Examination of Witnesses (Questions 2400
- 2419)
WEDNESDAY 2 APRIL 2008
Mr John Hutton MP and Andy Burnham MP
Q2400 Chairman:
I ask that because we are interviewing her very shortly. Of course
your meeting with Trinity Mirror has nothing to do with
wanting the political support of the Mirror Group of newspapers.
Andy Burnham: No, it was a discussion about
the changing nature of the world. If you are saying that I sought
the meeting to press the need for support, then no, absolutely
not. I am having many such discussions about the changing nature
of the media world in relation to online news sources and local
news and I think it is entirely proper that I am trying to bring
forward the best of what we have from our system and help people
make sense of the changing world, and ensure that there is a healthy
media industry in the future.
Q2401 Lord Inglewood:
Can I just preface my remarks by pointing out that I am the Chairman
of CN Group that owns the Northwest Evening Mail, which
is the only newspaper in John Hutton's constituency. I would like
to go back and talk about the public interest investigation because,
as I understand it, the guidelines have indicated that this avenue
will not be gone down save in areas where ownership rules were
swept away by the last Communications Act. That general proposition
is subject to the proviso "save in exceptional circumstances".
Do you think there are circumstances where perhaps, with the way
the world has moved on, that that particular bit of guideline
might be changed?
Mr Hutton: It is perfectly open to the secretary
of state to change the guidelines. We published the guidelines
back in 2004 in an attempt to deal with the concerns that had
been expressed about this opportunity to intervene. We thought
it appropriate to set those conditions out at the time. In a fast
moving landscape where there are significant changes taking place
in the media world I do not think there is much more we can say
other than only in exceptional cases might we go further or might
we refer a case that was not covered by that original guidance
in 2004. I think if we were to try to specify what those exceptional
circumstances might be it would rather defeat the point of the
exercise. I hope the Committee will take it as an indication of
how we view this power to refer cases to the Competition Commission
on public interest grounds as an exceptional power by the fact
that only one such reference has been made since the Act was passed,
notwithstanding 17 media mergers that were referred during that
period of time to the various competition authorities. It is,
by its very nature, an exceptional power only to be used in exceptional
circumstances. I do not think I could commit a future secretary
of state to specify what those exceptional circumstances would
be. I do not intend to set out in any detail what those exceptional
circumstances will be because by definition you then limit the
freedom of manoeuvre that you might want in a particular case.
I think there will need to be some room for manoeuvre in truly
exceptional cases which was always our logic in setting up the
guidance in the way we did.
Q2402 Lord Inglewood:
I appreciate that you obviously cannot answer hypothetical questions,
but the kind of thing we have been wondering is whether you would
be able to trigger a public interest investigation if, for example,
a UK asset was bought by one of the major US internet organisations.
That throws up a number of technical points, but is that the kind
of thing that in certain circumstances you might consider was
an exceptional circumstance.
Mr Hutton: It could be, yes. This is obviously
quite a specific issue and I think it would be helpful if you
would allow me to write to the Committee with some more specific
details. What I do not want to do is to ad lib an answer on this.
I would like to take some proper advice on the specific issues
that you raise in that type of scenario. I think it is appropriate,
given the speed with which things are moving, that secretaries
of state have some wriggle room when it comes to public interest
referrals and that could conceivable be such a case.
Q2403 Lord Maxton:
Virgin Media, for instance, outside the 10% share owned by the
Virgin Group, is in fact American owned. Let us say Google decided
they were taking over Virgin Media—not an impossible scenario—how
on earth could the British Government intervene in that at all?
Mr Hutton: It would have to be a qualifying
merger under the terms of the legislation, so it would have to
relate to a merger, an acquisition in the UK.
Lord Maxton: This is where, in the fast
changing world that you are referring to, it is very difficult
to assess what would happen.
Chairman: If you could set some of this
out for us it would be very helpful. Lord King?
Q2404 Lord King of Bridgwater:
There are some very good minutes of our meetings; have you read
any?
Andy Burnham: Yes, they are very informative
and wide ranging.
Q2405 Lord King of Bridgwater:
Has the Government given any thought to the issue that increasingly—one
of the things that has been very clearly visible to this Committee—the
traditional sources of news are being rapidly overtaken by a whole
lot of other sources of news including the internet which is quite
outside the Government's control? What thoughts are you giving
to the problems that people who are completely outside our jurisdiction
actually merge and present real challenges to the issue of plurality
and dominance with which we are concerned?
Andy Burnham: You are raising a very important
point and I would say the assumption three or four years ago was
that there would be almost a breaking apart by online sources
of traditional news. However, I am sure the Committee has read—and
heard from Ed Richards about it as well—the Ofcom New
News, Future News review. That shows that television news
is arguably more important as a source of news for the public.
