UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1099-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

CULTURE, MEDIA AND SPORT COMMITTEE

 

 

DCMS ANNUAL REPORT

AND RESPONSIBILITIES OF THE SECRETARY OF STATE

 

 

Thursday 25 October 2007

RT HON JAMES PURNELL MP and MR JONATHAN STEPHENS

Evidence heard in Public Questions 1-132

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Culture, Media and Sport Committee

on Thursday 25 October 2007

Members present

Mr John Whittingdale, in the Chair

Janet Anderson

Philip Davies

Mr Nigel Evans

Paul Farrelly

Alan Keen

Rosemary McKenna

Mr Adrian Sanders

________________

Witnesses: Rt Hon James Purnell MP, Secretary of State for Culture, Media and Sport and Mr Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport, gave evidence.

Q1 Chairman: Good morning everybody. May I welcome James Purnell to the Committee? James is a regular before this Committee, but this is the first time he has appeared before us as Secretary of State. May I also welcome the Permanent Secretary of DCMS, Jonathan Stephens? Perhaps I could begin. There was a great deal of speculation in the run-up to the reshuffle of responsibilities within Government that DCMS might not survive at all or indeed that, if it did, it might look very different. In actual fact it does not look very different to the department which existed before. Was all that speculation completely out of place or was there in fact a debate and did you have to fight for your survival as Secretary of State for Culture, Media and Sport?

James Purnell: That is a slightly hard question to answer because I was not there at the time so I do not know. What I do know is that the split of responsibilities that we have now, with Tessa Jowell doing the Olympics as a full-time job and the DCMS doing the sporting part of the Olympic legacy as well as all of our existing responsibilities, is the right one. I would also say that there was much discussion in 1997 about whether having a Department for Culture, Media and Sport was the right approach. I think the last ten years have shown that it is. The sectors fit well together and if you look, for example, at the way that culture has thrived over the past ten years, the consensus is that the culture in this country is world class and having the Department for Culture, Media and Sport certainly has not got in the way of that.

Q2 Chairman: In the debates which have taken place in this Committee in a number of different areas when we have had inquiries, looking at heritage, looking at tourism, looking at creative industry, each time we have had quite a long discussion about whether or not it was appropriate that that particular industry should be within the DCMS or whether it might not do better in DTI as was, or maybe in education. Do you think those debates are now behind us, this is now settled, the DCMS goes on?

James Purnell: It is always for the Prime Minister to make those decisions and indeed there have been some changes at the margins. For example, in the last reshuffle NESTA became a shared responsibility. The Department for Innovation, Universities and Skills lead on that but we have a dual lock arrangement with them on that. In 1995 DCMS gained some responsibilities around the creative industries. Changes can always be made at the margin, but the broad outline we have is the right one and we can continue to have debates around whether they need to change at the margins.

Q3 Chairman: Particularly regarding the creative industries, a huge amount of the issues surrounding the creative industries concerns copyright. Copyright has now gone off into the new Department for Innovation, Universities and Skills. How is that going to work between the two of you?

James Purnell: It works very well and we have very productive relationships with them over that. Having a Department for Innovation which is looking at copyright in the context of innovation, which is after all the fundamental reason for having a copyright regime, is a very sensible arrangement.

Q4 Mr Sanders: The previous Prime Minister set out priorities for each Secretary of State. Unfortunately in his letter to your predecessor he did not mention the word "tourism". Are you still working to these priorities, given the cuts to VisitBritain which were announced this week?

James Purnell: Yes, we think tourism is a vital part of the economy. It may just be worth me saying a little bit about that in terms of introduction. We have reduced the VisitBritain budget and the reason that we are doing that is that we believe there are efficiencies which can be achieved. We have asked VisitBritain to lead on a strategic review of how we achieve those objectives. That is in the context of £350 million being spent by Government on supporting tourism. The amount provided by central government has doubled since the mid-1990s. If you look at the amount the RDAs spend, for example they are spending over £40 million, in the mid-1990s they did not exist and that money was not being spent. We believe that a strategic review can lead to a more effective way of achieving the outcomes which we prioritise in tourism.

Q5 Mr Sanders: But are the priorities which the Prime Minister set out in his letter to your predecessor, which did not mention tourism, still the priorities of your administration?

James Purnell: The priorities which I have are set out very clearly in the CSR White Paper and in the objectives we all have and tourism is one of those four objectives.

Q6 Mr Sanders: But tourism was not mentioned then, so is tourism now a priority even though the Prime Minister did not set it out?

James Purnell: The document which I am operating to is the CSR White Paper which set out very clearly that economic impact was one of our four key goals and tourism is a very important part of that. Tourism is a key responsibility and a key priority for the department.

Q7 Mr Sanders: In terms of tourism as an industry, which has a variable performance, as we have been discovering in the inquiry which we have just opened into it, there are aspects of traditional tourism areas which are having a very hard time. The Prime Minister, in a reply to a question I asked the other week, said that he agreed there were some problems and something needed to be done. Are you looking at things which could be done to help coastal resort economies which are dependent on tourism?

James Purnell: Yes, we are looking at that and we should be very happy, if the Committee wanted to submit some early ideas on that, to look at those. Seaside towns clearly face particular challenges and we are working very closely with the Department for Communities and Local Government to see what we can do in that area. That is why the Prime Minister gave you the response he gave you and we shall be making announcements on that shortly.

Q8 Mr Sanders: You will only be making announcements. Will that be your department or Communities and Local Government?

James Purnell: Clearly the area of regeneration of coastal towns goes much wider than simply tourism, heritage or culture. We are looking at what we can do within our departmental responsibilities, but there are obviously wider issues which are for the whole Government to consider. We should be very happy if, as part of your initial views from your tourism inquiry, you had things you wanted us to consider for seaside towns, to look at that.

Q9 Philip Davies: May I just press you on this funding for VisitBritain? I think you basically said that you were cutting the funding because efficiencies can be made. It strikes me that that can apply to every government department there is and you are part of a Government which makes it a virility test to spend as much money on departments as possible and to say things are getting better because you are spending X amount of money on it. When your Government are challenged on anything their answer is that they are spending X amount of money on it as though that will make things better. Why is it that in every other government department spending more money indicates that it is a priority, whereas in your answer it is simply efficiency savings?

James Purnell: I clearly do not accept your premise but in any case, if you are saying that as a way of saying the Government should be concentrating on finding efficiencies where they can, then presumably you welcome us looking for that and you welcome the idea of a strategic review to see whether outcomes can be achieved in a more efficient way.

Q10 Philip Davies: I would certainly welcome your Government looking for efficiency savings in every department. What I am curious about is why these efficiency savings only seem to apply to your department and none of the other government departments.

James Purnell: That is clearly not true. The Government overall are pursuing 3% efficiency savings across the range of what they are doing and in this area, because the £350 million is being spent overall, because the amount of money from central government has doubled since the late 1990s, we believe that a strategic review can find efficiencies and that is why we set them what we recognise is a challenging target.

Q11 Philip Davies: What are the efficiency savings they are going to make?

James Purnell: It would not be for us to start to tell people how to manage their budget. That is why we have precisely asked VisitBritain to conduct that. VisitBritain is an extremely successful NDPB. They have a great record in terms of delivering efficiencies, modernising their operation, going to look at internet marketing, for example, and we are therefore giving them the responsibility to be able to advise them on how to do that.

Q12 Philip Davies: You have said that you have identified efficiency savings which can be made. You cannot say you have identified efficiency savings and then say you do not know what they are. What are the efficiency savings which you have identified they can make?

James Purnell: We have identified the budget we think they can work within. We have asked them to lead the review on how to achieve them.

Q13 Mr Evans: Looking at the budget, would it not be kinder to VisitBritain if you wound it up?

James Purnell: No, we have doubled the amount of money overall going from central government to promoting tourism. A significant amount of money is being spent by VisitBritain under this revised budget and we think that by looking at how that money is spent and organising it efficiently we can achieve those outcomes but at a reduced cost. I would have thought you would support that.

Q14 Mr Evans: I am sorry but you have gone from 2006-07 with a budget of £50 million down to £40 million in 2010-11. That is £10 million less plus inflation, which will no doubt eat into that figure as well. From what I can estimate, the savings which will be made will be on frontline services that VisitBritain are there to do. They are there to do a specific job which is to attract internal tourism to the United Kingdom. They will not be able to do that to the same effect with £40 million.

James Purnell: I do not agree with that. If you look at the amount the RDAs are spending, if you look at the wider support, the £350 million, there is scope there for very good support for tourism in the UK and we believe that through the strategic review we can do that in a more efficient way. As part of our spending review we have also been able to increase spending for the arts, for museums, for the heritage and when you look at what people say are the reasons why they are visiting this country, those are many of the top reasons why they want to come here. Therefore, by providing proper funding for those institutions and those events we will ensure that they are able to continue to track visitors from around the country and also from around the world.

