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16 Jun 2009 : Column 165

Digital Britain

3.34 pm

The Secretary of State for Culture, Media and Sport (Mr. Ben Bradshaw): With permission, Mr. Speaker, I shall make a statement on the publication of the “Digital Britain” report.

Britain’s digital industries are among the most successful in the world. The global technological revolution means that if we make the right decisions now, they will continue to grow and Britain will continue to prosper from them. The report, which is part of the Government’s active industrial policy, spells out how we can make the most of the opportunities today and in the years to come.

The report covers four broad themes. First, we will make the most of the digital revolution only if we have the right infrastructure. Just as bridges, roads and railways were the foundations of Britain’s 19th-century industrial strength, our digital communications infrastructure will help power our future success. Businesses, other organisations and individuals want access to high-capability, high-speed networks, both fixed and mobile. This is key to Britain’s competitiveness.

As a first step, we are reaffirming our commitment to ensuring universal access to today’s broadband services, delivered through a public fund, including money that has not been used for digital television switchover. But we also need to ensure that Britain has the best next generation fixed broadband. Other countries are already investing heavily in this. Here, we have already seen an energetic market-led roll-out of next generation fixed broadband, but the economics of building what are essentially new networks mean that if it is left to the market, true super-fast broadband will reach only two thirds of homes and businesses over the next decade. The other third would be left behind.

Telecommunications prices for the consumer have fallen significantly in recent years and are expected to fall further as technology advances, so we have concluded that the fairest and most efficient way of ensuring that people and businesses are not left out is to use some of that saving in the form of a small levy on all fixed lines to establish an independent national fund, which will be used to ensure maximum next generation broadband coverage.

To complement improvements to fixed broadband, we also need to modernise our wireless network. This report sets out plans for the structured release of sufficient high-quality spectrum Europe-wide, for the creation of the next generation of mobile networks. This will ensure that the UK is among the earliest countries to deploy these networks and that UK consumers continue to enjoy the benefits of vigorous competition. Today’s report also sets out our intention to upgrade all our national radio stations from analogue to digital by 2015, with DAB firmly placed as the primary platform.

Having the right infrastructure will not, however, be enough unless everyone can use, and benefit from, the opportunities that new technologies offer, so participation is the second big theme in today’s report. Technological progress reduces costs, so affordability is partly addressed by the market. However, we are complementing this with Government action. Our £300 million home access scheme gives children in low-income families access to
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computers and the internet. As well as the ability to afford the technology, people need capability and skills. We address these in a number of ways in this report. I am pleased to announce today the appointment of the digital entrepreneur Martha Lane Fox as our new digital inclusion champion. We are also publishing today the report by my noble Friend Baroness Morris of Yardley on digital life skills.

The third key theme of “Digital Britain” is content—sustaining and strengthening our creative industries and securing plural provision of key public service content in the digital age. The ease with which digitised content can be copied makes it increasingly hard to convert creativity and rights into financial reward. The Government believe that taking someone else’s property and passing it on to others without consent or payment is tantamount to theft. Developing legal download markets will best serve both consumers and the creative industries. We will also legislate to curb unlawful peer-to-peer file sharing. Ofcom will be given a new duty to reduce this practice significantly, including two specific obligations: the notification of unlawful activity and, for serial infringers, identity release to enable targeted legal action by rights holders. We also propose technical measures by internet service providers, such as bandwidth reduction for serial infringers, if the other measures prove insufficient.

We will also implement a new, more robust system of content classification for the video games industry, building on the pan-European game information system with a strong UK-based statutory layer of regulation; that will ensure the protection of children, now and in the future.

I now turn to the evolving role of the BBC and Channel 4, and the need to protect public service content, particularly in the nations and regions of our country. In the digital age, a strong, confident and independent BBC is more important than ever. The Government support multi-annual licence fee settlements for the BBC, so that it can plan ahead and act independently of day-to-day political pressures, but we also believe that it is in the BBC’s own interests to evolve into more of a public service partner with other media organisations, and to see itself as an enabler of Digital Britain. We have been encouraging discussions about a joint venture between BBC Worldwide and Channel 4, which we believe would benefit both, as well as securing the future of Channel 4. Those talks are ongoing, and we are ready to help in any way we can.

Members of this House have repeatedly said that they believe that strong local and regional news, including a plurality of provision, is essential for the health and vibrancy of our democracy—I agree. The recent public service review by the regulator, Ofcom, also highlighted the importance of news in the regions and nations. We welcomed its report and the BBC’s response supporting partnerships. Partnerships are very welcome, but they may well be insufficient to meet the scale of the challenge. We believe that that will require a secure and sustainable funding stream.

