§ Lord Davies of Oldham
rose to move, That the draft order laid before the House on 1st May be approved [18th Report .from the Joint Committee].
The noble Lord said: My Lords, I beg to move that the draft Broadcasting (Independent Productions) (Amendment) Order 2003 laid before the House on 1st May 2003 be approved. Section 16(5)(a) of the Broadcasting Act 1990 provides for the Secretary of State to specify by order the meaning of the terms "qualifying programmes" and "independent productions". The Broadcasting (Independent Productions) Order 1991 was made in June 1991 to define those terms. The 1991 order was amended by the Broadcasting (Independent Productions) (Amendment) Order 1995. This draft order further amends the 1991 order. It is being laid before the House under Section 16(7) of the Broadcasting Act, which requires a draft to be laid and approved by a resolution of each House. I am satisfied that this draft order is compatible with convention rights.
The effect of the Broadcasting Act 1990 is to require the BBC. the Channel 3 companies, Channel 4 and Channel 5 to ensure that in each year not less than 25 per cent of the total amount of time allocated to the broadcasting of qualifying programmes is allocated to the broadcasting of a range and diversity of independent productions. Part I of the Broadcasting Act 1996 applies a similar 10 per cent independent productions requirement to licensed digital programme services. Among other things, these requirements are intended to implement the council directive of 3rd October 1989 which makes provision as to the proportion of a broadcaster's programmes which are to consist of works created by producers who are independent of broadcasters.
Independent producers help to promote innovation and creativity within the UK programme supply market. It is widely considered that the independent productions quota has been working well providing competition and a stimulus for originality which has benefited programme supply in the UK. However, a number of issues relating to the detailed operation of the quota have been identified and the amendments made in this order are designed to deal with those issues.
I shall explain briefly each of the amendments in turn. As regards change of ownership, the aim of the independent productions quota is threefold: to promote cultural diversity and to open up the 1060 production system to new energies and voices; to stimulate the growth of small and medium-sized enterprises, promoting creativity and fostering new talent; and to tackle vertical integration within the UK programme supply market. However, under current provisions, restrictions on share ownership of a producer by a broadcaster or an associated company apply where there is no impact on the UK programme supply market because the broadcaster does not aim any of its services at the United Kingdom.
This order means that, rather than applying to broadcasters generally, the existing restrictions on share ownership of a producer will apply only in respect of any broadcaster who provides a television service intended for reception in any area in the United Kingdom—whether or not that service is also intended for reception elsewhere. Therefore where a producer is more than 25 per cent owned by a broadcaster, provided that broadcaster does not aim any of its services at the UK, that producer will qualify as an independent producer.
The second change affects the treatment of producers who lose their independent status. Currently, in order to qualify as an independent production the producer must be independent when the relevant programme is "made". The date on which a programme is considered to be made has been interpreted as the time of transmission. Therefore, even though a broadcaster may have commissioned a programme in good faith from an independent producer, if that producer subsequently loses his independent status before the programme is made, it does not qualify as an independent production. That has caused a number of problems for broadcasters.
By allowing a producer to qualify as independent on the date on which he was commissioned to make a programme, this order will allow him to continue to be so regarded as independent even were his status to change before the programme is transmitted. This is subject to the conditions that the relevant broadcaster must have commissioned the producer in good faith in the expectation that he would be an independent producer when the programme was made and that the programme was made within two years of the date on which it was commissioned.
The final change made by the order is a technical one. Uncertainty has been expressed as to the scope of the duties to monitor the broadcasting of independent productions by the Office of Fair Trading in respect of the BBC's digital programme services and those of the Independent Television Commission in respect of other digital programme services licensed under Part I of the Broadcasting Act 1996. This order makes it explicit that the definitions prescribed by the principal order apply to digital programme services. In our view, that includes the BBC's digital channels.
The Secretary of State is required to carry out a formal consultation under the Broadcasting Act 1990. The BBC, the ITC, the Welsh Authority and the Producers Alliance for Cinema and Television—PACT, the trade association—were consulted during the preparation of this instrument.
1061 As the House is all too well aware, the Communications Bill is currently progressing through Parliament. The policy on independent productions was outlined at an early stage in the communications White Paper. It evolved following consultations on that White Paper and on the draft Communications Bill published last summer. In particular, major changes were made following the review by the Independent Television Commission of programme supply market, published in November last year.
Noble Lords will recall that the Secretary of State asked the ITC to carry out this review in response to concerns expressed during the consultation on the draft Communications Bill, in particular by the joint committee chaired by my noble friend Lord Puttnam, about the overall economic health of the UK programme supply market and the position of independent producers within it.
The ITC report welcomed the Government's proposals,to permit qualification for the quota to apply to broadcasters without a UK channel presence, and to producers who are independent' at the point of commission, rather than time of transmission".These are the two main concepts contained in the order. I think it safe to say that the issues have been thoroughly considered and, accordingly, I commend the order to the House.
Moved, That the draft order laid before the House on 1st May be approved [18th Report from the Joint Committee].—(Lord Davies of Oldham.)