Q15 Mr Evans: Yes, but you have to tell people about what we have got. After all, one of the biggest spenders on advertising of any organisation in the United Kingdom is Her Majesty's Government. I look forward to Her Majesty's Government slashing by millions of pounds the amount of money they spend on advertising themselves. You clearly think advertising is effective in one regard but not in another.

James Purnell: No, I disagree with your premise. The point is that we believe the outcomes can be achieved in a more efficient way. As I have set out, a significant amount of money has been spent in this area. We also believe that it is important to make sure that there are good attractions in the country for people to come to see and that is why we have been able to find money for the arts, museums and heritage. We believe in this particular respect it can be done in a more efficient way and that is why we set them that goal. Coming from where you come in the Conservative Party, I should have thought you would have welcomed that.

Q16 Mr Evans: I believe in efficient spending and I should like to see it start with Government. The fact is that we had the local authorities before us this week and they are strapped for cash and cutting back on how much money as a percentage they can spend on advertising their local attractions. VisitBritain is the one key area which actually joins the whole of the United Kingdom up, selling it to people within the UK and of course abroad as well. We are in a very competitive field here. Tourism is one of the fastest growing industries in the world and the Government have just decided to slit one of their wrists.

James Purnell: The responsibility of being in Government is to make decisions about where money can be spent efficiently and where it cannot. As you know, you are strongly committed to trying to reduce the size of Government. It is slightly ironic that whenever the Government try to do that in an efficient way, you denounce it as an abandoning of the goal. It is not abandoning the goal: it is an attempt to achieve the goal in a more efficient way and I should have thought you would welcome that.

Q17 Mr Evans: I welcome obesity being tackled at government level in the fat which exists around Whitehall, but organisations which have been proven to be effective, in that every pound they spend actually works and brings a lot of money into a number of smaller businesses in the United Kingdom, are now going to be damaged.

James Purnell: We have asked them to conduct a strategic review. We will look at the proposals they come up with. We believe that the goals can be achieved in a more efficient way and that is just part of what being in Government is about. You have to make decisions about where money can be spent efficiently and that is exactly what we have done.

Q18 Janet Anderson: May I just say how very much we welcome the priority you have given to seaside towns. It was of course a Labour Government in 1997, or very soon afterwards, which gave assisted area status to seaside towns, recognising the particular problems they face. I just wonder whether you could set out for us how you see the future of those seaside towns and what you will be doing to help.

James Purnell: We are still developing our plans and we would be happy to hear from the Committee about that. Some very interesting work has been done by English Heritage, for example, looking at the role of heritage in regeneration. We want to look at the role of culture in regeneration. That is only one part of the story, but we are interested in what can be done in this area and it is an area we are actively thinking about.

Q19 Chairman: May I just come back to VisitBritain? A few weeks ago you published the tourism strategy for 2012 and beyond and it has your introduction in it. It has always been plain that one of the greatest opportunities that 2012 offers us is a lasting boost to tourism in this country; that has clearly been one of the things the Government have set as a strategic goal. In your document you say that central to maximising the opportunities for domestic and international tourism afforded by the Games are our national and London tourist authorities, VisitBritain and Visit London. You have now announced that in the years between now and the Games VisitBritain's funding is going to go down in cash terms every single year. UKinbound, who represent all the industries which benefit from visitors to this country, say they are shocked and horrified. They say that this announcement confirms that DCMS has completely lost the plot. How do you respond? How are you going to deliver that strategic objective if you are cutting the budget to the body which is tasked with delivering it?

James Purnell: I am going to start sounding like a broken record. There are £350 million being spent overall, the amount of money has doubled, we believe that the same goal can be achieved in a more efficient way through a strategic review and that is the goal we have set them.

Q20 Chairman: VisitBritain said to you before the CSR that they needed an increase in that budget if they were to deliver that tourist potential. You have slapped them in the face. You have not even given them their existing budget.

James Purnell: I think VisitBritain have done an extremely impressive job and they have modernised their service in an extremely impressive way over the last few years. What we are asking them to do with the rest of the sector is to lead a review about how that very significant amount of resource can be used in a more efficient way.

Q21 Chairman: Are you confident that we can obtain the full tourism benefit from the 2012 Games although we are going to cut the budget each year?

James Purnell: I am. If you look at the budget overall and you look at the efforts of RDAs, local authorities, the partners we have in Wales and Scotland, Northern Ireland and VisitBritain, we believe that is a significant investment and that it can be used in a more efficient way than it has heretofore.

Chairman: As you know, we are in the middle of our tourism inquiry. We will be taking further evidence on this and I suspect we may return to the theme.

Q22 Alan Keen: I always argued, and was proved right, when Gavin Davies and Greg Dyke worked together as Chairman and a sort of Executive Chairman, that there was no backup. Now the BBC has been changed so there is the new Trust whose job it is to make sure things do not go wrong, or awry. Are we not in danger, with Ofcom saying they want to be involved in broadcasting policy, of taking away their effective regulation of broadcasting? If they are trying to do both jobs, will they not fall between the two?

James Purnell: No. All Ofcom are doing, and I believe they have done so extremely successfully, is implementing what Parliament asked them to do in the Communications Act. Parliament asked them very clearly to have both a regulatory role and a strategic role and that is exactly what they are carrying out. That aspect of their responsibilities is clear. Creating the BBC Trust has been a good way of separating out the responsibilities within the BBC. The governors' arrangement was trying to do two things at the same time and separating those things out is a better model. If your question is going to where Ofcom and the Government relate to each other ---

Q23 Alan Keen: Yes.

James Purnell: --- it is very clear. We are responsible for policy and legislation. They have a regulatory role and they also have a strategic role in terms of advising us what that policy role should be.

Q24 Alan Keen: It works so that you talk with Ofcom constructively looking ahead.

James Purnell: Yes. When I talk to people overseas about Ofcom's role, the most common remark is that people want to learn from what we have done here. They are extremely impressed by the way Ofcom has done its work. I was in America recently talking to politicians, regulators and broadcasters and a number of people asked me whether they could poach Ed Richards and Ofcom senior management. So that is a vote of confidence in the way that they are doing their job. I told them to keep their hands off.

Q25 Alan Keen: I am in a slight difficulty because we are hopefully moving towards the end of putting a report together on public service broadcasting. I do not want to say too much about our conclusions, even if we had reached conclusions. How do you see the future of the BBC, personally and as Secretary of State? Obviously you cannot speak outside that role.

James Purnell: I tried to set it out in my speech to the RTS. I am confident about the future of public service broadcasting. There are very clear cultural arguments which will continue to mean that it is relevant after digital switchover. What is clear is that digital switchover does raise some questions about the regime we have had and how it will continue in future and therefore what we have announced is a convergence think tank within Government to consider those issues and to have a series of debates over the next few months to start to think about that post-switchover world.

Alan Keen: Because of our ongoing deliberations I had better not go any further.

Q26 Rosemary McKenna: You will not be surprised if I want to return briefly on broadcasting to the issue regarding the report this Committee did into Quiz Call Television and the subsequent disclosures which came out on the premium rate phone-ins and the scandalous abuse of those and the rip-off that people experienced and the recent report from the BBC and from Deloitte Touche on the ITV situation. Are you happy with the way Ofcom and ICSTIS helped with the complaints that they received.

James Purnell: Yes, that has been done in an effective way and it has been treated with real seriousness. You can see that from the way the Ayre report was commissioned. The Air Report clearly did find some issues which needed to be addressed in terms of the way that ICSTIS - now PhonePlay Plus - and Ofcom relate to each other. Ofcom are consulting on that, but that shows the serious and proactive way in which they have dealt with that. My role in that is not double guessing the way that they carry out their investigation, but it is to ensure that the policy and regulatory framework is effective enough. I am therefore writing to Ed Richards today to ask him, in the light of the investigation, to give us advice on whether the powers at their disposal are sufficient, whether there are implications for the policy framework from what has happened and whether the current enforcement regime is suitable. The reason I am doing that is that our priority has to be viewers. Clearly it is unacceptable for millions of phone calls to have been made, for people to have paid for those phone calls and for them not to have had a chance of winning. Given the seriousness of that, I do not want to get into saying this should happen or that should happen on the individual case. I want to make sure that the policy framework is robust enough to make sure that it does not happen again and that is why I have asked Ofcom to advise us on that.

Q27 Rosemary McKenna: I am very pleased to hear that. That was my next question. Are you content that the regulation they had was right? Do you think there is a possibility that Parliament may have to revisit that? The technology which was used is very new so will that have to be improved, will that legislation have to be improved, will that have to come back to Parliament?

James Purnell: We have to be very clear that any steps which need to be taken to strengthen the regulatory regime would have to be a priority. I want to make any decisions on that on the basis of evidence and advice and that is why I have asked Ofcom to do that. It is worth saying that actually this Committee played a very significant role in highlighting this in the first place and therefore it is a legitimate issue for Parliament to continue to have a strong interest in.

