House of Commons Culture, Media and Sport Committee

DCMS Annual Report and Accounts 2010-11 and the Responsibilities of the Secretary of State

Oral and written evidence

Tuesday 27 October 2011 Rt Hon Jeremy Hunt MP, Secretary of State for Culture, Olympics, Media and Sport, and Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport

Ordered by the House of Commons to be printed 27 October 2011

HC 1603-i Published on 7 March 2012 by authority of the House of Commons London: The Stationery Office Limited £5.50

The Culture, Media and Sport Committee

The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies.

Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Steve Rotheram MP (Labour, Liverpool, Walton) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Tom Watson MP (Labour, West Bromwich East)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume.

The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some of the written evidence are available in a printed volume.

Additional written evidence is published on the internet only.

Committee staff The current staff of the Committee are Emily Commander (Clerk), Andrew Griffiths (Second Clerk), Sarah Heath (Assistant Clerk), Elizabeth Bradshaw (Inquiry Manager), Jackie Recardo (Senior Committee Assistant), Keely Bishop/Alison Pratt (Committee Assistants), and Jessica Bridges-Palmer (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected]

List of witnesses

Tuesday 27 October 2011 Page

Rt Hon Jeremy Hunt MP, Secretary of State for Culture, Olympics, Media and Sport, and Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport Ev 1

List of written evidence

1. Rt Hon Jeremy Hunt MP, Secretary of State for Culture, Olympics, Media and Sport, Department for Culture, Media and Sport Ev 17

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Culture, Media and Sport Committee: Evidence Ev 1

Oral evidence

Taken before the Culture, Media and Sport Committee on Thursday 27 October 2011

Members present: Mr John Whittingdale (Chair)

Dr Thérèse Coffey Steve Rotheram Damian Collins Mr Adrian Sanders Philip Davies Jim Sheridan ______

Examination of Witnesses

Witnesses: Rt Hon Jeremy Hunt MP, Secretary of State for Culture, Olympics, Media and Sport, and Jonathan Stephens, Permanent Secretary, Department for Culture, Media and Sport, gave evidence.

Q1 Chair: Good morning, everybody. This is the will implement a number of them post the Olympics Committee’s annual session at which we welcome the and particularly in the latter half of next year. Secretary State for Culture, Media and Sport, Jeremy But we have had, I think, extraordinary support from Hunt, and the Permanent Secretary, Jonathan the civil servants in my Department, who have been Stephens, ostensibly to review the annual report and put under huge pressure by having to face change on accounts but generally a wide-ranging exploration of that scale but, I think, do recognise that as a all your responsibilities. Just before we start, two Department with responsibility for very important members of the Committee are attending questions but sectors in our national life, this is the right thing to we hope will come to provide reinforcements in due do now. course. I would like to welcome Steve Rotheram as Jonathan, I don’t know if you want to add any details the new member of the Committee; he has replaced on that. Cathy Jamieson, who has been elevated. Not literally; Jonathan Stephens: Yes, just to say that we are on she is now on the Front Bench. track against the profile and targets that we have set Perhaps I might begin. Secretary of State, you set out, so last year we set out to save £3 million on our perhaps one of the most demanding targets in pay bill. We slightly overachieved; we reduced it by Whitehall in terms of the cost reduction for your own £3.2 million. In addition we made £1.7 million of Department, a savings target of 50%. Can you tell us savings on non-pay. That, as the Secretary of State how confident you are that is going to be achieved said, has been challenging for people in the and what have been the consequences? Department and has caused us to look at how we do Jeremy Hunt: Absolutely, and I may hand over to the things and has caused us to do things in new and Permanent Secretary to put a bit more flesh on the different ways that have enabled us in many areas to bones of that because he is implementing that improve our performance. For example, in particular programme. correspondence we have gone from close to bottom of Could I just start, as I think this is the first time we the Whitehall league table to close to top of the league have met since the whole phone-hacking issue came table, now, in this current week, achieving more than to light, by congratulating this Committee on the 60% replies within 48 hours to correspondence into incredibly important role they played during all those the Department. We’re responding to 95% of PQs events and in particular, I think, the Select Committee within time. In terms of prompt payment of bills, we hearings with the Murdochs, which had a very are paying more than 80% within five days, and more important role in underlining the role Parliament has than 90% within 10 days. So, on these key processes in getting to the bottom of all these issues. I think that our performance has improved. was helpful and extremely important. I am sure you will come on to this later but the Chair: Thank you. Secretary of State, I think, feels that good progress Jeremy Hunt: The 50% target is a huge challenge. It has been made against the policy priorities that he has is the biggest in Whitehall. I might start by saying that set. We have also achieved the first major sale of an the reason for that was not because we wanted to cut asset under this Government—the sale of the Tote. for the sake of it but because we set as a strategic Perhaps it is symptomatic of our performance and objective being able to limit the cut to front-line arts how we view it that we’ve been asked to take on and sports bodies to 15%. The only way we could get significant extra responsibilities with the machinery of the numbers to add up if we were going to deliver government shift, and most recently the extra capital 15% to people like the British Museum, and the whole programme to extend mobile coverage in rural areas. sport plans for national governing bodies, was for We’ve taken on the unexpected, as well, in the Royal back-office costs, both at the Arts Council, Sport Wedding. England and all our arm’s length bodies, as well as We are setting ourselves the ambition of being a new ourselves, to be cut by 50%. We are, I believe, on model Department in Whitehall terms. We are one of track to deliver that. There is a slightly unusual profile the first to have moved to an all-flexible resourcing to the cuts because of the Olympics next year, so we model, and other Departments are coming to us to see cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

