My Lords, now that we have disposed of the business expected to be brief, I am glad that we can get on to the main business.
These instruments are being made under the European Union (Withdrawal) Act 2018. They make appropriate amendments to correct deficiencies in domestic broadcasting law in a no-deal EU exit scenario. I think we can all agree that, no matter what our respective views on EU exit are, we need to ensure that television services available in the UK are regulated properly and that the public continue to be effectively protected from harmful content after we leave the EU. We also need to make sure that the same laws and rules that are currently in place in the UK continue to apply, providing continuity and certainty.
I have to stress that these draft regulations address only the necessary technical amendments to ensure that the law is operative on exit day, rather than introducing sweeping new powers into law. The Delegated Legislation Committee has been content with these draft regulations and Her Majesty’s Opposition in the other place agreed that,
“this is a necessary measure that has to be taken”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 5.]
As noble Lords may know, the European Union’s Audiovisual Media Services Directive currently underpins several pieces of UK primary legislation, including the Communications Act 2003. We are therefore using Section 8 powers from the European Union (Withdrawal) Act 2018 to fix deficiencies in primary legislation to ensure that Ofcom continues to have jurisdiction over services that are available to UK audiences, or are established in the UK.
Let me summarise the main provisions of the draft regulations and why they are important. If we leave the EU without an agreement in place, the Audiovisual Media Services Directive will no longer apply. The directive—“AVMSD” as it is commonly known—establishes minimum content standards and provides for freedom of reception and retransmission for audio-visual services such as television and video on demand. Crucially, AVMSD provides that a service which is regulated in one member state can adhere to that country’s rules while being available all across the EU. Services are thus allowed to operate with a single regulator’s licence, regardless of where the service is received in the EU. This is known as the country of origin principle.
In the event of the UK exiting the EU without a deal, the country of origin system of authorising services would be deficient, as reciprocal arrangements created by AVMSD would no longer exist. Without the amendments carried out through this instrument, television services originating in EU member states would still be allowed to be broadcast in the UK without a licence, thereby leaving the UK with no possibility of regulating the content of such services and protecting UK viewers from harmful content. The draft regulations remedy this deficiency by introducing the country of destination principle, which will require any television service that is available in the UK, whatever its country of origin, to be licensed by Ofcom.
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While the convention cannot be considered a full replacement for the AVMSD, the ECTT sets out some minimum content standards for cross-border services and a system of mutual co-operation to enforce the standards. Furthermore, both the AVMSD and the ECTT provide that a majority of transmission time on a television channel must be reserved for works of European origin. The AVMSD refers to the convention in its definition of European works, and this in turn safeguards the UK’s status as a producer of European works, which is important for content sales and the UK production industry. This has been confirmed by the European Commission.
The draft regulations also ensure that services with Irish language content— RTÉ One, RTÉ 2 and TG4—continue to be available in Northern Ireland. The UK made those commitments in the Good Friday Agreement, and later through the European Charter for Regional or Minority Languages. This is necessary because these services are established in Ireland, which is not a party to the ECTT, so under the changes introduced through the draft regulations, they would now need to be licensed by Ofcom. However, we are making these services exempt from this requirement, to keep within the spirit of the Good Friday agreement.
The draft regulations introduce a new power for the Secretary of State, who will be able to designate regulated electronic programme guides after consulting with Ofcom. This was a necessary change because Ofcom’s jurisdiction depends on whether services are available on UK EPGs. We need the power to amend the list of regulated EPGs if there are new EPG entrants into the market. Being a designated EPG does not in and of itself carry any burdens on the companies who provide EPGs. Rather, creating this category was a necessary change to ensure that the legislation around licencing continues to operate effectively.
To conclude, I believe that the draft regulations are necessary to ensure that the UK statute book works on exit and that audiences are protected from harm, and I commend them to the House.
My Lords, the Minister will be pleased to hear that it is not my intention to oppose to this instrument. As he indicated, in the event of a no-deal Brexit, we need to ensure that those companies that provide at least linear television services in the UK are properly licensed—whether they are based here or elsewhere—and that viewers are protected. However, I take a very different view from the Minister in describing this instrument, particularly the description we find in the Explanatory Memorandum. Paragraph 12.3, for example, explains and justifies the lack of an impact assessment on the grounds that,
“the instrument will maintain the status quo as far as possible”.
