Examination of Witnesses (Questions 586
- 599)
TUESDAY 12 MARCH 2002
RT HON
TESSA JOWELL,
RT HON
PATRICIA HEWITT
AND MR
ANDREW PINDER
Chairman
586. Secretaries of State, and Mr Pinder, I
would like to welcome you here today, and thank you very much
for appearing. I do not know whether it is the first time that
a select committee has had two secretaries of state willing to
appear before it together, but we are much obliged to you. Secretary
of State for Culture, Media and Sport, if you would like to make
an opening statement we would be glad to hear it; and then Secretary
of State for Trade and Industry if you would like to make an opening
statement. I am doing it in alphabetical order!
(Tessa Jowell) Thank you, Chairman. There
are just a few points about the process that I would like to make
by way of introduction to help the Committee in terms of the timescale
to which the development of this policy is working. As you will
be aware, the White Paper, on which you conducted an inquiry,
was extensively consulted on; and work has been underway over
the last nine months, nearly a year now, on the translation of
that policy into the draft legislation. As I think we have indicated
already, we hope to be in a position to publish the draft Bill
towards the end of April in order that it can then be subjected
to a period of pre-legislative scrutiny by both Houses. Concurrently
with that, there will be a further consultation with the industry.
In the light of both processes of consultation, any further amendments
to the draft legislation will be made in the hope that this Bill
will find a place in the Queen's Speech and move to second reading
some time in November. Part of the policy which has been developed
on a separate track is the policy in relation to media ownership
and cross-media ownership. We conducted a separate consultation
in order to develop the proposals (in fact there were no major
proposals in the White Paper) on media ownership. That consultation
finished at the end of January. I have been engaged in discussion
with a number of those who submitted responses, and we expect
that the draft clauses on media ownership and cross-media ownership
will not form part of the draft Bill, but that the policy on media
ownership will be announced at the time we publish the draft Bill.
The draft clauses will then be available to the joint committee
and for wider consultation during the consultation period. I hope
that helps the Committee in giving an indication of progress and
the rate of progress.
(Ms Hewitt) Thank you very much, Chairman. Just to
add to what Tessa has said, and perhaps just to give a little
bit of background here. If it is the first time that two secretaries
of state have appeared simultaneously before a select committee
then I do think it is entirely appropriate; because what we have
done in developing the White Paper and, shortly to be published,
the Bill is something of a first. When I became the e-Commerce
Minister I discovered that the DTI was about to start work on
a White Paper on telecommunications regulations, and the DCMS
was about to start work on a White Paper on broadcasting. It was
quite obvious, both to Chris Smith and to myself, that this made
no sense whatsoever and that there should be one White Paper on
the Government's future policy framework for the communications
sector. From that clear view from Chris Smith and myself, we established,
first of all, a joint team of officials to carry forward the White
Paper, and then of course a joint team to do the actual work on
the Bill. It has been a very effective example of cross-departmental
working with, instead of DCMS officials advising the Secretary
of State for Culture and DTI officials advising their secretary
of state, a joint team advising both secretaries of state and
our junior ministers simultaneously, which has been very good.
Of course, the reason we have done it was not to demonstrate that
joined up working is entirely possible; we have done it because
the issues of content development and regulation, infrastructure
investment and regulation, and spectrum management are now so
closely interlinked that we believed we would risk jeopardising
the development of this sector in the United Kingdom if we did
not create one single consistent regulatory and policy framework.
That is precisely what we have set out to do in the White Paper;
and in the Bill, as Tessa has said, that will shortly be published
ensuring that the issues of economic regulation and content regulation
are both given proper attention and that the connections between
them can be properly understood and handled.
587. Could I just ask a factual question, insofar
as you are able to answer it, about when you envisage this Bill
being enacted and implemented?
(Ms Hewitt) Our commitment is to establish OFCOM during
2003; so naturally we would be seeking to ensure that the legislative
timetable permits us to reach that objective. For reasons you
will understand, I cannot pre-empt decisions that have to be made
on the timetable.
588. The only reason I ask that is because I
think it is useful for the Committee to understand the timescale
on which we are operating. The last Broadcasting Bill was enacted
in 1996;we are looking at something like 2003 for this. That is
seven years, so one might envisage that we are looking at a Bill
that might be expected to last until 2010; and, therefore, that
is the perspective I think it is necessary for all of us to look
for.