Q28 Chairman: Do you not feel that actually what has been revealed has been regular abuses, regular breaches of the broadcasting code going back really over quite a long period and that the regulators woke up to this pretty late in the day? Did the regulatory system not fail in not detecting this and acting against it earlier?

James Purnell: The regulatory system, which is based on a complaints-based approach, is the one we gave to them and given the framework they are operating in, they have done that in a robust and proactive way. What I want Ofcom to advise us on, and obviously we would be very happy to provide copies of that to the Committee, is whether that system is robust enough. That is something we need to take very seriously. Our priority has to be viewers. Millions of phone calls were made, people were cheated and we need to make sure that it does not happen again.

Q29 Paul Farrelly: Last year when we saw both the regulators and the broadcasters it was fair to say there was an unwarranted air of complacency which has certainly not been borne out and justified by events since. One of the anomalies was where you have ICSTIS able to levy a maximum fine of £2 million, which was dwarfed by the scale of the estimated fraudulent revenue derived by GMTV. Is that not an anomaly which needs to be looked at? Otherwise we rely on the charitable good will of the companies committing the offences in the first place either to donate the money to charity or to try to identify who has lost out.

James Purnell: It was Parliament who put in place the possibility of this co-regulatory arrangement with ICSTIS and if there are conclusions from this work from Ofcom which say that the enforcement regime is not sufficient, then we would need to look at that very seriously.

Q30 Mr Evans: You have announced two reviews, one of which is the wider distribution of public funding for public service broadcasting and the other one is the additional resources for the BBC. You brought the first one forward to about 2009 and the other one has been kicked into the long grass a bit. Would it not be more intelligent to bring them both forward and do them both at the same time?

James Purnell: Do you mean: should we start reviewing the licence fee now?

Q31 Mr Evans: The impact that it will have on the BBC. Anyway, in light of recent announcements from Mark Thompson, there clearly is a crisis in the BBC.

James Purnell: If we start getting into reviewing the BBC's licence fee every year, we start to have far too much parliamentary or political interference in the BBC. One of the things we have in this country, very well established over many decades, is a tradition of free speech and of the BBC being independent from us. So I would not favour that. What I do favour is us thinking in a serious way about the implications of convergence and that is why we are working with the Department for Business, Enterprise and Regulatory Reform on doing that and that is why we shall be bringing in a wide range of experts to allow us to do that thinking. It is important to think about it in that context rather than trying to respond to any individual thing which may be happening now.

Q32 Mr Evans: But there is a crisis there though. The BBC have announced now that they are going to cut back maybe £2 billion of money, over 2,000 people could lose their jobs and it seems to me that the services which are being cut are actually the public service broadcasting bits which deal with news and current affairs. They are the important bits, are they not?

James Purnell: Here you go again. You say they are cutting back £2 billion. We have actually given them a settlement, which I believe is a fair settlement, which allows them, if they realise their efficiencies and if they get the household growth which has been predicted, to have an extra £1.2 billion to spend. If you are saying you want us to give them another £2 billion, I was not aware that was the place in the political spectrum that you were coming from.

Q33 Mr Evans: No, it is not. Are you therefore surprised by the announcement Mark Thompson made then? Do you think that they should have been able to achieve everything that they did without making savage cuts to the staff levels, without attacking news and current affairs, that they should have been able to have done that within the settlement which was announced by Tessa Jowell?

James Purnell: I think it is a fair settlement and it is for the BBC to decide how to achieve the efficiencies that they have to achieve to reassure licence fee payers that their money is being used effectively.

Q34 Mr Evans: You do not have a view then that news and current affairs seem to be at the top of their list for axing.

James Purnell: No, I have a clear view that it would be wrong for me to have a view about exactly where the BBC should be spending its money because then you start to undermine that very tradition of independence of the BBC. Sometimes good examples can make very bad laws and start to set very bad precedents.

Q35 Mr Sanders: You are telling them how to spend their money on the digital switchover, in fact they are having to allocate a sum of money to help vulnerable people with the switchover, a job which most people and this Committee concluded ought to have been out of general government funds and not from the licence fee.

James Purnell: It has always been part of the BBC's role to support the spread of new broadcasting technology and doing that with switchover is right for the country and it is also right for the BBC. It will mean that millions of households who at the moment are paying for but cannot receive digital services will be able to do so. What I am saying that it would be wrong for me to do as Secretary of State for broadcasting is to start telling them what programmes they should make or where they should spend their money. What we should do is set them overall purposes - and that is what we have done - give them stability and funding and then it is for them to have a relationship with their audiences and with the Trust to make sure they achieve those purposes in an effective way.

Q36 Mr Evans: There may be 2,000 people who currently work for the BBC who this Christmas will be getting their P45s who may think that you have not delivered them stability whatsoever. They will be rather anxious about the fact that they are losing their jobs. You are abdicating your responsibility by saying you had no view whatsoever on how those efficiency gains are going to be made when it is the public service remit that is being attacked.

James Purnell: It is obviously a tragedy for anybody who loses their job and I am not saying anything of the kind you just said. What I am saying is that there is a very clear separation of roles. It is for them to decide how to run the BBC, where to spend that money, where to have particular decisions. What we set them is a framework which I believe includes a fair settlement and which includes very clear public purposes and it is for them to realise that.

Q37 Philip Davies: Rosemary mentioned the scandal in TV of customers being ripped off with the phone lines and that kind of thing. However, there was another scandal over the summer time as well about TV programmes where things were faked, such as the Queen and a series of others as well. Do you think things like that undermine trust in public service broadcasters?

James Purnell: I said in Cambridge that I thought there were two conclusions to be drawn from that. Clearly there are issues there for broadcasters to look at, but that is the right conclusion and editorial issues are a responsibility for them. The wrong conclusion would be to say that the comment and criticism which came from that is a sign that people are losing trust in public service broadcasting overall. What it shows is that people value public service broadcasting, they rely on it for accurate information and that is a sign of the importance of public service broadcasting and one of the reasons why I believe it will continue to have that role over the period which will follow switchover.

Q38 Philip Davies: Do you think the incident over your photograph at your local hospital has slightly undermined your ability to have a go at public service broadcasters when they are caught out faking programmes? Do you feel that has constrained you somehow?

James Purnell: Of course I did not have a go at broadcasters and I recognise that it is a very funny photograph. It is a very funny blob which has me in all sorts of places: going to the moon, winning the World Cup. I even understand that Nigel took me on a night out at the Conservative Party Conference, which is enough punishment for anyone frankly; it was my cut-out though I know it is hard to tell the difference between the two.

Q39 Philip Davies: I am actually trying to make a serious point here about whether you feel, because that would be quite serious, that because of that unhappy incident you had been constrained from making criticisms of broadcasters when they do clearly get things wrong and it does undermine trust in them?

James Purnell: My role is the policy role and I have always said very clearly that it is not for us to get into editorial decisions of the BBC or indeed anybody else. I do not accept the premise that we should be going around criticising individual editorial decisions.

Q40 Philip Davies: One final point, which is admittedly a bee in my bonnet and the other Committee members will be sick of me mentioning it. We have had this restriction on junk food advertising in order to try to sort out the obesity problem, which I felt was a triumph for the nanny state and would not make any difference whatsoever to obesity. One of the points I made at the time was that this would be the start of something bigger and this was the thin end of the wedge. Even I was surprised by the speed with which Alan Johnson announced a couple of weeks ago that the Government would perhaps be going even further with these restrictions before we had any idea of what the impact of the original restrictions was. What discussions had he had with you about that announcement and what impact do you feel that would have on things like children's programming?

James Purnell: We agreed the announcement in the normal way and agreed the wording of that and indeed we are part of the group which is looking at tackling obesity of which advertising of food is only one aspect. We are absolutely clear that it is important for us to make sure that advertising plays its role in ensuring that we can tackle the increase in obesity, which is a very serious issue in this country. That is why Ofcom introduced the changes that it did. In fact we had already said that Ofcom would be reviewing that in 2008 based on the evidence. The Government are looking not just at Ofcom's role but, as Alan said in his statement in the chamber, the wider impact across the whole range of the media of advertising on obesity, particularly amongst children. That is the responsible thing to do, but it must be based on evidence.

Q41 Philip Davies: Will it also be based on the impact it will have on broadcasters?

James Purnell: Of course. That is exactly what Ofcom did and that is exactly the process they will go through in the already-announced review which Ofcom are due to do.

Q42 Paul Farrelly: Clearly there is an issue about how public service broadcasting content is supported or encouraged in the digital age. At the moment we have the BBC which has had a bit of a kick because it got far less money than it wanted. It is going through massive change now with the cuts which it has been making, the move to Manchester and its responsibilities towards digital switchover. Is it not premature now to talk about top slicing the BBC's licence fee on top of all that, rather than looking at other options such as setting up a trust fund as they did in places like Canada?

James Purnell: I want to take issue with the idea that we gave them a kick. They asked for a certain level of funding, as everybody does, making the best case they can. We looked at that. It was thought that greater efficiencies were possible and we gave them a settlement ---

Q43 Paul Farrelly: That loose language is not the question.

