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2 May 2006 : Column 421WH—continued
Local Radio Franchise (Plymouth)
12.30 pm
Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): Over the past two years, through a series of debates—about our university, our burgeoning health and marine science industries, our transport challenges and the urban renaissance in my constituency—I have been able to draw to the House's attention the progress of the city of Plymouth. My Conservative predecessor left a legacy of Plymouth having the poorest ward in England. We now have an urban vision developed by leading architect David Mackay, a planning framework to implement his vision, and the award of the Royal Town Planning Institute silver jubilee cup to the city council team that is bringing it on-stream—it beat the team that is bringing the Olympic village on-stream. We will soon be unveiling the economic strategy to match our ambitious aspirations for the built environment. Progress is evident all around us in Plymouth in the form of cranes on almost every horizon. Plymouth is a city on the move. Strong partnership work across the public, private and community sectors underpins its new-found confidence.
It was therefore unsurprising that when Ofcom announced that applications were invited for a licence to operate a new commercial radio station in Plymouth, there was a lot of interest from people in the area. That interest came from people with substantial roots in the community, and with proven track records of running businesses, particularly in the radio and media industry. David Rodgers, David Fitzgerald, Ian Calvert, Richard Bath, Louise Churchill, Elaine Elliott, Alan Qualtrough, Graham Gilbert, Angela Rippon and Hugh Scully, to name but a few, came forward in respect of four bids with local roots. As well as investing their own time and money over two years and undertaking four trial broadcasts, they took into account the views of more than 4,000 people living in Plymouth, dozens of Plymouth businesses and hundreds of listeners.
Unsurprisingly in the context of a city on the move, all that research pointed in the same general direction: a wish for there to be a radio station that is much more Plymouth-focused than any of the current stations, and for it to complement and reinforce the pride and confidence people have in the city. Therefore, there was consternation, disbelief, astonishment and downright anger when the bid went to an outsider, Diamond FM. Its proposals simply do not stack up in accordance with the climate of opinion in Plymouth as most people understand it.
In a straw poll of immediate reaction to the decision, the chamber of commerce notes responses such as "an absolute farce", "unbelievable", "bizarre" and
For where else will British local business people collect together to invest in the region of £100,000—which is how much it takes to put a local bid together properly—if a foreign-owned bank can waltz in and do what amounts to little more than desk research over the space of a month to make a successful bid?
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As the Minister and Ofcom have pointed out in replies to letters written by me and other furious people, there are four criteria to which Ofcom is required to have regard in awarding licences. They are set out in section 105 of the Broadcasting Act 1990. Let us consider each of them.
The first criterion is financial sustainability over the 12 years of the licence. It is extremely unlikely that the viability of any of the bids could have been questioned, given the substantial media shareholders who backed them. In questioning 20 advertisers, Diamond was unable to find a single one who would commit to advertising on the new radio station—hardly a ringing endorsement of its sustainability. So why did Ofcom award the licence to an applicant with financial projections which the regulator regarded as "ambitious"? Surely that can only mean that there is a strong probability that over time the quality of the programme service on offer will be downgraded so that the company stays profitable. From what people tell me about the way Macquarie Bank Ltd operates, it is hardly likely to sustain a loss leader.
Criterion (b) is how far the proposals cater for the tastes and interests of people living in the area that the licence covers, or any particular tastes and interests where that is the basis of the proposal. Ofcom refers to Diamond's proposal as likely to be "relatively popular"—which, again, is hardly a ringing endorsement. The bid is rock-based, and experience elsewhere in the UK is that rock is a notoriously difficult format with which to achieve acceptable audience levels. It also has a strong male bias, and I note that the Radio Licensing Committee considering the licence comprised of one woman among its seven members. That is unacceptable.
The research of the other four applicants produced overwhelming evidence that pointed in the same direction. Why was it ignored? Why, at a time when Plymouth has such bold ambitions, was Diamond allowed to make a virtue out of not consulting people who are leading the renaissance? On page 52 of its application, Diamond states:
Apart from Diamond's very thin local research and its making no reference to the key elements of the city's progress that I have mentioned, it wrongly quotes the name of the local paper and refers to "the Plymouth Sound", which no one who is local would ever do. Surely it could have involved at least one local person who would have spotted that. Indeed, we have yet to come across any evidence that before being granted the licence it visited the city at all, except through employing market researchers. No trial service was conducted to see whether Plymothians liked what it was offering.
