Creative industries in Scotland Contents

5Broadcasting and the BBC in Scotland

79.The UK Government is responsible for broadcasting across the UK. This includes ultimate responsibility for the BBC and the regulation of other broadcasters through Ofcom, the independent regulator and competition authority for the UK communications industries. As part of our inquiry, we have considered the role of broadcasters in relation to the TV production sector in Scotland. We have also looked at the role of the BBC in Scotland more generally, in light of the current Charter Review and debate about the future of the BBC.

Broadcasters and the Scottish production industry

80.It is clear that Scottish television production is highly reliant on Public Service Broadcasters (PSBs)—those broadcasters which operate for the public benefit rather than for purely commercial purposes.113 Creative Scotland’s 2014 review of the Scottish film sector noted that broadcasters play an integral part in the film sector, stating that, although UK broadcasters have a limited role in terms of commissioning film productions, TV production is vital for maintaining facilities, businesses and allowing crew to make a living, all of which are required for a healthy indigenous film industry.114 Similarly, Bill Matthews, the BBC Trustee for Scotland, told us: “There is no doubt that the BBC does and should play a significant role in the creative sector in Scotland”.115

81.We have been told that there are a number of barriers to the development of a sustainable indigenous production sector in Scotland. Chiefly, these are poor access to commissioners, who are largely London-based, and the failure of regional quotas, which require PSBs to commission productions from outside of London, to result in genuinely Scottish production companies receiving commissions from broadcasters.

Access to commissioners

82.Several of our written submissions have stated that Scottish production companies are disadvantaged by a lack of access to commissioners, who are mostly London-based.116 A recent report produced by PACT, a trade association for the independent television, film, digital, children’s and animation production sector in the UK, looked at building a sustainable independent production sector in Scotland, and highlighted the importance of access to commissioners, and recommended that there should be “more visibility and presence of UK commissioners across Scotland”.117 Bill Matthews observed that “there has been some evidence that moving a commissioner somewhere else sometimes changes where they are likely to commission” but stated that the most important thing was to have a “robust process” for commissioning which provided content suitable across the UK.118

83.Describing the extent to which BBC commissioners are present in Scotland, Ken MacQuarrie, the Director of BBC Scotland, told us:

In Pacific Quay, we have had, for example, Jo Street, who is now the daytime commissioner. There is no doubt that it helped access for companies based in Scotland having a commissioner based in Pacific Quay. Similarly, in the areas of entertainment we had a similar arrangement there. On the production, we have the controller of factual production for the UK, Natalie Humphreys, also based in Pacific Quay. That begins to give you a critical mass, Chairman, where there is a better access without having to go to London.119

The BBC subsequently told us that there are 54 people within the BBC TV network with commissioning responsibility of whom 4 are based in Scotland.120 11 of the BBC’s 54 commissioners have responsibility for the BBC’s spend outside of London. This does not include those commissioning content in Scotland for BBC Scotland.

Regional quotas

84.Under the Communication Act 2003, Ofcom has the power to determine a proportion of programmes which must be produced, and expenditure which must be committed, outside of the M25 area for channels 3, 4 and 5.121 The agreement between the BBC and Department for Culture, Media and Sport provides for similar quotas in relation to BBC productions.122 In order to be classified as regional (or out-of-London) productions, two of the below criteria must be met:

the production company must have a substantive business and production base in the UK outside the M25;
at least 70% of the production budget must be spent in the UK outside the M25;
at least 50% of the production talent by cost must have their usual place of employment in the UK outside the M25.123

The written evidence from Ofcom states: “the legislation does not allow us to set quotas for different parts of the UK outside London, we do ask broadcasters to report where programmes are produced, in line with the criteria [detailed above]. This allows Ofcom to see the balance of out-of-London productions across the UK as productions are assigned to either Scotland, Wales, Northern Ireland or one of the English sub-regions”.124

85.These quotas have resulted in PSBs increasing their spending on productions outside of the M25,125 but there are concerns that they have not supported the development of a sustainable Scottish production sector. The Scottish Parliament’s Economy, Energy and Tourism Committee heard considerable concerns from the production sector about “Lift and shift”—the term applied to production companies moving existing productions (for example drama Waterloo Road and topical programme Question Time) from London to locations outside the M25 in order to count towards the out-of-London quota. The concern about “lift and shift” is that locally-based production companies are not commissioned to produce content as the out-of-M25 quota is filled by essentially London-based companies who have transplanted an existing property to another location in order to count towards the quota requirement.