The licence fee is the existing major intervention for content. There is nothing in either the BBC charter or legislation to say the BBC must have exclusive rights to it. Independent of the level at which the licence fee is set after 2013, we will consult on the option of sharing a small element of it post-2013 to help ensure high-quality plural provision, particularly in the regions and the nations. Subject to that consultation, we will use some
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of the current digital switchover underspend to fund pilots of this model in Scotland, Wales and one English region between now and 2013. We have, however, made it clear to the BBC and others that we are open to alternative proposals, should they wish to make them during the consultation. Alongside “Digital Britain” we are publishing a range of related documents, including the outcome of the review by the Office of Fair Trading of the media merger regime and local and regional media.

The fourth key theme in “Digital Britain” is the continued modernisation of government itself. The digital revolution has huge potential to improve the services of government and public bodies, and to reduce costs. It raises questions of data security and how government, as a major buyer in areas such as health and education, can encourage UK-based research and development, open standards and interoperability. The report sets out how public services will be delivered primarily online and electronically, thus making them quicker and more responsive to the public while saving money for the taxpayer.

This report will help accelerate Britain’s recovery from the biggest economic shock the world has seen since the second world war, and it is a central part of our industrial strategy. It will be key to our economic growth, social cohesion and well-being as a nation, and I commend it to the House.

Mr. Jeremy Hunt (South-West Surrey) (Con): I thank the Secretary of State for giving me prior notice both of the report and of his statement, and I congratulate him on giving his first statement to the House in his new role. With Lord Carter’s surprising and rather hasty departure from the Government, it is now the Secretary of State, less than a fortnight into the job, who must pick up the baton in an immensely complex but vital area for the economy. I therefore hope that he recognises that I do not mean it personally when I say that today’s report is a colossal disappointment.

The introduction, on page 3, says that the report seeks to achieve seven things. So what are they? The first is an “analysis”, as is the second; the third is a “statement of ambition”; the fourth is a “restatement” of need; the fifth is an “analysis”; the sixth is a “framework”; and the seventh is a “review”. Where in all of that is a single action?

There is one area in which the report has excelled itself, and that is consultation. The interim report published in January announced eight consultations, and this one announces 12, plus one new quango. That is surely government of the management consultants for the management consultants by the management consultants.

Britain has huge competitive strengths in the digital industries, particularly in the production of digital content, but to embrace these opportunities we need a proper digital infrastructure. Will the Secretary of State explain why, when America, France and Japan are laying fibre optic cable to thousands of homes, Britain’s operators have barely started to think about it? Why have the French Government been able to create competition between internet service providers to lay fibre in France Telecom’s ducts while the British Government have
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stood by as BT makes minimal investment, protected by a monopoly over the local loop?

Today’s solution, according to the Government, is a broadband tax, but rather than taxing, should the Secretary of State not be seeking to stimulate investment through the regulatory structure? The cable revolution happened without a cable tax; the satellite revolution happened without a satellite tax. Everyone recognises that some public investment might be necessary to reach the more remote parts of the country, but simply slapping on an extra tax is an old-economy solution to a new-economy problem. Unfortunately, the numbers do not add up either. The tax will apparently raise about £150 million per annum. Will the Secretary of State confirm that at that rate it will take 20 years to cover the estimated £3 billion cost of the broadband roll-out?

There are some things that we welcome. We welcome the decision on DAB. We welcome the moves to tackle piracy. However, having heard promises to tackle that problem four times in four years, we have today been promised only a consultation. Will the Secretary of State make a commitment that any required legislation will be laid before the House before the next election, so that it can be sorted out once and for all? We also support the roll-out of a universal 2 megabits broadband connection by 2012—probably the single most important practical outcome of today’s statement. That is all supposed to be funded by the money not used for digital switchover, but given that only 5 per cent. of transmitters have switched over—none of which covers a major urban area—will the Secretary of State tell us what will happen if costs are higher when the other 95 per cent. of transmitters are switched over?

Let me turn to regional news. Does the Secretary of State accept that the traditional model for regional news—based on the old ITV transmitter regions—has failed, and that what people really want is not regional news but local news? Why does Birmingham, Alabama have eight local TV stations when Birmingham in the UK, four times its size, has none? Why is the Secretary of State using the public’s money to prop up a failed system when people in his Exeter constituency have to watch the news from Plymouth, and people in my constituency in Surrey have to watch news from Southampton? In America, much smaller cities have not just one but a whole clutch of local news channels, greatly enhancing a sense of community and vibrant local democracy. None has access to a licence fee. Instead of putting yet more of a burden on taxpayers, why are the Government not embracing a digital era version of syndicated local TV—something that could also be a lifeline to our local newspaper industry?

On the licence fee, this afternoon’s statement shows breathtaking inconsistency on the part of the Government. Less than a month ago, the Secretary of State’s predecessor insisted at the Dispatch Box that the BBC needed an inflation-busting £68 million per annum rise in the licence fee to fulfil its core purposes. So, why is the Secretary of State saying today that it has a spare £100 million a year to give to other broadcasters? If that money really is spare, should we not first consider giving it back to licence fee payers, which is what nearly three quarters of them have said that they want?

