House of COMMONS
MINUTES OF EVIDENCE
culture, media and sport committee
AND responsibilities OF the secretary of state
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Taken before the Culture, Media and Sport Committee
Mr John Whittingdale, in the Chair
Mr Peter Ainsworth
Mr Adrian Sanders
Mr Tom Watson
Memorandum submitted by National Audit Office
Witnesses: Rt Hon Ben Bradshaw MP, Secretary of State and Mr Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport, gave evidence.
Q1 Chairman: Good morning. Can I welcome the Secretary of State in his first appearance before the Committee this morning and also the Permanent Secretary of DCMS, Jonathan Stephens. The purpose of this morning's session is look specifically at DCMS's Annual Report and Accounts but, as usual, we range far and wide covering the responsibilities within the Department. Perhaps I could start with the Annual Report. On the face of it, the Department did rather well in that you under spent by £80 million in the last financial year against the final estimated voted by Parliament. The main reason you were able to deliver that was £160 million under spend in respect of the Olympic Delivery Authority. If we balance against that, there are some very significant overspends: £10 million overspend on Free Swimming, £15 million overspend on the Tate Gallery, £38 million overspend on the Arts Council, £22 million overspend on UK Sport. Does this not suggest that your financial planning is somewhat lacking in the Department?
Mr Bradshaw: I am sorry to have to deflect the first question to the Permanent Secretary because this was, of course, the financial year before I was in the Department and as the Accounting Officer I think he can probably give you a more comprehensive answer to that initial question.
Mr Stephens: Those reflect under spends or overspends against the original parliamentary estimates so they do not reflect budgetary changes agreed with the Treasury during the year, including access, for example, to end year flexibility, namely previous years' under spending. So against the budget finally set by the Treasury we actually came in very close to the budget but because we had significant under spending on the Olympic spending during the year we did not need to return to Parliament to secure a supplementary estimate in the normal way that would be expected, which would then have revised those figures.
Q2 Chairman: Are you suggesting that the overspends were allowed because of the under spend on the Olympic budget?
Mr Stephens: No, they reflected other budgetary flexibilities allowed by the Treasury. It was not a case, for example, of us taking money from the Olympic budget and putting it into the other areas. The Olympic budget is managed as a ring fenced budget within the Department's overall allocation. What I was pointing out was that we had access to other flexibilities, including end year flexibility and also the access to some income from the sale of a significant asset of the Department, the land to the north of the British Library, which meant that during the year, with the agreement of the Treasury, our budget was increased but did not need to be reflected in parliamentary estimates.
Q3 Chairman: It was also reported in July that there was a significant shortfall of £100 million in the capital budget which was intended to pay for a number of specific projects. We now learn that in actual fact you have been successful in gaining money from the Treasury and that you are intending to go ahead with the projects. I think, Secretary of State, I heard you say on the radio at the weekend that part of the cost of these was going to be met from efficiency savings with the Department. Would you like to tell us a bit more about these efficiency savings?
Mr Bradshaw: Yes, I would be happy to. First of all I hope you will think it is fairly good news that we have managed to persuade the Treasury to allow us an extra £30 million draw down on our end year flexibility pot this year and next year. The rest of that gap has been helped by their allowing our museums to dip into their reserves without that counting against our dell. The remainder of it will be met by what we propose to be £10 million of savings in the next financial year which we area currently discussing with all of our NDPBs and other bodies as well as efficiencies within the Department's own internal spend.
Q4 Chairman: In terms of the revenue expenditure for grants that you give to the NDPBs, there have been reports of very significant reductions; is that still likely to be the case?
Mr Bradshaw: No, that should not be the case at all. In fact, if you look at the trend of spend during this CSR period it is up on the previous year and in each of the three years for virtually all of our NDPBs. It is up each year of the three year CSR period. Obviously there may be an impact in the third year depending on what decisions are made working with our partner organisations on finding that extra £10 million, but it should not have the overall impact of the sort of cuts that you describe.
Q5 Chairman: Bodies like the Arts Council and English Heritage can look forward at least to some stability if not significant growth.
Mr Bradshaw: The Arts Council spend profile I can give you exactly: 437 million last year, 443 million this year and the projection is for 463 million next year - 2010/2011 - so that is quite a significant increase on this year.
Q6 Chairman: You do not anticipate that figure changing.
Mr Bradshaw: It may be that as part of the £10 million that a small amount of that would come off, but given that the increase is £20 million from this year to next the impact on the Arts Council's budget in relative terms would be very insignificant.
Q7 Mr Sanders: It is a little while since money was spent on producing a new logo for the Department which had happened just six years after the Department was created. I am just wondering what benefits there have been to the Department's productivity from the expenditure of public money on a new logo.
Mr Stephens: I have to confess that the new logo predates even my arrival in 2006. I think if you said it was six years after the Department was created, that would be 2003.
Q8 Mr Sanders: It was 2006.
Mr Stephens: That is a little time after the creation of the Department. Clearly it is important that the Department's identity is clearly and well known. That is something that when we give funding to our bodies for capital projects we attach importance to; we do not have any plans to revise or have a new logo as far as I am concerned.
Mr Bradshaw: Can I just add a value for money point? As a Department we have always delivered on our efficiency targets. We delivered £50.8 million in 2008/09 against a target of £48 million. Whether that is relevant to your question on value for money I will leave you to make a judgment.
Q9 Mr Sanders: I do not think it is directly relevant to my question. My question is actually about how you would judge the efficacy of spending money on a logo. I am not sure if anybody can remember what the logo was that it replaced, but the argument at the time was that it would improve the distinctiveness of the Department in the eyes of the public but I am not aware that any tests has been undertaken to judge whether that was so. Have any studies been undertaken to show whether that money that was spent on the logo has actually represented value for money for the taxpayer?
Mr Bradshaw: I do not know how you would measure that. I think what you can measure is the success of our Department in having argued successfully for an increase in the current CSR period for the benefit of all of the organisations that we care about deeply and when some departments had a cash freeze in their budget. I think in fact that the Department is delivering on its PSAs and DSOs. How you measure the direct impact of a logo on a successful performance of a department strikes me as being a question that is impossible to answer.
Q10 Mr Sanders: It is the kind of question that you ask other bodies to determine when they put in applications for funds from government departments. They have to prove how that money will be spent and what value will derive from it. It seems there is one law for them and a different law for a department where a new logo is chosen.
Mr Bradshaw: We certainly would expect all the organisations we fund to deliver value for money, but whether we would ask them to measure the direct impact of their logo on their ability to do so I am not aware we have ever done that in any of the departments I have worked in and I do not think it is measurable.
Chairman: Let us move to something completely different. Paul Farrelly?
Q11 Paul Farrelly: As a Committee we have been, with the departments, through a long process of scrutiny regarding the Heritage Bill. It was quite a surprise to everybody that the Queen's Speech did not feature the Bill at all, particularly as in terms of voting days in the House of Commons we have not had the busiest of schedules in the last year. Could you tell us what efforts the Department is making to ensure that a Heritage Bill is included in the forthcoming Queen's Speech?
Mr Bradshaw: It was not in the draft Queen's Speech so I would be very surprised if it was in the forthcoming Queen's Speech and we regret that. We always argue very strongly for our legislation and I regret the fact that it has not been possible to include a Heritage Bill in the recent parliamentary session. I hope the Committee would understand that there is always extremely stiff competition for legislation and legislation has to take priority in terms of how the Government as a whole thinks. I hope very much that we will have a bill on the digital economy and it may be for the Committee itself to reach a view as to which of those two pieces of legislation is more urgent. That does not mean, however, that we have not been able to make progress on many of the issues that you highlighted in your report on heritage both on the public policy statement, on planning, on the vision statement which my colleague Margaret Hodge will be publishing shortly and a number of the other issues that you highlighted in your Select Committee Report.
Q12 Paul Farrelly: Clearly we have had a very thin parliamentary schedule in terms of voting days in the last year. Just to be precise, you do not foresee any Heritage Bill being produced in the House this side of the general election?
Mr Bradshaw: Given that the next session is going to be, by its nature, truncated and it will bear all the qualities of a session running up to a general election which brings with it its own challenges in terms of managing the Government's business, and given that the pressure, if anything, is for fewer bills in the coming session than were published in the draft legislative programme in the summer, I think it would be highly unlikely. I hope very much though that we will have a Digital Britain Bill which, certainly so far as the Department is concerned, would be our legislative priority given some of the pressing issues on our digital economy and some of the issues that we may come on to discuss later.
Q13 Paul Farrelly: Clearly there are a lot of bills that get passed that are neither foreseen nor contained in the Queen' Speech. When it became clear that this last parliamentary session was not one of the busiest in legislative terms, did the government make any further lobbying to include a Heritage Bill at all?
Mr Stephens: This is regularly debated across government; the ultimate decision is for the cabinet and, along with a number of other departments, we have pressed our case strongly. As the Secretary of State has indicated, we have taken significant steps to ensure that the principles and policies behind the Bill, as set out in the original White Paper, can be carried forward in the meantime. We have done a lot of work to ensure that that is the case and that is supported and appreciated by the sector.