§ 11.15 a.m.
§ Baroness Buscombe
My Lords, as the Minister has said, this order has been drafted to reflect the recommendations made in the ITC programme supply review and consequently to amend the definition of "independent producer" in accordance with the review's recommendations. While we welcome the extension of that definition, we do not believe that this order is the correct mechanism through which these changes should be implemented. The Broadcasting Act requires that the terms "independent productions" and "qualifying programmes" are defined by order. The meaning of the terms was first specified in the initial 1991 order, which was subsequently amended in 1995. The order laid before the House today further amends the 1991 order.
It is not clear why the Government have chosen to amend the existing Broadcasting Act rather than introduce a relevant provision into the Communications Bill, which contains the requirements for the programming quotas for independent production. I would welcome further clarification on this issue.
The order amends the current definition of who may be regarded as an "independent producer" for the purposes of Article 3 of the original order in two ways. The limits on share ownership in Article 3(4) of the 1991 order will now apply only with respect to UK broadcasters. The effect of the order will be to apply a 1062 restriction to UK producers and not to other European producers. This indicates that the Government believe that it is acceptable to own a television channel or, for that matter, a number of television channels in other European countries and qualify as an independent producer, but if a producer owns a channel in the UK, it will be prohibited for quota inclusion.
The order therefore allows Endemol, for example, which has significant broadcasting interests in Europe, to be classed as an independent producer. However, the order still prevents Fremantle, formerly Pearson, from being regarded as an independent for the purpose of the quota because its parent company, RTL, owns 65 per cent of Channel 5. Fremantle provides less than a fifth of Channel 5's programming and will be significantly affected by being classed as a non-qualifying independent. Does that really make sense?
The Government have conferred powers on Ofcom through the provisions of the Communications Bill to ensure that the programming quota is adhered to. We believe that the independent producers not falling within the definition of "qualifying independents", as specified by the order, will suffer considerably as licensed public service channels will have to take account of whether the programmes that they commission fall within the quota requirement. The consequent effect will be to damage the non-qualifying independents and therefore distort the market for independent programme commissioning. We think it would be prudent to review programme commissioning from non-qualifying independents in addition to qualifying independents to ascertain how this independent production quota is impacting on the sector.
The second modification inserts two new sections into the 1991 order and relates to the status of the independent producer. We support the proposal that an independent producer's status at the time a programme is commissioned will dictate whether the quota will be met. In a constantly evolving industry such as independent production, this clarification of the producer's status will provide the necessary certainty needed within the sector.
I hope that the Minister will rethink the order and its consequent effect on programme commissioning. We wish to encourage growth and innovation and not to punish the large independents for their success. An alternative definition of independent producers would be preferable. We believe the proper mechanism for achieving that would be through the Communications Bill.
§ Lord Thomson of Monifieth
My Lords, I thank the Minister for his extremely clear explanation of what is involved in this order. Independent television producers with a protected quota are a healthy and creative feature of the broadcasting landscape, and have been so for a long time now.
As the Minister said, the order makes three changes. One is technical and relates to digital technology. The second also reflects the fast-changing landscape. It 1063 ensures that independent programmes are defined as "independent" at the time they are commissioned and completed rather than at the time of transmission, when ownership may have changed in these fast-moving times. That seems sensible to noble Lords on these Benches.
However, as the noble Baroness, Lady Buscombe, has already made clear, it is the third change that raises more difficult issues. It deals in effect with the special case of Endemol, a brilliant and, it must be said, essentially British independent programme-making company, but now financially owned by a Spanish broadcaster that does not broadcast in Britain. In our view and as the Government appear to believe, it is a deserving special case, but it is clear from the remarks made by the noble Baroness that special cases make dubious law. This needs to be looked at very carefully indeed. Certainly it is to be hoped that this precedent does not create difficulties for our own system from other continental European broadcasting organisations. The Government and the new Ofcom will need to keep a vigilant eye on the situation.
One of the difficulties is that all this will lead inevitably to claims for quasi-independent status for other broadcasting organisations in the United Kingdom, including quasi-independent status for small ITV regional companies. At the Committee stage of the Communications Bill I expressed a nostalgic and romantic affection for small ITV companies such as Grampian and Border. In the light of what the Minister has said, I should like to make it clear that the definition of independent status is one thing—it is a vital element in the whole system of an independent production quota—and the spread of regional programme production centres is a separate matter which is equally important for the health of the British broadcasting industry.
My honourable colleague in another place, Nick Harvey, put the matter succinctly. I am happy to rest on his remarks. He said:An independent production house should be just that. It should be independent of the broadcasting industry, and the programme supply industry and the broadcasting industry should be kept apart".—[Official Report, Commons, First Standing Committee on Delegated Legislation, 19/5/03; col. 016.]I endorse that view.
In the days, long ago, when I was chairman of the Independent Broadcasting Authority, the original impulse behind the independent quota was to stop the abuses of vertical integration in both ITV and the BBC which produced some of the most ludicrous and wasteful restrictive practices in the history of the British trade union movement. It is that historical background which creates a difficulty for some of the remarks made by the noble Baroness, Lady Buscombe, about the more domestic aspects and implications of the order.