86.These complaints have been mirrored in the evidence we have received.126 Alasdair Smith, Scotland Director from Creative Skillset, told us that “lift and shift” was “not a positive way in which to help to develop the sector.”127 He said that “If this Committee has the influence to try to press for greater localised commissioning within Scotland, I think that would be a positive outcome for everybody concerned. I don’t think that is a controversial thing to say either. That is one of the things that will help and with that will come a certain momentum.”128

87.The BBC’s evidence to that Committee acknowledged that “We now need to ensure that the companies that are based in Scotland are winning entirely new business and are drawing from the local population and talent base.”129 Channel 4 also responded to the criticism of “lift and shift”, stating:

criticism should be weighed against the potential benefits to an increased freelance sector that can emerge off the back of big productions landing in a location, whether that be in Scotland or elsewhere in the UK. Channel 4 would also note that any potential benefits to relocating production facilities should be weighed against the costs of relocation and the corresponding impact on budgets for programming, which could be invested in local production companies.130

Making a similar point, Alan Clements, from STV, told us that “the more production we have in Scotland, it is good for everybody”, whether this was from independent production companies producing local content, or in-house broadcasters producing UK content.131 Mr Clements also told us that “the quotas […] concentrated the minds of the commissioners”, mitigating the fact that most of them are based in London.132

88.There are also concerns that the definition for out-of-London productions excludes aspects of production such as on-screen talent and ownership of content. Equity noted that “Ofcom has a definition for ‘out of London’ production that excludes front of camera talent and activity”, meaning that local actors do not have to be engaged. They suggested that Ofcom consult with stakeholders about how on-screen talent could be included in its definition of an out-of-London production.133

89.Matchlight Ltd—an independent production company based in Scotland—argued that the criteria for regional productions did not address questions of ownership or value, as the “IP and profits generated by the ‘Scottish’ project put against the quota are often held outside of Scotland”, and that productions can be counted as Scottish productions even when as little as 10% of either the “production budget” or “production talent” need to be spent or based in Scotland.134 PACT has called for more rigorous application of quotas, to encourage greater transparency and oversight, and said that they could support Ofcom to play “a stronger role in monitoring and auditing how the definition is interpreted”.135

90.Although the regional quotas requiring Public Service Broadcasters to commission productions outside of London have been effective in changing the balance of spending across the UK, there remain serious concerns about the extent to which the policy is helping to support a sustainable production sector in Scotland. There is also evidence that Scottish production companies are disadvantaged by poor access to commissioners.

91.We recommend that Ofcom review its definition of out-of-London productions, with a view to ensuring that spending by Public Service Broadcasters on out-of-London productions goes to indigenous production companies. This should include looking at whether local on-screen talent and ownership of IP should be included in the criteria for regional productions.

92.The BBC and Channel 4 should take immediate action to better engage with Scottish production companies to ensure there is no disadvantage in being located in Scotland when it comes to opportunities to win commissions. This should include locating a greater proportion of commissioners in Scotland—access to commissioners being a key issue which was highlighted to us by the Scottish production sector.

The BBC in Scotland

93.The BBC is the UK’s only publicly owned and funded broadcaster. BBC Scotland is the division of the BBC responsible for broadcasting in Scotland. It has 1227 full time equivalent staff and operates from 13 centres around Scotland. The written evidence from BBC Scotland sets out the services provided in Scotland:

In addition to network BBC services, television services for audiences include BBC One Scotland, BBC Two Scotland and the Gaelic language service, BBC ALBA (operated in collaboration with MG ALBA); speech and specialist music radio services are provided via BBC Radio Scotland and, in Gaelic, BBC Radio nan Gaidheal; and there is online provision at www.bbc.co.uk/Scotland.