Q14 Paul Farrelly: On that point, English Heritage has said that two-thirds of the content of the proposed bill could be implemented without legislation. Do you agree with that?
Mr Bradshaw: Yes we do and we are in the process of doing that. I do not know whether it would be helpful to the Committee if I were to write formally to the Committee outlining exactly what we have already done and what we propose to do without the need for primary legislation to deliver it. I would happy to do that.
Q15 Paul Farrelly: That would be useful. It then begs the question, why produce a draft bill in the first place?
Mr Bradshaw: Again this predates me so I will refer the question to the Permanent Secretary.
Mr Stephens: We recognise the need for development policy across the heritage sector. We went through an extensive period of consultation. There are aspects that can only be introduced by legislation and the opportunity both to take policy forward and to consolidate existing legislation was widely welcomed. One of the aspects, for example, that can only be introduced by legislation is consolidation of the various different lists for scheduling historic and ancient monuments into one fundamental list which is a significant measure of simplification for the sector for businesses and individuals who are involved. That can only be achieved by legislation but we can put in place a number of administrative measures in the meantime that come close to achieving some of that simplification and introducing a number of the policy changes elsewhere.
Q16 Paul Farrelly: One of the things that you have pressed ahead on was a new Policy Planning Statement, PPS15, and one of the comments that come from the sector which I am involved in day to day in my area is that some of the definitions and designations in the Policy Planning Statement relate to the abandoned draft bill and are not found elsewhere which is causing some confusion.
Mr Stephens: That is clearly something we need to reflect on along with the Department of Communities and Local Government because this is a joint planning statement with them.
Q17 Paul Farrelly: Secretary of State, could you address issue in your letter?
Mr Bradshaw: Yes, I would be happy to. It is a draft, it is out for consultation and anybody is free - and indeed we would welcome their comments - to comment on it, but I am happy to do that.
Q18 Paul Farrelly: One other comment that has been made is that despite the title, heritage does not seem to carry much weight in the draft and it seems to be rather more of a developer's charter than a protector of the historic environment. How would your respond to that concern?
Mr Stephens: What we are trying to do is to reflect the development of policy so that along with our heritage advisers in English Heritage many positive developments have taken place which allow for positive development and preservation of listed buildings and their return into current and appropriate use. I think that is an area in which the sector has significantly developed over recent years and was looking for us - this emerged during consultation on the original policy - to reflect that in revised policy and guidance. The revised guidance is an attempt to ensure that buildings with historic architectural merit are protected but also that where development is appropriate and consistent with that protection, that there are not excessive or unreasonable controls that might prevent the return to current use and a sustainable future for these buildings.
Q19 Paul Farrelly: Would you accept a point that has been made by a number of organisations that in terms of getting a draft that was more acceptable and more comprehensive, the Department should have relied on wider input rather than principally just on English Heritage?
Mr Stephens: This followed on a very extensive process of policy development consultation which had the widest possible consultation so we published a consultation policy paper leading up to the original white paper. We then published what was originally the bill in draft, again inviting consultation. The revised policy guidance is now again out for consultation. Of course the government develops these things with its heritage advisor in English Heritage but then seeks to ensure that these are open to and commented on by the sector as a whole. Certainly my impression is that the sector has welcomed that approach and it has helped to build a broad consensus behind the thrust of policy.
Watson: Before I ask you some searching
questions on the illicit file sharing element of Digital Britain, can I just
add a couple of supplementaries on heritage?
Would you take this opportunity to congratulate Mr Herbert for discovering
the Staffordshire gold haul and do you think that something so culturally
significant should remain in the
Mr Bradshaw: I would certainly like to join in those congratulations and say yes, I think it would admirable if it could be and we are working with the regional development agency and our partner bodies to see whether that is a deliverable aspiration.
Q21 Mr Watson: There is no chance, as a result of future cuts, of bringing back charging in museums, is there?
Mr Bradshaw: Not under a labour government although, as I am sure you are aware, the conservative Mayor of London has indicated he would like to bring back what he calls voluntary charging, whatever that means.
Q22 Mr Watson: If I could just taken you onto Digital Britain, in one of the finest speeches the prime minister has ever made he used the quote, "a fast internet connection is now seen by most of the public as an essential service, as indispensable as electricity, gas and water". Given the prime minister's leadership on this issue and proposals to temporarily cut people off as a result of accusations of illicit file sharing by some sections of the music industry, do you think that those people deserve to prove their innocence in a court of law?
Mr Bradshaw: Yes, absolutely. The suspension to which you refer - which would be as a very last resort for serial and serious infringement - would be subject to a strict two-stage process. It would not just happen on the basis of an accusation as you seem to suggest in your question. Firstly there would need to be court order for any of the technical measures that we are discussing in the consultation document to be implemented. Secondly, there would be a right of appeal to a tier one tribunal. I hope that you would not go away with the impression that innocent teenagers are going to be cut off willy-nilly on the basis of an accusation; that is not our intention or is not the effect of what we will propose when we come to publish the bill.
Q23 Mr Watson: I think that is actually new.
Mr Bradshaw: It is new; I have announced it to you today, Mr Watson.
Q24 Mr Watson: Does that mean that an individual citizen can go to court to oppose an order to cut them off?
Mr Bradshaw: There will be the right of an appeal to a tier one tribunal, yes.
Q25 Mr Watson: Perhaps we can explore what a tier one tribunal is later on. I want to test you a little more on this. Have you estimated the cost of implementing the system to suspend file sharers for industry? If so, can you say what that is?
Mr Bradshaw: I would imagine we would do so in the regulatory impact assessment that we will be publishing alongside the bill. I know you have a strong record of speaking out on one side of this argument - this is not meant pejoratively - but there are very strong arguments on the other side, the cost of doing nothing to the music industry alone in this country is estimated at about £200 million.
Q26 Mr Watson: Whose estimate is that?
Mr Bradshaw: That is the industry's estimate. It is an estimate that I have not seen challenged by anyone in any serious way. You will be aware that it is not just the film industry that is concerned about illegal file sharing, it is the music industry, it is all of our creative sectors. This is a problem which governments all over the world are grappling with. I welcome having a serious debate about how we ensure that people who create things can make value out of it. What I do not accept is the argument that there should be anarchy on the internet and that anyone should just be allowed to access what they like free of charge. The bottom line is, this is theft and I think we have to be clear about that. Yes, there need to be market solutions and there are some very imaginative and innovative market solutions that are being developed all the time, but if you are suggesting that we do not need to take action to curb this problem I think the impact on that on our creative sector - which is massively important to our economy and which has outgrown our economic growth in general and will provide a lot of the well-paid jobs in the future - will be devastating. I think we do need to get the law right and I hope that you will help us do that if you have the chance to serve on the committee.
Q27 Mr Watson: I will try to do that in any way I can. So the only estimate we have got to the cost to industry is £200 million and that is an industry statistic.
Mr Bradshaw: That is just for the music industry.
Q28 Mr Watson: Has the music industry estimated how much it will cost industry to police the system with the suspension system?
Mr Bradshaw: They may well have done.
Mr Stephens: I am afraid I do not know either but, as the Secretary of State said, that is one of the issues that will be covered in a regulatory impact assessment.
Q29 Mr Watson: Has the Department estimated what the increased income to industry will be as a result of implementing this new regulatory burden?
Mr Bradshaw: The aim is to significantly reduce - I think we give a figure - by 70%. If we do not manage to reduce by 70% the level of illegal file sharing then we would move to the next stage in terms of considering technical measures. One would have to take the estimate of what is currently being lost to our creative industries and cut 70% off that to arrive at the figure you have just described.
Q30 Mr Watson: Would it be possible to give us in writing the estimates that helped you to form the decision to implement this new system?
Mr Bradshaw: Absolutely, I would be delighted to do that. I am not sure whether or not it is something we should do in advance of publishing the regulatory impact assessment or whether it would be best to wait and put it all in there in a comprehensive way or to do both at the same time.
Q31 Mr Watson: Given the prime minister's excellent earlier quote, do you think there should be a human rights impact assessment on this legislation as well?
Mr Bradshaw: I think there has to be a human rights impact assessment for every piece of legislation.
Q32 Mr Watson: I think that might be new as well; I do not think you have announced that before.
Mr Bradshaw: I do not think it is new that there has to be one for every bill; for it to get through LP it has to have had the sign off on the human rights stuff.
Q33 Mr Watson: With the additional income generated for the industry with this new suspension system - the 70% target you are aiming at which would presumably, in the logic you apply to this, generate extra income to the industry - have you worked out how much the artists would get of that figure?
Mr Bradshaw: That would depend on the contractual arrangements that individual artists have with the rights holders if they are not the rights holders themselves. There is very, very strong support from organisations that represent individual artists and getting the Featured Artists Coalition to agree to a single policy was described to me like herding cats and the fact that they did manage to get to an agreed policy on this I think shows the level of concern among individual artists, even those who - and there will be different views on this - do not agree with all of the detail that they came up which I thought was a very sensible and constructive submission. We will take theirs and all of the other submissions into account before we publish the bill.
Q34 Mr Watson: Have you considered how much the industry is making now through suing people for illicit file sharing at the moment?