It also suggests that the only inconvenience broadcasters with services available in the UK will face is the,
“need to familiarise themselves with new licensing system and guidance as proposed by Ofcom”.
Both lines show significant complacency on the part of the Government and are a massive oversimplification of what will happen if the instrument is needed.
The Explanatory Memorandum states explicitly that,
“no, or no significant, impact”,
on the private or voluntary sector is foreseen. Frankly, this is nonsense. When this instrument was debated in the other place on 29 January, the Minister there, Margot James, was forced to admit that at least 50 or 60 channels will for the first time be required to be licensed by Ofcom—hardly evidence of no, or no significant, impact.
Even more significantly, the Minister appeared to acknowledge that the loss of involvement with the AVMS directive regime, including the country of origin principle, should be of concern to us in this country, noting that the UK currently has a sizeable share of the entire European television market. As noble Lords will be well aware, we have something like 1,200 of the 3,000 channels across the whole of the EU. She said:
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The instrument makes a major change to the status quo. COBA gives an excellent example of why this is a problem by considering what would happen if we in the UK wished to introduce new rules for on-demand services over and above the standards required by the EU 27 under EU rules. It suggests considering what would happen if, for example, we in this country wished to place further restrictions on the advertising rules for foods high in fat, sugar and salt—something I believe we are very likely to do in the near future. In such a case, we would be reliant on the EU, which we will have just left, to enforce those new rules for us. That seems highly unlikely, not least when the EU 27’s on-demand services are already meeting arrangements in line with EU requirements. Why would they want to accede to our wishes in those circumstances?
More generally, this instrument could have provided a vehicle to address the uneven playing field between linear and on-demand services. I regret that it did not but, to be fair, the Government acknowledge the problem. In the other place the Minister, Margot James, said:
“We recognise that after exit we may need to consider a long-term and future-proofed approach to video-on-demand regulation”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 8.]
It is a widely held view, which I share, that this issue needs to be addressed as quickly as possible. Will the Minister go just that little bit further than Margot James and tell your Lordships’ House that, after exit, the Government will develop plans for a long-term and future-proofed approach to video on demand?
It is clear that this instrument does not live up to the claims made for it in the Explanatory Memorandum. That said, it is still needed to provide protection for UK citizens and a degree of certainty for the providers of broadcasting services here, but I hope I have made clear that exiting the EU will be accompanied by additional burdens for our hugely successful broadcasting sector and the wider creative industries. I hope the Minister will acknowledge that this will be the case and commit the Government to doing all they can to protect our creative industries by, for example, maintaining a strong copyright regime and the existing very successful production incentives of tax breaks. Above all, would the Minister be at least willing to pick up the recommendations from my noble friend Lord Clement-Jones and many on these Benches who have been calling for a rethink on some of the elements of the proposed new immigration system so that broadcasters and others in the creative industries can continue to access highly skilled talent from the EU 27 after Brexit?
My Lords, I support that excellent speech from the noble Lord, Lord Foster of Bath. It was extremely well argued and well researched and brought out a series of very real concerns. I have sat patiently through these discussions. We are seeing how Brexit will potentially destroy some of the jewels in the crown of Britain’s industrial and economic capacity. There is no more striking case of this than in broadcasting, which is one of Britain’s great success stories.
My experience of this is as a member of your Lordships’ Internal Market Sub-Committee of the European Union Select Committee, which did a thorough report on non-financial services and took evidence from broadcasters. At the time I was really shocked by the concerns expressed about the viability of their activities in this country. There is no doubt, whether to a greater or lesser extent, that what we are talking about will destroy opportunities for hundreds of young people who would otherwise have the chance of really fulfilling jobs in the media and broadcasting sectors.
No one I recall coming across in this field believes that the European convention is a full substitute for the EU directive. I would like to hear on what basis the Minister thinks it is. It clearly is deficient in that it is not comprehensive and does not have any means of enforcement through the Commission and the court. The fact is our industry is showing that it has no confidence in this poor substitute by the fact so many companies are relocating to the continent.