(Ms Hewitt) That is absolutely correct.
Miss Kirkbride
589. I do apologise in advance because I have
an election in which I have to go and vote in person. I have to
leave at 11.30, but it is with no disrespect to your evidence
which I will be reading afterwards. I think the first point about
what we are going to do here is to do with analogue switch-off.
Does it not concern both Ministers that of the millions of televisions
that are still being sold they are analogue and not digital? Is
the Government, as part of this Bill, going to give a very firm
date about analogue switch-off?
(Tessa Jowell) The policy remains the policy as set
out by Chris Smith, that we are aiming for analogue switch-off
between 2006 and 2010. We believe that that is a challenging timescale;
we believe it is a realisable timescale, subject to the successful
co-operation that is now underway both across our two Departments,
but also engaging with the industry and the broadcasters in order
that the issues of respective concern and responsibility in taking
them forward can be properly addressed. In relation to your point
about the sale of televisions, yes, it is a matter of concern;
and one of the actions that will shortly emanate from the Digital
Action Plan is consultation on the issue of mandating the sale
of integrated televisions; but there are broader issues, obviously
of public concern, and that is the issue for the market. As I
always say when I am asked about this, I think there is still
a major task to be achieved of winning people's hearts and minds,
selling the case for digital and people deciding that this is
a switch that they personally want to make. That is the challenge
but the timescale remains the same. With the concerted and focussed
efforts set out in the Digital Action Plan, led by the two Ministers
from my Department and from Patricia's Department, working with
the industry stakeholders group now in place, we believe that
the timetable is achievable with that momentum.
590. It remains some eight years away potentially
from the timescale you give. As you say, it is a matter of concern
about the fewer television sets sold which are digital, is it
not something on which you should show a bit more proactive leadership
to bring the date forward? Potentially you are dealing with the
Treasury as well, insofar as buying out those people who will
be unhappy to convert their televisions, so the analogue spectrum
could provide a source of income to do that and bring this forward
in the best interests of Britain into the digital age.
(Tessa Jowell) As you rightly say, the end date is
still eight years away. As I have indicated, and you have no doubt
had an opportunity to study the Digital Action Plan, you will
see there the range and technical complexity of many of the tasks
that are to be undertaken. It is important that we create as much
certainty as possible. The certainty is established by the four-year
window, 2006-2010. It will be necessary towards the end of that
period—we recognise this—but it is too early to determine
the precise nature of the steps to be taken. Of course, it will
be necessary then to look at the numbers of people who remain
unconvinced and still with their analogue sets to make judgments
in light of the numbers, a sort of demographic profile, and to
agree action in the light of that. We know what drives digital
take-up. What drives digital take-up is good content. The investment
very particularly the BBC are making in new services is, we believe,
an important contribution towards that.
(Ms Hewitt) Chairman, if I may, could I just add to
a point Tessa has made on that, because this is another very good
example of the connection between content and infrastructure and
one driving the other. I do not know, Chairman, if you remember
but we previously discussed the question of integrated digital
television, and it is frustrating that, with a few exceptions,
there are not yet many really easily affordable integrated television
sets on the market. Of course, it is not only through an integrated
set that you will get access to digital television. One of the
issues we are addressing in the Action Plan is the availability
of cheaper set-top boxes that will give access to the full range
of digital services sitting on top of the existing analogue services.
We are also doing more particularly with the digital TV logo,
and an advertising campaign will soon be launched to ensure that
consumers have the information they need and are not misled by
thinking that a large and very expensive wide screen television
is in fact a digital television, when it is probably nothing of
the kind. On the issue of, should the Government be buying out
people who have not yet made the switch, it is important to get
the timing of that decision right; because, of course, a premature
announcement that we are going to be buying out customers who
have not switched may have the absolutely perverse effect of slowing
down the take-up that would otherwise have happened as a result
of developments within the market, strongly assisted by ourselves.
(Tessa Jowell) Can I just add one final point, which
perhaps will reassure the Committee, to say that our records so
far in relation to digital TV ownership is running at more than
twice the average rate in Europe. The latest figures show that
in the UK digital TV ownership is running at [37] per cent, and
in Europe at 16 per cent.