Mr Bradshaw: I have not made an estimate of that, no. I do not know whether we would have the figure. I imagine that would be a commercial figure; whether we can get it or not I do not know.
Q35 Mr Watson: Have you estimated how many jobs might be generated through this new system, if any?
Mr Bradshaw: What we have estimated and what I think we have said quite clearly - and I will try to say quite clearly now - is that we do not take any action the impact of the growth of illegal file sharing on our creative sector would be potentially devastating. As a sector it is growing more quickly than the rest of our economy. It has continued to grow through the downturn very, very strongly. It is one of the sectors that the government has identified in its industrial strategy in Building Britain's Future as one of out future growth sectors on which we want to place greater emphasis and give greater priority. If we do not get the legal framework right, if we do not allow people to create and defend value of what they create then the future employment prospects would be very bleak indeed. That is why this matters so much. We are leading the way on this debate, by the way - other countries are looking at what we are doing - and if we get it right I think it will help us build on our existing strengths in the creative and cultural sectors which will only be very good for jobs and for the economy.
Q36 Mr Watson: Do you agree with the industry lobbyist Geoff Taylor at the BPI who says that there could hardly be more on-line music offerings?
Mr Bradshaw: There could hardly be more?
Q37 Mr Watson: There could hardly be more.
Mr Bradshaw: I am not quite sure what he means by that.
Q38 Mr Watson: He says there is plenty out there and the business models for on-line music are not working.
Mr Bradshaw: I think I acknowledged that by saying that we not only need a legislative framework to tackle illegal file sharing, but we need workable commercial models. At the same time as trying to establish a legal framework that protects rights owners and the value of what they create, it is also important that we work with the industry and IS providers and everybody else to try to help them develop workable commercial solutions. There are a number out there already that are springing up and I suspect the better the legal framework we get the more likely it is that others will spring up.
Q39 Mr Watson: Is it not a surprise to you that ten years into the ubiquity of the internet the industry has not got its act together?
Mr Bradshaw: I think it would be fair to say that the industry has been quite slow at coming to this, but I think there has been considerable acceleration in the last 12 months and indeed every week that goes by we are seeing a greater velocity in that direction which I think is a welcome thing.
Q40 Mr Watson: I do not think there is enough empirical evidence to prove that the decisions you take on suspension will generate more income for the industry, will do anything to stop the proliferation of illicit file sharing, nor will it remunerate artists in the way that the internet possibly could with new business models. What you should be considering is statutory licensing for on-line music rather than spending the resources of a department on trying to once again chase piracy as the industry has tried to do from time immemorial from opposing the invention of the phonograph to the audio tapes of killing music in the '80s to the invention of CD ROMs and DVD rewritables. The film industry even opposed the VHS video recorder. Do they not have form on trying to ignore new technology and should it not be our job to get them in a room, sort their licensing arrangements out so that new entrepreneurs can enter the market and get the music industry onto an even keel?
Mr Bradshaw: I am grateful for the advice but I do not think it is an either/or. I think we both need to pursue the solutions or the partial solutions you have just described with a legal framework that protects some of the more egregious assaults on rights holders value.
Q41 Chairman: Can I approach it from a slightly different angle? Could you just run through the procedure again? The right holders will notify the ISPs of the persistent file sharers, or at least the IP addresses. The ISPs will then notify the owners of those IP addresses and send them the notice to desist. It will then require a court order for the rights owners to discover the identity. Once they have obtained that information then they will have to apply for a further court order before they can take technical measures against them.
Mr Bradshaw: The Permanent Secretary may have more detail on this than I do, but my understanding of the current proposal is that if there is a decision to go to technical measures then there will have to be a court order in order to initiate that process.
Q42 Chairman: This will be the second court order.
Mr Bradshaw: No, this is the first court order and this is only at the end of a process which we think in the large majority of cases - the evidence suggests this from other parts of the world - the warning letters alone are going to be enough, particularly for the sort of cases that are often quoted (teenagers at home on their parents' internet). What we are talking about here are serious and often commercial illegal file sharers. However, if the court order is given to proceed to technical measures, that will then be able to be appealed against by the person against whom the measures are being taken.
Q43 Chairman: The revelation of the names of addresses behind the IP addresses - which is information currently in the possession of the ISPs but not the rights holders - will be given by the ISPs with or without a court order?
Mr Bradshaw: I imagine that will become public as part of a legal process.
Mr Stephens: I do not know the direct answer to that. We can write and this will be one of the issues covered in the bill when published.
Mr Bradshaw: I think we have just closed the consultation but we have to have been through a long period of consultation. Even the possibility of suspension was a suggestion for consultation with a hard and fast policy which would be laid down when we publish the bill and it will be open to debate in the House.
Q44 Chairman: I think our brief exchange this morning has suggested that this may be a matter of some controversy when it reaches the floor of the House of Commons. You do not have long. Is this going to be right up the front of the new session?
Mr Bradshaw: I do not know when the bill will be introduced; that will be a matter for the business managers. I am aware there are strong views on all sides, but what I would say is that - you may get a better feel of this from discussions you have - I also detect quite strong cross party support for meaningful measures on this and of course the stronger that cross party support is, the more likely it is that we will get the bill quickly and we will get it in a form which everyone is happy with.
Q45 Chairman: Can I just move onto one other aspect of Digital Britain? You have announced very ambitious plans to deliver digital radio upgrade programmes by 2015 and have most of the national stations move off analogue to digital by then. That will require extensive investment and digital transmission network. What estimate do you have of what it is going to cost to do that?
Mr Bradshaw: The current estimate that we are working on is about £10 million a year to build out the DAB multiplexes. Is that the figure you were interested in?
Q46 Chairman: The one I had is rather more than that. Where is that money going to come from?
Mr Bradshaw: It will come from a mixture of sources. We expect the BBC to play a significant role in this; commercial radio; public funds as well.
Q47 Chairman: I think with the current state of commercial radio their ability to invest any more is almost zero. Do you foresee, therefore, further government investment, maybe from the licence fee?
Mr Bradshaw: That is one of the things we are not currently intending to spend a share of the licence fee on, but if there is an even bigger under spend in the digital switchover programme than we are currently expecting, who knows?
Q48 Chairman: The digital switchover programme appears to be earmarked for quite a large number of purposes.
Mr Bradshaw: There is quite a significant under spend.
Q49 Chairman: You are confident that it can be delivered. What are you going to say to all the people who have not bought a new car in the last two years?
Mr Bradshaw: We are working with the motor manufacturers both to ensure that future new cars do, but also to ensure that there is some sort of gadget that you will be able to use in your existing car to make sure that you can pick up digital radio. One of the things we have said quite clearly is that we will not go ahead with this unless by 2013 certain conditions are reached, ie we have more than 50% digital radio ownership and that reception on all of our main roads is not going to be a problem. So we have put conditions down but at the same time we felt it was important to provide market certainty that we specified an end date by which time this should happen.
Chairman: I am going to move onto another aspect of the use for licence fees. Paul Farrelly?
Q50 Paul Farrelly: One of the areas where the licence fee may possibly be top sliced is to help deliver a two megabyte broadband service. Can you tell us where those discussions stand at the moment?
Mr Bradshaw: I do not think the question was quite right. What we have said is that we would use some
of the current under spend from the digital switchover which is not from the
licence fee; it was agreed separate to and on top of the licence fee settlement
at the last licence fee negotiation, the 3.5% figure. Yes, we have said that that would help fund
the roll-out of universal broadband by 2012 to two megabytes. We have said that we will fund the roll-out
of universal next generation broadband by 2017 using this very small levy on
fixed phone lines. So the proposal is
not to use a share of the television licence fee after 2012 to help deliver
broadband; the proposal is to use a small of the licence fee, again money that
is not currently available to the BBC, to help save regional news and news in
the nations of the
Q51 Paul Farrelly: Your consultation on independently funded news consortia on ways to do that closed a month ago. When do you anticipate producing a summary of the results of that?
Mr Bradshaw: Very soon. I want to move very rapidly towards going out for tender on the independent regional news consortia so that we can announce a preferred bidder early in the spring next year.
Q52 Paul Farrelly: In terms of the balance of views on that consultation, if you drew a line down the middle of a piece of paper and you put the BBC in the "no" camp who might join the BBC on the "no" side?
Mr Bradshaw: I have not studied the ballot exactly but the vast majority of the other interested organisations, including obviously regional news journalists, ITV and local newspaper groups have a very strong interest in forming part of these consortia are strongly in support. Certainly the public, when we questioned them or when they are questioned on our behalf, expressed very strong support for the importance of regional news. It was their most important piece of public service broadcasting; they did not want the BBC to have a monopoly and they thought it was a perfectly reasonable idea to use a small fraction of the licence fee not currently available to the BBC to help secure its future.
Q53 Paul Farrelly: Media commentators - there are many of them - can thank you and Sir Michael Lyons for fattening their pockets in terms of their freelance earnings in terms of the public discussions you have had recently. Were the BBC also suggesting that it would be best to give the licence fee money back - at least that is what Sir Michael seems to suggest - rather than help fund a more vibrant regional news? How would you describe that approach? Scorched earth, or would that be too harsh?