In 2002 91% said they relied on television as a source of news
and the figure rose to 94% in 2006. Ed Richards, if I understood
what he was saying to you, was saying that we may have misunderstood
a few years ago how people were going to use online sources of
news. He was indicating that people would appear to be using it
as a supplementary form of news rather than a replacement for
their main source of news. I think that is quite interesting and
also the drop-off in reliance on newspapers and radio has not
been as not been as dramatic as perhaps some were predicting a
few years ago. I feel personally that in the last decade the public's
understanding of what news it gets from a particular source has
clarified and sharpened slightly. I think people think now that
in newspapers there are a lot of opinions, in some there is a
lot of entertainment. If they are going for it for the hard news
and facts that they then make their own judgments on I think they
understand there is a different role performed by national newspapers.
I think the internet is a source of detail, sometimes gossip,
sometimes unsourced material. I would say that television news
will potentially become more important to the public as a source
of main news. I think the figures bear that out. Television news
has not diminished as people's main source of news which I think
is interesting given everything that is going on around us.
Q2406 Baroness Howe of Idlicote:
I would like to go back to citizenship and the Communications
Act which is the basis on which all this area was discussed and
was not even there at the beginning when the Act appeared. Given
that there was this rather interesting split—which Ofcom
tried to join together and then separated again—of consumer
and citizen, the citizen side of things is clearly very much a
public interest area. I would have thought you would agree entirely
with that.
Andy Burnham: Yes.
Q2407 Baroness Howe of Idlicote:
There have been quite a number of people giving us evidence who
have suggested that Ofcom is not paying quite as much attention
to the citizen side of this work as the consumer side. Perhaps
that is totally understandable because that was the original way
it was set up. Given that you are having three yearly reviews,
have you got any other thoughts about what additional powers Ofcom
should perhaps have? It is noticeable that it has no powers other
than on education as far as the internet is concerned. Might it
not be sensible to give it more overview and some responsibility
for overseeing the changes so far is the internet concerned.
Andy Burnham: I think you raise some very major
questions. Indeed, Ofcom were on the radio this morning commenting
on the social impact of online social networking sites. The representative
from Ofcom indicated himself that they did not have wide ranging
powers in this area, nevertheless they are increasingly commenting
on the online world and its impact on the traditionally regulated
world as we get into a more converged world. I am very conscious,
coming into this job, of how these two worlds are very much living
side by side and one does impact upon another. How we carry forward
the best into the new era is a very important question but I think
it is a question for Parliament really. The Convergence Think
Tank should consider it but then it should come to Parliament.
I do not know whether you have had chance to read the Byron review
last week which was in my view a significant piece of work looking
at the safety of children online and also the safety of video
games. I think what you are seeing in a number of forms at the
moment is a discussion beginning whereby people are actually going
to challenge the kind of notion that was around a few years ago
whereby the internet has come along, it has smashed everything
to pieces and we have to just give up on the idea that there can
be a form of consensus, be it voluntary regulation, glued back
together about standards, content, taste, decency and impartiality
in the new world. Ed Richards when he was before you did talk
about this and he did say that it would be for Parliament to give
Ofcom that role. I think we have moved into a slightly different
phase at the moment whereby people are not accepting that the
online world has just smashed everything apart irrevocably for
good. I think we are beginning to see that in a range of areas,
for instance music publishers talking about how they can get a
system that works for them in terms of getting value back to the
creators of high value content. We have Tanya Byron looking at
how you can protect children in this world and coming to better
solutions with the internet service providers. This discussion
is building in other areas and I think it is a very fertile ground
for your Committee and Parliament to consider.
Q2408 Baroness Howe of Idlicote:
From what you are saying you have a huge amount on your plate,
but nevertheless what you are saying is rather slow in reacting
to the speed of change that is happening as well. I am wondering
again about this three yearly review, just how little are the
powers of Ofcom in the whole of this world we are talking about
and would it not be sensible to include in that some extra powers?
Andy Burnham: Personally I would not think they
are necessary. I was in the Department for Culture, Media and
Sport as a special advisor to Chris Smith when the Communications
White Paper that preceded the Communications Act 2003 was developed.
If I cast my mind back to that time I think the importance of
the citizen in relation to the changing media world was absolutely
at the centre of that White Paper and then carried forward into
the legislation. You had Ed Richards before you and I think he
was very clear on this point. Questions were raised about the
quality of news and he was pointing to evidence that the quality
of news had stabilised and sometimes even improved in recent times
in terms of overseas content and other things by which they would
judge that. I think the system very much has the citizen at its
heart. There are voices around pushing the needs of the consumer
and saying that the market is changing and we need to do this,
we need to do that; I see it has my job to stand back and consider
at all times what is in the best interest of the citizen.