There are some bright spots in the report, but overall it does not feel like an agenda for a new digital economy. It reads more like a top-down attempt to protect and
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prop up old business models using yet more public cash. The Conservative Government deregulated telecoms and launched Channels 4 and 5. They unleashed the cable and satellite revolution. Instead of digital dithering from a dated Government, we need new-economy dynamism from a new Conservative Government.

Mr. Bradshaw: I am glad that the hon. Gentleman mentioned the role that Lord Carter of Barnes has played in this report, because I omitted to thank and commend Lord Barnes on his excellent piece of work.

Contrary to what the hon. Gentleman said, the report contains 78 action points. In the main, we are consulting only on matters that require primary legislation, and I hope that hon. Members on all sides will think that that is generally good practice. However, we are consulting on one thing that does not require primary legislation, and that is the idea of sharing some of the BBC’s licence fee. I acknowledge that we have decided to do that, because it is quite a big move of principle—but if the hon. Gentleman does not think that we need to consult on it, he can just send me a letter saying that he agrees with the proposal. That would be very helpful indeed.

The hon. Gentleman implied that there was no need for public investment in the next generation of broadband roll-out. I appreciate that he has not had time to read all 250-odd pages of the report yet, but when he looks at it more closely he will see that virtually every other country in the world is using public funds to help ensure the provision of good-quality next generation broadband. Australia is using £22 billion sterling of taxpayers’ money to that end. By no means are we saying that the amount of money that we intend to use from the digital underspend and the levy on fixed lines will be sufficient in itself, but we do believe that it will be enough to pump-prime as the market would not otherwise do—that is, to complete the final third of provision for homes and businesses. That final stage of provision will cover many people in the rural constituencies of Opposition Members.

The hon. Gentleman asked about the timing of legislation. As he will appreciate, I am not going to comment on the next Session in Parliament: suffice it to say that this Government have made it clear that the digital revolution is one of our main priorities. As I said in my statement, it is a major part of our industrial strategy. He was wrong to say that not one urban area in the country has so far enjoyed digital switchover, because Exeter has. [ Interruption. ] My constituents would be very offended if their city were to be described as anything other than a major urban centre. Exeter recently became the first digital city in the country, and very successful the switchover was too.

Contrary to what the hon. Gentleman says, we anticipate that the rest of the digital switchover will go very smoothly. We are confident about that. We think that we are likely to be able to make the savings from the underspend that we have projected, and in fact believe that that may even be a conservative estimate.

The hon. Gentleman also said that we are ignoring local news in favour of regional news. Far from it: the model that I have just outlined would enable exactly the sort of local news provision that he described, and not just by the independent television providers who will be invited to bid for this new pot of money. The introduction of digital radio will free up radio spectrum for local and
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community radio stations, which will be able to provide exactly the sort of very local news and content that he advocates.

The hon. Gentleman said that instead of spending the digital underspend on the vital protection of the public service content of news in the nations and the regions, he would rather give the 75p a week back to the licence fee payer. All the way through his response, however, where he agreed with us about outcomes, he was prepared to will the ends but not the means.

Mr. David Blunkett (Sheffield, Brightside) (Lab): May I thank you personally, Mr. Speaker, for the courtesy and kindness that you have shown me over the years that you have occupied your post? I also congratulate my right hon. Friend the Secretary of State on his new appointment.

Does my right hon. Friend agree that for the digital highway, as for the physical highway, people need a vehicle, they need training, and they need to know the rules of the road—and that above all, they need awareness of risk? The money left over from the digital switchover appears to be dwindling, but given the need to keep children safe and to protect individuals and companies from crime, fraud and the dangers of cyber attack, does he agree that we could give some of it to the new digital champion, local authorities and educational institutions? The money could be used to raise awareness of the risks and to educate the population as a whole, because the opportunities being opened up must be matched by tackling the risks that undoubtedly exist in this new digital age.

Mr. Bradshaw: Yes, I entirely agree with my right hon. Friend. Again, he may not have had time to look at the report yet, but when he does he will see that we have committed up to £12 million of the surplus from digital switchover to be used for a communications programme and targeted outreach as part of the national plan for digital participation.

Mr. Don Foster (Bath) (LD): Ensuring the success of our creative economies will be critical in rebuilding our economy, as the Secretary of State says. I hope that he will accept that we have a lot of ground to make up. His statement is a step in the right direction, but too many issues remain unresolved, such as the possible merger of Channel 4 and BBC Worldwide, and the inclusion of a return path in digital boxes. Why, for example, has he not even addressed the issue of the governance of the BBC? Surely we need an independent body, not a regulator that remains within the BBC. However, it is welcome that we now know who is to classify video games, that tax breaks for that industry are now on the agenda, and that we at last have a date for switchover to digital radio.

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