Media Bill (Third sitting)

Stephanie Peacock Excerpts

Committee stage
Thursday 7th December 2023 Public Bill Committees

[The Chair]

Order. Before we begin, I remind Members to please send any speaking notes to Hansard at [e-mail]—they will be very grateful. I also remind Members to please switch all devices to silent, and that tea and coffee are not permissible in this sitting.

Clause 28

Prominence on television selection services

[Stephanie Peacock (Barnsley East) (Lab)]

I beg to move amendment 21, in clause 28, page 37, line 4, at end insert—

“(5) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This amendment would make the Secretary of State’s power to designate regulated television selection services subject to approval by both Houses of Parliament.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 29, in clause 28, page 40, line 2, at end insert—

“(2A) When preparing guidance under subsection (1), OFCOM must have regard to the strategy and policy published by the BBC pursuant to clause 62 of the Agreement between Her Majesty’s Secretary of State for Culture, Media and Sport and the British Broadcasting Corporation, dated 7 November 2016, as that clause may be amended or updated at any time.”

This amendment requires OFCOM explicitly to consider the relevant parts of the BBC’s regulatory framework when setting its guidance for the new prominence regime under subsection (1) of 362AL.

Clause stand part.

Schedule 3.

[Stephanie Peacock]

I am pleased to be starting part 2 of the Bill today. Indeed, an update to the prominence regime is arguably the most anticipated of all the Bill’s measures, and I am certainly keen to see it come into force.

As I have spoken about many times already, our public service broadcasters are the cornerstone of our broadcasting sector in the UK, investing billions in original productions and creating content that is trusted, valuable and entertaining for UK audiences. Historically, in return for the high standard of programming and investment that public service broadcasters provide, their channels have been made easy to find on linear television sets—to the benefit of audiences across the country. However, amid rapid changes in how viewers access television and content more generally, the prominence regime, which has not been updated for decades, is at increasing risk of becoming diluted and outdated.

As ITV identified in its submission to the Culture, Media and Sport Committee, the major risks are twofold. First, public service broadcasters are in danger of being cut out of view, as global content players and platforms strike international deals with online platforms for prominence. Secondly, as a result, our public service broadcasters are at risk of being forced to concede increasingly material percentages of their revenue to these platforms, simply to appear on them. In this situation, it seems like almost everyone loses out—from audiences, to the wider UK production economy, to even the platforms themselves, which may find themselves in a position where they cannot promote the content that UK viewers most want to see. A new prominence framework for the digital era, therefore, was always going to be crucial.

The next question to answer was how prescriptive such a new regime would be in legislation. I am pleased that, in response to this, the Government have avoided explicitly spelling out what prominence looks like in the Bill, or making primary legislation restrictive or resistant to future changes in technology and behaviour. Instead, we have before us a principles-based approach based on finding mutually beneficial carriage deals between what is branded “designated internet programme services” and “regulated television selection services”, with Ofcom being able to provide a framework in which these negotiations can operate.

That is then backed up by a strong dispute resolution and enforcement powers for Ofcom, including the ability to improve significant penalties in the result of non-compliance. This allows for maximum flexibility in both legislation and negotiations, as well as proper protections where agreements cannot be reached. It also allows for the regime to be expanded where necessary to capture new technology that people might be watching television content on. Platforms and PSBs have a history of successful negotiations, creating mutually beneficial deals and partnerships that would be counterintuitive for the prominence regime to undermine.

With that in mind, I am glad that the Department has made a few changes to the initial drafting of the Bill, in particular regarding the agreement objectives that are designed to incentivise the agreement of appropriate terms between platforms and PSBs. The original phrasing had concerned both parties. For PSBs, there were fears that the stated focus on costs would see platforms making unfavourable demands on advertising and data. For the platforms, there was concern that the phrasing could imply a responsibility on their behalf to cover the cost of PSBs. The new phrasing, which looks at the provision of public service content to audiences in the round, will hopefully alleviate some of these worries.