Mr Bradshaw: First of all it is not the BBC's licence fee to give back and the 3.5%, as I have explained, is not the BBC's to spend now on programmes; that has been set aside for digital switchover. That comment puzzled me. If the BBC wants to offer a reduced licence fee that is up to the BBC. The BBC has made a perfectly valid and constructive alternative suggestion in its response to the consultation suggesting that an alternative funding mechanism might be from the spectrum tax. We think that poses one or two challenges but we will be examining that. We have not made our minds up. The priority for us is to save plurality in the regional news and news in the nation. That is what the public wants. We want there to be a funding system that is sustainable, reliable and transparent. We have come up with a suggestion - indeed I think the Select Committee itself came up with a similar suggestion in your last report on this subject - but we are open to other alternatives. I think it is very important that we separate this whole issue of the size of a licence fee from the idea of using a part of the licence fee. If a decision is taken post 2012 to use a part of the licence fee to fund regional news on the third channel, that does not in any way impact on the size of the licence fee that goes to the BBC. That will be a matter for debate in the normal way as part of the licence fee renewal process under a labour government. Under an alternative government things may look rather different as my shadow said in an interview yesterday.
Q54 Paul Farrelly: I am glad you mention that because there are some colleagues in different parties who are all in favour of a vibrant regional news provision which could be funded by so-called top slicing, particularly from that element of the digital switchover that remains, but at the same time they would like to hand the money back to the licence fee payers. Is that a case of not being quite clear in what they want and having their cake and eating it?
Mr Bradshaw: All the political parties say they want to save regional news. I would say that it is only the government that up to now has come up with a credible way of actually funding that. I could say the same about broadband roll-out. I think all the political parties pay lip service to universal broadband and of course universal broadband is particularly important for many of our rural areas and yet it is only the government so far that has come forward with a practicable and realistic means of funding it. I will leave that for others to judge.
Q55 Paul Farrelly: There has been an announcement of a number of privatisations in the last couple of weeks. Has the Department been approached for its views on the potential sell-off of either BBC Worldwide or Channel 4?
Mr Bradshaw: No, although I am sure you will have spotted that in Digital Britain we suggested to the BBC Trust that it might want to examine whether or not to look at putting BBC Worldwide or bits of BBC Worldwide on a more independent or arms' length footing. Again those will be matters for the BBC to pursue.
Q56 Paul Farrelly: In respect of Channel 4, the Department has not been asked for its views about that by the prime minister, the Cabinet Office or the Treasury.
Mr Bradshaw: No. We made it very clear in Digital Britain, again in contrast to the official opposition, that we think that Channel 4 should remain a public service broadcaster; we think it is important that we have plurality in our public service broadcasting sector. We favoured very much a kind of joint venture between Channel 4 and BBC Worldwide and that is something they are still actively pursuing. The latest information on that is quite encouraging.
Q57 Philip Davies: Can I commend you on your approach to the BBC and top slicing; it is something that this Committee has been arguing for for years probably now. There was a piece in the Daily Mail over the summer recess and I just wondered if you could confirm whether or not it was true. I will quote it to you - I do not want to be accused of paraphrasing - it says Ben Bradshaw's "unprecedented criticism of the BBC and his enthusiasm for 'top slicing' a chunk of the licence revenue to help fund ITV seems to have backfired on the Culture Secretary. So much so that Bradshaw has been told by Gordon Brown to desist from further outbursts". His source is quoted as saying, "Ben has received a rap on the knuckles for what is seen as an own goal". Is there any truth in that piece?
Mr Bradshaw: The usual accuracy of the Daily Mail. I think if there had been any truth in it you would not have heard me saying very much more about it after that. You may have noticed that in my Royal Television Society Speech, not only did I say more but I said it even more clearly.
Q58 Philip Davies: The prime minister's position maybe so weak that you just ignored his rap over the knuckles. Just because you carried on saying it does not necessarily mean that you did not receive the rap on the knuckles, it just means that you have ignored the rap on the knuckles.
Mr Bradshaw: I can assure you I did not receive a rap on the knuckles. On the contrary, Number 10 are fully behind
the policy announcements that we have made.
I worked very closely with Number 10 on my RTS speech. I think there is a genuine concern in Number
10 and I have this too, but at the moment it is almost impossible for anyone to
say anything about the BBC without it being reported in a critical way. If we actually go back to my RTS speech and
read it in full you will see that it is by and large a very robust defence of
the BBC and of the public service broadcasting ethos. My one criticism of the BBC governance was
the only thing that made the news headlines rather than my 80% support of what
they are doing now. Also, I have to say,
I was taking on robustly some of the arguments that were made by James Murdoch
Farrelly: Can I just make one point about
the trial of the independent regional news consortium? I know that no decisions have been made as to
where the trial will take place, but can I urge that it is not in
Mr Bradshaw: I think there is a lot of sense in that. It is refreshing to be lobbied by an honourable member not to have; one of the pilots in his or her region is most of the lobbying has to have them, but I that is very sensible. We have an open mind and there are some regions where that brand is stronger and some where it is weaker, and needs help and intervention more quickly I would suggest.
Paul Farrelly: We would be very happy to have one in Staffordshire.
Q60 Mr Sanders: You will know, as I do, being from a region that has already switched over to digital, the vast majority of the complaints have come from people who receive their service on a relay station and they do not get the full set of stations (they do not get ITV3 and they do not get ITV4). If you ask those viewers what they would like the surplus on the digital funds to be spent on they would say, "Let us have what everybody else has". It is actually quite a high number of people who are not getting the full range of services. Has there been any thought applied to whether the dividend could be used in that way?
Mr Bradshaw: Yes, I think there was thought given to this and I cannot remember the reason why it has not happened, but the Permanent Secretary might be able to help me.
Mr Stephens: I am sorry, I cannot help on that specific point but it is key that everyone, as a result of switchover, receives a significantly increased range of channels and receives all the public service broadcasting service channels that are put out on the public service broadcast owned multiplexes. The issue that you are referring to, that some of the commercial multiplexes are significantly increasing their reach but not to the point of almost universal coverage. That is a matter essentially of commercial judgment.
Sanders: It is an issue in an area where a
lot of people receive their television signal from a relay rather than a main
transmitter, which is the case in the West Country, so that quite a high number
of people are affected. This probably
will not be a problem in
Mr Bradshaw: Indeed, there are some in my own constituency. The Permanent Secretary has reminded me of the reason why we have not so far taken any action on this and that is because, as he says, everybody is getting a much better service both in terms of volume and quality than they had before and the channels they are not getting are really ones that are commercially based so this would be a commercial decision for those channels.
Q62 Mr Sanders: You could argue the same thing about regional news.
Mr Bradshaw: With regional news you are talking about a section of public service content within a commercial channel. What you are talking about is an overall commercial channel package which those commercial providers have not chosen to make as universal as you and I would like.
Q63 Chairman: Can I return to the BBC?
This Committee, like you, wants to see a strong BBC public service
broadcasting but we have had occasional criticisms of the BBC and you have
already referred to your very robust speech to the RTS in
Mr Bradshaw: I think they are certainly making some encouraging noises and they are in conversation, as I understand it, with the NAO as to how this Committee's wishes and the PAC's as well can be fulfilled without, as the BBC see it, their editorial independence being jeopardised. I do not see that these problems should be insurmountable and I think with a bit of good will and hard work on both sides that this is something that they can progress and I am hopeful that they will do so.
Q64 Chairman: Progress has been made but at the moment it is still the case that an NAO inquiry into an aspect of BBC expenditure has to be through mutual agreement between the NAO and the BBC. We have said that the NAO should have exactly the same access to the BBC as they have to any other public body. Is that your view too?
Mr Bradshaw: I think there may be arguments for a slightly different arrangement with the BBC because of the BBC's unique status. The BBC is not like any other public body; it has a different status. I would much rather that this issue was resolved between the BBC and the NAO themselves to the satisfaction of both. However, I have also made quite clear that if that does not happen, this is an issue that is bound to come up in the context of the next charter review and, given the very strong feelings of Parliament on this matter, that is unavoidable. I would hope that it can be resolved long before then.
Q65 Chairman: You also said about the Trust, that you did not think it was sustainable in the long term and that you know no other area of public life where, as is the case with the Trust, the same body is both regulator and cheerleader. These were arguments that were made forcibly by the opposition at the time of the Communications Bill - when I had a different role - but which were rejected by the then secretary of state. What has changed to cause the government to alter its position?
Mr Bradshaw: I am sure they were rejected for very good reasons. I take the view - and it is no something that I am aware of having a view on before because I was not responsible for the policy - that it is not the Trust itself which is unsustainable, I think the model of regulation is one that is unlikely to stand the test of time and as we move towards a more digital age, as we move towards the BBC - I hope - becoming an enabler of Digital Britain, as we move even possibly to the licence fee being used for some other important public service broadcasting content that the public want and value but which the market will not provide, as we move towards a different broadcasting landscape I think that will probably call for a different regulatory structure. I do not have a clear view as to what that should be; I think that will depend on the landscape. I think it is the landscape that comes first and then the regulatory structure around it. One of the things I felt uncomfortable with and one of the problems that the BBC had in actually defending itself effectively has been this slightly awkward tension between cheerleading and regulating which this Committee has identified and others have identified. I want to see a structure where the BBC robustly defends itself more effectively than it has done but at the same time where it is properly regulated. I am not sure the current structure has delivered that. I think it has done better than the previous one, but I think we could have a better structure still. What that is will hopefully be for me to play a role in in years to come.
