Draft Broadcasting (Independent Productions) (Amendment) Order 2014
The Committee consisted of the following Members:
† Baker, Steve (Wycombe) (Con)
† Beith, Sir Alan (Berwick-upon-Tweed) (LD)
Denham, Mr John (Southampton, Itchen) (Lab)
† Djanogly, Mr Jonathan (Huntingdon) (Con)
† Gapes, Mike (Ilford South) (Lab/Co-op)
† Gillan, Mrs Cheryl (Chesham and Amersham) (Con)
Hepburn, Mr Stephen (Jarrow) (Lab)
† Hinds, Damian (East Hampshire) (Con)
† Jones, Susan Elan (Clwyd South) (Lab)
† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
† Roy, Lindsay (Glenrothes) (Lab)
Shannon, Jim (Strangford) (DUP)
Smith, Mr Andrew (Oxford East) (Lab)
† Stunell, Sir Andrew (Hazel Grove) (LD)
† Tomlinson, Justin (North Swindon) (Con)
† Uppal, Paul (Wolverhampton South West) (Con)
† Vaizey, Mr Edward (Minister for Culture and the Digital Economy)
Leoni Kurt, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Thursday 30 October 2014
[Mr Dai Havard in the Chair]
Draft Broadcasting (Independent Productions) (Amendment) Order 2014
11.30 am
The Minister for Culture and the Digital Economy (Mr Edward Vaizey): I beg to move,
That the Committee has considered the draft Broadcasting (Independent Productions) (Amendment) Order 2014.
It is a great pleasure to serve under your chairmanship, Mr Havard.
The order before the Committee today is aimed at ensuring that for the purposes of commissioning television programmes, the definition of “independent producer” excludes only those production companies that are UK broadcaster-owned from being considered independent. It is important to say up front that the order does not extend the definition of qualified independent producers to producers owned by UK broadcasters that do not qualify at present—I hope that is absolutely clear. The order is intended merely to confirm what has been the agreed policy over the past 10 years, namely that a producer that is owned by a non-UK broadcaster or is part of the same group of companies as a non-UK broadcaster should not be prevented from being classified as an independent producer if it meets the qualifying criteria.
I will explain that in more detail. As many members of the Committee will know, the Communications Act 2003 requires that public service broadcasters—the BBC, the channel 3 companies, Channel 4, Channel Five and S4C, the Welsh language channel—ensure each year that not less than 25% of the total amount of time they allocate to the broadcasting of qualifying programmes is allocated to the broadcasting of a range and diversity of independent productions. The Act applies a similar 10% independent production requirement to all digital service broadcasters that are not public service broadcasters—the likes of Sky, for example.
The aim of the independent productions quota is threefold: to promote cultural diversity, opening up the production system to new energies and voices; to stimulate the growth of small and medium-sized enterprises; and to tackle vertical integration within the UK programme supplier market. The quota is widely considered to have worked well over a number of years, providing competition and a stimulus for originality that has benefited programme supply in the UK. However, a few issues have been identified with the legislation as currently drafted. The amendments to be made by the order are designed to deal with those issues.
The Communications Act requires that the terms “independent productions” and “qualifying programmes” be defined by order. Article 3(4) of the Broadcasting (Independent Productions) Order 1991 defines an independent producer as someone who is not employed
by a broadcaster and does not have a shareholding greater than 25% in a broadcaster, or a company in which no one UK broadcaster has a shareholding greater than 25% or in which no two or more UK broadcasters have an aggregate shareholding greater than 50%. I know I will not have to go through that again, as hon. Members will have grasped it immediately.The definition must also be read in conjunction with article 3(5) of the 1991 order—a point I know a lot of hon. Members were going to make. That stipulates that, for the producer to be considered independent, any person connected to the producer—that is, in the same ownership chain—must also not be employed by a broadcaster, own more than 25% of a broadcaster or, as a company, be more than 25% owned by one UK broadcaster.
The meaning of the terms in question was first specified in the 1991 order, which was subsequently amended in 1995 and in 2003. The last of those amendments—that is, the 2003 order—failed fully to reflect the policy to which Parliament had agreed on ownership of a UK production company. That policy was, in essence, to allow a producer to be treated as independent even if owned by a foreign broadcaster, so long as the foreign broadcaster’s services did not target the UK.