Q2409 Baroness Howe of Idlicote:
I was going very much back to what Lord Puttnam was saying that
the first bill that the pre-legislative scrutiny group looked
at was absolutely consumer and basic and it was really to do with
the potential for encouraging possibly beneficial takeovers.
Andy Burnham: It may be a mistake to think of
the two as utterly opposite poles that cannot be reconciled. Thinking
back to Lord Corbett's question about meetings and discussions
I have had, I think it is entirely proper to consider how the
industry—be it the television industry or the press—can
sustain what we all consider is good and valuable about our current
system in a different world and how the media regulatory landscape
can be constructed in such a way that it gives things we value
a chance of surviving into the future. I think that is an entirely
proper discussion. Parliament, on the one hand is holding out
for things which are simply not going to be sustainable in a world
where anybody can start a television channel.
Q2410 Baroness McIntosh of Hudnall:
Specifically on the point about the regulatory environment—perhaps
this is a question that both secretaries of state might have a
view about—it could be argued—indeed it has been argued
to us—that the current process whereby two different regulators
look at issues of plurality in relation to mergers is cumbersome
and slow moving. Mr Burnham, you have just said with great clarity,
that this is an extremely fast moving environment where there
are a lot of new players, where there is a lot of new information
that constantly has to be taken into account, reviewed and considered
within the domain of public interest, and plurality is very much
at the heart of the public interest issue. Are you content that
we should have such a cumbersome regulatory regime? Would it not
be better to streamline it? Is it necessary for both the Competition
Commission and Ofcom to need to take a view on these matters?
Q2411 Andy Burnham:
These are probably questions for the Convergence Think Tank; that
is why my predecessor decided to set that up. I will say again,
that is the place for the broadest possible discussion where the
needs of citizens, consumers and others can be balanced so that
we can carry forward the best bits about the British media landscape
we have had for so long. I think we have to be careful in some
senses to avoid getting trapped into this idea that the landscape
is fast moving, everything is changing in the world. I am not
sure that that is correct. My constituents, as it happens, are
reading the Daily Mirror in large numbers still, they are
watching Granada reports. They are doing the same things as the
figures I quoted to Lord King a moment ago show. What is changing,
it seems to me, are the economics of the industries that are providing
those things that my constituents are still using, and the question
is: are the things that my constituents like, like Granada reports,
still sustainable? These are different questions.
Q2412 Baroness McIntosh of Hudnall:
Mr Burnham, I doubt your constituents are spending a great deal
of time thinking about the regulatory environment, but it is our
job to think about that.
Andy Burnham: I would not patronise them.
Q2413 Baroness McIntosh of Hudnall:
I do not wish to patronise them. I am simply saying that if they
are anything like me they are not spending a great deal of time
thinking about it in their daily lives, but it is something which
has an impact on the kinds of choices that are available to them.
I accept that you say that the issue of the way in which the environment
currently operates is something which the convergence group is
looking at, but do you accept that there is an element of double
handling—not double counting, that is probably the wrong
phrase to use—which may have a deleterious effect on the
way in which these issues are examined.
Andy Burnham: My assessment is that the Communications
Act was a good piece of legislation, strengthened by the House
of Lords, as it happens, and as a result of that strengthening
is better balancing the needs of citizens and consumers. Without
going into detail, John Hutton has been describing today how precisely
those balancing tests have been applied in recent times. I think
we need to consider how long that legislation can and should last.
We are only five years into it. I think we said at the time of
the Communications White Paper that it is likely to have a lifespan
of around ten years. The Convergence Think Tank should advise
John and myself about whether that is too long and your Committee,
I am sure, will advise us on whether you think that is too long.
I would just come back to the point—I think it is an important
point—that figures show people's behaviour is not changing
as much as some of the experts out there keep telling me it is,
and I feel at times that my job is to stand back a little bit,
consider at all times what do the public consider is valuable
that they have currently got. I think they think regional news
is valuable to them, they like it. They know where it is, they
like the impartiality of British television news and I have to
say that I was surprised that the Conservative Party this week
took a reasonably large step in moving away from preserving the
impartiality of television news by non-public service providers.
Q2414 Chairman:
We are going to come onto that.
Andy Burnham: I think the public considers valuable
what it has always had. My big point would be how you sustain
those valuable things in a world where the economics of which
are changing very quickly and the business models on which those
valuable things have been funded are no longer going to be available
in the way they once were.
Q2415 Chairman:
I think the point we are trying to get to is whether it is too
cumbersome and too lengthy a process at the moment. Without referring
directly to the current case, these things can go on month after
month after month leading to uncertainty.
Mr Hutton: If you look at the public interest
process there are two fundamental issues to be addressed. One
is the affect on plurality of ownership and I think it is perfectly
appropriate for Ofcom to be asked to advise the secretary of state
because that is where the expertise lies. In the context of a
merger—which is essentially what we are talking about as
well—there is always going to be at least the principle
of a competition issue to be resolved. There are two issues—plurality
of ownership and competition—which have to be addressed.