One thing about the statutory instrument really worries me. What we are doing with it—I can see why from the point of view domestic regulation—is saying that from now on we will no longer have the country of origin principle, but the country of destination principle. That will be used against us by commercial interests on the continent that want to prevent full UK access to the market. They will say, “You want to switch to a country of destination arrangement. That means we insist on the right to regulate your right to broadcast in our country”. This is very bad news for the British entertainment and broadcasting sectors. The Minister has many difficult questions to answer.
My Lords, I share the concerns so powerfully expressed by the noble Lord, Lord Foster. His speech demonstrates that these regulations, like so many of the exit regulations we are debating, raise fundamental policy questions. They are being presented under Section 8 of the withdrawal Act and other powers as merely transitional provisions designed to tidy up loopholes, but they are not. They raise fundamental issues of policy.
I have a specific question for the Minister concerning those broadcasters based in EU states that are not parties to the Council of Europe’s European Convention on Transfrontier Television. As the Minister and the noble Lord, Lord Foster, have explained, there is currently no need for Ofcom to license them because they are based in another EU state. As I understand these regulations, and the Minister will correct me if I am wrong, broadcasters based in non-convention states, including Belgium, the Netherlands, Luxembourg, Ireland—apart from for Irish-language programmes—Sweden and Denmark will now need to be licensed by Ofcom. Is it right that they will have to apply for a licence on 30 March or before then, or will there be a transitional provision by which they will be granted one automatically by reason of the fact they were previously covered by the EU directive?
My Lords, I thank the Minister for introducing the instrument before the House this evening. I should declare my interest: I was the Shadow Minister in the other place for the Conservatives when the Ofcom Bill was taken through. I was an adviser to the Conservatives on the committee that covered film policy, and also devised a film policy for the Conservative Party that did not go very far but concluded that it was in their most favoured interest to have a tax break. I have been a beneficiary as a modest investor in films of which I am very proud—not many have been released in the cinema, but they have been broadcast.
The noble Lord, Lord Pannick, asked the very same question on procedure that I would have asked, but I have a very specific question for the Minister that I hope is relevant to this directive. Broadcasters and film producers have benefited from a very specific budget line, which is a legal instrument empowering finances for co-productions throughout the European Union, from which British producers and others have benefited. A number of Danish and Swedish co-productions have been shown on British television, which have been of huge interest to viewers in this country. Going forward, will we benefit from that budget line to the same extent and will co-productions still be viewed as a positive development? It will be of great interest, I am sure, to the film and broadcasting industry to know if that is the case.
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However, a licence will not be required for television services provided by broadcasters in those countries that have signed and ratified the Council of Europe’s European Convention on Transfrontier Television, known as the ECTT, which the draft regulations would implement into UK law. The ECTT was signed and ratified by the UK in 1993, but it has not been implemented into UK law because of a disconnect clause in the convention which provides that EU member states must apply the relevant EU legislation in their mutual relations instead. The convention provides for a similar system of freedom of reception and transmission between the parties to the convention as the country of origin principle. All but seven of the EU 27 countries are parties to the ECTT.
“A sector that grows at 25% more than the average rate of the economy is certainly a success. In part, that success is indeed down to the very beneficial regime, the AVMSD”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 29/1/19; col. 7.]
So the loss of that “very beneficial regime” can surely be expected to have rather more than,
“no, or no significant, impact”.
The reason, of course, is that owners of the 600 or so channels currently licensed in this country but shown in other EU countries will now need to make new arrangements, not least by seeking licences elsewhere in the European Union. As I am sure noble Lords are well aware, to achieve that, they will either have to move their headquarters from the UK to another EU 27 country, or at the very least move some of their editorial staff to ensure that they have what is known as a “meaningful presence” in a different European country.
We already know that Sony is moving its headquarters to the Netherlands. We have already heard about Discovery Channel, Turner and NBC planning the movement of staff. Even the BBC is planning the movement of staff. Hardly surprisingly, Ireland, Germany and the Benelux countries—Belgium, the Netherlands and Luxembourg—are all actively targeting UK-based companies to persuade them to move to their country so that they can benefit from the AVMS directive and the current country of origin regime.
