1.This draft Legislative Reform Order (LRO) has been laid before Parliament by the Department for Digital, Culture, Media and Sport (DCMS), together with an Explanatory Document (ED). The draft Order is proposed to be made under section 1 of the Legislative and Regulatory Reform Act 2006 (“the 2006 Act”) which allows a Minister to make provisions by order to remove or reduce a burden, such as a financial cost or administrative inconvenience. According to DCMS, the purpose of the draft Order is to allow analogue commercial radio licences which are due to expire from 2022 to be renewed for a further ten-year period on the condition that the licensee also provides a service on a digital radio multiplex.
2.DCMS sets the LRO in the context of the continuing move from analogue to digital radio, with digital radio currently accounting for close to 60% of all radio listening, up from less than 25% in 2010. The ED explains that analogue commercial radio licences have benefited from a series of licence renewals since the mid-1990s, most recently through another LRO in 2015. DCMS says that the draft Order proposes a further licence renewal on the understanding that this will provide an incentive for stations to invest further in digital radio.
3.The Government launched a review of digital radio in February 2020 which will consider how radio should adapt to the challenges and opportunities from new audio technologies and new consumer behaviours, such as online streaming. The review will also consider the longevity of analogue radio whether and when there should be a switchover to digital. While the review will report by March 2021, DCMS emphasises that any future digital switchover is “likely to be some years away”, and that it is necessary therefore to deal with analogue radio licences now before they start to expire from 2022. The stations affected include Classic FM, Absolute Radio and TalkSport, as well as around 100 local licences. The Department says that under the current legislation, it is not possible to renew these licences further, so Ofcom, as the regulator, would have to conduct a competitive re-advertisement.
4.The main proposal in the draft Order is to allow national and local analogue commercial radio licences to be renewed on a third occasion for a ten-year period; local licences that were granted on or after 8 April 2010 to be renewed on a second and third occasion for periods of five and ten years; and following renewal of a licence, the nomination of a small-scale radio multiplex service, rather than a local service. The renewal would mean that licences will expire between 2032 and the mid-to-late 2040s, although DCMS expects that, in practice, analogue radio will reach a natural endpoint significantly earlier.
5.The Committee considered whether the proposals meet the statutory tests set out in the 2006 Act. It appears that the draft Order would remove or reduce a burden by generating considerable cost and administrative savings for both radio stations and Ofcom, as a competitive re-advertisement of national and licences would be avoided. With regard to the balance between the interest of businesses that may wish to enter the market, the interests of radio stations that would benefit from renewal of their current licences, and the interest of listeners, the costs of a competitive process could lead to radio stations having to divert investment away from developing their content and services, and the ED makes clear that there is limited interest in a competitive process: only one station operator expressed an interest in bidding for a national licence while no operator expressed an interest in the re-advertisement of local licences. In addition, commercial radio is under significant financial pressure as a result of the pandemic and a sharp drop in advertising revenues and businesses may enter the market via the digital or online routes or through the takeover of existing stations. During public consultation, a majority of respondents supported the proposals.
6.DCMS has proposed that the LRO be subject to the affirmative resolution procedure.
7.In the light of the information provided by the Department, we are satisfied that the Order meets the tests set out in the 2006 Act and is not otherwise inappropriate for the Legislative Reform Order procedure; and also that the affirmative resolution procedure proposed by the Government is appropriate.
1 Digital radio multiplex is the means by which digital radio stations are broadcast: it consists of a number of stations bundled together to be transmitted digitally on a single frequency in a given geographic area.
2 Legislative Reform (Further Renewal of Radio Licences) Order 2015 (), see: DPRRC, , Session 2015-16, HL Paper 8.
3 Radio multiplex licences are currently awarded either for national (UK-wide) or local (generally county-sized) coverage. A small-scale multiplex service would enable stations to broadcast to geographic areas smaller than those covered by existing local radio multiplexes.