It also highlights that:

In 2014/15 BBC Scotland produced over 2500 hours of originated television, a record high, with 882 hours of local television for Scotland, 944 hours of network television and 702 hours on BBC ALBA. This represents an increase, in total, of 119 hours on 2013/14.136

94.The BBC’s Annual Report and Accounts for 2014/15 notes the disparity between how well people in England, Wales and Northern Ireland feel they are represented by news and current affairs content produced by the BBC with how people in Scotland feel. Scotland is the only nation where less than half of people feel the BBC is good at representing their lives.137 This is illustrated in the table below.

Figure 1: The % of people in each nation who think the BBC is good at representing their life in news and current affairs content

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Source: BBC Annual Report and Accounts 2014/15

There is a similar disparity in relation to how well Scottish audiences, compared to those in other parts of the UK, feel represented in BBC drama.138

95.In relation to audience satisfaction, Ken McQuarrie told us: “we are driven by serving our audience and clearly a figure that is less than the other nations is not something that we are comfortable with. We are in the process at the moment of understanding exactly what is driving that difference between ourselves and the other nations. It is a key objective for us to meet the needs of the audience with a news and current affairs service that is relevant to their lives but also appreciated by the audience. That is the work that is absolutely core and part of the charter”.139

96.As part of our consideration of how BBC services provide for Scottish viewers, we heard from Bill Matthews, BBC Trustee for Scotland and Chair of Audience Council Scotland. He told us that although the Audience Council Scotland represented “an audience that has a diversity of views” there was “a theme for some time, where there is I think a consensus among members of the Audience Council, is that portrayal is really important to audiences throughout the UK.”140 Audience Council Scotland’s 2014/15 Annual Review noted that more could be done to make content produced in Scotland representative of contemporary Scotland and recommended that BBC Scotland should have greater authority and resources to commission programmes for Scottish audiences so that they may better meet audience tastes, especially in news and drama.141

Charter review

97.The BBC is established by Royal Charter, which sets out the public purposes of the BBC, as well as the duties of the Executive and Management Board. The BBC’s Charter is due to be renewed in 2016, and in July 2015 the UK Government published a consultation paper to inform the new Charter.142 In September 2015, the BBC responded to the Government’s consultation paper, setting out its plans for the next 10 years, including detail on serving the nations and regions.143 This stated:

we will need to adapt our services to ensure they fully reflect and report the increasingly divergent politics of the UK. […] Our priority is to ensure we arm citizens in all four Nations of the UK with the information they need to make sense of their world and help hold those in power to account.

[…]

we will deliver a different BBC News homepage in each Nation. We will personalise our news services to reflect personal passions and interests in every part of the UK.

98.Bill Matthews told us that it was clear that through the Charter review “that there is going to be a discussion about exactly how we deal with ‘nations issues’ going forward in the BBC”. He also told us that the Audience Councils responded formally to some of the review documents, to represent the views of Scottish viewers.144 Equity’s written evidence stated that charter renewal offered an opportunity to considering BBC’s role in Scotland, stating:

there is an imbalance in what the BBC raises in Scotland and what it spends. The Charter renewal process is bringing focus on this issue as the BBC itself is debating its role in Scotland.145

99.We welcome the focus there has been, during the debate about renewal of the BBC Charter, on serving the different nations and regions of the UK. It is important that the BBC takes the opportunity Charter Renewal represents to ensure it responds to concerns about the extent to which its content provides for and reflects the audience in Scotland.