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27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens how it is done, including the Treasury, which is a first everything we can to minimise the risks in both those in my 28 years of experience in dealing with them. two areas. At any stage there are things that bubble to the surface Q2 Chair: We discussed, I think, in a previous as things that need concentrated attention. We have session whether or not you were going to need to obviously been focusing a lot on the Olympic Stadium make compulsory redundancies. Do you think you can recently, and are happy to discuss that in detail. I was achieve the savings without it, or is that still a at the Olympic Park a couple of days ago to look at possibility? the 2012th flat in the athletes’ village, which has now Jonathan Stephens: I can never rule it out. The been completed, and I think the transformation of the savings we have made so far have been achieved whole of that area now is extraordinary. It gives great without compulsory redundancies. Between now and confidence when we are thinking about a legacy, next year we have agreed to some 79 voluntary because the key elements now are there: the redundancies. As the Secretary of State said, our transformation of Stratford station, which was profile requires further reductions in costs and staff unveiled at the end of last year; the opening of the after the Olympics and we will approach that on the Westfield Shopping Centre, which had more than a same basis. million visitors in its first week; the 3,000 flats that form part of the Olympic Village, half of which will Q3 Chair: The possible move or sharing of a be social housing; along with all the sports facilities building—is that now off the agenda? Are you staying and the modelling of the Olympic Park. I think you where you are? have a very strong feeling when you go there that this is an area that is going to be hugely attractive and Jonathan Stephens: No. We need to make substantial desirable post-Olympics. In that respect, I think the savings in our non-pay costs as well, including perennial worry that people have about the Olympics accommodation costs. We have not at all ruled that is that we spend a lot of money on the event itself but out. Part of our non-pay savings has been made by then you get left with a lot of white elephants quite a determined pursuit of releasing space within afterwards. I think we and the last Government—we our building and then seeking to let it out, so we have need to give them a lot of credit as well for this— secured an extra £1.5 million from increased rental have done everything we possibly can to minimise the income and we think we can go further in that. If the risk of that happening. right offer comes on the table we will certainly look at moving. Q6 Chair: It was Jacques Rogge who said he wanted to avoid white elephants and that obviously is Q4 Chair: Looking at the general breakdown of your desirable, so can you tell us a bit about where we are expenditure by category and the projection over the now on the stadium? next four or five years, most areas are suffering Jeremy Hunt: Yes. Dealing with football clubs is reductions but of the same sort of proportion. I could never the smoothest process in the world but we had not quite work out—why is it that for broadcasting a process, which the Government and the Mayor of and media, the resource expenditure drops from about London decided to halt because we were informed by £140 million to £40 million and the capital the London Borough of Newham that they were not expenditure goes up from £11 million to £25 million? sure they were able to meet the financial requirements Jonathan Stephens: May I ask which table you are in the bid that they put forward with West Ham and looking at? went on to win. We are now going for a different Chair: I think this is out of your annual report and solution, which I think will bring a lot more certainty accounts table 1, pages 15 to 21. in the process, which is essentially a leasing solution. Jonathan Stephens: I most probably had better write We are confident that we will sort out a legacy use for with a detailed answer to that, but just offhand I the stadium in perpetuity in the spring, and basically suspect that it may be to do with the shift of at the moment there is a football option and a non- responsibility for S4C. football option. We are looking very closely at what Chair: That would be useful if you could. we can do to make sure we have two good options, Jonathan Stephens: I will certainly write. both with football use and without football use, so that we have a real choice when it comes to deciding who Q5 Chair: If I can move on, in terms of the we would sign a lease with for the use of the stadium. challenges facing the Department, the biggest and most high profile—the one that if it goes wrong, you Q7 Chair: Boris is quoted as saying, “We will keep are dead—is the Olympics. Can you, first of all, say it in public hands but we will effectively rent it to whether there are any things that cause you to wake a football club, almost certainly West Ham.” Is that up sweating in the middle of the night about the premature, do you think? Olympics, or are you absolutely confident it is all on Jeremy Hunt: I think it probably is a little bit track? premature because we are at the start of a process and Jeremy Hunt: I have not got to the stage of waking we will know where we stand, but I think a lot of up in the middle of the night sweating, but there are people in this process have thought that having a always things that you have to be very concerned football tenant would be the best option in terms of about. I think transport and security are the two big one of the things that would guarantee usage every areas where on a project of that scale there is the most weekend during the football season. So it is obviously room for unpredictability, and we are doing immensely attractive to have a football tenant, but I cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