It is also welcome that there has been a clarification over legacy devices. It is important that technical feasibility is taken into account when deciding which devices are designated as being in scope of the regime. I would, however, like to ask for some clarity on the requirement to secure “appropriate” prominence. This was a major topic of discussion during the pre-legislative scrutiny process, with the majority of PSBs calling for this to be upgraded to “significant” prominence. The arguments around this were mostly based on the differences between linear and digital streaming landscapes.

On a traditional television set, appropriate prominence has, in practice, meant a fixed and high slot on programme guides—a relatively straightforward goal to achieve. However, the BBC said in its evidence that it has still sometimes struggled to secure high listings for its children’s channels on linear televisions. Likewise, S4C noted that it remained channel 166 on Virgin Media in Wales until 2021 due to a wide interpretation of the word “appropriate”. On streaming sticks and smart TVs, however, there is an ambiguity as to what appropriate prominence should provide in practice, especially given the many ways one programme might be reached within only one such device. Therefore, for the regime to have its intended impact, the argument is that significant prominence will be needed to ensure that public service content is easy to find on every necessary interface. That was also recommended by the Culture, Media and Sport Committee. However, I am aware that Sky and others have expressed that there may be some unintended consequences to upgrading to significant prominence, particularly because of the risk of overriding consumer choice and preference.

Will the Minister provide a full response to the argument for significant prominence and outline the reasons why the prominence requirement has not been upgraded? Further, what conversations have been had with Ofcom on how the detail of the regime will be set out in the code of practice to ensure that it meets its aims? As I will go on to say throughout the Bill’s passage, we need a strongly empowered Ofcom if this Bill is to be a success.

On a similar note, Will the Minister tell me whether the Department has considered the possibility of including remote controls and multi-use devices in the prominence regime? I know that is something the BBC has consistently called for. Its latest thinking is that electronic programme guides could be given a prominent button on remotes, rather than one PSB in particular. Although my priority remains to see this clause passed, we must explore these questions to make sure that we are fully seizing this once-in-a-generation opportunity to ensure that public service content is easily findable in a digital age.

I will also take this opportunity to briefly discuss the role of regional prominence. Before I continue, I want to reassure colleagues that I do not mean to imply through the use of the phrase “regional prominence” that Wales and Scotland are regions, rather than nations in their own right. I use that terminology because that is how the Bill refers to prominence arrangements that will be required for the likes of S4C and STV, as well as other, genuinely regional services provided by our PSBs. For those broadcasters and their respective audiences in Scotland and Wales, proper prominence will be absolutely crucial. That is perhaps even more so the case when we consider that S4C simply cannot match the promotion budgets of those that dominate streaming platforms, yet it provides a unique service in the Welsh language that others simply do not.

However, some platforms have raised concerns over the technical feasibility of ensuring regional prominence. For example, techUK has said that technical and privacy challenges mean that providing regional variation in prominence would be a disproportionate burden. As a result, S4C has raised concerns that user selection might be used in lieu of guaranteed prominence. That would be quite different to the envisaged package of benefits that the prominence regime would provide for PSBs.

First, will the Minister first reaffirm that the Bill does not require regional prominence for S4C, STV and other regional programming that our PSBs provide? Secondly, will he update us on what discussions his Department has had with both Ofcom and platforms on how this requirement on regional prominence will be enforced and adhered to on a practical level? I know that the detail of what is required will become clear when Ofcom’s code is published after the Bill, but some baseline reassurances are needed now to clarify whether changes are needed to primary legislation to secure the kind of prominence we had all envisaged for the likes of S4C. The Bill must empower Ofcom as much as it can. Regional prominence goes to the very heart of why these changes are being made in the first place, and it is vital that its inclusion in the Bill is in no way compromised or diluted.