James Purnell: Let us recall what the process was. People said we should not give them a charter at all. We did. People said we should not give it to them for ten years. We did. People said we should not continue the licence fee. We did. We gave them a six-year settlement, we gave them a settlement which allows them to get an extra £1.2 billion above that if the predictions are realised about efficiency and household growth, so that is a sign of confidence.

Q44 Paul Farrelly: The question was about top slicing.

James Purnell: I just wanted to put that in context. We are not bringing forward proposals for top slicing at this stage or for a trust or for anything in particular. What we are saying is that the public service broadcasting is an important part of British culture, that the BBC and the other public service broadcasters are one of the great things about Britain in my view, but the regime under which that has been achieved is changing incredibly quickly and therefore we have to have serious thinking about how we achieve those goals in a completely different area, in a world in which the spectrum which is being given to people is not the only way to reach the whole of the TV audience. People will be able to do it after switchover by just contracting with digital terrestrial, cable and satellite.

Q45 Paul Farrelly: Can you give the Committee some idea of how far you have progressed with these reviews and when you expect to come to some conclusions either for consultation or decision?

James Purnell: We will start the seminars in January; we will have a series of seminars over the next year. We are putting the think tank in place and will advertise for people to join us to work in that think tank shortly. We will be very happy to work with members of the Committee on exactly that. It is a very important task.

Q46 Paul Farrelly: Has no timetable been set down for a conclusion?

James Purnell: We have set out the timetable for the PSB review which Ofcom are doing, for our review after that. Clearly we will have to have some conclusions in place before switchover.

Q47 Paul Farrelly: Before switchover has finished. It has already started.

James Purnell: Yes, before switchover has finished.

Q48 Alan Keen: Right from the very beginning of highly entertaining programmes like Pop Idol - and they have been going a few years now - I have never ever trusted them because they have never declared the voting figures. There is a certain amount of deception now because it keeps people phoning in again. Should Ofcom look at that in detail as well? As politicians we are used to seeing everything put out as it is and it has never seemed right to me from when they started five, six, seven years ago. I felt it was wrong for them not to publish the voting figures. Should Ofcom look at that?

James Purnell: If you are upset about that or people are upset about it you can make a complaint to Ofcom or make representation to the programme makers. It is not for me to say that.

Q49 Rosemary McKenna: Can we move on to digital switchover? Last week Whitehaven switched to digital. Are you confident that your communications strategy, particularly with help schemes for vulnerable groups, will work over the next five years given that round about 8% of people had not already gone digital in Whitehaven before the BBC2 switch-off?

James Purnell: I am very impressed by the preparations which Digital UK have made and indeed which all the stakeholders in Whitehaven have achieved and it will be a very useful exercise for us to learn from. We have to be clear about our expectations about this. It is an extremely complicated programme, it is one which is happening all over the industrialised world, all over Europe, all over America and there will be hitches and glitches along the way. Getting millions of people to come over to digital is a very ambitious task. However, I do think it is an important one and it is one which reflects the fact that the UK has had a leading role in digital television and by completing the digital transition and being able both to make sure everyone has access to digital TV but also having new spectrum being released for new applications we shall be able to make sure the UK can stay at the forefront of that digital change.

Q50 Rosemary McKenna: I am obviously particularly interested in Scotland because Borders is next in line. We have been watching very closely what was happening. I always campaigned for the voluntary sector to be very much involved and Digital UK have done that and that is very, very good. However, I believe one of the issues which emerged last week was that there are groups that the voluntary sector does not cover, particularly the elderly, those people who are fiercely independent and who do not want to have anything to do with the voluntary sector. I believe we learned last week that is one of the areas where there is a problem and somehow or other we have to get round that.

James Purnell: We work very closely with the voluntary sector and it is something which, as has happened in Whitehaven, we want to do as the programme rolls out. We also want to see whether we can do more with individual volunteers. We are working with local authorities, social housing providers and we will use absolutely every single method we can to reach people. We are writing to everybody who is eligible for the help scheme; there is a wide range of contacting people going on. At the end of the day, if people decide not to take up the help, we cannot force them.

Q51 Rosemary McKenna: I believe the drop-in centres were very important in that regard. People who had not already done anything at least went to a drop-in centre and got some information and assistance.

James Purnell: Yes, that is right.

Q52 Rosemary McKenna: The review will of course make all of these issues clear. One of the issues people are still concerned about is retailers misselling.

James Purnell: The retailers in Whitehaven have really played a very helpful role. You may have seen that they recently announced they would be phasing out the sale of analogue equipment in those regions where switchover is happening and we very much welcome that.

Q53 Rosemary McKenna: The so-called dividend review, the release of spectrum. Public service broadcasters have been saying that the additional spectrum should be allocated to them so that they can provide HD services on Freeview. Do their arguments stack up?

James Purnell: There would have to be a very high threshold of persuasion before we started to allocate the released spectrum to existing users without making it available for other people to bid for. The reason we have said that we will pursue market mechanisms to achieve that is because that is the best way of revealing the most economic use for them and that is better than Government deciding on individual uses for that released spectrum. However, Ofcom are working with the broadcasters on whether there is capacity to be found within the existing allocation to digital terrestrial so that more HD services could be provided in that. We have very strongly encouraged the broadcasters to work with Ofcom on that.

Q54 Rosemary McKenna: So they are not persuaded.

James Purnell: You might be able to do more services, potentially HD services, through the existing allocation which people have. It would require individual consumers to buy new equipment, but receiving HD channels requires people to buy new equipment in any case.

Q55 Chairman: While we are on switchover, you will be aware that discussion has begun about when and whether we should switch off the radio analogue transmissions. The radio industry has indicated that it wants a bit more certainty about the future. Have you reached any preliminary conclusions yet?

James Purnell: We are going to be setting up a group to look at this, think about radio and the issues which have been raised. That is exactly the same approach we used for television. It is worth saying that it is a very significant task. There are millions of sets, sets in people's cars, but we also recognise the very great importance of digital and the figures today show that there has been a very significant increase in listening to digital, for example. We want to work with the radio industry and Ofcom and with consumer groups and with the BBC on that and we shall be making announcements on that shortly.

Q56 Chairman: So you would now say the question is not whether but when.

James Purnell: We would say we have set up a group to give us some views on that.

Q57 Mr Sanders: One of the things which concerned us when we were looking at digital switchover was the possibility of cowboy operators giving poor and dishonest advice to consumers as to what equipment they may need when this process takes place. What we have seen in Whitehaven is a very small-scale switchover. We are now going to move into much wider areas of coverage where the opportunities for misinformation are that much greater. Can you give us an assurance that you will use whatever power you have and liaise with other departments which have enforcement capabilities to crack down on anyone fooling people and misinforming people through this process?

James Purnell: Yes.

Mr Sanders: Good answer.

Q58 Alan Keen: A few quick questions on sport. In June 2006 the Secretary of State said that Sport England were going to be more focused. Sport England are looking at it slightly differently and saying that they have to be more focused because so much money has been taken away from grassroots to the Olympics. How do you see that? Your department still has to get the transfer of more money through Parliament.

James Purnell: Two slightly different issues there. In terms of sport, as a Government we have actually found an extra £100 million for school sport and we are making fantastic progress on increasing the amount of sport in schools. We have overachieved our target in terms of the proportion of pupils doing two hours and we now want to give all children the chance of doing five hours. I would not want a perception that we are going backwards on that; we are massively improving that and the Olympics are a great opportunity to raise participation further, indeed one of our key commitments as part of the legacy. As part of our spending review we are talking to Sport England about their goals and arrangements for the next spending review period and will announce that when we have concluded those discussions. In terms of the Lottery Order, we are saying that we are laying today the Order which will enact the funding package and the take from the Lottery to go to the Olympic Lottery Distributor. It is worth saying that it is absolutely appropriate for the Olympics to be one of the things the Lottery funds and indeed I think that was a matter of cross-party consensus when the bid was first put in. In the same way that the Lottery, for example, funded the Millennium Commission - 20% of the Lottery in its initial period went to the Millennium Commission - it is appropriate for the Lottery to help to pay for the Olympics. As part of the new public funding package for the Olympics there has actually been an increase from the exchequer of £5 billion and the proportion coming from the Lottery has fallen from just under half to just under 25%. It is a fair ask which we are making of the Lottery Distributor and our goal, as expressed in the memorandum of understanding with the Mayor, is that that should then be repaid from land sales after 2012. We think the Olympics will be great for Britain. We think they are going to be good for sport and indeed for culture and we think this is a reasonable approach. We have laid the Order to do that today and we will debate that in both Houses.

Q59 Chairman: Debate it in both Houses where? In committee or on the floor?

James Purnell: That is for business managers to decide. I would not want to prejudge that.

Q60 Chairman: Would you like to see it debated on the floor of the House?