The 2003 order amended certain elements of the definition of independent producers—including, for example, by introducing the qualification that ownership of the producer by a UK broadcaster was a disqualification —but did not amend article 3(5) relating to any person connected to the broadcaster or producer. Therefore, if a person connected to the producer fails any of the tests defining independent producers in article 3(4), the producer cannot be considered independent. That connected person could be, to give an example, part of a group of companies that include not only a UK broadcaster but any broadcaster anywhere in the world.
The net result is that the current definition still excludes some producers that the Government, and crucially the industry itself, believed were within the definition. Ofcom has told us that it excludes high-profile production companies such as Zodiak Media, which makes “Wallander” and “Being Human”, and FremantleMedia, which produces “Take Me Out” and “Through the Keyhole”—I know that is a favourite of my hon. Friend the Member for Shrewsbury and Atcham—as both companies are owned by broadcasters that predominantly operate in other parts of the world. Although a public service broadcaster could commission programmes from those producers, according to the strict letter of the legislation it could not count those programmes towards its independent production quota. Therefore, it is essential that we clarify the anomaly for broadcasters and producers and for Ofcom, whose regulatory role is to ensure that broadcasters comply with the independent production quotas set out in their licences.
The order rectifies that situation by redefining the term “broadcaster” to ensure that it refers only to UK broadcasters or broadcasters whose transmissions are primarily aimed at the UK and are consistent with article 3 of the 1991 order. It preserves the independent status of producers connected to a person who owns or is owned by a broadcaster that does not aim its services primarily at the UK by removing the references to the producer in article 3(5), so that only the broadcaster
must meet the test, not the producer or any person connected with the producer. Any producer owned by a UK broadcaster will still be excluded from the definition of an independent producer, to ensure that we continue to prevent vertical integration in the UK supply market.Let me reassure the Committee that these changes are being made with the support of the industry. When we wrote to all broadcasters last summer to notify them of our intention to correct the legislation, we received no comments opposing the move. Prior to laying the order before the House, we again gave broadcasters the opportunity to comment on the draft. I can confirm that all were supportive of the changes. We also worked on the order with Ofcom and the Producers Alliance for Cinema and Television, the member body for the UK independent production sector, to ensure that it was fit for purpose. To date, the industry has been applying the definition set out in the policy, rather than what is contained in the legislation. The order will ensure that the policy intent and legislation are fully aligned.
In conclusion—two words that will bring joy to many of my hon. Friends—this is an important clarification for the industry, the public service broadcasters and all other commercial digital channel operators in the UK, which rely on the definition in question to identify the companies that they may commission to fulfil their quotas for independent production. It will enable Ofcom to undertake its regulatory duties more effectively. I commend this necessary and proportionate order to the House.
The Chair: May I just say that PACT sent me a brief as part of its contribution to the debate? If other hon. Members received it and wish to use it, they may do so.
11.38 am
Susan Elan Jones (Clwyd South) (Lab): It is a pleasure to serve under your chairmanship, Mr Havard. I pass on the apologies of my hon. Friend the Member for Bishop Auckland (Helen Goodman), who is unavoidably absent.
Labour is proud of Britain’s vibrant creative industries, which contribute more than £71 billion per year in gross value added. Quotas were introduced under the Labour Government to ensure that 25% of public service broadcaster programming is commissioned from independents. That initiative was hugely successful, and the independent television sector now contributes £3 billion to the British economy. Independents produce some of our most popular television shows, including “Sherlock”, “Downton Abbey” and “Who Do You Think You Are?”. The independents quota has been so successful that the director-general of the BBC, Tony Hall, recently announced that he is going to open up almost all BBC programming to competitive tender and award contracts to in-house producers, alternative broadcasters and independents on the basis of getting the best results.
We want to ensure our that broadcast ecology, which is positively blooming, stays healthy and continues to thrive. Although closing this loophole might not be a radical change in itself, it is important that we set it in the wider context of media plurality. To be classified as an indy, and therefore to count towards PSB quotas, production companies must not be owned by or under the same parent company as a broadcaster. If the order
is accepted in total, it will send out the message that we are comfortable with the increasing global vertical integration in the media market and the narrowing of media plurality.Labour has been vigorous in protecting media plurality. My right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) gave evidence to the Leveson inquiry and to the Lords Select Committee on Communications, in which she said that media policy should be
“about promoting plurality and diversity and guarding against monopoly.”
She and colleagues have been clear that the place of regulation is to ensure that there is a competitive market and that a plurality of voices and views are available to the British public.