Finally, I will address my two technical amendments to this clause. First, I suggested an amendment that changes the power of the Secretary of State to designate or specify a description of regulated television selection services from the negative procedure to the affirmative. As the CMS Committee report recognises, although the Secretary of State can only designate services deemed to be used by a significant number of viewers, and must receive a report from Ofcom, the Minister can still make a decision that goes against Ofcom’s recommendations. Given that, it seems sensible that their decision should be open to greater parliamentary scrutiny.

Too many Bills coming through this Parliament have given sweeping powers to the Secretary of State, as the Minister and I discussed at length during the Data Protection and Digital Information Bill. Though such measures are sometimes needed to futureproof a regime, it is absolutely crucial to ensure that parliamentary scrutiny is not seen as an onerous task to be bypassed, but an important part of shaping good policies. With that in mind, I would like to see the affirmative procedure used in this case.

Secondly, the BBC has raised concern that the new framework creates a level playing field for licensed public service broadcasters in a way that it does not for the BBC. Indeed, the BBC is required under its framework agreement to publish a distribution policy, outlining the conditions under which it makes its services available. The conditions include securing appropriate prominence, quality and value for money. The BBC is also legally required to offer services to third parties without charge and on a fair, reasonable and non-discriminatory basis.

The Media Bill largely recognises that the BBC has a distinct regulatory framework—no less so than in this very clause, where it is made clear that there will be no additional “must offer” obligations on the BBC given its equivalent obligations. However, though there is explicit reference to the BBC’s “must offer” duties in the Bill, there is no matching reference to the BBC’s charter and framework agreement in the “must carry” section of the Bill. Both a “must carry” and a “must offer” requirement are needed to create the conditions for PSBs and platforms to have successful negotiations on prominence from a level playing field. The exclusion of comprehensive “must carry” requirements on platforms when it comes to the BBC may therefore make such negotiations harder. That is particularly worrying given the BBC says it already faces increasing difficulty when negotiating with some platforms that have little interest in supporting UK PSBs. It says global platforms, in particular, are more focused on self-preferencing their own content, monetising user interfaces and controlling data and algorithms.

My amendment would seek to rectify that inequality in the Bill. It would give the BBC an equivalent negotiating position to the commercial broadcasters, setting out that any regulated platform must also act consistently with the charter and framework agreement. That is hopefully a largely technical change to ensure no unintended consequences that could put the BBC at a disadvantage. My absolute priority on prominence is to ensure that the new measures are brought into force, but it is also important that we take the opportunity to ensure the new regime is as robust and effective as possible while we still have the chance.

[The Minister for Media, Tourism and Creative Industries (Sir John Whittingdale)]

This section of the Bill on prominence is a central part of the changes the Government wish to make. Although the hon. Lady has done a good job setting out the reasons we decided it necessary to update the prominence requirements, I hope she will forgive me if I recap them since I think it is important that the Government’s position is set out in some detail.

As the hon. Lady described, the objective of the UK system of public service broadcasting is to ensure that public service content is readily available to as wide an audience as possible and is easy to find. PSB prominence plays a crucial role in delivering that. In doing so, it boosts viewership and engagement, which are important to sustain advertising revenue and brand value for PSBs. In turn, that ensures they can continue to deliver the high-quality original programming that UK viewers expect. PSBs receive the benefit of prominence in recognition of the additional obligations placed on them, such as news and current affairs provision, and that has become known as the PSB compact.

However, the existing regulatory framework for ensuring carriage and prominence of PSB channels, set out in the Communications Act 2003, does not extend to the PSBs’ on-demand services, nor services other than electronic programme guides that enable viewers to navigate and select TV programmes. Audiences increasingly watch TV online and, in many cases, bypass traditional distribution platforms altogether, so without the new prominence frame- work, we risk undermining the long-term sustainability of the PSB system in the UK. All PSBs have been calling for an update for some time.

Clause 28 introduces a new online prominence framework for PSB apps, referred to in the Bill as “designated internet programme services”, wherever they appear on particular user interfaces, referred to as “regulated television selection services”. The framework is principles-based to ensure that regulation is proportionate and adaptable for the future without negatively impacting consumer choice and experiences. This approach to regulation aligns with the consistent feedback we have had from stakeholders on both sides through our engagement with them on this issue.