James Purnell: I should like to see it debated in the appropriate way.

Q61 Alan Keen: Can you bring us up to date on what I thought was a peculiar aim? I understand millions of pounds are being put in for the Olympics by persuading athletes at a second level down from the very top to take up and train for events which are not normally played in this country. It seems to me a waste of money if we do that. If we do not do wrestling or tiddlywinks or whatever it might be, why waste the nation's money on trying to get athletes to compete in every event?

James Purnell: Clearly it is a matter for UK Sport who are world leaders in terms of performance support. One of the goals in the Olympics is not just to train people for 2008 and 2012 but to have a legacy of a performance support system in this country which has been taken to a higher level. That is what UK Sport are trying to achieve. I actually think that in the UK there are many people who take up individual sports. In football, for example, there are lots of people who are taken on when quite young by football clubs, who do not then make the grade and who could easily make the grade in other sports. If people have a natural sporting ability, it is worth seeing whether there are other sports they can perform in. Anything which gets us medals in 2008 and 2012 is something we should all investigate.

Q62 Alan Keen: You know my dedication to football.

James Purnell: I do know that.

Q63 Alan Keen: I understand in the resource accounts in the last fiscal year another £5.6 million has gone to Wembley Stadium. I am not against that, but why?

James Purnell: It is not a new grant. It is money which was originally agreed for Wembley but because of the delays in the completion of that project the money was counted in the latest period rather than previously. There is no new money at all; it is exactly the same amount, the £20 million which was originally allocated.

Q64 Alan Keen: I am still in correspondence with at least one person. I have been on this Committee for ten years now and quite a few people think that really the FA still owe £20 million back to Sport England, whoever it was who gave them money, on the grounds that athletics were to have been able to take place in Wembley Stadium and originally that was why the £20 million extra was given. I have to respond, even though I favour football over anything else, to the people who do argue that £20 million are still owed in the opposite direction.

James Purnell: No one is going to say that the construction of Wembley was a perfect process but the original agreement was that DCMS would contribute that £20 million and it has just accrued in this year. There is nothing serious about that.

Q65 Alan Keen: Nothing appears to be written down anywhere so any answer you give can never be proved right or wrong.

James Purnell: This ground has been gone over many, many times.

Q66 Paul Farrelly: I declare my interest as the Secretary of the Rugby Union Group in Parliament. I want to return to what is euphemistically called the raid on the Lottery, the extra money that has been taken out of the Lottery. Sport England are clearly concerned about the effect on grassroots sport and I can see it in constituencies such as mine. When you take the list from the Amateur Swimming Association, for example, you can see the point at which big amounts of funding for new swimming pools have stopped because the Olympics have kicked in. My own borough has 100-year-old swimming baths which need replacing now; £5 million without Lottery support is a great deal of money for a district council to afford. The way it has been done will have an impact on things locally and may just continue to rankle in the run-up to the Olympics. I know the Government have gone some way in terms of addressing this and saying the hope value from some of the assets and the legacy may be given back in the future, but good causes, community sport, will suffer in the meantime. Is there not a better way to pull everyone together from around the country than extracting this money from the National Lottery?

James Purnell: The only alternative is grant-in-aid funding, exchequer funding. The increase in the contribution from the exchequer was £5 billion, far, far outweighing the absolute amount and also the proportion coming from the Lottery. I think that was an appropriate way of doing that. If the money had all come out of grant-in-aid, then there would obviously have been less to go round in terms of spending review settlements. One of the things we have been able to do is to achieve a spending review settlement which will mean that the DCMS money overall will go up in line with inflation, thus allowing us to give above-inflation increases to museums, above-inflation increases to the arts. I hope what that can allow us to do is to get away from the idea that somehow there is opposition between sport and culture on this. I think that making the cultural Olympiad a real success is one of the great opportunities of the Olympics. We will be in the world's shop window for the four years after Beijing and the spending review settlement gives us a good platform for doing that. When I talk to NDPBs they say the thing they absolutely focus on is that grant-in-aid funding.

Q67 Paul Farrelly: I want briefly to look at a couple of other options. One of the new Parliamentary Private Secretaries to your department, a former member of this Committee, a former England rugby international, Derek Wyatt, has long championed the Treasury giving up an extra slice of VAT on Lottery tickets to fund the Olympics rather than it being taken out of good causes. What do you think of that option?

James Purnell: I think he is a fantastic MP and great representative for these arguments. I would say that any reduction in Treasury income would obviously mean less money available to be spent on other spending departments. What we have been able to achieve is a far better than expected spending review outcome and I hope that gives people the resources they need to continue to invest in the grassroots and also in excellence, whether in arts, heritage or indeed sport.

Q68 Paul Farrelly: Are you continuing to make the argument that there might be different ways of doing this? Do you see it as a closed-door decision?

James Purnell: I see it as a settled package and that is why we are bringing it to Parliament today.

Q69 Paul Farrelly: We talked about the £5 billion which the Treasury has made over and above. A lot of that is not actually money which has been laid out. There is a huge amount of contingency; depending on the way you calculate it, it gets up to about 50%. People organising events round the world would have died for that amount of contingency. As we go along preparing for the Olympics, do you think it might be intelligent to review the appropriate level of contingency and were it, for example, found to be too high then revisit this issue and perhaps release some more money back to the Lottery good causes?

James Purnell: I am very happy to have Jonathan answer that who is also Permanent Secretary for Tessa Jowell. Obviously that question falls predominantly within her area of responsibility and I note that you have her coming before your Committee at some point. Maybe Jonathan, as her Permanent Secretary, can take that question, but I do not want to start straying into Tessa's area.

Mr Stephens: We think the contingency is a prudent allocation against the risks. On any major, huge construction project like this a number of risks can be anticipated and a number cannot. We think that is a prudent allocation against it. Obviously we will keep on reviewing it, our intent is not to draw down and use any more than is absolutely necessary and we have the arrangements from land sales after the Games to ensure that the Lottery can be paid back.

Q70 Paul Farrelly: In this important area of detail I seem to have strayed into one of those grey areas of responsibility.

James Purnell: There is nothing grey about it at all. The reason I am not answering the question is that it is not my responsibility.

Q71 Paul Farrelly: The question is: would it not be an intelligent approach over time to keep reviewing the level of contingency and were it to be found perhaps to be over prudent then that might be, within that exchequer funding, a source of funds to be released back to good causes and the Lottery?

Mr Stephens: We certainly will review it regularly. We will not release funds from the contingency unless it is justified by the risk that materialises. As we stand now, this is a prudent allocation because we are very clear that the public sector funding package totalling £9.3 billion is it and the final budget and not to be exceeded. Over time some of that contingency is being funded out of the Lottery. Clearly if that is not needed then we will return it to where it came from.

Q72 Paul Farrelly: So we should not see it necessarily as being a closed door.

Mr Stephens: No. Equally, we know that there are significant risks to be managed on a very large-scale project of this sort. This is a prudent way of managing them at this stage and we need to keep it under review, as you have suggested.

Q73 Chairman: Are you able to tell us when the ODA is going to publish its budget?

Mr Stephens: The ODA already has a budget for this year; it published its corporate plan earlier in the year. It will publish a budget for each year as it approaches the year.

Q74 Chairman: Will they not publish a detailed current estimate of the cost of constructing the Olympic Park?

Mr Stephens: We published a lifetime budget; Tessa Jowell published that in March. The next stage on that is a detailed allocation against the latest much more detailed plans and a detailed assessment and allocation of risk. That is still going on and will still need to be considered by the various funding parties. I am sure that once that is concluded there will be more detail which will be appropriately published, consistent of course with the commercial considerations of making sure the ODA is in a position to get the very best possible deal out of the contractors it is currently negotiating with.

Q75 Chairman: Are you able to say how much of the contingency has so far been committed for specific expenditure?

Mr Stephens: The funders have already approved commitment of £360 million; that is discussed in the recent NAO report which was published which looked at the budget set out in March. I should be clear that that is contingency that has been allocated but not yet drawn down. The funders will go on reviewing the allocation of contingency against risk as we go forward.

Q76 Mr Evans: I am very keen on this idea of getting youngsters to do five hours of sport a week; it is something that is absolutely essential and necessary and sport has always been seen, by some schools at least, as being the one which could be squeezed, particularly within the curriculum. Is this £100 million you have announced additional funding and going to be year on year on year and protected? How is it being distributed?

James Purnell: We are working up the delivery plans with the Youth Sports Trust and with local authorities, schools and Sport England and we shall come forward with proposals shortly.

Q77 Mr Evans: My big fear is that if it is given to local authorities without it being ring fenced it is just going to be swallowed up in huge amounts.

James Purnell: We are not planning to spend it through local authorities. The Youth Sports Trust are the lead delivery body on that. They work very closely with schools. They have funded, for example, sports co-ordinators. This extra money will fund an expansion of competition managers, which we hope will allow all schools to have competitive sport. The DCMS part of the money is very much focused at community sport and out-of-school sport. The five hours are in and out of school and that can fund a whole range of activities from coaching at the end of the day through to Friday evening and Saturday evening sports activities which can have both a sporting part but also a goal in terms of reducing anti-social behaviour. We are developing the delivery plans and will happily share them with the Committee.