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27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens think we need to be careful to make sure that is not look at every possible option, and we have the only option on the table because we want to make responsibilities nationwide so we should be around the sure we have a proper competition, so we want to country in everything we do. make sure that we have a viable non-football option Chair: I do not want to compete with Liverpool, but as well. the Committee also noticed quite a lot of space at If you look at what is happening in Stratford, you Salford when we went to look at the new media city look at Westfield, you look at Stratford station and up there. the transport links, and then you look at perhaps the surprising commercial success of the O2 Arena, it is Q10 Damian Collins: I am just warming to that possible to imagine legacy use that is not football theme. I am sure the Permanent Secretary will want being commercially viable going forward, and I think to give the Secretary of State options, so I am sure we need to explore that option carefully as well. Folkestone could put in an attractive bid for DCMS to be part of the creative regeneration of Folkestone, Q8 Chair: On the procedure to reduce the size of somewhere the Secretary of State has previously the stadium down to 60,000, I understand the cost is visited. estimated to be about £35 million, which previously Going back briefly to the Olympic Park, I wanted to would have been met by the new owner of the touch on the question the Chairman asked about the stadium. Were you always going to have to find that cost for refitting the stadium post-Games. Will those cost? costs be dependent on the likely tenants? If it is not Jeremy Hunt: That was always budgeted for and that football but rugby union or cricket or indeed an was always part of the original proposal. athletics stadium with an open-air entertainment Jonathan Stephens: Perhaps I could just clarify: what space, there may be very different costs and was always in the original budget was the original configurations required, depending on the likely base case for legacy, which is to reduce it down to tenants. 25,000, and that is the £35 million transformation Jonathan Stephens: Yes, absolutely. The £35 million budget that forms part of the £9.3 billion. that is part of the post-2012 transformation budget that is in the £9.3 billion is for a base case reduction down Q9 Steve Rotheram: Chair, can I link what you have to a 25,000-seater stadium. Building up from that, been saying with something that the Permanent things that require more would obviously require a Secretary said earlier? I understand the importance of different set of costs, and obviously that is something why DCMS should be located in London with the that needs to be covered in the bids we are looking for. London Olympics, but post-2012 he was talking about fixed costs such as buildings and reducing that. Both Q11 Damian Collins: I want to ask you questions Heseltine and Sir Terry Leahy have produced a report about football and particularly the Committee’s for the Government, and in that they talk about Football Governance report. Obviously we have had locating Departments out into areas other than a chance to digest the Government’s response to that, London, and one of those suggestions is Liverpool. but if I may ask the Secretary of State about this. I think we could make a very attractive offer to the The Sports Minister was very clear when he appeared Department to come to somewhere that would have before the Committee that the Government would much reduced fixed costs for buildings, and obviously consider legislation as the ultimate sanction if the a ready-made work force able and willing. If it is football bodies refuse to reform, and that again is about cost reduction then the Government should be highlighted in the Government’s response to our looking at relocating wherever possible, and I can report. I wonder if you could say something about that think of nowhere better for DCMS to be than the and your appetite for taking that kind of step. former European capital of culture. Jeremy Hunt: I think we are very clear that the Jeremy Hunt: Let me congratulate Mr Rotheram on governance of all our sports is incredibly important. his brilliant advocacy of Liverpool, as ever. From a Let me just make it a positive rather than a negative. cultural point of view and a sporting point of view he I think we have an opportunity as a country to be the is absolutely right. Liverpool is a fantastic city. We premier country in the world for hosting major sports are looking at all options in terms of how to run a events. If you look at the sequence of events that we model Government Department. Without wanting to have coming up after 2012 in this country, it is a big be flippant, one of the things that separates DCMS is opportunity. It is something we do very well. Two that we distribute 93% of the money that we get from million people come to this country every year to the Treasury out to arm’s length bodies, so we have a watch or play a major sporting event. That is a big very different model from other Departments, which number and helps our tourism industry enormously. run many more of their own programmes. When I I think there is a very big opportunity there but, as I started we had about 500 civil servants and that will think you have said in the past, we cannot preach to go down to, more likely, 250, so we are a very small FIFA about improving their governance unless we are Department in our own right, but I think the real absolutely clean ourselves. So that is why we have to influence that we can have is with our arm’s length be clear with sports governing bodies, and since the bodies and encouraging them to be imaginative about Sports Minister’s comments about football being the where they locate themselves. I thought you were worst-governed sport, there seems to be somewhat of going to suggest that some of them should locate a competition among other sports to see whether they themselves in the Olympic Park, which has also been can wrest that crown. I think we have to be very clear discussed as well. But I think it is important that we that sport is a national asset and it needs to be run cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 4 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens properly, so we are very serious about being willing are trying to do—one of the most important points we to bring forward legislation. I don’t think it would be are trying to deal with—in the football governance legislation that was football specific. I think it would review is to make sure that football authorities be a template that we would expect all sports to follow recognise their responsibilities to wider communities. if they were in receipt of Government money. We That is why I think it is completely legitimate to say would have to think what that would be, but the FA that football clubs are more than just financial assets gets £26 million a year from the Government at the when it comes to their purchasing or sale. They have moment. huge fan bases and they need to have some I very much welcomed what the Select Committee responsibility to fans as stakeholders in clubs, and said in their report and I hope you, in turn, welcomed they need to have responsibility to their local our response on 12 October where we basically communities. I think that one of the reasons why the accepted the case you made for more independent football creditors rule makes all of us uncomfortable representation on the FA Board, for a licensing is that it does not seem particularly fair to the system, and for better structures to make sure that Government, but another reason is the local supporters have a say in the running of clubs and are businesses. When you think about the local businesses potentially able to build up stakes if they want to that suffered when Portsmouth went through its own clubs. difficulties, you have something there that does not We have—again being positive—had a pretty good feel right. So I hope that as part of a broader response from the key players in the football world recognition of its responsibilities, the football world and we have asked them, as you know, to come does come up with some constructive proposals. forward with an agreed set of proposals that meet the issues that you and we raised, before the end of Q13 Damian Collins: One other point—and I would February. Let’s see what happens. I think there is a be happy if you answered this question now or in a moment, and I encourage people in the football world response in writing at some point after this hearing— to grasp this. We had the massive disappointment of is to do with club ownership. The Government’s the 2018 World Cup bid but what was impressive report was very clear on the need for reform of the about that bid, from my perspective, was the way that club ownership rules in the modern era. We have seen all partners in the football establishment came incidents of clubs being acquired by foreign registered together and put a fantastic bid on the table. There companies, organisations, where the ultimate was incredible co-operation between the FA and the ownership is not known and the football authorities Premier League and many other people, and I think do not have the resources to conduct their own there is a moment when we can grasp that to wrestle investigations into the ownership. We highlighted the with some of these longstanding problems, and I am case of Leeds United through the hearings, and there hoping we can give it as big a push as we can to make has recently been the case of Coventry City where sure that happens. again, because of the nature of its ownership, it is unclear who the ultimate owners are. Q12 Damian Collins: The Committee has not taken We requested in the report that the Government a corporate view on the Government’s response but I consider in particular the case of Leeds United and certainly was encouraged by the amount of common whether there could be a retrospective investigation ground between the Committee report and the into whom the owners of the club were before Ken Government’s response. I want to ask about two very Bates assumed ownership earlier in the year, and specific areas, the Government’s position on which in whether the Government could talk to HMRC about the response I was not 100% clear on. The first was that. I have had no correspondence with HMRC and on an issue I raised quite a lot through the hearings: of course they will not talk about individual cases. We the football creditors rule, by which football debts are do not even know whether they have investigated it paid in full but other debts are not, and therefore or not. I would welcome, either now or in writing in communities lose out when football clubs and players the future, a further response from the Government on get paid in full. The Government has put the challenge that point, which was included in our report, because to the football authorities to find a way of resolving it is not particularly referenced in the Government’s this issue and finding a modern method of dealing response, although there are general comments about with football debts and other debts of football clubs. club ownership, which I welcome. There is also a court case pending next month between Jeremy Hunt: I will make sure we get you a proper HMRC and the Football League. If that court case response on the particular Leeds point. I think the failed and if the football authorities failed to respond general point about ownership of clubs is to get the to the challenge of removing or reforming the football right balance. I am not in any way against foreign creditors rule, is there something you would ownership of clubs. I think for every Glazer you have recommend, particularly to the Treasury, in terms of an Abramovich. If you look at the success of the taking action? Many people see this as not purely a Premier League—the best in the world and something football issue, but an issue that affects all businesses that means that we have fantastic football to watch and any creditor of a football club, and that affects every Saturday—foreign owners have played a very communities as well. key role in making that possible, so I think we should Jeremy Hunt: We would certainly consider the welcome good investment. Government’s position carefully. We need to wait, I looked quite carefully in opposition at whether you obviously, until that court case is resolved. I think could do something around “fit and proper” persons. there is a broader point here, which is that what we It is quite difficult because you get people who may cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