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[Sir John Whittingdale]

My hon. Friend makes an interesting point, and I have sympathy with the concern he expresses. However, if this Bill was not passed, the advantages of being a public service broadcaster would be very small. All the PSBs have made it clear that they regard prominence as an essential benefit of the compact, in order that they are easily found and accessible. Because they have laid such stress on that, we assume that it is still their wish to remain designated as PSBs.

It is, of course, up to any PSB to walk away from the compact if they chose to do so. In doing so, they would no longer necessarily be able to benefit from prominence and the other advantages that come with PSB designation. However, I know that both my hon. Friend and I believe that there is a continuing need for public service broadcasting in this country. One of the purposes of the Bill is exactly to address the point he makes, by ensuring that PSB designation is still an attractive proposition for broadcasters to seek.

Let me return to one or two details of precisely how the system will operate. Once the necessary internet programme services and regulated television selection service providers have been designated, new sections 362AJ to 362AN introduce new rules to ensure the availability of public service content. That is achieved by requiring providers to offer their designated IPSs to RTSS providers and requiring RTSS providers to carry these designated services. After all, prominence would be redundant if the PSB services are not on the platform to begin with.

These availability requirements will be underpinned by statutory agreement objectives that providers of designated IPSs and RTSSs must act consistently with when reaching an agreement on the availability and prominence of designated services and when keeping that agreement in force. These include that the arrangements support the sustainability of public service broadcasting and do not disproportionately restrict how the platform may innovate its service. The intention behind these agreement objectives is for Parliament to provide expectations for the outcome of negotiations between designated IPS providers and RTSS providers. These objectives are to be supplemented by more detailed Ofcom guidance on how providers may act consistently with them.

In that respect, let me address the point made by the hon. Member for Barnsley East in her amendment 29. Proposed new section 362AL requires Ofcom to

“prepare…guidance about how providers of designated internet programme services and providers of regulated television selection services may act consistently with the agreement objectives”

when negotiating on the carriage and prominence of designated services and after an agreement has been reached. The Government absolutely recognise that Ofcom’s guidance should take into account the BBC’s equivalent duties under the framework agreement, as also reflected in its relevant strategies and policies under the agreement, including clause 62. However, I can tell the hon. Lady that proposed new section 362AL(2) already provides for such considerations by Ofcom by referring to

“any duty of the BBC under the BBC Charter and Agreement that is comparable to the duty of providers of designated internet programme services other than the BBC”.

This may be a good opportunity to expand on another point. By convention, the BBC is not regulated in statute. It is the Government’s intention for the new prominence framework to apply to the BBC through the framework agreement. We plan to work at pace with the BBC to make corresponding changes to the its framework agreement to ensure that the relevant parts of the prominence regime apply to the BBC, while also acknowledging how it legally functions. It is the Government’s view that there is already provision in the Bill for Ofcom to consider the BBC’s comparable duties and corresponding policies under its framework agreement in its guidance on the agreement objectives. It is for that reason that I am unable to accept the amendment of the hon. Member for Barnsley East.

Overall, we think the principles-based approach that we are taking, with Ofcom playing a vital role, is the correct one. It will give Ofcom the tools it needs to ensure that the regime is functioning effectively without being too inflexible or overly prescriptive. Once designated services are available on the platform in question, new sections 362A0 to 362AR introduce specific duties on providers of RTSSs, including the requirement to carry and display designated IPSs with an appropriate degree of prominence. That includes the requirement to carry and give regional prominence to designated S4C services in Wales and STV services in relevant parts of Scotland.

[Stephanie Peacock]

I asked the Minister to reaffirm that it does not require regional prominence. Obviously, I am very keen to hear that it does because I know that there are some concerns, particularly from S4C, that it might do so in theory but not in practice.