Criterion (c) is the extent to which any proposed service would broaden the range of programmes available by way of local services, and cater for tastes and interests different from those already catered for. Diamond's application estimates that a locally provided rock-based station would cater for a taste not currently provided for. I will comment further on that claim in a moment.
At three minutes long per bulletin, they are certainly an improvement on those of the existing radio stations, which offer minimal local focus. Weekday news bulletins from 6.30 am to 6 pm are short—usually two minutes long—and are biased towards national and international stories. Provision of local information is minimal. However, Diamond's proposal is hardly in line with the aspirations that the more broadly based research of the other applicants demonstrated. What Plymouth really wants is much more local focus than that offered by the existing operators—97FM Plymouth Sound, Classic Gold Digital and Pirate FM.
Criterion (d) is the extent to which there is evidence of demand or support for the provision of the proposed service from people living in the area. Rock-based formats always prove challenging in the UK. After nine years, Xfm still achieves only a 1.5 per cent. audience share in London. Virgin AM nationally achieves only 1.6 per cent. and in London, where it is on FM, it achieves only a 3 per cent. share. Kerrang! in the west midlands has a 3 per cent. share.
Audience research suggested that those who wanted such a format also wanted minimal speech interruption of the music. Streaming and iPods increasingly make that possible, and will make achieving audience share with rock even more difficult. Rock music is readily available from at least three other services: Virgin AM, Planet Rock and Xfm on digital—the future of radio, perhaps. However, Diamond expects to achieve a 7.5 per cent. audience share in its first year, rising to 10.7 per cent. in year three.
The four Diamond applications were clones of each other, the common format being classic rock. Was Diamond ever going to bother about local support or be responsive to local need? How can a genuine verdict be expected before the evidence has been examined? The sample of Plymouth opinion taken by Diamond was derisory. Its licence application states that it spoke to 452 people, and 128 stated a preference for a classic rock station—a minority of a tiny sample. So Ofcom has decided that a city with a population of between 200,000 and 300,000 people will, for at least 12 years, be landed with a radio station based on the preferences of 128 of its citizens.
What my constituents say is lacking in Plymouth is a quality local news and information service—a radio station for Plymouth. Can Ofcom really say that its award of the licence satisfies the need for comprehensive local news, let alone for a fully fledged station with broad local content? Diamond has tried to recognise that by talking up that aspect of its bid in a way that allows Ofcom to tick the box, but Diamond's provision will represent only marginally more than current providers, and in a way that is wholly unlikely to meet the aspirations revealed by other applicants' research. What a lamentable waste of precious airspace at this crucial juncture in Plymouth's future.
All in all, Diamond seems to have a very tenuous claim to meet any of the four criteria. The statement Ofcom issued some weeks after the award of the licence outlining its reasoning stated,
"given the characteristics of the area, it felt unable to indicate whether any one of the four statutory licensing criteria . . . would be likely to be regarded as of particular significance. However, it
- was stated that, in respect of criterion (d)—the extent to which there is evidence of local demand or support for a proposed service, Ofcom would be likely to attach greater weight to robust and meaningful evidence of demand as demonstrated by findings from research undertaken in the licence area and, if appropriate, detailed analysis of the existing market, than to evidence of local support as demonstrated by letters from potential listeners and/or advertisers."
Why? Had it already made up its mind that it needed to create the conditions for a formulaic, cloned approach, such as Diamond's? Diamond's bid bears a close resemblance to unsuccessful Macquarie-backed bids by Radio UK Holdings Ltd. in Swansea, the north-east and Southend. It seems clear that Ofcom was tilting the playing field to allow Macquarie bank to take its place as one of the foreign-owned UK radio operators permitted by the Communications Act 2003. What on earth else could account for its being awarded the Plymouth licence when its application was so lacking in quality? Plymothians deserve better than that.