Q78 Mr Evans: The monitoring of this is absolutely essential as well and also the spreading of the money out to rural areas. I am President of Clitheroe Wolves which has 400-plus kids playing football every Saturday which is brilliant, also cricket organisations. I am sure we all have them in our constituencies which are strapped for cash or they are not supported in the way that we think they should be, particularly as getting fit and the obesity problem are now very high on the agenda. Getting that money right through is going to be important.

James Purnell: I totally agree with that. In terms of the information we now have on participation both by young people and adults, we now have that on a local authority and maybe even a ward basis. You can monitor the changes from different years and also the differences between your local authority and other local authorities so you can benchmark them to see whether they are doing a sufficient job. We now have the evidence to be able to monitor that effectively. I also totally agree with what you are saying about the importance of clubs. We have to widen the participation base of the pyramid but we then need to have a successful club infrastructure to which people can then go to develop a lifetime sporting habit and to develop their talent. I am very much focused on that and on working for national governing bodies to achieve that.

Q79 Mr Evans: That is good because clubs are fairly well self-selecting as far as the youngsters who go and join them are concerned. If we are looking at keeping another section of youngsters fit, then the school structure is perhaps important. I had a number of youngsters here this week from Ribblesdale School, a great school. I asked them how many hours of sport they did a week and the answer was two. How we get them from two to five is going to be important. I question whether £100 million, which works out at roughly £12 per pupil, is going to be sufficient within the school year to achieve that and also how it is going to be done imaginatively within the curriculum which is already hard pressed. In a number of rural areas you will find that schools tend to close earlier because of transport problems; the youngsters have to finish about quarter past or half past three and then they are away. May I ask that you liaise very closely with Alan Johnson and the Minister who is responsible for delivering this programme so that all these little areas can be ironed out properly and you actually hit the target most effectively by ensuring that the number of hours that youngsters are doing sport is increasing for all of them?

James Purnell: We work very closely with Alan Johnson and the Department of Health on the participation goal and that is in a large part about getting people who are not active at all now to start to do walking, cycling, physical activity, which can then lead into sporting activity. We will also work very closely with Ed Balls at DCSF to deliver the five hours. The £100 million is the amount we were asked for and the people who are delivering it were clear that they thought they could deliver the five hours within that. We will monitor it and you will be able to hold us to account if it is not delivered.

Q80 Mr Evans: To be honest, as I say, I welcome it, but in the wording of it specifically it says "up to five hours". That seems to be the maximum. I prefer to see the minimum being five hours not the maximum.

James Purnell: There are only so many hours in the week. I think five hours is quite ambitious. There are things we want to do. We also want to give young people the chance to develop their cultural activities in and outside school as well. We are very clear that sport and culture are part of living a good life and make a big difference to people's health and their life chances. We want to make sure that everyone has access to that.

Q81 Paul Farrelly: One of the very welcome and possibly undersold government policies towards encouraging children's sport has been the community amateur sport's club scheme. This week we launched a campaign to try to extend that scheme to allow junior subscriptions to qualify for gift aid. That was launched in the House this week cross party. So far only 4,500 of a possible 44,000 clubs have taken advantage of this scheme. We have a part to play as MPs, Government and local authorities as well. Mine has not really done anything on this and I shall be trying to remedy that. What would really give the scheme a boost would be if you, Secretary of State, could join us in persuading your old friend the Chief Secretary to the Treasury, Andy Burnham, who is a mean footballer himself, to get the Treasury to come to a quick conclusion that that scheme should be extended to encourage more youngsters by giving the clubs the gift aid element of junior subscriptions. Will you join us in that campaign?

James Purnell: I actually run a sports club of which he is the striker, so I shall be able to lobby him on the football pitch. Clearly this was an important initiative and the fact that around about 10% of people have signed up for it is good, though we would obviously like to be able to do more and there are issues which we would be happy to examine with you. There are also issues which people raise about disposals and the effect that tax status has on that. We are happy to look at those with you. Clearly tax policy is a matter for the Treasury and not for us but we are happy to look at the representations you want to make around that.

Q82 Alan Keen: Two members have already paid tribute to the hon Member for Sittingbourne and Sheppey and I recall that in one of the first debates we had on the Olympics he said that it need not be within the M25. As the escalating costs go up and up, do you not regret that we did not take his advice and have the Olympics on the Isle of Sheppey?

James Purnell: Clearly it is a world destination and would have been appropriate. I think the IOC were clear that they thought London was the one with the greater chance of success; not that the Isle of Sheppey would have had no chance at all.

Alan Keen: It must have been touch and go.

Q83 Janet Anderson: As I think you know, the arts world was delighted with the financial settlement they got. I understand you have indicated that you would like a move away from targets. Could you set out for us what you are expecting from the arts world in return and why you have started to signal a different approach?

James Purnell: The targets can work very well when you are trying to change the direction of an organisational change to deal with a growing problem. Targets have been effective in moving the debate around excellence and access on to the next stage. I remember back in 1997, when we started talking about the importance of access and you and Chris Smith were doing that, that there was a big debate about whether it could be done. Some people said you could not widen access without dumbing down and I think that argument has been won now. You hear very few people who make that argument, the argument of principle. It is now time to move on to a much more enabling relationship with the Arts Council, but also with other NDPBs, and rather than having crude top-down targets we should have a relationship based on clear strategic priorities. It is then for them to say how they think that should be met in detail and to liaise with their funding organisations about how to achieve that. In terms of the goals we have for them, as you know we have set up the McMaster review to think about how excellence can be promoted both by the way that we play our role, the way the Arts Council does and the way the museums play their role. That is because there is fantastic work going on in Britain. The arts in Britain are world class but we are quite clear that we need to make sure that can continue to be the case and we want to make sure the funding and organisational framework is set up as best it can be to support excellence in the arts and in culture and in museums in this country. The sine qua non of funding has to be that the work is excellent. That, I believe, far from being in opposition to access supports access and indeed there is a virtuous circle between the two that excellent work stimulates people to come in. If you want to have a continuing world-class arts infrastructure in this country that means having large audiences which are hungry for innovative work, hungry for excellent work and prepared to take risk and to go to sample a wide range of work but also to have people who are going to be coming through to be the stars, directors, actors of tomorrow. That balance of having excellence and access working hand in hand is the key strategic goal for them going forward. It is just that I do not think that I should be telling them how to do that in very great detail. I want to free them up to work out with funded organisations how they achieve it.

Q84 Janet Anderson: You quite rightly talk about promoting excellence and bringing on new talent. I have two small regional theatres in my constituency, the Royal Court in Bacup and the Millennium Theatre in Waterfoot where I shall be launching the Bacup Film Festival on Saturday evening; international of course. Neither of those theatres receives any kind of public funding at all. Am I right that the Arts Council is going to have a review of funding to regional theatres? What do you think will be the emphasis which comes out of it?

James Purnell: Everyone pays for the arts and everyone has the right to be able to access excellent work. We do have the arm's-length principle in this country and I am not going to start getting into saying which one they should be funding and which one they should not. The principle is very clear, which is that all regions of the country have the right to be able to access really excellent work.

Q85 Mr Sanders: You mentioned earlier the Cultural Olympiad. Everyone I speak to has a different idea of what the Cultural Olympiad is actually about: arts, culture, heritage, all three. Can you define for us what the Cultural Olympiad is?

James Purnell: There is a slightly trite answer to that which is that eight objectives are set out in the agreement with the IOC for the Cultural Olympiad and they form part of the promises we made. That is the core of the Cultural Olympiad. What we have been working on in the first few months of meetings has been the overall spending framework and by providing that uplift for museums and the arts we hope it will allow them to contribute to the Cultural Olympiad. It clearly will not be limited just to the work in those eight objectives: it will be a whole range of people who want to do work in the run-up to the Olympics and Olympic year which is culturally relevant. The thing I was really keen to avoid was getting more money, keeping a bunch of it back and making people bid for it and then only being able to get money from us for the Cultural Olympiad or from local authorities for the Cultural Olympiad. That would have been wrong. Instead, what we have done is given people that money in their baseline, given them a clear overall goal of contributing to the Cultural Olympiad and it is for them to decide how they do that.

Q86 Mr Sanders: Presumably you want value added from this. Would you preclude an existing event, festival, gathering of some nature that fitted into the theme set out, from accessing any funding because they simply tweak what they are doing and put five rings on it and call it an Olympiad event?