[Sir John Whittingdale]

I am happy to address that point. The hon. Lady also raised the subject, which was debated on Second Reading and in the Select Committee, of whether the requirement for “appropriate prominence” is a better description than “significant prominence”. That is something we looked at carefully, particularly as it was one of the Select Committee’s recommendations, but we feel that it is important that the approach to regulation should be proportionate and allow for flexibility and operability across different RTSSs. We believe that an appropriate level of prominence, as determined by Ofcom in the code of practice, provides that flexibility and enables Ofcom to implement the regime in a practical way.

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[Sir John Whittingdale]

The hon. Lady makes an absolutely fair point. I hope Ofcom will look into that as it draws up the rules. Finally, on the point about voice activation, she is right that I can talk to my television set without even needing to pick up a remote control. Again, it is an obligation of Ofcom’s to consider appropriate prominence in that respect, and I am sure that it will take that into account.

[Stephanie Peacock]

I hope the BBC is reassured by the Minister’s explanation. I am happy not to press amendment 29 to a Division. This has been a useful debate, involving Members on both sides of the room, and it was particularly good to note the points about TV remote controls and gaming, which affect so many of the population.

On amendment 21, I continue to disagree with the Minister on the use of the affirmative procedure. For that reason, I would like to vote on it.

Question put, That the amendment be made.

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The new review forms part of a broader package of measures to support the independent production sector, which also includes the new duty on Channel 4 to ensure that it commissions fairly and an increase in Channel 4’s independent production quota. The Government believe that the package delivers the best of both worlds. It gives more flexibility for Channel 4 to grow, resulting in larger and more consistent commissioning budgets and more money flowing back into the independent production sector. I hope the Committee favours clauses 29 to 31 standing part of the Bill.

[Stephanie Peacock]

I will begin by discussing clause 31, which I think requires a bit more attention, before briefly addressing clauses 29 and 30. In perhaps the most significant of the changes made to Channel 4 throughout the Bill, clause 31 ends the restriction on Channel 4 that means it cannot be involved in the making of any programmes that it broadcasts.

Before I speak in a little more detail about the clause, I want to take the opportunity to set some context. I welcome the fact that an even more significant measure has not made its way into the Bill, as the Minister alluded to. The Government’s initial plans to privatise Channel 4 would have been disastrous. Channel 4 has a truly unique role in British broadcasting. As a company owned by the British public, which costs the public nothing, it commissions new programming, creates jobs, and discovers new talent across the country.

The channel plays a key role in the pipeline of talent and skills in the industry. For example, 4Skills has provided opportunities to young people who might never have considered a career in broadcasting, through apprenticeships, training schemes and the Content Creatives scheme. 4Skills has reached over 10,000 people since 2015 and aims to reach a further 100,000 over the next decade. Channel 4 has also brought us Film4, which spends more on British film than any other UK broadcaster. It invests millions in feature films that nurture new talent and help to sustain writers, directors and production companies across the UK. In addition, Channel 4 takes seriously the need to enable opportunities outside London, spending over 50% of its commissioning budget outside London—something it has committed to continue even after the introduction of the clause.

The Government’s plan to sell off Channel 4 was a plan to sell out Britain, heavily disrupt the broadcasting industry, and puncture several local economies. I am very pleased that Ministers finally came to their senses, although I question why it took them so long, and I reiterate the disappointment that I expressed on Second Reading that the process has delayed the introduction of other important measures in the Bill.

The clause is best understood in the context of the U-turn on privatisation. Channel 4 never asked for the removal of the publisher broadcaster restriction. Instead, the measure was announced as part of the package that the Government put forward when announcing Channel 4 would not be for sale. The statement that the then Secretary of State, the right hon. Member for Chippenham (Michelle Donelan), put out at the time said that the change would give the channel more “commercial flexibilities”, and

“exploit Intellectual Property…as other public service broadcasters are able to.”