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27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens not have had the most transparent past in terms of was that if we did not, we would end up in a process how they made their money, but then turn out to be of litigation that could slow the whole process down model owners of clubs. You get other people who may by as much as 12 months, which I am very anxious have completely kosher pasts and turn out not to be to avoid because of counties like Cumbria that are good owners of clubs, so it is a little bit difficult to itching to sign contracts with suppliers so that they make a generalisation. I certainly would not make the can meet the Government’s challenge to have 90% generalisation that says foreign ownership is bad and super-fast broadband coverage. Obviously with our domestic ownership is good. I welcome outside general concern about growth in the economy, we are investment but transparency is important, and for trying to do everything we can to make sure that the me—and I think it is beginning to be solved—the broadband network plays its part. issue that has been a big concern is debt. I think the European Financial Fair Play rules will gradually sort Q16 Damian Collins: Finally, another issue that the problem out, but we need to be very careful to sectors within the creative economy lobby make sure that very important community assets are Government on in terms of growth is through tax not put at risk by irresponsible financial management. credits, particularly with the success of the film tax I do not want to suggest that is particularly happening credit. You will be aware of the lobbies that exist but, given what has happened to the banks and other between the different companies on that. Has the sectors of the economy, we need to be eternally Department made an assessment of the return to the vigilant. Treasury of tax credits? There has been some analysis of the film tax credit, which suggests that for every Q14 Damian Collins: I certainly agree with that. I pound in tax relief the Treasury gives it generates think the concern about ownership is less whether about £13 in extra income. I wondered if DCMS had someone is a foreign owner or a domestic UK owner. looked at studies like that and at how they might apply It is simply whether people knew who the owner was, to other areas of the creative economy like video which has not been the case. games or animation television, which is equally To move on from football, I want to ask a couple of seeking that type of financial support. questions about the communications review and some Jeremy Hunt: We certainly do look at all those figures of the things you touched on in your speech to the and what we say to people like the video games Royal Television Society as well, particularly the industry is, “Please give us the best, the most general area of deregulation. Are there any particular objective, the most independent research you can priorities for you in where deregulation could support because we will be very happy to engage with the growth in media industries, or are you going to wait Treasury”. The video games industry is a huge and see what responses you get back from the sector? potential new growth industry. I think the film Jeremy Hunt: We obviously will wait. We will take industry is an area where, if you look at the success seriously any responses we get from the sector, but of the independent television production sector, which for me the most interesting and important area of has not had any kind of tax credits, we have not had deregulation that we are looking at very closely is success with our independent film sector in the same deregulation of the ability to use communications way, and that is a potential new growth industry if you assets, in particular to make sure we get the best look at the success of British film. If you look at the super-fast broadband network in Europe, which is an local television sector, which will launch next year absolute priority for the Government. We think that with 20 new licences being awarded for local TV the digital and creative industries are a massive stations, with another 40 the next year, that is going to opportunity for the UK. We are the second largest be another big new sector for the digital and creative creator of digital content in the world, but we need to industries. We are absolutely prepared to engage in have the best digital infrastructure in the world as well any way we can and try and get to the bottom of these and at the moment we don’t. The rules around the use numbers, so we can make the case. of BT’s poles and ducts is something we have made great progress on. It may not be necessary to have Q17 Damian Collins: Would there be scope for legislation to solve those problems, but we are every looking at the R&D tax credit, which at the moment is keen to make sure that other people are able to use restricted to work to resolve scientific or technological those assets if they want to contribute to the roll-out uncertainty? There has been debate about whether this of, for example, the fibre-optic network. So that will could be also extended to include work that leads to be a particular area of focus. the creation of UK-owned IP, which might be of benefit to particular areas of the creative industries Q15 Damian Collins: You said in your speech, “I as well. will be talking to Ofcom about any necessary steps to Jeremy Hunt: We certainly have looked at that. It make this happen more quickly.” Have you had any would not be right for me to go into detail about further conversations with Ofcom about that? discussions we have had with the Treasury on those Jeremy Hunt: I have, and I have had good issues. The only thing I would say is that every sector conversations with BT as well. I think we are making of the economy has a tax break of one sort or another progress. The most sensitive issue of all is the prices that it says would be absolutely vital, and every sector that BT charge to BT’s competitors in order to use also says that it would be revenue-positive for the those ducts and poles, and I am hopeful that we are Treasury if it got that particular tax break. The going to get a very good solution in the next couple Treasury is quite weary of hearing those arguments. of months. My real concern when I made that speech We do make the case for a number of our sectors but cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 6 