James Purnell: Not at all. It is a slightly false distinction between existing work and additional work. What we are doing is funding organisations to be able to run themselves well and there is an opportunity with the Cultural Olympiad to do work which benefits from the fact that people will be coming here, using the themes of the Olympics and people far more creative than I will be able to decide how to do that. We also have these eight commitments in the Tier 2 projects, as it is called in the jargon, which are the big national projects. There are the opening and closing ceremonies which LOCOG are responsible for. There is also a whole series of events which will be happening in the regions under the so-called Tier 3 project. There will be a wide range of events, local, regional, national and the ceremonies themselves and I really think it is going to be one of the great things about the Olympics. It will be a real sporting celebration but also a cultural celebration.

Q87 Mr Sanders: I think everybody agrees that it is a wonderful idea. There are fears that, for example, something like the BBC Proms, in the run-up to the Olympics, could market themselves as part of the Cultural Olympiad and access funding which might otherwise have gone to funding a new music festival somewhere else in the capital or outside. I just want to know whether you will try to encourage more value added, new events, perhaps more diverse, perhaps at a more local level than just looking at some of the national events which take place and maybe seeing this as an opportunity to subsidise what they already do.

James Purnell: I think that is a slightly false choice in the sense that we will be able to fund local and regional events and indeed through the Legacy Trust and the Tier 3 events there are plans to do exactly that. There will also be national events and indeed one of the eight commitments is for a festival of live music. I do not think we should say the money should only go to an organisation which is not planning to do an event already. Some of them will be entirely new events; others will be museums putting on events which are part of their normal course of exhibitions but which reflect Olympic themes or which are somehow related to the Cultural Olympiad. It would be wrong for me as a politician to start to impede that cultural and creative process.

Q88 Philip Davies: May I ask, whilst you were on the football field with Andy Burnham, whether or not you asked him when the Treasury were going to implement the Goodison review recommendations which would deliver more money into the arts?

James Purnell: The Goodison review was about philanthropy and now is a good time to start thinking about how we can get more charitable investment in the arts. Real progress has been made on the tax treatment of charitable giving and that is something which genuinely benefits people and their cultural and heritage sectors, but if we had been in the position where we had been cutting money to the arts, it would have been harder to say to the private sector that we want them to give more. Given that we have now been able to reach what is not a bad settlement, we can now work with the Arts Council and others to see what more can be done, for example to encourage new money, people who have made significant amounts of money in the City to put more money into culture.

Q89 Philip Davies: Would Mr Stephens, given his distinguished career in the Treasury, be able to explain why the Goodison review was set up by the Treasury and then completely ignored by the Treasury for a number of years afterwards.

James Purnell: That is a slightly political question, if I may say so, so I might take that one back. I do not accept that we have not made progress on philanthropy. Real progress has been made and the Goodison review will be a helpful input into the work we will be doing on that.

Q90 Paul Farrelly: One of the other reviews we have looked at has been the heritage protection review. That envisages local authorities, unitary and second tier authorities, taking on a great deal more responsibility and yet it is not clear, particularly with respect to conservation, where the money for that is coming from, nor the additional expertise. I just wondered how you were addressing those issues.

James Purnell: We have been able to give English Heritage a cash increase for the next period and they have made clear in their statements following that that they want to move forward with the heritage protection review and will liaise with ourselves and local authorities about exactly how to do that. Overall a large part of that extra work they will be doing will be working with local authorities on training, on how to run this new system effectively. That is a large contribution towards local authority costs. We believe that in the medium term when this is implemented it will make the management of place by local authorities much more effective and therefore there is a lot for local authorities to get from it.

Q91 Paul Farrelly: Are you suggesting then, quite apart from the extra responsibilities English Heritage have, that local authorities must look to that £5 million from English Heritage to fund their responsibilities and not more direct funding for authorities themselves?

James Purnell: We do not fund local authorities. What I am saying is that the English Heritage money is going to be spent on supporting local authorities to implement this new system and it will be something which local authorities all round the country will be raising with MPs. I am sure you have probably had letters about buildings which they did not think should be listed getting in the way of regeneration programmes, for example. This is a process to try to respond to that concern that local authorities have put to us.

Q92 Paul Farrelly: What arguments are you making elsewhere in Government on their behalf?

James Purnell: This is just a reflection of what English Heritage have said in their statements around the CSR. They want to look at how we can move forward on the heritage protection review. We want to work with them on that and we are not going to prejudge those discussions.

Q93 Paul Farrelly: May I make one plea? I am the founding patron of an organisation called Urban Vision North Staffordshire, which is one of the 15 or so CABE seed-funded architecture and design centres around the country. It is a fact in areas such as mine, which have every quango alive marching across our patch, all pinching people off each other by virtue of offering bigger salaries at each stage with no expansion of the total expertise available, that these architecture and design centres have contributed to that in attracting young enthusiastic people who normally would not want to work for councils which are overloaded. May I ask you to be a champion for those within your department? They often have to look for funding from bodies sponsored by the CLG or BERR, as it is now known, through the RDAs. I should like to see the department standing up for centres like that and standing its ground with the other departments, making sure they are made a priority.

James Purnell: I certainly agree that CABE's work around that has been successful and that they have been a very good initiative. CABE and English Heritage have a really positive role to play in terms of defining that sense of place in terms of regeneration. What we want to move away from is the sense that there is an opposition between these two, that actually by treasuring and supporting the historic environment as well as having new design which CABE particularly focused on we can really make place born again. That is the goal which has been achieved brilliantly in many of our cities around the UK and which this settlement and the heritage protection review allows us to take to the next level.

Q94 Paul Farrelly: After English Heritage, who will you pick on next? I see that the resource accounts from the department state that a further peer review of a major non-departmental body will be carried out this year. Which one of your non-departmental public bodies is going to be in line for peer review treatment?

Mr Stephens: We have not announced that yet, but I am very happy to write to you as soon as we do.

Q95 Paul Farrelly: When are you going to?

Mr Stephens: I do not know. Happy to write.

Q96 Paul Farrelly: Any idea? Before Christmas?

Mr Stephens: Soon.

Q97 Paul Farrelly: Soon. Before Christmas?

James Purnell: Happy to write before Christmas.

Q98 Chairman: Are you able to give us any more detail about the settlement package for specific initiatives, for instance for renaissance in the regions, which we in our last report praised and said must continue to be funded.

James Purnell: We will be making announcements on that very shortly.

Q99 Chairman: And the National Heritage Memorial Fund?

James Purnell: We will be making announcements on that very shortly.

Q100 Chairman: Lots of announcements to come. One small technical point. When you gave evidence to our inquiry into collections you said that the DCMS grant-in-aid to the 17 sponsored museums and galleries is £335 million in the current financial year. You have since announced that grant-in-aid for England's national museums and galleries will increase from £302 million this year to £332 million in 2010-11. So your latest announcement is promising a smaller figure in 2010-11 than the one you gave us.

James Purnell: That is because the original figure included capital and the second figure you quoted was only resource. We have not yet made our capital announcements.

Q101 Chairman: Another announcement still to come.

James Purnell: The two figures are entirely consistent.

Q102 Paul Farrelly: May I ask you when you expect to publish your creative economy Green Paper?

James Purnell: We will be doing that soon as well.

Q103 Paul Farrelly: Before Christmas?

James Purnell: We will do it when it is ready. We are trying to do it before Christmas but I want to make sure we get it right. It is progressing very well. The creative economy programme has been a huge success but even in the period of the creative economy programme, for example, YouTube has gone from not existing to being a massive company. That shows the huge amount of change that is going on. We want to make sure we get the proposals right and we are working very seriously on them at the moment.

Q104 Paul Farrelly: Coming from North Staffordshire and the Potteries it would be remiss of me if I did not make a plea that ceramics is in as a creative industry. That is all about design and intellectual property which increasingly is ripped off on an industrial scale by China who send their salesmen out within four weeks of new designs coming out. It is an intellectual property issue and Will Hutton, whom I used to work with on The Observer, has been working on the Green Paper and has also been working in North Staffordshire. It would be remiss on that score for ceramics to be excluded.

James Purnell: Will mentioned that to me only this week. You will be glad to know that is being taken forward. That is a very good example of industries where there will be places in the world which have low-cost bases where the UK can really succeed in the creative industries by being high value added, by having the greatest creative skills and that is as true of ceramics as it is of any other sectors of creative industries.

Q105 Mr Evans: Tying all the arts heritage and culture together with all the theatres, etcetera, that we have here I remember from the Lyons review that at one stage they were looking at a bed tax on hotels. Are the Government still looking at that possibility or has it been killed off?

James Purnell: That is clearly an issue for the Treasury rather than for us, but I do not believe that is something which is under active consideration.

Q106 Mr Evans: But your department will have an input into that discussion.

James Purnell: Absolutely and we have made our views clear on that in the past.

Q107 Mr Evans: Clearly that is important as well for international visitors coming in but also, when they do come in, one of the first things they see is Heathrow Airport in a lot of cases. Do you have a view as to what role that airport must play in welcoming visitors and how do you think that it is faring?

James Purnell: Generally it is very important that we have a good welcome for people and that will be particularly important in the run-up to 2012. We have a group, which is in the document which Jon had in front of him earlier, which is looking at that welcome. One of the things it is looking at is Heathrow, working closely with the airport and other partners.