What the announcement did not include was a detailed assessment of what impact the change might have on the independent production sector more widely. Even Channel 4 warned that there could be

“unintended consequences on the UK production sector”

as a result of the new powers. Directors UK also pointed out that the changes could

“distort or negatively impact the market in which our members are employed”.

Furthermore, the Media Reform Coalition expressed concern that even the current state of play was seeing smaller independent companies suffer, with Channel 4 becoming overly reliant on super indies. It was therefore crucial that the wider market was properly considered before the change was implemented.

I am pleased that the Department and Channel 4 have made a range of commitments to mitigate any potential negative impacts of the change. 4Skills will receive increased annual investment, the number of roles outside London will be doubled and, perhaps most important, Channel 4’s independent quota will rise to 35% of qualifying programmes. If Channel 4 does commence production, which I understand would be a gradual process and is some way off at the moment, further measures would be put in place. There would be a separate C4C production business with its own board and governance, a proper dispute resolution procedure and new reporting requirements. All of that will then be underpinned by a new requirement for Ofcom to consider whether Channel 4’s in-house productions have impacted on the fulfilment of its remit.

Nevertheless, I do not believe that package of measures has eased everyone’s concerns. I know the Media Reform Coalition, for example, has called for the restriction to remain in place and for further measures, such as a small and medium-sized enterprises guarantee, to ensure that a majority of commissioning spend goes to producers with an annual turnover of less than £25 million. Although I believe that significant progress has been made since the first draft was published to assess the impact of the clause on the market, I continue to understand and recognise that the changes will be worrisome to independent producers, particularly small ones.

If Channel 4 decides to exercise the new powers in the Bill, I hope it continues the approach it has taken thus far of doing everything possible to allow the independent sector to thrive, from top to bottom, and keeping itself accountable by setting targets that ensure this. With that in mind, I am happy to proceed with the measures within and without the Bill in the hope that they will be the start of a longer process of assessment and engagement with the wider market. I am grateful that Channel 4 will remain in public ownership, and hopeful that it will continue to deliver a unique contribution to the industry, as well as our screens, for years to come.

I know there was some concern over the initial drafting of clause 29, not because anyone disagrees with the principle of the duty, but because of a fear of unintended consequences if the clause did not take into account the primary functions of Channel 4 in looking to mirror the Companies Act 2006. Indeed, the new duty outlined in this Bill should largely only reinforce what Channel 4 is already doing. As such, it is right that the wording has been adjusted so that it directly references the primary functions of the channel, and is based on the well understood directors’ duties in the Companies Act 2006 while recognising the channel’s status as a statutory corporation rather than a limited company. Having spoken with Channel 4 since the new version of the Bill was published, I understand it is much happier with this drafting.

Clause 30 places C4C under a duty to facilitate fair competition for its commissions for broadcast and on- demand services; both Ofcom and Channel 4 are then given duties to report on C4C’s performance in adhering to that policy. As mentioned when we discussed the terms of trade regime in part 1, it is incredibly important to ensure that basic principles of fair competition are applied when public service broadcasters are commissioning work, so I am pleased that this clause will further enshrine good practice in legislation.

[Sir John Whittingdale]

Perhaps I should start by saying the one thing we agree on is that Channel 4 has played a valuable role in the UK broadcasting ecology, and that we want that to continue. I do not always agree with everything I see on Channel 4—I suspect few in this room do—but it has a history of innovative programming that is of real benefit. As the hon. Member for Barnsley East says, it has been hugely important in supporting the independent production sector and creating jobs across the UK. I should say that “Married at First Sight” is made, in part, in my constituency of Maldon. I think that Channel 4 has just announced there is going to be a dedicated channel to “Married at First Sight”, although how much of a contribution to the public service broadcasting remit that will make is perhaps debateable. Nevertheless, Channel 4 has a wide range of diverse content.