In a way, British broadcasting is a victim of its own success. Our content is in high demand and we are regarded as a hotbed of talent. British broadcasters and production companies are very desirable assets and, as a consequence, are being bought up by large American companies. Viacom recently acquired Channel Five for £450 million. Some of our largest independent companies have been scooped up by media giants. 21st Century Fox has worked with private equity to manage Endemol and Shine Group, the producers of “Big Brother” and “MasterChef” respectively, and all3media has been bought by Discovery Communications and Liberty Global, which also owns Virgin Media.
Over the past decade, the proportion of our television shows that are ultimately owned by US companies has more than doubled, from 10.6% to 22.3%. “Downton Abbey”, seemingly the pinnacle of Englishness, is actually owned by an American company. Although the Secretary of State for Culture, Media and Sport recently announced that these takeovers were “no bad thing”, Labour’s priority is to preserve media plurality and a thriving and creative media ecology. Therefore, having listened carefully to what the Minister has said, we do not believe that he has fully addressed our concerns, and we will return to this issue in future, because we cannot fully support the order.
11.41 am
Sir Alan Beith (Berwick-upon-Tweed) (LD): I am surprised to find the Labour Front Bencher opposing what I thought was a relatively uncontroversial measure because it puts the regulation of production into the position that most people seem to have thought it was in for some time. However, I share the view that it is important that we maintain a healthy, home-grown independent sector. In regions such as the north-east of England, it is an important contributor to the local economy—my constituency features frequently on television screens, and I believe it will do so again at Christmas in “Downton Abbey”, if recent filming reaches the final production, as I am sure it will.
I hope that the Minister, in carrying forward this necessary change, will continue to monitor how healthy our home-grown independent sector is. I hope that if there is any threat to it at any time, he will consider whatever modification might be required. Clearly, there are circumstances in which the best solution for maintaining a production company is to bring in capital from an overseas owner, because that does not mean vertical
integration in this country but brings in new capital. However, we do want to ensure that the smaller independent producer remains healthy.11.43 am
Steve Baker (Wycombe) (Con): As the Minister was speaking I felt joyfully transported back to the heady days of summer 2010, when as you may recall, Mr Havard, Opposition Members were accusing the Government of being Hooverite in their commitment to laissez-faire liberalism. I feel I should congratulate the Minister on once again demonstrating how wrong Opposition Members can be.
The Minister confirmed that the order is a regulatory measure based on licensing and quotas, and I hope that one day—of course, I will support the order today given the system we have—we might be able to free the television industry from those licences and quotas. I hope that perhaps he might give some indication, while staying in order, of where we intend to go in the longer term.
I think I heard the hon. Member for Clwyd South celebrate American private equity ownership of parts of the television industry. I felt that perhaps roles had been swapped. I wonder whether the Minister could confirm that he is committed to a free and open system of investment in British media, not only to develop the depth of our industry but to ensure that it is properly plural and diverse.
11.44 am
Mrs Cheryl Gillan (Chesham and Amersham) (Con): I rise to support the Minister on this small piece of technical secondary legislation. I hope it will be agreed to, because it is obviously the will of the industry for these amendments to the current legislation to be made.
I declare an interest, because recently I introduced a Bill, which has received its Second Reading, to allow ease of access to the highways of my county of Buckinghamshire for filming. As the Minister will know, Pinewood is next door to my beautiful constituency of Chesham and Amersham, in the Chiltern hills, an area of outstanding natural beauty. Many of the traditional programmes that we see on television are filmed in and around locations in my constituency. Long may that continue to be so.
I declare an interest: I used to work in the film industry. I worked on a Government project called “British film year” for Dickie Attenborough and David Puttnam, and I saw at first hand just how wonderful our capabilities are in film, television and independent production. Long may the Minister look after this precious industry, which brings so much income into this country.
We have a long tradition of thriving and excellent independent producers, and we have technical expertise in the film industry that goes around the world. At Amersham and Wycombe college not so long ago, I saw the most wonderful training being given to youngsters who are working in the games industry and with green screen technology. Many of the special effects that we see in our modern films, which we all celebrate, come from home-grown British talent and British education.
I am glad that the Minister has brought forward the order today, and I hope he will continue to listen and respond positively to what comes from the film and television industry.11.46 am
Mr Vaizey: This has been a livelier debate than I was expecting, although I am disappointed that my hon. Friend the Member for Shrewsbury and Atcham has not intervened to share with us and praise his favourite programmes. I extend that invitation to all Members of the House. If this had been a debate about local newspapers, Members would have been pleased to talk about their local paper—or were this a debate on local radio, their local radio programme. I urge Members to come to future debates armed with examples of great British programming.