Q66 Chairman: Without going into great detail, you believe that the BBC would perform better if it was subject to an external regulator separate and independent from the BBC.
Mr Bradshaw: Yes.
Q67 Chairman: Possibly Ofcom?
Mr Bradshaw: Possibly. Possibly a separate public service regulator. Again I would not want to be prescriptive about models. No doubt this is something that will be debated at great length and in great detail around the next charter review and I think that is the right place for it to happen.
Q68 Chairman: The next charter review is not for some time. Do you not see any case for revisiting it before then?
Mr Bradshaw: Whether you are talking about the regulatory structure or whether you are talking - as some are at the moment - about cutting the licence fee half way through a charter or licence fee period that would amount, in my view, to an unprecedented and unacceptable assault on the BBC's independence. It will not happen under a labour government.
Q69 Chairman: It is fairly unprecedented to attack the government structure that you yourself created.
Mr Bradshaw: I would not say I was attacking it. I was questioning it and I was saying that I did not think it would be sustainable in the long term. I was not calling for its immediate abolition.
Q70 Chairman: You also said that you thought the BBC had probably reached the limits of reasonable expansion. Do you think the BBC could deliver its public service remit without all of its current range of services and funding level?
Mr Bradshaw: Again I think that is for others to judge. The BBC itself has recognised that there are legitimate questions over this. I cannot remember the exact timing of this but I think probably between James Murdoch's speech and my speech it announced its own review, including into its size and what it does. We look forward to seeing what it comes up with very much indeed. I do not think it is up to governments to be prescriptive about the size of the BBC and what it does. That is up to the BBC Trust and the BBC itself to decide. I was simply trying to make the point that at a time when the commercial sector has been finding things really tough and the BBC has been cushioned, if you like, by this inflation proof licence fee settlement, that it needs to be more sensitive than it has been about the impact that its activities have on its commercial competitors. I think that is a fairly fair point to make and I think it is a point that the BBC itself, in initiating this review, has now itself recognised.
Q71 Chairman: The level of funding of the BBC is absolutely a matter for you to determine. Do you feel that the BBC could successfully deliver its public service remit with a lower level of funding?
Mr Bradshaw: It clearly could deliver its public service remit; whether it would be able to deliver a range of programmes that people value depends on what you define as public service. Do you define Strictly Come Dancing as public service or not? These are really questions you need to ask the BBC. One of the things that justifies the licence fee is the universality of its appeal. There is a danger, I think, implicit in your question that if the BBC were just to retreat to narrow, high minded content that would undermine the argument for funding through the licence fee although again that would be a matter of debate when it comes up for review next time around. If we reach the judgment and you reach the judgment as well in your Committee that the licence fee was still the best funding mechanism for the BBC and there is not a better funding mechanism for public service broadcasting anywhere else in the world. That is a view I still hold but I think you could seriously undermine that argument if you were to say to the BBC, "You've got to stop doing entertainment and popular things; you have to concentrate on worthy, dull things". That is not the future that I would want for the BBC and I do not think it is a future that most of your Committee would want either.
Q72 Mr Ainsworth: In the Royal Television Society speech you also took the opportunity to announce that you were going to consult on ending the ban on product placement which struck some people as rather odd because your predecessor back in March had said that there was no conclusive evidence that had been put forward that the economic benefit of introducing product placement is sufficient to outweigh the detrimental impact it would have on the quality of the standards of British television and viewers' trust in it. So what changed, other than your appointment, between March and September?
Mr Bradshaw: My appointment was not insignificant in the change because I took a
different view. I also think that the
economics of the commercial broadcasting sector changed; they have been
changing very dramatically over the last few months. It did not seem to me reasonable for the
government to prevent the commercial sector from generating more income through
this as long as we could ensure that there are proper safeguards in place and
more than that really. The clincher for
me was that I did not think it was reasonable for our producers and our
programme makers to be put at a competitive disadvantage not just with our
American, Australian and
Q73 Mr Ainsworth: What your predecessor said in a written statement to the House of Commons was that there was no conclusive evidence that had been forward, so it was not just an opinion it was a judgment based on the absence of evidence. Did you see any additional evidence which caused you to have a different view?
Mr Bradshaw: I am not aware that I saw any evidence that Andy did not see, but even if it was the same evidence I came to a different view.
Mr Stephens: If I may say so, the point cuts both ways. As the previous secretary of state said originally in his announcement, he recognised that the arguments were very finely balanced,
Q74 Chairman: There was a complete transformation in policy with potentially very significant implications. In addition to which, you announced in September that you were going to launch the consultation that the new policy would be in place in the new year; I do not think we have yet seen a consultation, have we?
Mr Bradshaw: No, but you will do shortly. I think it is an exaggeration to see this as a huge transformation of policy. I hope this is a small but useful change in policy that will make a bit of difference to our creative industries and our broadcast industry. I would not over-egg it; it is not going to be the be all and end all that is going to save ITV. I took a different judgment; politicians sometimes, even of the same party and same government, do take different judgments. I am sure there are members of your party, Mr Ainsworth, who have different views on a number of issues.
Q75 Mr Ainsworth: I would find that very surprising.
Mr Bradshaw: I just came to this new with a fresh face and I was convinced by the arguments in a different way from Andy.
Q76 Mr Ainsworth: Have you got an assessment of the potential value to the commercial sector?
Mr Bradshaw: There have been various assessments and they vary from 25 million to 100 million a year.
Q77 Mr Ainsworth: Do you have a view of your own on that?
Mr Bradshaw: I think it is quite difficult to make an accurate assessment until it actually happens, but the proof of the pudding will be in the eating. I think the fact that it was warmly welcomed - I was actually rather surprised by the near universality of the welcome of the decision given how much I agonised over it - shows that the industry itself thinks that this is not going to be transformational in terms of their prospects, but it will be a useful help in difficult times.
Q78 Mr Ainsworth: Obviously the worry is that you get a whole lot of tacky stuff and the worry was reflected in your predecessor's judgment. How do you set about preventing tacky stuff?
Mr Bradshaw: There are already safeguards around things like alcohol and unhealthy foods and so on. We just have to make sure that we get this right as part of the consultation and I hope that anybody with an interest, including this Committee and others, will help us get the regulations right.
Q79 Mr Ainsworth: It just sounds a bit desperate really; I guess the situation is a bit desperate.
Mr Bradshaw: Desperate for whom?
Q80 Mr Ainsworth: Desperate for the commercial sector. Nobody seems to know what it is worth. They seem to think it might be worth something. You have been pressurised, I suggest, into making a change without actually having looked at any new evidence.
Mr Bradshaw: I have not been pressurised at all actually. I was not lobbied on it by anybody. I think the general assumption was that the government had made up its mind and was not going to change its mind. I simply looked at the evidence, looked at the papers and came to a different view. As far as I was concerned it seemed odd to me that we should not be doing something that every other country is doing that has equal concern for the protection of children and the integrity of its public service broadcasting that was putting our own programme makers at competitive disadvantage. That was not a position I would have found very difficult to defend in front of your Committee.
Q81 Mr Sanders: Turning to tourism, with falling tourist numbers and the economic downturn, should funding for tourism be re-examined?
Mr Bradshaw: I am not sure on what basis you say falling tourist numbers because there have been some rather encouraging figures recently that show that there has not only been a small but not insignificant rise in visitors to our biggest attractions this year. There was a piece in the FT about that today. Domestic tourism spend rose 3% in June as against the June before and, although the numbers are slightly down, the foreign visitor spend in the three months to August was 2% up on the same period before. There is growing evidence that the so-called "staycations" have really helped our tourism sector surf the wave of the downturn or get through this very difficult period, a combination of significantly fewer Brits going abroad, more continental visitors coming here and spending more thanks to the exchange rate. It is not the doom and gloom that you suggest thankfully.
Sanders: The actual number of overseas
visitors to the
Mr Bradshaw: We have trebled central government funding for tourism since 1997
as I am sure you are aware and the figures you were just referring to were the
annual figures; the figures I was using were for the three months most important
months of the year in the summer and although you are right to say there were
fewer overall foreign visitors to the UK because of the global downturn they
actually spent more and the exchange rate means that even with fewer visitors
we get more bang for their buck. I do no
think the picture is nearly as gloomy as you describe. Yes, there is always an argument for spending
more on marketing and VisitBritain did this year spend an extra £6.5 million on
both overseas and domestic marketing to attract people both to visit here and
to persuade more people to have what have become known as staycations. As I say, there is increasing evidence as we
get the data in - it is still early days for the full summer data - that this
has had a significant impact and certainly without it I suggest the figures
that I have just given to you may have looked a lot worse. Given the fact that we have just gone through
the biggest economic shock the world has suffered since the 1930s I think the
fact that our tourism sector has been holding up so well is absolutely
fantastic and a great tribute to its quality and its improved offer. Of course it is partly helped by all the
investment that this government has put in, including your constituency; there
has been a massive investment to improve the infrastructure and the tourist
offer. Our museums, for example, are the
eighth biggest tourist in the
Q83 Mr Sanders: What is your view on the "five key asks" of the tourism industry? Are you considering any further measures to boost tourism?