591. Is this with Sky?
(Tessa Jowell) Yes.[1]
592. So it is not a digital set but a digital
Sky system?
(Tessa Jowell) Yes.
593. Can I move on to the BBC, and whether or
not it will fully come under OFCOM. I think the thing which most
concerns me on the Committee is that a case has not been fully
made for the BBC to be excluded in whole part under OFCOM, particularly
with regard to its commercial dealings, and whether or not the
BBC really plays fair with the commercial sector in terms of services
provided to British Airways or other people; and whether or not
that really is an area in which the OFT should regulate—whether
the BBC is acting fairly under the licence agreement and, therefore,
within the auspices of OFCOM as opposed to the governors who make
decisions at the moment in a rather perverse way.
(Tessa Jowell) I think that is one for me. You are
right to phrase your question as you did—will the BBC come
fully under OFCOM—because you obviously recognise that in
parts of its regulatory responsibility OFCOM will be responsible
for the BBC; and certainly in relation to the BBC's commercial
services, OFCOM will have oversight and will be the regulator
in relation to those commercial services. In relation to the BBC
more generally, the position that will appear in the draft Bill
is the position as set out in the White Paper. It might help the
Committee if I just very quickly run through it. It will maintain
regulatory responsibility of the governors; and will at the same
time, however, and for the first time make all broadcasters accountable
to common standards of regulation under the first of the three
Tiers that will be established by OFCOM. In relation to those
standards that apply to all broadcasters covering negative content
and so forth, the BBC will be expected to apply the same standards
as other broadcasters. In relation to Tier 2 and Tier 3, again,
Tier 2, dealing with the quantitative aspects of broadcasting,
the proportion of independent production, the proportion of UK
production, the proportion of regional programming, the BBC will
be liable for standards which are the same as those applying to
other public service broadcasters, and those standards will be
set by OFCOM. Tier 3, which is the Tier at which broadcasters
will be self-regulatory (this is part of the deregulatory thrust
of the new regimes as compared to the present time), the BBC will
be more heavily regulated than it is our intention to regulate
the other public service broadcasters. I am happy to go into that,
Mr Chairman, in some detail should you wish me to do so. There
are areas of the BBC's operation that will certainly have reference
to OFCOM. As I have indicated, the commercial services will be
regulated by OFCOM. There will then be other areas like decisions
about new BBC services where the decision is taken by the Secretary
of State. Once OFCOM is established, OFCOM will have a role in
advising the Secretary of State on the marketing impact of new
services. To suggest that the regulation of the BBC will be entirely
separate from and without reference to OFCOM is simply not the
case; but it is our intention, as set out in the White Paper,
and in recognition of the unique constitution of the BBC to maintain
a dual system of regulation—the governors for the BBC, and
OFCOM for the other public service broadcasters and the other
commercial broadcasters at tier one.
594. New services, a new channel for example,
would remain within your offices; you would be the final arbiter
as to whether or not a new service could be provided by the BBC?
(Tessa Jowell) Yes, I would; but I would take advice
in doing that from OFCOM on the very important issue in relation
to the wider broadcasting market, and there are very clear standards
or tests that the BBC have to meet in submitting bids for new
services; they have to be consistent with the public service remit
and distinctive.
595. Market failure?
(Tessa Jowell) Not market failure specifically, but
they have to be considered in context of the broader impact on
the broadcasting market. When I gave approval of the two new children's
channels in the autumn, and when I gave approval to BBC4 it was
because I was satisfied on those grounds. When I did not approve
BBC3 it was on two grounds. Firstly, I was not satisfied that
the first submission was sufficiently distinctive and consistent
with the public service remit of the BBC in what is a very crowded
part of the broadcasting market; and, secondly, I was not satisfied
that it would not have an adverse effect on the broader market.
596. Can I be clear about existing services
where the BBC is competing in a market in which other commercial
operators would like to offer their own services; it might help
to go back to a specific example where the BBC offers a new service
to British Airways as well as one on the Paddington Line. There
is a row going on about that particular service. It is believed
the BBC basically offers it for free, and that means no commercial
provider can actually offer that service in that way. Who is going
to decide that in future; are those commercial markets who are
upset about it going to go to OFCOM, with no reference to the
governors; the governors will be excluded from this?