Given that we do not know yet which companies are likely to move their headquarters or their staff, and we do not know where they are likely to go, or how many staff are likely to go with them, it is difficult to be clear about precisely what the impact will be. However, I would argue strongly that there should have been a detailed assessment of the likely impact. We should have had, for example, detailed discussions with each of the potential receiving countries about what is meant in their country by a “meaningful presence” to ensure that a company would be allowed a licence in that country. Indeed, it is somewhat unclear what a meaningful presence in this country would be. Could the Minister give us a definition of what would amount to a meaningful presence here, enabling a company to get a licence here?
We know that some UK-based companies already have staff in other countries. I am not suggesting that there will be a total flood of people leaving, which would be catastrophic for the industry, but it will certainly make a significant dent in our world-beating broadcasting sector. Does the Minister believe the words in the Explanatory Memorandum—that there will be,
“no, or no significant, impact”?
Can he justify why we have not had an impact assessment for this instrument?
I am aware that when the Minister responds to my query he may refer to the convention on transfrontier television—the ECTT. He may argue, just as the instrument does, that implementing the ECTT—which, as he rightly pointed out, we signed and ratified as far back as 1993—provides a similar system of freedom of reception and transmission between the parties to the convention as the AVMS does between EU members. If the Minister uses that to justify the claim that,
“the instrument will maintain the status quo as far as possible”,
I suspect he will be in significant difficulty, because there are major problems in making that claim.
The Minister said that “only seven” of the EU member states are not members of the ECTT. However, only seven is more than 25% of the EU 27, so that means that UK companies that wish to have their channels shown in Belgium, Denmark, Greece, Luxembourg, Sweden or—especially important in this regard—the Netherlands or Ireland, will have no choice but to move HQ, as I said, or at least to move some staff, to another EU country. So will he acknowledge that describing the ECTT as a “similar system” is not a widely shared view?
Indeed, PACT—a trade organisation representing, among others, UK television companies—notes that the enforcement regime of the ECTT has nothing like the same ultimate recourse to a body such as the EU Court of Justice. COBA, the Commercial Broadcasters Association, describes the ECTT as having significant limitations. Our own House of Lords EU Select Committee, in HL Paper 135, said that,
“neither the Transfrontier Television Convention nor coproduction treaties are viable alternatives for trade”.
In the other place, the House of Commons DCMS Select Committee concluded just last month that the ECTT was “severely limited”.
Even the former Digital Minister, Mr Matt Hancock, was forced to admit when giving evidence to the EU Select Committee, that the ECTT was agreed in 1993, and that,
“in this space, that is a long time ago”.
No doubt because of that huge distance, another difference appears, in relation to how the ECTT handles advertising, compared with the AVMS directive.
If the Minister needs any further convincing, he should surely note what the creators of the ECTT itself said. What did the Council of Europe say about it? It published a paper very recently—its 2018 report, Brexit: The Impact on the Audiovisual Sector—which says:
“In the absence of the COO principle, UK-based companies would face new barriers when broadcasting to Europe and could choose to relocate their headquarters to another member state, with the consequent direct negative effects on employment in the UK, and additional indirect losses for the UK creative economy”.
Even the creators of the ECTT do not appear to think of it as the solution to the problem. Faced with all this, does the Minister stick to the view that the ECTT is a similar system to the AVMS directive, that if we implement it there will be no, or no significant, impact, and that the status quo is being maintained? Surely he cannot agree with any of that.
I turn now to another aspect of the instrument that definitely does not meet the Government’s claim to be maintaining the status quo. By waiving any UK licence or notification requirements for on-demand services other than UK-based ones, they will intensify rather than mitigate the already uneven playing field between linear and the increasingly popular on-demand services. It is already bizarre that, in relation to non-EU so-called third countries, we rely on the host country’s regulator to provide a licence, and no UK licence is required, even if the services are being made available here in the UK.
Of course, I am prepared to admit that, in a sense, under the AVMS directive that is also true for on-demand service providers coming from the other EU 27 countries. But there is a major proviso: there is no formal legal dispute mechanism through the European Commission in the alternative arrangements. We will suddenly deny ourselves any formal dispute mechanism, at least for on-demand services coming to the UK from the EU 27 countries.