Mr Bradshaw: Yes indeed. One of the other things that we have done which you may or may not have noticed is that, as a sign of our commitment to the tourist industry (do not forget I represent a constituency from the same part of the world as you, which is heavily reliant on tourism so I am acutely aware of the importance of the tourist industry to our economy) is that we re-established the inter-ministerial group on tourism. They are looking specifically at the "five key asks" of the industry itself to see what more can be done to help address the concerns and the requests the industry have made.
Q84 Mr Sanders: One of those five is about improving access to and reducing the costs of visas. Since the government signed up to those five asks they have increased the cost of visas which is having an impact on certain student visas that are expensive as well as people who wish to come here just to visit.
Mr Bradshaw: That is one of the issues we are discussing as part of that inter-ministerial group. I think we will all be aware of individual cases of teething problems with the new visa and point system as well. We are regularly lobbying on behalf of all of our bodies not just the tourism sector but the arts and culture sector who have also encountered some difficulties sometimes in getting people in at short notice for theatre or musical performances. We are confident that these initial problems are being ironed out and will be ironed out but we are happy to make any representations that you think would be appropriate on that.
Q85 Mr Sanders: I think it is issues like that which have lead to the British chambers of commerce and big companies like Travelodge, etc, to argue that tourism ought to move from DCMS and into DBIS. If that became a firm proposal how would you defend keeping tourism within DCMS?
Mr Bradshaw: Most of the tourism industry does not agree with moving it to DBIS, as you know, and my personal view is that it makes absolute sense to keep tourism in the department that is responsible for most of what we would call the tourism offer. I have already mentioned museums but you could include art galleries, you could include investment in projects like C-Change, multi-million pound investment in improving Torquay and the facilities at Torquay. There was a wonderful exhibition I visited, Mr Sanders, in your constituency, the Gormley Exhibition, which has led to a doubling or a trebling of visitors to that particular attraction. We have the wonderful heritage sights for example Stonehenge and all of these things are within our Department and I think if you were to transfer tourism to DBIS it would just get swallowed up and smothered in this huge department, a department which is bigger than it has ever been, and it would get lost amongst more pressing industrial and economic sectors. I think having a department that has a dedicated tourism minister - which we have and which DBIS, I suggest, would not have - and a department that has increased its priorities in terms of our strategic objectives in the last few months is a sign that we are prepared to back on tourism's behalf. I do not think that job would be done more effectively by a much bigger department that has bigger fish to fry.
Q86 Philip Davies: Moving on to gambling, can I ask you why you think the gambling industry should pay so much each year towards tackling gambling addiction when, as far as I am aware, for example, the supermarket industry does not have to pay a levy on tackling obesity even though they sell cream cakes?
Mr Bradshaw: The gambling industry does not have to; it is a voluntary levy as far as I am aware.
Q87 Philip Davies: You said they have to pay £5 million a year or else you would force them to which is hardly voluntary, is it?
Mr Bradshaw: I define that as voluntary.
Q88 Philip Davies: You would define that as voluntary?
Mr Bradshaw: Yes.
Q89 Philip Davies: You pay £5 million or we will make you pay £5 million; that is voluntary is it? It is novel form of voluntary.
Mr Bradshaw: You can call it what you like but I welcome the fact that the gambling industry has recognised its responsibilities to make a contribution to a fund to tackle problem gambling. I think that is a responsible approach and it is the role of government sometimes when you are trying to improve matters, who would rather work on a voluntary basis than by legislation or regulation. I would have thought that was a good conservative principle actually.
Q90 Philip Davies: Given that the government benefits from sales of the National Lottery -which is gambling and it is gambling that is aged at the age of 16, it is a form of addictive gambling because it is scratchcard - how much does the government pay towards this gambling addiction?
Mr Bradshaw: I am sure that in our NHS and other areas there are people who spend their time and public money addressing this issue, but if you are saying that there should be no responsibility on the gambling industry itself to make a voluntary contribution then I do not agree with that.
Mr Stephens: I think the point here is to support evidence and research into responsible gambling and responsible gambling is one of the key concerns that the National Lottery Commission is charged with in the licence arrangements it makes for the Lottery and remains a key government objective that that is operated in a way that is consistent with responsibility in gambling.
Q91 Philip Davies: You talk about responsibility in gambling, the Gambling Commission have just recently done a survey of bookmakers to see how many people under 18 have been gambling, yet the government allows people to gamble on the National Lottery at the age of 16. Can you, Secretary of State, tell me why it is so much better for a 16 year old to buy £5 worth of scratchcards than it is to put £5 on the Grand National each year?
Mr Bradshaw: I think there is a difference in the nature of the gambling between going into a betting shop and buying a scratchcard from the newsagents; it is a different type of gambling. I think it is a sensible decision.
Q92 Philip Davies: You do not think that the age for gambling should be 18 irrespective of what form of gambling it is? If not, why not? Why is it so good to gamble at 16 on the National Lottery but not gamble on anything else?
Mr Bradshaw: We can have an argument about ages and majority. People can get married and die for their country aged 16 so why should they not go and by a scratchcard?
Q93 Philip Davies: Will the Department consider making a contribution to this Responsibility in Gambling Trust that it thinks is so important given that it encourages people to buy National Lottery tickets?
Mr Bradshaw: As the Permanent Secretary has already said, we have a National Lottery Commission which regulates these matters which can intervene if it wants to. The Responsible Gambling Strategy Board has made a number of recommendations to the NHS, to GPs, on a helpline and on research which we, along with other government departments, would examine. If you are saying that we should spend even more of our very limited resources on it, no I would not say that; that was a priority when the industry itself has stepped up to the plate and I commend them for doing so.
Q94 Philip Davies: Can I tell you what is going to happen and caution you against allowing this to happen? The Responsibility in Gambling Trust or the GREaT Foundation or whichever organisation you want to give it to to deal with these things, they will spend £5 million and it will not make a blind bit of difference to the levels of problem gambling and what will happen is that these organisations - which tend to be self-serving and empire building in nature - will say the reason it has not made any difference is because we do not have enough money and we will need even more money next year. When they ask for their £10 million and that does not generate any difference either they will ask for £20 million. Can you guarantee that you will not allow this sort of salami slicer effect to take shape without any firm evidence to suggest that any extra money would actually make some difference?
Mr Bradshaw: I would certainly resist any demands for further money from government or from the private sector which is unjustified and not supported by any evidence.
Q95 Philip Davies: Can you tell me your view about how the Gambling Commission have performed to date with particular relation to the fees that they charge?
Mr Bradshaw: I do not have a view.
Q96 Philip Davies: Can I suggest that you have one?
Mr Bradshaw: I will ask some questions about them and if I feel I need to proffer a view on this along with so many other things I will happily give you one, but it is not something that anybody as asked me to express a view on yet but I will happily go away and come up with a view if I really feel I need to have one.
Q97 Philip Davies: Given that it is an industry that you are responsible for and many people in the industry are particularly displeased with the performance of the Gambling Commission so far in the sense that many people feel they know very little about gambling, and given that the fees that they charge people in the sector keep going up to unsustainable levels, can I suggest that it is something you should be looking into and holding them into account for, and perhaps you might write to the Committee with your views about it after you have done that?
Mr Bradshaw: Yes, and you might like to invite the Commission before you if you feel so unhappy about their performance.
Q98 Philip Davies: I think we may well be doing an inquiry into gambling at some point in the future. Can you tell us where the government is in terms of replacing the horse racing levy?
Mr Bradshaw: Our position is that if the book makers and governing body cannot resolve it then we may have to intervene. My colleague, Gerry Sutcliffe, is meeting the new Levy Board Chair, Paul Lee, to discuss this shortly.
Q99 Philip Davies: With respect, that has been the government's position for about 12 years and yet no progress really appears to have been made. Is there any possibility of any progress being made as opposed to just having the same position year after year after year?
Mr Bradshaw: I would certainly hope we can resolve it but if we cannot then, as I have made clear, we are prepared to intervene.
Q100 Philip Davies: Can I just move onto the Tote briefly? Many people were taken aback by the prime minister's recent announcements about the disposal of the Tote. When were you made aware of what the prime minister was about to say?
Mr Bradshaw: We have been discussing this for a considerable time. I do not think anybody should have been taken by surprise. I think this was a manifesto commitment going back to 1997, certainly to 2001, and I would have hoped that most people would recognise that in the fiscal climate going forward it makes absolute sense for government to have a look at some of its assets and whether disposal of those assets can help generate income that means constructive investment elsewhere or the avoidance of de-structured cuts elsewhere can be made or avoided. That is exactly what we are doing.
Q101 Philip Davies: So when the prime minister made his announcement recently - his re-announcement as you seem to describe it - about the sale of the Tote, you and your Department were aware that he was about to say what he said were you?