Diamond has no directors or senior managers with any knowledge of Plymouth that we are aware of. Tim Schoonmaker is listed as non-executive chairman. He is an American who certainly has great experience in UK radio from working with Emap, but he has recently joined Credit Suisse bank. Despite public reassurances that he will remain in post, it seems unlikely that he can do so for long, as he will be working for one of Macquarie's competitors. We now understand that Shaun Gregory, former managing director of Emap, is to become chief executive of UK Radio Holdings Ltd. We still have no idea who will manage the Plymouth radio station.
By way of contrast, three other applicants—Drake FM, Plymouth Live and Radio Plymouth—are local groups, and there is abundant evidence of their seeking opinions, trialling programme services and gaining support for their plans. All three easily demonstrate the financial resources necessary to sustain a 12-year local radio licence.
The Minister has responsibility for creative industries as well as broadcasting. I hope that he will take particular note of the recent letter that I received from Mark Hawkins on behalf of Plymouth Media Partnership, a cluster of just under 600 people involved in media and new media in the city that is set to become one of the five or six key clusters at the heart of the economic strategy that I mentioned earlier. He wrote to me as follows:
"We would like to make you aware of the astonishment and anger within the Plymouth media community at the recently announced decision by Ofcom to award a new local radio licence for the City to a company owned by an Australian Bank . . . The shock at this decision has not only been felt in Plymouth but also further afield. As one senior media executive told me 'It is a real slap in the face for an industry that has been identified as having huge potential for economic growth in the region. It is a disgrace that one of the locally owned bids did not succeed and enable the indigenous industry to grow' . . . Of equal concern is the complete disregard for the views of the people of Plymouth".
Pointing out that the Diamond application showed a minority of respondents expressing an interest in the format, he said:
That comes from a body that is in touch with the pulse of Plymouth in a way that no other group can claim to be with quite the same credibility. The Minister has responsibility for industries that are especially important in our region. We need to have confidence in his ability to consider what is happening in Plymouth in a joined-up way.
Perversely, Ofcom's decision can only result in a sub-optimal outcome for extending choice, providing diversity for local audiences and encouraging our indigenous small and medium-sized enterprises in the media sector. That cannot be right. If the Minister believes that my arguments do not add up to enough reason to take a closer look at what is going on under the current legislation and guidance, I invite him to tell me how and when we can revisit the criteria that led to such a perverse outcome.
Local radio should mean what it says on the tin, and I can certainly say that hell hath no fury like Plymothians who feel that they are being conned. Ofcom could scarcely have picked a less appropriate community on which to inflict a decision to grant a foreign, top-down media interest a licence for a local radio station. No city has a greater sense of new localism. If Macquarie sees the writing on the wall saying that its top-down bid is not welcome in Plymouth, perhaps the Minister can insist that it tells us sooner rather than later, and lets us have the licence back so that we can have a genuine local contest. Can he tell us whether the period that Macquarie has been allowed for developing the bid can be foreshortened? Why is it being allowed two years at this critical time in our city's history? The other bids would have been up and running much earlier. If the Minister can answer none of the above, perhaps he will consider asking Ofcom to look into whether, given the exceptional circumstances that I have described, there could be a further licence for Plymouth.
I am sure that the anger and frustration that I am channelling into Westminster from Plymouth is palpable, and it is probably only fair to signal to the Minister that we will look for further ways to raise the issues that I have outlined—after we have considered his response, of course.
12.45 pm
The Parliamentary Under-Secretary of State for Culture, Media and Sport (James Purnell) : It is a pleasure to speak under your chairmanship, Lady Winterton. I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing the debate. She has made an extremely powerful case, and I am sure that what she says was listened to with interest, both here and outside this Chamber.
This is an important issue for Plymouth, and I know that there are real concerns about the subject locally. My hon. Friend has been tireless in raising it, and in campaigning, not just on that issue but on the general importance of the economic regeneration of Plymouth. She has been discussing the issue before us with Ministers ever since the decision first came to light, as has my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck).
