)

It is important to get this right and to take the time to come to the right conclusion. After all, the main channel, Channel 4, where most public service broadcasting resides, has seen its audience fall from more than 10% to under 6% over the last decade. We must take such things into account.

There are some concerns about the remit. Key to driving the public service broadcasting aims of Channel 4 is the remit, which has evolved over time. There are concerns, for example, about Channel 4’s performance against the requirement to provide content for older children. Ofcom has repeatedly raised this concern and the Lords Select Committee on Communications recently concluded that Channel 4’s current programming in this area is unsatisfactory. We must go into the full details of how the remit is executed to make sure we have got that right.

Ofcom also found that spend on first-run UK-originated children’s programming has fallen by 45% since a decade ago. Older children’s programming is an important part of the remit as written.

Photo of Graham Jones Graham Jones Labour, Hyndburn

This is an interesting debate. On the Minister’s point about falling viewing figures in the last decade, there is now, of course, a plethora of choice and channels. It is natural that, for example, if in his West Suffolk constituency there are 10 candidates on the ballot paper, everyone receives fewer votes, but if there are two candidates, everyone gets more. It is a bit like television channels.

The Minister says that viewing figures have fallen, but that is because of the plethora of offers available. The key point is that Channel 4 is not making a loss. It is still breaking even on its viewing figures. That is a key issue that we need to and should remember. It is not losing viewing figures and money; it is losing viewing figures because of diversity across the platforms, but it is not losing money. It is still providing wonderful content, which is probably better than 10 years ago.

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Culture, Media and Sport) (Digital Policy)

The viewing figures I set out were a proportion of the market. The hon. Gentleman is right about Channel 4’s current financial status, but it acknowledges the risks because such a high proportion of revenue comes from advertising, which is, as everyone knows, a highly cyclical part of business and there may be shocks to the economy, not least the impact of Brexit, which is as yet impossible fully to ascertain. I take his point, but the matter must be looked at in the round.

I hope I have demonstrated the Government’s commitment to Channel 4 following its rich and proud history, our acknowledgment of and support for its work in promoting a plural and diverse element of our national life, its holding authority to account with rigour and innovation, and my personal commitment to Channel 4 and seeing it thrive sustainably. We will certainly take on board the points that have been raised from both sides of the Chamber. We will consider them over the summer with a mind to ensuring that Channel 4 has a strong and sustainable future. I have no doubt we will have the opportunity to discuss these matters again.

I have been remiss in waiting until the last minute of this debate to welcome to the Front Bench Kelvin Hopkins, who has a long history of involvement in these issues. We will make sure all views are considered and that, as we consider how the remit should be set going forward and how to ensure that Channel 4 is strong and sustainable in future, all voices in the debate are heard.

Question put and agreed to.

Sitting suspended.