Mr Bradshaw: Yes, and indeed we had been having discussions about this and I think Gerry Sutcliffe said in the last period when this was discussed that it would not happen in the short term but the timeframe we are outlining now is quite consistent with what Gerry said. I do not think people should be surprised about that.
Q102 Philip Davies: I think you will find that lots of people were surprised actually and the government sort of indicated to the Tote that they would have at least a three year grace where nothing would happen to allow them some stability. I do not know whether you have any contact with the employees of the Tote who, every so often, have been put in a position of uncertainty. They thought they had got some certainty from the government that nothing was likely to happen for at least three years and then that was all unravelled within the space of minutes by the prime minister's surprise announcement to the whole world apart from you it seems.
Mr Bradshaw: No, I do not think it should be a surprise announcement. There have been a lot of discussions, some of it in public but these discussions do not always happen in public. When you are talking about the sale of assets there are commercial considerations to take into account and the timetable that we have provisionally laid for out a possible sale of the Tote is entirely consistent with what Gerry Sutcliffe said in terms of that three year period whenever it was he said it in 2008. I am sorry that you were surprised but I cannot think of anything else that has been touted so often for public sale as the Tote and the fact that it should be included in the list of public assets which the government may consider disposing I would think is entirely predictable.
Q103 Philip Davies: Is there a deadline for the sale or a reserve price on the sale?
Mr Bradshaw: No, there is no deadline for the sale. Clearly the government will want to try to get as much money for the taxpayer from the sale and that may influence the timing in some respect, but there is no deadline and there is no reserve price.
Q104 Philip Davies: I am not entirely sure what great triumph this is for the public finances. A sale may raise, for argument's sake, £200 million. The government are still committed, I believe, to giving half of that to the racing industry which leaves £100 million. You can tell me perhaps how much the government is borrowing each day but I suspect that that figure of £100 million into the kitty - if it can raise that amount of money - is probably eight hours' worth of borrowing for the government. Was it really worth unsettling all of those employees at the Tote again to try to make a headline to raise about eight hours' worth of government borrowing?
Mr Bradshaw: I think it would be a mistake to see the proposal on the Tote in isolation. It has always slightly puzzled me - and I suspect this is the reason why the sale has been discussed so many times before - that government owns a betting organisation. I would have thought when everybody agrees that there were going to be some tough decisions ahead over spending and investment and all of those things that it makes absolute sense to have another hard look at whether the government is carrying assets that it does not need to carry, that it can realise value for the taxpayer from. That is exactly what we are doing, but to see the Tote in isolation from some of the other proposed assets I think would be a mistake. I think it is perfectly sensible for the government to have a look at this.
Davies: Finally, can I ask you about
taxes? We have recently seen William
Hill and Ladbrokes move their on-line betting offshore to
Mr Bradshaw: If you are suggesting that we match the
Q106 Philip Davies: Just for argument's sake I think it is 1.5% they are now paying being offshore, would you not agree that 1.5% of something is better than 15% of nothing?
Mr Bradshaw: I think you have to look at your taxation regime in the round and I am sure the Treasury will be doing that. Unless you have a level playing field for those companies that have kept all of their operations onshore and a consistent regime across the European Union, in a global economy this is a problem that is not likely to go away very quickly.
Q107 Philip Davies: Are you aware and are you doing anything to try to help the Bingo industry who feel that the tax regime that they face is very unfair in comparison with other areas of gambling?
Mr Bradshaw: Yes we are and that is why we made changes to gaming machine entitlements which benefited bingo halls and increased the stake and prize levels for category C and D gaming machines which I think were again of significant assistance to bingo halls.
Q108 Philip Davies: So as far as you are concerned that is it from the government? You do not feel the need for any further help for the bingo industry; as far as you are concerned what you have done is quite sufficient.
Mr Bradshaw: We are always open to representations that any of our sectors might like to make to us and we will always fight on their behalf with the Treasury.
Q109 Mr Watson: I have one question on the offshore arrangements of Ladbrokes and William Hill. I distinctly remember a case put by Ladbrokes to members of the Gambling Bill Committee that they were proud that they kept their affairs onshore, however they were being buffeted by overseas competition in an unregulated offshore market and they would implicitly stay on the UK shores if there was support for them putting fixed price gambling machines in their retail outlets. Given that they have reneged on that commitment, do you think it might be appropriate to look at fixed price betting machines because a lot of people are worried that for compulsive gambling that is a particular threat to the individual who is possibly vulnerable to the compulsive gambling habit?
Mr Bradshaw: Again I am afraid this is an issue that predates my tenure but I am happy to have a look at it and write to you or to the Committee with a response.
Q110 Chairman: Can I just come back briefly to the Tote? It is almost exactly one year since Gerry Sutcliffe made a statement in which he said, "I have concluded that it is not appropriate to pursue a sale in these market conditions". He went on, "It is right that the Tote is now given time to grow the business so that any future sale will achieve maximum value". Do you believe that these are now the right market conditions?
Mr Bradshaw: What I would say to that is that a year ago we were in a very different economic place from the one we are in now. We were at the beginning of a recognition of the severity of the global downturn and I think in the intervening period since then all bets have been off. I think it makes absolute sense for any government to have another look at the potential of realising assets and one would hope that thanks to policies of this government helping to secure a recovery we will be in a better place in terms of value for all of these assets, including the Tote, by the time the proposed date of sale comes along. That is certainly what we are working towards, but to say that we should keep any of these assets off the table in the current climate I think would be a mistake. Life has changed in the last year.
Q111 Chairman: The minister specifically said that the sale should achieve maximum value which I am sure is something you would also want to see. Previously the government rejected offers for the Tote of above £300 million; it is now speculated that the offers or the worth of the Tote may be significantly less than £200 million. How can this possibly be maximum value for the taxpayer?
Mr Bradshaw: If one was to wait to realise an asset until it had maximum value one would never sell it. Clearly we all want to try to get maximum value out of it and it may well be that a year or so down the line if there is concern about what would be raised from the sale that it would be looked at again then. I think to signal a refusal to even contemplate selling it would be a mistake and it is not sustainable in the current fiscal climate. That is a position I fully support.
Q112 Chairman: If the offer that was made was significantly less than the one that was previously rejected by the government as not being sufficient, would you not proceed with the sale?
Mr Bradshaw: I cannot give you a commitment on that now. I think we would have to examine all of the circumstances at the time in discussions with the Treasury and reach a view.
Mr Stephens: The governing principle here is that the sale should secure value for money for the taxpayer. That would be a judgment that needs to be taken in the light of market conditions at the time, the structure of the sale and likely proceeds to the taxpayer but also can properly take account of the opportunity cost of the investment foregone if one were to retain the Tote in public hands. The judgment is a value for money judgment and of course past offers are all off the table now and we must have regard to whatever can be generated for the taxpayer in current circumstances and market conditions.
Q113 Chairman: The considerations that you have rightly just identified were presumably precisely those which were applied previously and which led the government to conclude that it was not the right time to proceed with the sale.
Mr Stephens: That judgment was reached at a particularly fraught time in market conditions when proceeding with the sale in those conditions was quite unlikely to realise any sale and there were extremely turbulent market conditions.
Mr Bradshaw: It was the worst possible time, if you think about it.
Mr Stephens: The commitment that has been made is to proceed towards and consider a sale by the end of 2010/11. As I have just said, obviously final decisions will have to be taken in the light of market conditions at the time and a judgment on the value for money potentially secured to the taxpayer.
Q114 Chairman: You will appreciate that having given the Tote and its employees some assurance of stability a year ago you have now plunged them back into uncertainty and they are saying that you are not going to be able to make up your mind for at least another two years.
Mr Bradshaw: I regret any uncertainty that has been engendered by this but I have to say that it was made clear when Gerry made his announcement back in 2008 that this was three years and that is the timescale we are talking about. Given the current economic conditions and given the uncertainty that has been felt by a lot of people I do not think that that is an unreasonable or not a sensible course of action to take.
Q115 Mr Ainsworth: Economic uncertainty has been felt by a lot of people. What is your assessment of how the arts are faring during this particular time?
Mr Bradshaw: The arts are faring incredibly well. They are a remarkable success story. As I indicated at the beginning of the session, funding is still going up. Attendance at our galleries, museums, music festivals, arts festivals is increasing massively. Even this year I think the Edinburgh Festival had a 25% increase in attendance and that is a picture that is being replicated all over the country. It not only seems as if they are benefiting from staycations but almost against the backdrop of economic uncertainty people are looking even more for the nourishment and the inspiration - and in many cases the free nourishment and inspiration - that our galleries and theatre and everything else have to offer.
Q116 Mr Ainsworth: So the arts are thriving in the recession.
Mr Bradshaw: The arts are thriving in recession. They have been growing very, very well and very strongly over the last ten years and they have continued to grow during the economic downturn against the trend in many parts of the economy.
Q117 Mr Ainsworth: In that context what is the point of the Sustain Programme?