Proposals for changes to the structure of the BBC

100.In a speech at the 2015 Edinburgh International Television Festival, Scottish First Minister Rt Hon Nicola Sturgeon MSP stated that “a distinct BBC Scotland TV channel should be created–empowering BBC Scotland as never before.” She stated that this would:

help to secure the sustainability of the independent production sector in Scotland;
see more of the Licence Fee spent in Scotland, and
be the best way of making a wider and richer range of content available to Scottish viewers.146

101.A number of written submissions saw the potential for a positive impact should the First Minister’s proposal be adopted.147 A strong theme in these comments was that money raised from the licence fee in Scotland being spent in Scotland would be a positive development for indigenous production, and that a dedicated channel for Scotland would improve the range of content for Scottish audiences. Other witnesses challenged the benefits of establishing a new channel for Scotland. Alan Clements, of STV, told us that the costs of setting up a new channel could instead be invested in Scottish productions, to a much more beneficial effect.148

102.Bill Matthews told us that the proposal had not been discussed by the Audience Council, and that “in the end, frankly, it will be up to the BBC executive to design a solution”.149 Addressing the BBC’s accountability, rather than the First Minister’s proposal directly, the evidence we received from the BBC Trust stated that it “agrees that the BBC will need to be more accountable to Scotland, Wales and Northern Ireland.”150 When we asked BBC Scotland Director Ken MacQuarrie about the First Minister’s proposals, he told us:

On behalf of the audience in Scotland—and it is my job to serve the audience in Scotland as best I can within the BBC family—I would welcome the maximum resource to do that but so would every other divisional director across the BBC. In terms of the structures and, if you like, the governance of the BBC, I think that is a matter for the bodies who are involved in discussing the charter to take on board rather than for the executive to comment on, Chairman.151

103.When we asked the Fiona Hyslop MSP about the First Minister’s proposals, she told us:

The key here is how you can ensure that public service broadcasting helps support a sustainable creative industry sector, particularly in screen and production in Scotland. That is where the real anomaly currently lies. You have licence fee income of over £320 million [in Scotland] and you have a BBC Scotland budget of less than £200 million. The production spend—and I am quite clear here—in Scotland by Scottish companies that are based here is down at £35 million. The issue is that if you want to have a thriving creative industry sector, you have to make sure you have recurring production of programmes. […]

We have to get more produced in Scotland. Our suggestions for that are to have a more federal BBC and to have more opportunities for production. […] The channel is less important than the platform for production. […] Currently, we are really losing out. The opportunity to have more spend in Scotland is what is needed.152

104.When we asked Ed Vaizey what consideration the UK Government had given the Scottish Government’s proposals, he told us:

We obviously want to consult closely with the Scottish Government. We have a memorandum of understanding that requires us to consult, and also for the draft charter to be laid beforehand debated by the Scottish Parliament, but it is not our intention to devolve the BBC. We want to keep the BBC as a national broadcaster and as a reserved matter.

[…]

I agree [that] the BBC, like other broadcasters, needs to look very carefully at whether its programmes, programme makers and commissioners reflect the UK population. […] I think a perfectly fair point to challenge broadcasters on is whether or not the different voices in the United Kingdom are being heard in programmes or, indeed, are commissioned as programmes.153

105.We note the First Minister’s suggestion for a federal structure for the BBC and the possibility of a separate BBC channel for Scotland, and the comments we received both in favour and against. The BBC will no doubt take note of this debate, and in particular the principle that BBC’s future services in Scotland should represent the needs and views of the people in Scotland, as it considers its future services.

113 MG ALBA (CIS0027), PACT, A new model: building a sustainable independent production sector, December 2015

114 Creative Scotland, Review of the Film Sector in Scotland, January 2014

115 Q124

116 Matchlight Ltd (CIS0030) paras 2-4, Tern Television Productions (CIS0045), Caledonia TV (CIS0057)

117 Producers Alliance for Cinema and Television (PACT), A new model: building a sustainable independent production sector, December 2015

118 Q125

119 Q45

120 BBC (CIS0073)

121 Communication Act 2003, Sections 286-289

122 Department for Culture, Media and Sport, An Agreement Between Her Majesty’s Secretary of State for Culture, Media and Sport and the British Broadcasting Corporation, 2006, para 51

123 Ofcom, Regional production and regional programme definitions, 2010

124 Ofcom (CIS0019) para 2.4