My hon. Friend the Member for Plymouth, Sutton is a constant advocate of the economic regeneration of Plymouth. She is absolutely right to showcase the
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importance of the creative industries to that regeneration. In fact, on 14 December she brought a delegation from Plymouth to the Department for Culture, Media and Sport to discuss the future of local television. We discussed how local television could act as a learning slope for students who want to get into the media, as well as the importance of the role that local media can play in acting as a catalyst for the development of the creative industries in Plymouth and in the south-west generally. The delegation's central point was that the media and the creative industries will be at the heart of the economic future.
I have been lucky enough to visit the south-west regularly since becoming Minister with responsibility for creative industries, and I know that my hon. Friend's view about the importance of those industries is widely shared across the region, but in particular by Juliet Williams, the chair of the South West of England Development Agency. She has been centrally involved in my Department's creative economy programme. That regional development agency is actively looking to support the emerging creative industries in the south-west.
Of course, the media are not just of economic importance; they are also culturally and democratically significant. They help to shape our local and regional identities, and it is in the media that we have debates about the future of our cities, towns and regions. That is the second reason why the issue of a licence has been of such interest in Plymouth.
In the brief time available to me I should like to explain how the decision was taken, reassure my hon. Friend about some of the local content issues—if I can—and perhaps explain what more can be done if she is not satisfied. The first and overwhelming point to recognise is that licensing is a matter for Ofcom, which takes its decisions independently of Government. That is quite proper; that is the view shared by all parties in the House of Commons. It is not for me to justify or defend Ofcom's decisions. That is a matter for Ofcom, and it is quite able to do that itself. However, it is worth thinking through what the consequences would be if politicians were able to double-guess Ofcom's decisions.
It is right that decisions be taken by experts, based on the evidence, because otherwise politicians would clearly have a conflict of interest in choosing radio stations that could cover politicians' activities. To understand that, one need only do a thought experiment about a licence being won by a group chaired by a member of a political party, or someone who had been involved with a political party. If the Government of the day decided to double-guess the decision taken by Ofcom, it would lead to widespread public concern. That is why the decisions are taken by Ofcom. Before Ofcom, they were taken by the Radio Authority. It is right that those decisions be independent, and Ofcom should be able to take them without feeling that Ministers are standing behind it, ready to intervene.
Radio spectrum is scarce, so only a limited number of services can be made available in any one area. As my hon. Friend said, the Communications Act 2003 gives Ofcom a general duty to ensure the availability of a wide range of radio services throughout the UK. When taken as a whole, those services should be of a high quality and calculated to appeal to a variety of tastes and interests.
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The Broadcasting Act 1990 requires Ofcom to take into account several factors in awarding a radio licence, and my hon. Friend went through them. They include the applicant's ability to maintain the service, the extent to which the service caters for the tastes and interests of people living in the area and broadens the range of programmes available, and the evidence of demand or support for the proposed service. Those criteria are designed to ensure a fair and transparent evaluation mechanism for applicants. They also ensure a choice of high-quality radio services for listeners throughout the period of the licence.
My hon. Friend was clearly concerned about localness. The Communications Act recognised the importance of the local content and character of commercial radio services. Consequently, it gave Ofcom a new duty to secure, where appropriate, that services should include programmes containing local material and that a suitable proportion of programmes should be locally made. The Act defines local material as material that is of particular interest to persons or communities living or working in an area.
The localness regime does not and was not intended to dictate that licence owners should be locally based. In practice, however, Ofcom requires that stations be located in the licensed area and that the service produces at least some locally made programming. Ofcom has said that it is not appropriate to prescribe in advance a specific amount of local or locally made programming for the purposes of licensing. Rather, it is for applicants to consider what is appropriate and to construct their applications accordingly. Once proposals on local context have been made, however, they become a mandatory part of the service. A local content guarantee is therefore built into the licences.
Ofcom set out in detail how those criteria were applied to the Plymouth licence award, and my hon. Friend commented on them in detail. I shall not comment on the merits of Ofcom's decision, although the regulator noted that the winning bid contained more hourly local news than bids from other applicants. Anybody listening to the debate will be clear, however, that my hon. Friend disagrees with Ofcom's decision.