Paul Uppal (Wolverhampton South West) (Con): In a clandestine conversation with my hon. Friend the Member for Shrewsbury and Atcham, I managed to tease out that while he is not a fan of “Through the Keyhole”, we are both fans of “Take Me Out”.
Mr Vaizey: Well, there we are. “Take Me Out”, “Come Dine with Me”: the names of great and successful British programming just trip off the tongue.
Mike Gapes (Ilford South) (Lab/Co-op): Before the Minister moves on, is he aware that “The Great British Bake Off” is filmed at Valentines mansion in my constituency?
Mr Vaizey: That is a useful intervention from the hon. Gentleman, because I have been asking myself for many months where that Arcadian site is. The Vaizey family gathers round the television on a Tuesday evening to watch “The Great British Bake Off”. It is one of the great format programmes to come out of a rich and fertile format territory. I must move on from my hon. Friend the Member for Shrewsbury and Atcham, because I know that one of the reasons for his silence was the almost imminent cup triumph of his team that was, I am glad to say, seen to by Didier Drogba.
Returning to the main point, what does it mean to be British? That is a big debate that we could have here, and we do have an hour and a quarter to fill. I take the implied challenge from the hon. Member for Clwyd South on the ownership of British production companies. Although my hon. Friend the Member for Wycombe tweaked her point her a bit, I think it was actually that she had some concerns that American private equity was buying British production companies. In all seriousness, we are an open economy and we attract a lot of foreign investment, and it is worth remembering that that brings jobs and opportunities to this country.
Although we might spend a great deal of time debating the future of Channel 4, we do not pay attention to the fact that companies such as Nickelodeon and MTV employ many more people and produce quite a lot of British-based content. Discovery, thanks to the fertile climate that exists in this country in technical talent and creative expertise, effectively has its international headquarters in the UK. Indeed, we could also debate the implications of our membership of the European
Union. A lot of broadcasters base themselves in this country because of the opportunity to take part in a single European market for broadcasting. That is a point worth bearing in mind when we celebrate the success of the independent production sector in this country.I take up the positive note struck by my right hon. Friend the Member for Chesham and Amersham. Buckinghamshire—who would have thought it?—is a hotbed of television and film making, and at its heart sits Pinewood studios, which recently won planning permission to expand because of the huge demand for film and television production in this country. As well as providing jobs and investment, the content that is produced in the UK, with whatever capital one chooses to identify—British, American or other foreign capital—provides an extraordinary calling card for the UK.
Mrs Gillan: When I had some responsibilities for Wales, I was struck by what a thriving independent sector it had. I remember visiting a company called Tinopolis, which was doing programmes such as “Question Time”. Of course, the production facilities that the BBC took to south Wales and to Cardiff enabled that area of expertise to be developed in south Wales, where there is so much creativity. I was very pleased to see that, and it matches our creativity and development in Buckinghamshire.
Mr Vaizey: That is right. I was pleased to work with my right hon. Friend when she was Secretary of State for Wales to secure the future of S4C, which sits at the heart of Welsh language broadcasting. I know that the
hon. Member for Clwyd South also took a great interest in that issue. The combination of S4C and the BBC in Cardiff means that we have a thriving production sector in Wales.If we are talking about inward investment, let us look at Northern Ireland. HBO filming “Game of Thrones” there has, in effect, single-handedly created an independent production sector in Northern Ireland that is now a significant part of that economy.
As I was saying before my right hon. Friend’s welcome intervention, British production and British programmes are an extraordinary calling card. I well remember the Mexican Culture Minister visiting. After we had had our bilateral discussion, I said, “Is there anything else you want to do while you’re in the UK, Minister?” He said, “I want to go to Downton,” and we arranged for him to visit the set of “Downton Abbey” at Highclere castle. That programme is extremely popular in Mexico. Indeed, I remember my right hon. Friend the Chancellor of the Exchequer saying how popular it is in China.
This has been a great debate. We remain in the dark about the television preferences of my hon. Friends the Members for Huntingdon and for North Swindon and, still, of my hon. Friend the Member for Shrewsbury and Atcham, but no doubt in future debates, which they will be anxious to participate in, we will learn more. For the time being, I again commend the order to the Committee.