Q108 Mr Evans: As you know, Heathrow has come in for a caning recently, not just on security issues but queues generally everywhere, both going to the airport to get out and coming back in. We have heard some horror stories recently about people at passport control having to wait over an hour to come in. That is surely not something we would want to be the first thing they see when they come to the United Kingdom.

James Purnell: No, we want to have a good welcome for people and that is exactly why that group has been set up. We have to put that in context in the sense that there are growing fears about security, about international terrorism and they clearly need to balance that. There is a very good group which now works between the tourism industry, us, immigration officers, to make sure we can balance the goals of security and a good welcome for people and that is a very important thing.

Q109 Mr Evans: Getting that balance right. How long on average do you think somebody should queue before they enter the United Kingdom?

James Purnell: I am responsible for many things but I do not have a performance indicator on queues.

Q110 Mr Evans: No, but if somebody is waiting over an hour it does have an impact.

James Purnell: You clearly think that is unacceptable.

Q111 Mr Evans: You do not. Do you think that over an hour is acceptable?

James Purnell: I do not run Heathrow Airport.

Q112 Mr Evans: No, but do you think waiting over an hour to come into the UK is acceptable?

James Purnell: It is very easy to lecture people; I am not in that market.

Q113 Mr Evans: I am not lecturing, I am asking. Do you think it is acceptable?

James Purnell: You clearly are lecturing and you can do that if you want to.

Q114 Mr Evans: Do you think it is acceptable for somebody coming into the UK to wait over an hour to come in under normal circumstances?

James Purnell: It is important we give people a good welcome and I personally do not like getting into lecturing people over things for which I am not responsible.

Q115 Chairman: Can we move onto another subject? I am not sure you will find it any easier as it is one which has been difficult for your department, gambling. Firstly, the focus of attention has been largely on the issue of casinos. Can you tell us where we now are in terms of the Government's intentions to allow one regional, eight large and eight small casinos?

James Purnell: Yes, I can. We have announced a review of regeneration in East Manchester and that will report in the autumn. We have also written to the 16 local authorities which are getting large and small casinos to see whether they still want to proceed. There have been local authority elections since those awards were made. We have not had answers from all of them yet; we have extended the deadline for them to do so. We expect to move forward on that shortly.

Q116 Chairman: In terms of the eight large and eight small, are you still intending to go ahead with that and are you therefore simply looking at whether or not the places originally identified are still the most appropriate or are you actually considering whether or not to proceed in principle?

James Purnell: There was political consensus around the 16 when it went through and we will make decisions in the light of the answers we get from the local authorities. It would not be right to prejudge that.

Q117 Chairman: You are expecting that the Order at least to allow large and small casinos will be placed once the review is finished.

James Purnell: As I said, there is political consensus around that but I am not going to prejudge either the review on regeneration in East Manchester or what the local authorities say to us and we will make a statement on that in due course.

Q118 Chairman: As far as the regional casino is concerned, there are still several authorities, Blackpool being perhaps the most obvious, who hope that the prospect of a regional casino is not dead. Do you think that there will be any regional casinos in Britain any time within the next decade?

James Purnell: As I said, I am not going to prejudge the regeneration review. The decision to have one was one which was encouraged by the Conservative Party in the wash-up before the previous election so clearly we were working within that framework. We do want to look at that report before we make any decisions.

Q119 Mr Evans: So there is still some chance that there may be a super casino in the United Kingdom in ten years.

James Purnell: We will look at the regeneration review and make our views clear after that.

Q120 Mr Evans: So there is a chance then.

James Purnell: I notice your technique of repeating the same question again and again even though I have given you an answer. My answer is that we will make a statement after the regeneration review is completed. You may repeat the question if you want to but I will still give you the same answer.

Q121 Mr Evans: Cracked records are not really all that useful, are they?

James Purnell: Repeated questions get the same answers.

Q122 Mr Sanders: Why have you had to extend the deadline for these local authorities which at one point were really excited about having a piece of paper which allowed them to license a casino in their area?

James Purnell: Because some of them asked us for more time to do the review.

Q123 Mr Sanders: What is that review? Is that about them consulting in their local area?

James Purnell: Yes, some of them did consult. They all have their individual views and they asked us for more time and we gave it to them.

Q124 Mr Sanders: How many replies have you actually had?

James Purnell: We have had 14 replies and we are still waiting for another two.

Q125 Mr Sanders: So two are still outstanding. In the feedback I think Nigel's was one of the first to say they wanted to go ahead. I know that one of the criticisms in other areas has been that this is only a piece of paper to license a casino which could come with social costs and will really only provide a few low-value jobs when what some of these areas need, particularly coastal resorts, is real help with their regeneration. Do you really see that a casino is an answer to regeneration in an area which already has a lot of low-value jobs and does not want any more social costs?

James Purnell: Clearly the Act was put into place partly in response to requests from local authorities for us to examine that and that is why there was a consensus around the small and large casinos. I am not going to say that is the only way that coastal towns can regenerate themselves. Some local authorities may decide to do it in a completely different way. That is very much a matter for them rather than for me.

Q126 Chairman: Is it not unfair that the authorities which gambled on getting a regional casino, Blackpool being the most obvious, now that it looks unlikely in the foreseeable future that regional casinos are going to arrive, are excluded from a large and small opportunity because they staked everything on a regional?

James Purnell: It is worth saying that Blackpool have completed a regeneration report which they have put to DCLG and we are looking at it; so there is a wider context for this. We have to operate within the framework which is set out in the Gambling Act and we have to operate legally, so we will do exactly that. We will make decisions on that in the light of the responses we get from the remaining two local authorities.

Q127 Chairman: But you could allow those authorities which originally wanted a regional to bid for a large and small now that the regional is off the agenda.

James Purnell: I am not going to start speculating about what our legal powers may or may not be. We will make decisions on that based on what people say to us as part of those responses.

Q128 Mr Sanders: Has anyone said they are no longer interested?

James Purnell: Not at this stage.

Mr Sanders: All 14 have said they are still interested.

Q129 Janet Anderson: You will be aware that there was a lot of speculation and worry about gambling addiction and that there might be an increase in problem gambling, but actually the Gambling Commission study in September showed that it has stayed about the same; the problem had not increased. There is concern about the gaming activity with the strongest link to problem gambling, which is touch screen roulette which people can access in betting shops around the country. In fact the chairman of the helpline charity GamCare said that these terminals were "... easily accessible, rapid-play and you win or lose rapid rewards - hallmarks of games which tend to addiction". Is that something you intend to keep a watchful eye on?

James Purnell: Yes, we have set up research coming out of the Commission's study which, as you say, did not show an increase overall but did show some increase in certain categories and the Gambling Commission will be leading that research and making proposals if they think that is appropriate. With the Gambling Commission we have arguably the strongest regime for protection of gambling anywhere in the world and they have powers to deal with that if they think it is appropriate to do so. We set up specific research as a consequence of the present study.

Q130 Mr Evans: May I ask you as well for some clarity on the Blackpool issue? We did have the local authority before us on Tuesday. You are clearly governed by the Gambling Act but are you saying that if Blackpool wrote to you and said they were rather interested in a large casino now that the super casino future is dead for the foreseeable, you would just look at the rules to see whether that is possible?

James Purnell: We will make our decisions once those people have replied to us. I really cannot start saying what we would do because at this stage we do not have a full set of answers. We would clearly need to look at what our legal powers were at that stage. I am not ruling anything in; I am not ruling anything out. I am just saying that these things need to be done in a proper order. Studies have been commissioned and we will respond to them pretty shortly.

Q131 Mr Evans: As it should be, but you would at least encourage Blackpool then to write to you to indicate that they are interested one way or the other.

James Purnell: We are working with them on the basis of their regeneration review which they have submitted to Government. We have a very good process and good engagement with them on doing exactly that.

Q132 Chairman: In the first few weeks after the Prime Minister took office he proceeded to ditch a large number of the policies of his predecessor, a number of which came from your department. One of the ones which were widely speculated on, indeed it was hinted at in lobby briefings, was the 24-hour licensing law, that this was going to be reviewed and possibly amended. Is that still a possibility or are you content with the operation of the Licensing Act?

James Purnell: We are reviewing the Licensing Act and that was always planned, in fact it is something I announced when I was in the licensing job two years ago. We have always said that we would evaluate the Licensing Act. We are doing that across the whole range of issues which it raises from live music through to crime. It is worth saying that crime in the night-time economy has actually fallen by 5% but we are working closely with the Home Office on the review that they are doing of the crime side of things and the Prime Minister was referring to that. We are also doing a wider review of the effect of alcohol on society and the way in particular that children are exposed to that. That is something which the Home Office and DCSF are working on. Clearly that is a much wider issue than just licensing; licensing is only one part of that particular issue.

Chairman: We have no more questions. May I thank you both very much.