(Ms Hewitt) I do want to underline this point, because
I have been concerned from the outset to make sure there is a
proper system of economic regulation in relation to the BBC. You
have given the example at the moment of discussions going on about
the commercial news service that is being provided into the transport
sector. Particularly when internet usage was relatively new and
growing very fast there was concern about the BBC's commercial
website and the fact that it was offering services using brands
from its public service broadcasting. It is absolutely essential
that there is a system of regulation there that applies to the
BBC's commercial operation as it would to anybody else's; and
which can ensure, for instance, where a brand developed in public
service broadcasting is then leveraged on to a commercial internet
site, that that is paid for in a proper and transparent fashion.
At the moment those issues are dealt with by the Office of Fair
Trading. It clearly makes sense under the new arrangements to
bring that responsibility primarily within OFCOM, which will have
an overview of the entire market. OFCOM will be able, just as
OFTEL does where there are disputes between, for instance, British
Telecom and commercial competitors, to be the arbitrator between
the BBC and commercial competitors in relation to allegations
you are referring to about the BBC's commercial services.
597. What thought have you given so far to the
ownership of ITV, who are clearly in quite a lot of difficulty
at the moment? Are you able to expand on that before you can make
announcements to the draft clauses?
(Tessa Jowell) Not beyond what you already know, which
is that we have signalled our intention to lift the media ownership
rule that restricts the creation of ITV by setting a limit on
audience share. By lifting that rule, consolidation of ITV would
become possible within the context of media ownership rules. Of
course, it would be subject to competition rules. In a sense,
there are two hurdles: the existing media ownership rule which
we intend to remove; but, of course, competition rules would be
the key set of judgments that the competition authorities would
want to apply.
598. Have you said anything about media ownership
of ITN, who have more onerous rules than ITV at the moment?
(Tessa Jowell) Again, we signalled in the consultation
paper our willingness to look at rebalancing the ownership share
in order to increase the investment available. As I indicated,
indeed the policy in this area is being finalised and we expect
to announce the policy and obviously deal with points like that
at the time the Bill is published.
Michael Fabricant
599. Both Secretaries of State in their opening
remarks set out the genesis of the Communications Bill and demonstrate
the Government's recognition of convergence, both in technological
terms and also in software terms—programme-making and software
terms with computers. I thought Patricia Hewitt in particular,
by raising her relationship with Christopher Smith, almost argued
that there is a lack of symmetry in having two government departments
doing just this. Really I want to ask you—and I realise
it is not in your hands, but in the Prime Minister's hands: do
you not think there is an argument (and I will address this to
both Secretaries of State) just as there is convergence in technology
and the Communications Bill which will create a communications
agency, should there not be a communications minister? Delightful
as it is to have both secretaries of state here today, in the
future there might be one secretary of state in charge of all
aspects of communications?
(Tessa Jowell) The honourable Member is entirely right
in saying that the machinery of government changes are matters
for the Prime Minister. As Patricia indicated in her opening remarks,
I think we are rising to the challenge, which is a challenge for
a lot of policy in government now, which is the need to work across
departments to find new flexibilities that deal with issues like
this where my Department is responsible for content, and Patricia's
Department is responsible for making sure content gets to the
households; but the only sensible way of developing the policy
is on the basis of the seamless team that we have established.
You will have to judge whether or not it works well. We are confident
it works well, and that it will be a model for ways of tackling
other government policy that raises exactly the same kind of challenges.
(Ms Hewitt) I completely agree with that and I would
simply add, I think there will be real disadvantages in separating
telecommunications and economic regulation of communications from
other aspects of the DTI's work; because what is happening from
the telecommunications and internet end is really an integral
part of the impact on information and communication technology
right across the economy. I think there would be a real downside
in separating that from the DTI's other industry and economic
supply side function. Equally, I suspect if you removed broadcasting
from the Department of Culture, you would lose synergies on that
side. Wherever you put departmental boundaries, you have to join
it up in order to ensure there is a proper approach to the communication
sector, and I think that is what we are doing.
1 Footnote by witness: correction: the latest figure
for digital ownership is 39% which includes all providers of digital
cable, satellite and terrestrial services, not just Sky (source:
Strategy Analytics). Back
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