That is why Parliament has rightly decided under the Act to say
that Ofcom should advise the secretary of state if he has served
an intervention notice on a plurality issue and then the issue
should go, if the secretary of state is so minded, to the Competition
Commission for a determination. There are timeframes for both
processes, 20 days for the initial advice from Ofcom, six months
for the reference to the Competition Commission. With respect
I think the legislation does not build into it unnecessary delay.
There are these two very distinct and separate issues that need
to be looked at and I think someone has to do that properly.
Q2416 Baroness McIntosh of Hudnall:
I do not think anybody on the Committee would disagree with you
about that, Mr Hutton. The point is, as I understand it, both
Ofcom and the Competition Commission concern themselves with the
issue of plurality and therefore there is the potential—indeed
there is some evidence that there is actual—difference of
opinion between those regulators as to whether or not a plurality
issue exists in certain cases. Is that, even as a potential outcome,
sensible or coherent?
Mr Hutton: I think you are confusing the respective
roles of Ofcom and the Competition Commission in this process.
Ofcom is not making a determination on plurality of ownership,
it is simply confirming whether there is sufficient evidence on
plurality for it to go to a fuller and further investigation by
the Competition Commission. It is not making a determination on
the plurality issue; that is going to be looked at by the Competition
Commission. Essentially it is asking itself a different question.
It is not saying "Is there a problem about plurality?",
it is asking itself, "Are there enough grounds on that issue
for it to go to a full and proper investigation?" I think
they have respectively different roles in this process. It was
the view of Parliament that this was the right process to be set
up, as the secretary of state has made clear. This is something
we will obviously want to make sure is working properly. I do
not want to get drawn into the particular circumstances of the
Sky case because I have my own opinions about that and I am going
to keep them to myself as is right and proper, but I do not think
it was anyone's allegation or concern during that particular case
that things were taking too long.
Q2417 Baroness Bonham-Carter of Yarnbury:
Mr Burnham, you have said on numerous occasions this morning that
you want to preserve what is good. Just a moment ago you suggested
the alternative suggestion that impartiality in news should be
got rid of, it is not something you agree with. What is your attitude
of Ofcom's position which is that the impartiality rules as they
stand may have hindered the variety of provision of news?
Andy Burnham: On the rules as they stand the
test as I understand it is "due impartiality" and that
word "due" gives the programme maker or broadcaster
some ability to consider the context, to consider the way in which
the programme is being presented and then of course to exercise
any judgment about whether or not due impartiality has been exercised.
I have to say that I am not convinced by the Ofcom argument that
was put forward in its news review that because of this impartiality
requirement younger voters or voters from ethnic minorities were
not feeling they could get a virulent enough strain of opinion
and news or it was presented in such a way that it was sufficiently
engaging. I think you can, within the rules as they stand, present
news, current affairs and information in a sufficiently engaging
way without going towards what people would consider to be the
American model. My own mind on this matter is, as I said before,
that television news particularly has become more important to
people in recent times as a reliable place where they can get
factual information from news providers. Ofcom's review asked
respondents, "How impartial do you think each of the following
news sources is?" For television in 2005 41% thought so,
36% in 2006. If you look down the list press and other sources
do not come anywhere near that. I think there is something valuable
in those figures. 87% of respondents to consultation by Ofcom
said they valued the impartiality of television news and they
liked the fact that they could trust it as a source of news. I
feel that if you let this genie out of the bottle—as the
Conservative paper seems to do—the pressure that that then
exerts on the rest of the system means that that is a step beyond
which British broadcasting should not go because it will be to
the detriment of all things that John Hutton began on today, the
health of our democracy and the trustworthiness and the independence
of those news voices that are out there.
Q2418 Baroness Bonham-Carter of Yarnbury:
You are saying that you are in disagreement with the suggestions
that Ofcom are making.
Andy Burnham: Personally I am not convinced
by the argument that we should relax the impartiality rules as
a means of engaging younger and disenfranchised voters/citizens.
I think that within the system that we have there is much that
can be done to do that and I think most of our broadcasters are
finding ways of engaging people in current affairs issues. I think
there has been some really good programming in recent years on
these matters. It is a line over which, in my view, we do not
need to go and should not go at this stage because if you create
a sense all of a sudden that the public wonder whether they are
impartial or not you actually lose something precious and we would
regret it for a long time to come.
Q2419 Lord Maxton:
The reverse of that question is that if people think it is impartial
and it is not then there is a danger that public can be tricked
and trapped into thinking something is true when in fact it is
not.
Andy Burnham: That is a good question but because
of the impartiality rules as they stand people can have confidence
in television news.
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