The Government considered whether there should be a change of ownership because we want to make sure Channel 4 is in a strong position to thrive going forward. There is no doubt that the Channel 4 model is under pressure. It becomes particularly vulnerable when faced with an advertising downturn, as indeed we are seeing at the moment. To provide Channel 4 with greater support through diversification of its revenue streams, the Government have decided it is appropriate to remove the restriction to allow Channel 4 to make its own programmes.

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[Sir John Whittingdale]

Clauses 32 to 36 relate to S4C and enact the recommendations made in the “Building an S4C for the future” independent review. The clauses update S4C’s powers, public service remit, and audit and governance arrangements. They also adjust the approval arrangements for S4C’s commercial activities, and update the BBC’s responsibilities to support S4C in delivery of its public service remit.

Clause 32 amends the Communications Act 2003 to update S4C’s powers and public service remit. It removes the current geographical restriction on S4C’s powers, ensuring that it is able to provide services outside Wales, and confirms that it is allowed to provide digital or online services, as recommended by the independent review published in 2018. That will allow S4C to broaden its reach and offer its content on a range of new platforms in the UK and beyond, ensuring that it continues to play a vital role as a public service broadcaster and has a strong future delivering high-quality content for Welsh-speaking audiences in the UK and indeed around the world.

The clause also simplifies the framework of S4C’s functions, public service duties and public service remit currently set out in the Communications Act 2003, reflecting the new public service remit introduced for all public service broadcasters in part 1 of the Bill. In recognition of S4C’s position as the UK’s only dedicated Welsh-language broadcaster, the clause retains the requirement that a substantial proportion of S4C’s public service remit content must be in Welsh. However, to ensure that S4C is not unnecessarily limited in its ability to deliver for Welsh-speaking audiences, the clause confirms that S4C may also provide content that does not fulfil the public service remit alongside the content that does. That brings S4C’s powers into line with those of other public service broadcasters.

The clause also adjusts the approval arrangements for S4C’s commercial activities. It replaces the previous requirement for approval to be provided by way of an order in secondary legislation with the requirement for approval in writing. That will give S4C greater flexibility in responding to market developments, as was recommended by the independent review.

The Secretary of State will have the power to approve a range of activities by way of a general approval, or to approve a particular activity in a specific approval. Any other activities already being carried out by S4C are to be treated as approved at the point of commencement, whether or not they were previously approved by the Government, given that it would be impractical to pause them purely for the purposes of obtaining approval after commencement.

It is important that S4C is given commercial flexibility as recommended by the review. However, at the same time, as it is a PSB in receipt of significant public funding, it is also appropriate for the Secretary of State to be given the opportunity to consider the suitability of specific activities to ensure that they remain in line with S4C’s functions. The clause therefore specifies that S4C must obtain the Secretary of State’s approval in writing before providing any television programme service, or doing anything for a charge or with a view to making a profit.

It would be difficult to create an exhaustive list on the face of the Bill of approved activity for payment, or intended to make a profit, that S4C could undertake, because we cannot predict precisely what future commercial activity might constitute. The clause therefore allows the Secretary of State to determine which activities can be covered by a general approval and which would need specific approval, for example, on the basis of a financial threshold.

Clause 33 formally replaces S4C’s governance arrangements, currently set out in legislation, with a new unitary board that is composed of both executive and non-executive members. That is also in response to a recommendation made by the 2018 review, which recommended that the governance structure at the time, which was the S4C Authority, should be replaced with a new unitary board comprising executive and non-executive directors. That replaces the previous two-tier management structure, which the review concluded created uncertainty around responsibilities.

In response to the review, and with the support of the Government, S4C has already created a shadow unitary board that undertakes governance responsibilities, with provision in its standing orders for specific situations where the differences between the previous model and the unitary-board model have required a bespoke approach. The clause therefore places that arrangement on a statutory footing by establishing S4C’s new unitary board and confirming that the board has overall responsibility for S4C’s activities in pursuit of its powers and duties.