My hon. Friend asked specifically about the two-year period in which the service is to be up and running. I understand that that is a maximum and that the service will be up and running within nine months.
My hon. Friend's comments also concentrated on local ownership and local representation. The foreign ownership of broadcasting services is not a new concept in the UK, and it has been possible for non-UK residents to own radio licences since the Broadcasting Act 1990. The Act allowed anyone from any member of the European economic area to own a broadcast licence, and anyone from beyond the EEA to hold cable and satellite licences. The Communications Act went one step further by removing foreign ownership restrictions on all broadcasting licences. There is nothing in legislation, therefore, to prevent a foreign company from owning a licence.
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In the case of Plymouth, Ofcom stated that the applicant would be the fifth local commercial broadcaster in the area and that the ownership of the licence by a wholly owned subsidiary of Macquarie bank would place Diamond in a strong position
That is the case that Ofcom made, although, as I said, my hon. Friend has doubts about it. I am sure, however, that she will continue to raise the issue with Ofcom.
To say the least, my hon. Friend has made a powerful case in explaining why Ofcom's decision has not been warmly greeted by all sections of the Plymouth community, but I hope that she will understand why I cannot pretend to be able to overturn that decision. As I said, there is no facility for ministerial double-guessing of Ofcom's decision, but my hon. Friend clearly believes that there are further issues to consider. She will therefore need to discuss those with Ofcom and, indeed, she is already doing so. I hope that she will also look at the local content guarantee and that she will be reassured that there are facilities and processes to enable us to consider any worries that might emerge about local content as the service develops.
My hon. Friend mentioned her concern that those local content guarantees might be diluted if the service were not financially viable. She might be interested to know, however, that anyone who believes that a licence holder is failing to comply with the terms of their licence or format can complain to Ofcom. In some cases, that could lead to fines or even the loss of the licence. Moreover, Ofcom itself will conduct regular sampling of stations to ensure that they comply with their formats.
Linda Gilroy : I am listening carefully to my hon. Friend's response and I suspect that he will tell me that there is the possibility of judicial review if we are totally unsatisfied with the way in which Ofcom has gone about its job. However, I am concerned that we have got the whole framework wrong and I hope that my hon. Friend will cover what I said about local radio meaning what it says on the tin. What opportunities do we have to revisit the question of whether we have got the framework right?
James Purnell : If my hon. Friend wanted to revisit the framework, and people decided that that was necessary, we would obviously need to revise the Communications Act. She knows how long that would take, and although I do not want to dismiss that possibility, it would not make any difference to this particular licence award. The Act has been on the statute book for less than three years, and there is no appetite for revising it at this stage. As I said, the prime route for raising concerns about the licence is Ofcom, which makes the relevant decisions.
Although local radio and licence applications have been a real concern locally, they are not the end of the story in terms of media in Plymouth. One area of potential interest that my hon. Friend might want to consider is community radio. Community radio stations are run and generally owned by the local community and address exactly the issues that she described. They provide the opportunity for local coverage and debate and are typically run by local residents and community
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groups. Some people see them as providing exactly the kind of service that my hon. Friend thinks her constituency needs.
Linda Gilroy : I am reluctant to intervene, because we are reaching the closing stages. However, Plymouth is the 15th largest city in the country, and we aspire to be among the top 10. We want fair treatment under the arrangements for allocating commercial radio licences.
James Purnell : I understand what my hon. Friend is saying, but I am seeking to explain that if she is unsuccessful in achieving a material decision on the award of the licence, there are further routes, beyond looking at the licence application. Some people would say that the movement towards community radio is significant and is not to be dismissed. It could help to address some of the concerns that she raised, and she might like to work with local community groups to explore that possibility. Indeed, the Community Media Association can help groups interested in developing local stations, and I encourage her to discuss the opportunities with it.
Beyond local radio, there is the possibility of local television, as I discussed with my hon. Friend's constituents when we met. That could involve satellite, the internet or, potentially, digital-terrestrial. I hope that those suggestions are helpful—
Ann Winterton (in the Chair): Order.
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