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens we need to be selective and make sure we have a solid also has an incredibly important role in making sure case before we push it. that we do have the best super-fast broadband network in Europe. They are already investing £2.5 billion in Q18 Steve Rotheram: If we could go back a step, getting fibre to two thirds of the street cabinets in the again just on the football issue. I am delighted that country, which potentially means that for two thirds this Committee, although I was not a member at the of the country they could get, in time, up to 100-meg time, took football issues seriously and hopefully that download speeds, which will put us a long way ahead report and the Government’s response will push things of many countries in Europe. We have a rural forward. In regard to what the Secretary of State said, broadband programme designed to deal with the parts it is surely just about good owners and bad owners, of the country that BT do not think they can reach on not about what passport the owners happen to have, a commercial basis. and if there are any good owners out there, there is no I think competition is important, not just in the better football club to invest in than Everton Football process of getting the infrastructure put up. It is also Club at the moment. They are looking for a new important in terms of take-up, because it is the owner and it does not matter what the passport is. I competition between TalkTalk, Sky, BT and Virgin am telling you, you won’t get a better opportunity. that has meant we in this country have some of the In the Tory manifesto and in the coalition agreement highest take-up of broadband of any country in the there were some time-limited recommendations in world, and that is what then provides the platform for regard to football in particular. I am wondering now new businesses like Tesco.com to deliver their whether the Secretary of State believes that the threat groceries to people who book online, and so on and of legislation as the ultimate sanction might just ring so forth. What we have to be aiming for is not just a little hollow to the football authorities, given that at the best super-fast broadband network in Europe, but the time not just the current coalition Government but we need to aim for at least 50% take-up of that fast previous Governments told them to get their house in broadband because that is when we are going to get order, and they have played at it and have probably the jobs from telemedicine and home education and paid lip service to what the Government was trying to all these new sectors that are completely nascent at achieve. I wonder whether you think that this time, the moment, and that is where competition matters as you might be able to persuade them or to force them well. So we need it at both ends of the spectrum. We into doing something. are doing everything we can to try and inject Jeremy Hunt: The advantage of not doing it through competition at a local level. It is not easy—I want to legislation is that it happens much more quickly. I be up-front about that, because BT has a huge cost agree with you, this is one of those things where advantage because they have this network there actions speak louder than words, but I think we have already—but we are trying to do everything we can, to be very clear, we do need our major national sports talking to people like Virgin, people like Fujitsu, to to be governed properly and we do have some serious try to understand what it is they think they need in issues in football governance. I think the fact that the order to compete and to have a realistic chance of FA has already accepted the need for two independent winning these contracts. additional directors, and had moved on that already, is a sign of good faith, but we need to do lots more. Q20 Dr Coffey: Of course I was delighted that Particularly in the coalition agreement we talked about Suffolk was added to the list of funding making it easier for supporters to build up stakes in announcements recently. I remember you started off clubs, and that is an area we have not yet delivered your vision of rolling out the rural broadband on, but we are looking very closely at that. programme by saying it would be effectively the I am hoping that the willingness of the football responsibility—I am not quoting, it is just my authorities to work together, and also the fact that next memory: “We would get you a digital pump to every year is going to be the biggest sporting year in our village, and then it is kind of up to you, not history as a country, will create a moment when the completely the community, but up to the service football authorities will think this is time to grasp the providers, how it gets to your house”. BDUK does not bullet. I am very realistic that this has not happened seem to have taken that approach, necessarily. In fact, in the past, and if it has not then the Government will we are seeing different solutions county by county. have to come up with sufficient measures to make sure What guarantee will there be, say to the residents of that we deliver on our commitment to ensuring we Suffolk, that they will be able to get that and they have good governance of the sport. will not be part of that missing 10% on the super- fast broadband? Q19 Dr Coffey: I want to go back to broadband, Jeremy Hunt: The broadband roll-out is a real building on what you were saying earlier about the triumph of localism, if I can put it that way, because requirement to have the best digital infrastructure. I I did have the option. There was about £230 million was encouraged by what you said about how talks of Government money in the broadband pot and then with BT are going well, because other providers have through the licence fee settlement we added £300 said to members of this Committee that they are million to that—so £530 million. It would have been concerned that if the prices are not right, they will just a very tempting option for any Secretary of State to walk away and we will end up with a BT monopoly. sign a big deal with BT and hand them a cheque for Is it your view that that may happen? £530 million. The reason we did not do that was that Jeremy Hunt: It is very important that we don’t have it would have stamped out any opportunity for local a monopoly in this country but, speaking frankly, BT enterprise and local inventiveness in dealing with cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 7