The clause makes further changes to the Broadcasting Act 1990 to create the unitary board, adding the requirement for non-executive and executive members in accordance with the principle of the unitary board, and confirms that, as now, the chair must be appointed by the Secretary of State, along with a specific number of non-executive members.

The rest of the clause is largely limited to updating existing legislation with references to non-executive and executive members.

Clause 34 amends S4C’s financial audit arrangements in schedule 6 to the Broadcasting Act 1990, so that the Comptroller and Auditor General is formally appointed in legislation as S4C’s external auditor, rather than S4C’s being able to choose its own auditor. Again, this is in response to a recommendation made by the review. The review recommended that the Government consider whether the audit arrangements were suitable, and the Government accepted the recommendation. Although the Comptroller and Auditor General has actually taken over the auditing of S4C’s accounts, the clause puts the arrangement on a statutory footing.

The clause also places requirements on S4C subsidiaries. It requires each S4C subsidiary to appoint the Comptroller and Auditor General as auditor unless the Comptroller and Auditor General agrees that the subsidiary may appoint a different auditor. The Comptroller and Auditor General may inspect the accounts of any S4C subsidiary regardless of the identity of the subsidiary’s auditor, and S4C must give the Secretary of State access to the accounts and related documents of an S4C subsidiary.

Clause 35 allows the BBC and S4C to come to an alternative arrangement on ways for the BBC to support S4C in delivery of the public service remit. Current legislation results in a fixed approach of requiring the BBC to provide at least 10 hours of programmes in Welsh to S4C per week. The clause amends the 1990 Act to allow the BBC and S4C to agree in writing an alternative arrangement to the BBC’s existing responsibility if it is mutually and commercially beneficial for both parties. That reflects the fact that the BBC may be able to provide to S4C other types of support that are more relevant to its functions and remit in the modern digital broadcasting age. That could include, for instance, the use of spectrum, specific services, rights, funding or content. This will better enable S4C to broadcast a wide range of high-quality content and serve Welsh-speaking audiences. The BBC will be required to publish the terms of an alternative agreement as soon as reasonably practicable. The BBC will be able to exclude from publication any information that it considers to be commercially sensitive.

The clause also removes references to S4C’s analogue television service and the requirement for Channel 4 to provide S4C with programme schedules and programmes to deliver that service. This simply reflects the fact that S4C’s analogue television service, which showed programmes in English from the Channel 4 service alongside Welsh language programmes when Channel 4 was not available in all parts of Wales, no longer exists.

Finally, clause 36 introduces schedule 4, which contains further amendments to the Broadcasting Act 1990, the Broadcasting Act 1996 and the Communications Act 2003 that are required as a consequence of the provisions in this part. The changes also reflect S4C’s new public service remit.

Taken together, these clauses reflect the Government’s recognition of the valuable contribution that S4C makes to the lives and wellbeing of Welsh speakers and learners. We remain committed to helping S4C to adapt to the changing media landscape and remain relevant as an independent and modern public service broadcaster in the UK. I urge that clauses 32 to 36 and schedule 4 stand part of the Bill.

[Stephanie Peacock]

The second chapter of part 3 of the Bill makes a number of changes to S4C, which I understand is largely very welcoming of the Bill and wants to see it passed, particularly in order to benefit from prominence measures and to become in scope of the listed events regime. These clauses are of crucial importance, but are not quite as immediately transformative as the changes made to C4C, as they largely provide a legislative basis for changes that have already started to roll out. Indeed, it was all the way back in 2018 that the “Building an S4C for the future” review made recommendations, which the Government accepted and which form the basis of the clauses.

Given the long wait for the new laws, S4C and DCMS agreed for many of the changes to be adopted early in the meantime. As such, although clause 32 introduces a new remit, S4C has already taken advantage of the changes within it, offering online and digital services and providing services outside Wales. This has allowed S4C to adapt to the changing landscape and broaden its reach and appeal beyond just those Welsh speakers situated in Wales. It is therefore welcome that the clause ensures that legislation reflects the new reality of how S4C can be accessed and delivered.