Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 586 - 599)




  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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