Mr Bradshaw: The Sustain Programme has been to help particularly those organisations that may be suffering from a downturn in private giving and although there has been, I think, a doubling in private giving since 2001, the last year, most people would accept, has inevitably led to a reduction in private giving. We do not want to see arts organisations go to the wall because of a short term problem in private giving. This is an intervention that, through the Arts Council, we are making to support those organisations who are maybe being particularly badly affected by a downturn in private giving. I think it is a sensible role for government to take. It is a good example of active government doing the right thing in a downturn, rather than do nothing and government allowing organisations to go to the wall. We need these organisations in the future, we want them to get through this period and we want them to continue to make the contribution that they have made as our economy rebounds.
Q118 Mr Ainsworth: It is just rather hard to square the rosy image that you have painted of the state of the arts in this country with arts organisations threatened with going to the wall. Am I right in thinking that Sustain money has essentially now been spent?
Mr Bradshaw: It would not suggest so from my brief because it says that the Arts Council are investing a further £40 million through the Sustain Programme. I will have to write with confirmation as to whether that money has already been spent.
Q119 Mr Ainsworth: They closed the applications about ten days ago.
Mr Bradshaw: I will have to get back to you on that.
Q120 Mr Ainsworth: The question is really whether there is going to be a Sustain 2 because the problem with private giving will not go away any time soon I do not think.
Mr Bradshaw: No, although there are signs that the reduction is slowing. I do not think there is a contradiction
between saying that there has been a fall-off in private giving; there tends
generally to be a fall-off in private giving.
If you look at what is happening in the
Q121 Mr Ainsworth: To make up the total difference?
Mr Bradshaw: I cannot confirm whether the total difference has been made up in these cases. I am sure that the Arts Council can help or the individual organisations themselves might be able to help provide you with figures, but certainly helping out where a strong case is made that otherwise the impact would be damaging.
Q122 Mr Ainsworth: It is unclear from your brief whether or not the Sustain Programme is going to be replicated or continued in some way.
Mr Bradshaw: I cannot confirm that. I cannot say, because we do not know, whether the total reduction in private giving in the last year has been made up for by public investment. I would very much doubt it, but I think what we have tried to do and what the Arts Council has tried to do is to target its help where it has felt it has been most needed, I think with good effect as well.
Q123 Mr Ainsworth: Can I quickly ask about the "night less ordinary" programme which your department announced just over a year ago? Has this been successful and how would you judge its success given that, as I understand it, the objective here is to get people into the habit of going to the theatre which obviously takes time to establish?
Mr Bradshaw: The first three months for which we have data I think were very encouraging, both in terms of tickets that were given out and in terms of the evidence of new attendance by people who otherwise would not have attended. However, it is early days and I think we are going to have to make a more considered assessment of how it is doing when we have more figures and more data. Clearly I think the measurement of its success is whether it hits the original target in terms of the number of tickets given out and whether we can show that it is attracting new young people to the theatre who would not otherwise have gone to the theatre. If you look at some of the initial performance some theatres have been doing much, much better than others both in terms of allocating all of their tickets but also in terms of the number of first time attendees that they are attracting. I would hope that as the scheme develops over the coming months that those theatres that perhaps have not performed as well can learn from the experience of those that have. I think overall, by and large, if you look at the response on the Facebook site of the young people who have benefited from this it has been a tremendous bonus to many people seeing high quality British theatre that they never imagined they would have a chance to see otherwise.
Q124 Mr Ainsworth: Have there been regional differences?
Mr Bradshaw: I am not aware that there have been clear regional differences;
there have been local differences. I
think the Nottingham Playhouse has been one of the most successful; the Royal
Shakespeare Company has been very successful; the Theatre Royal in
Q125 Mr Ainsworth: There has been some criticism within the theatre sector that this is a short term fix for a long term problem. Presumably the really important thing here is to be able to assess over time whether flinging free tickets at a whole bunch of people actually gets them to go back to the theatre and become habitual theatre goers.
Mr Bradshaw: I think that is absolutely right and you may know more about the genesis than I do, but did this not come out of one of the recommendations of the McMaster review that suggested that we should have a free week which we did not accept because we felt, for that very reason, that in a week of free tickets it is impossible to actually get people into the habit of visiting the theatre that they then never lose through their life time and that is what this scheme is designed to achieve. I think it is fair to say there was a lot of scepticism about it when we announced it, including among theatres themselves. On my visits I have spoken to regional theatres who are taking part in this and they have said to me that they did not really think much of this idea but actually it has been a great success and they had really enjoyed doing it; it had got people into audiences that they would never have had before and it is encouraged them to engage with a group of young people they had not really engaged with before. As I say, I would not claim that we can be certain at the moment that it has been a huge success, but we will want to learn from the first few months to try to make sure that it is further down the line.
Watson: I want to talk to you about a
gallery that we have allowed to go to the wall in my constituency and that is
Mr Bradshaw: If we have not done that then I will do so and either write to you directly or copy it to the Committee if you would find that helpful.
Q127 Mr Watson: Thank you, that is very kind.
Mr Stephens: I am conscious that the Arts Council does regard it as important to learn lessons from this area. This was a Lottery funded project and they clearly attach importance to ensuring that value is secured for the public from the Lottery fund
Q128 Mr Watson: So they would produce some publicly available report.
Mr Stephens: They are certainly conducting their own review of lessons to be learned. As the Secretary of State has said, we can make sure at the appropriate time that the conclusions are shared.
Q129 Mr Watson: Two floors of this Will Alsop designed building are currently empty. You could put the Staffordshire gold haul in there. Perhaps in your discussions over the haul with the RDA you could suggest it as an option.
Mr Bradshaw: That sounds like a good one for the local paper.
Chairman: Regional newspaper as well.
Q130 Mr Watson: Do you worry about the death of arts and film criticism? The rather excellent Cosmo Landesman, the film critic with the Sunday Times, has written about the newspaper industry getting rid of their specialist journalists and he quotes a writer, Harry Knowles, who says, "So much about "So much of our culture, particularly in films, is driven by PR and hype. We need those voices that say, 'Hey, this is crap, this is just useless and here's the reason why'." Is our culture being diluted by the PR industry?
Mr Bradshaw: No, I would not say that is a fair assessment. I think we still have a very healthy cultural criticism world in both our broadcasting and our newspaper landscape and on-line increasingly as well and also on blogs such as yours.
Q131 Mr Watson: I have just one point on libraries and the digitisation of collections. Vivian Reding, the European Commissioner, recently said that the creation of a Europe-wide public registry that could stimulate private investment in digitisation whilst ensuring that authors get fair remuneration and that if we do not reform copyright rules on orphan works and libraries swiftly, digitisation and the development of attractive content offers will not take place in Europe but over on the other side of the Atlantic. Ninety five per cent of published works are not available to purchase now; is the Department doing any work to accelerate copyright reforms at European level in this area?
Mr Bradshaw: Yes, we are and we are hoping very much that the Spanish Presidency will pick this one up and run with it. As you are probably aware, we will support an extension of the copyright term to 70 years as long as it is the creator, the artist, the writer themselves who get the benefit. There is a new Spanish culture minister who is very engaged in this whole area and they have indicated that they do want to make progress on this and we would certainly support them in doing so.
Chairman: We are very nearly at the end.
We have a couple more questions for you to cover.
Q132 Mr Sanders: Sports are an important issue to a lot of people. Would you like to see test cricket again on free to air broadcasting?
Mr Bradshaw: I do not have a very strong view personally but I am aware that a lot of other people do and that is why my predecessor announced the review that is being conducted by David Davies and will report shortly. I am acutely aware not least because I have a cricket-mad godson whom I took to Lords in the summer who strongly bemoaned the fact that because they do not have Sky at home he could only watch the highlights on Channel 4 but that was it; he could not get to watch the test cricket. I do not want to pre-empt anything that David Davies may come up with because it is an independent review and it is quite right that it should be so. He will make his recommendations, we will make our preliminary recommendations which will have to be statutorily consulted on so everybody will have a fair crack at the whip at expressing their view on this.
Q133 Mr Sanders: Would you accept that there is definitely a link between the amount of coverage a sport gets and participation?
Mr Bradshaw: No, not necessarily. Someone told me the other day that the Grand Prix had one of the highest - if not the second highest - level of television coverage but that does not mean to say we are all going out racing cars round tracks. There is not a direct link but I accept that television coverage is important and access to the important national sporting events on free to view television is important. There is also, as I am sure you will be aware, the counter argument from sporting organisations and some of the other television companies about the income that is generated through television rights for sports. There is a balance that needs to be struck here and that is why we constantly review this as an issue and why we have asked David Davies to do that. I look forward to receiving his report.
Q134 Chairman: It has been suggested that if we are to be successful in our bid to host the World Cup in 2018 FIFA are saying that we will have to substantially de-list the World Cup matches. Are you aware of that?
Mr Bradshaw: I am vaguely of them having made that recommendation but it is not something that we would need to make a decision on now. I think some people would have quite strong views on that recommendation but FIFA have made no formal approach to us.
Q135 Chairman: You would not rule it out?
Mr Bradshaw: I would have to consider it but it does not sound to me to be a very sensible suggestion.
Q136 Chairman: Secretary of State, we have covered a huge amount of ground. There are still areas that we have not touched on; is there anything else you would like to tell us about?
Mr Bradshaw: No, not really.
Chairman: In that case can I thank you very much indeed, and also the Permanent Secretary.