In our view, it will remain an important responsibility of Ofcom to preserve, on the one hand, the purity of the independent system—it is better to keep that absolutely clear cut—and, on the other hand, to promote vigorously regional distribution of television programme-making, both among the 1064 independents that enjoy the protection of the quota and the BBC and ITV. Ofcom will need continually to remind broadcasters and programme makers that the real broadcasting regions in the UK lie a long way beyond the M25.
§ Lord Gordon of Strathblane
My Lords. I shall be brief because I do not wish to impede the smooth progress of the order. I know that the Minister will reflect on today's brief debate when we come to the Communications Bill. I agree with the noble Baroness, Lady Buscombe, that it would be highly appropriate for the Government to produce an amendment to the Communications Bill. Frankly, if they do not do so, other people will. I am sure that a government amendment would be much better drafted than anything I, for a start, could attempt.
I disagree mildly with the noble Lord, Lord Thomson. He suggested that we should not import this principle domestically. In my view, if you accept the logic of article 3(a) of the draft order—that is, that a production house owned by a foreign broadcaster is not interfering with UK broadcasting—the same logic would apply to an ITV company acting as an independent producer for the BBC.
There is a very simple definition of independence. You are an independent producer where you are not able to influence the placing of the contract for the making of the programme. It is as simple as that and I commend the definition to the Government. I hope that they will bring forward an amendment to the Bill.
§ Lord Davies of Oldham
My Lords, as I expected, given that our minds are honed to these issues because of the passage of the Communications Bill, we have had a short and precise debate. I have heard the representations that have been made and I have noted the indications that the Communications Bill may give rise to further discussions on this subject. So be it.
Let me reply to the point made by the noble Baroness, Lady Buscombe, and perhaps persuade my noble friend on the matter. The advantage of the order as opposed to the Bill is that it gives greater flexibility in rapidly changing times. This is the second order related to this issue since the Broadcasting Act 1991. Noble Lords will have noticed that, by a happy coincidence, another Communications Bill is passing through the House at the present time and that it would have been 10 years since change had been affected. Most of us will recognise that the process of change is accelerating all the time and that we need an order on these issues to give us the necessary flexibility to adjust to changing circumstances. Although I have not the slightest doubt about the merits of the debates and the amendments to the Bill—they help in establishing accurately the basis of the legislative framework—changes of a more limited nature enshrined in orders will increase flexibility.
The noble Baroness raised the issue of the definition of independent productions and referred to Fremantle in particular. We do not see the order as the end of the story. The issue is still very much at the centre of our desire to maintain and continue to develop a healthy 1065 vibrant programme supply market where the contributions of all creators are recognised and rewarded.
As will be recognised from our deliberations on the Bill—which we will happily continue next week—we see a very important role for Ofcom and its annual factual and statistical report in considering aspects of the programming quota for independent productions. So, through the framework of the Bill and the envisaged role of Ofcom, we are also engaged in a careful evaluation of the quotas and how they are working. Combined with the flexibility contained in the orders derivative from the legislation—assuming that the Bill is enacted—we shall have a framework for addressing these issues. We recognise that, wherever the line is drawn, there will be compelling arguments on just the other side of that line. The noble Baroness made a forceful point in that regard.
I am grateful for the remarks of the noble Lord, Lord Thomson, in support of crucial aspects of the order. The issue is not only about Endemol, although the noble Lord is right to identify that as the issue that came most sharply into focus in establishing the independent quota when it was taken over by a foreign company. It should be established that where the parent company is not broadcasting into the UK and not in any way, shape or form affecting UK transmissions, the issue of ownership is quite different and it would be appropriate to regard companies such as Endemol as independent.
That then raises the next question in regard to where the line is to be drawn: why are not other independent television companies regarded as sufficiently independent to be considered as independent producers for the quota? Our anxiety is obvious. The problem with a definition that would allow a regional ITV company producing a programme for the BBC—and allow the BBC to produce programmes for ITV—to count as independent cannot be squared with the broad objectives that underpin the whole concept of the independent quota—which is how we in this country, with our resources, increase competition, multiply the sources of supply and stimulate creativity and new talent.
I am not in any way, shape or form seeking to deny the role of the BBC or the independent television companies in terms of fulfilling criteria on creativity and talent, but the independent quota is designed to assist fresh sources of supply to be generated. The moment one translates the international position into the British one, the big broadcasters could effectively be competing in the quota area by their offshoots, defined as independent. That is our reservation.
The order contains merits which I think are recognised on all sides of the House. But circumstances are rapidly changing. This is an exceedingly exciting industry to regulate. It is enormously important to our nation. We know the significant role that television plays in our national life. I identify the order as having the merits of addressing particular issues at this time which need the case made out for them while pursuing a course in 1066 which we recognise, in our discussions on the Communications Bill, that we need to retain areas of flexibility for considering the very powerful arguments of where our lines are defined. On that basis, I commend the order to the House.
§ On Question, Motion agreed to.