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens broadband gaps. What we have done is parcel it up digital and creative industries—outside America, the into 40 parcels, and that will mean that we will get a biggest concentration of leading-edge technology different solution in Suffolk from Norfolk, from clusters in the world is in the UK—so there is a big Wiltshire, from Somerset, from Scotland, and I am opportunity for us and I want to make sure we grasp it. very happy with that because what I have noticed in the counties I have visited is extraordinary Q22 Dr Coffey: I must send you the chapter from enthusiasm. What is exciting and what we have said the book I wrote. It is interesting you mention High is, “If you can deliver universal 2-meg connection to Speed 2 because I think I was suggesting for the £30 everyone in the county and 90% are able to get a billion-plus we are investing in High Speed 2 we super-fast connection, which is 24-meg, then you can could deliver probably that to every single household have the money.” and perhaps the age of the train may have gone by What is exciting is that lots and lots of counties have then. come back to us and said, “We would like to see if Jeremy Hunt: I have chosen not to sour relations with we can get super-fast broadband to 100%,” including the Department for Transport by adopting your cause. my own county, Surrey, and Wales. They are trying to find 100%. Cumbria were talking to me this week. Q23 Dr Coffey: I am not trying to engineer a Cabinet They want to get 100% super-fast by 2020. I think the split either. Another delivery of broadband is the trick is to have a solution whereby the county delivers mobile broadband and the upcoming spectrum on the 90% target for super-fast but makes it possible auction. There seems to be some confusion about for local communities to come together who are in whether it is delayed or not, but I think, again as you that final 10%, and have a community-led solution to suggested last month, Sweden did theirs two years that. That is where I think the interesting discussions ago, Germany did it last year, Italy are doing it now. are happening at the moment and that is where I think I appreciate we seem to have some extra complexities, the village pump concept is important, because if you which perhaps the Italians decided not to take account are in a remote village—providing that a fibre point is of and perhaps may regret later, but can you give us not too far away—then you have a chance of getting your view on where we should be going with the on to the national fibre network, and that is the point spectrum auction, and how quickly? Will any of the we are taking. money that is raised come back and help the delivery of broadband, perhaps the ultra-fast that you were Q21 Dr Coffey: In your speech last month to the talking about? Royal Television Society, I think you were suggesting Jeremy Hunt: First of all, I think any proper that consumer demand is growing and if we need broadband strategy needs to have three elements. It speeds of 1 gigabyte by 2020 we are not investing needs to have rural, urban and mobile. It is already anything like enough at the moment to deliver that. starting to happen; I think Ofcom had figures Can you tell me more about why you said that? You yesterday saying that for young people now their talked about ultra-fast; what actual level of investment mobile was more important to them than TV. I think will it require and whose responsibility will it be to we have to assume that most access to the internet deliver that investment? will be through mobile devices going forward and the Jeremy Hunt: The Chairman asked me about things whole new generation of internet products and that keep me awake at night and put me into a cold services will revolve around mobile access, all the sort sweat, and although it is not quite in that category, of things you can do on the move using GPS and so on broadband my perennial fear—this Government is going to press ahead with HS2 and that is a big on. We are only at the very start of that revolution so commitment to make, given all the other economic it is very important we get this right. pressures. By the time that opens, we will be opening Let me find a tactful way of putting it. I think our our first high-speed train 45 years after the French mobile network operators are quite judicially active opened theirs and 62 years after the Japanese opened and that has held up the process of having these theirs. So my concern over broadband is that instead auctions. What I was trying to say in my RTS speech of thinking forward to what broadband needs are is there may be a narrow competitive advantage in likely to be, given that there is a 60% increase in delaying the process, but it is in their combined consumer demand for bandwidth every year at the interest and in the national interest that we get on with moment, it would be very easy to try and keep pace these auctions, and I am seeing all of them to stress with that without understanding the big picture, which that point. I am seeing O2 on 2 November, and 3 on is that we are going to need not super-fast but ultra- 10 November, and I think in the first half of November fast speeds going forward. That is why, as well as I will be seeing Everything Everywhere and Vodafone getting rural areas up to super-fast speeds, 20-meg as well, to stress this point that it is in everyone’s plus, I think we need to be thinking about the next interest that we proceed with this auction. stage and we are in the process of working up a policy At the moment, Ofcom have announced a delay. It at the moment to see how we can introduce 100-meg should not mean a delay in the actual roll-out of the broadband into parts of the UK. We have not network infrastructure, because that is not going to be developed that yet and there is no money around, so available until the completion of digital switch-over it is a challenging thing to do. anyway, but I would not want to see any further But I think we have to be visionary and bold and delays. I think this is a very big priority for the understand that this is something where there is a real Government, to make sure that we crack on with this opportunity for Britain to be first. We have such big auction. cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 8 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens

Q24 Dr Coffey: I won’t release our report that we are Parliament does vote on it in one of the DCMS publishing next week, but the House itself did come to requests for resources. the view in a debate earlier this year that 98% Dr Coffey: It just seems an unnecessary middle-man, coverage should be the target Ofcom set. How much with associated administration, but okay. Thank you, notice do you think Ofcom should take of the will of Mr Chairman. the House? Jeremy Hunt: The Treasury has already taken note of Q28 Chair: Can I come back to the digital areas we the will of the House, because the Chancellor made were talking about? One of the suggestions was, an announcement at the Conservative Party particularly if a number of different providers are conference that we would be extending the coverage going to be supplying super-fast broadband—maybe requirement for 4G to 95%, which means that 99% of ultra-fast in due course—they should, as part of the households will get 4G coverage. That is £150 million deal, give an undertaking that they would take investment, which I think will transform rural measures to prevent their network being used in the communities. The exciting thing about that is that distribution of illegal material, pirated. Do you have because it is through the 4G spectrum it is for data as any sympathy with that? well as voice, so it will provide an alternative in terms Jeremy Hunt: I do have sympathy with it. I have of broadband access for communities. It will not be sympathy with the sort of broader point, which is that super-high speeds but you should be able to get 5-meg I think that ISPs and search engines all need to take a or 10-meg, which is better for a lot of them than they responsible attitude towards what they can do to are able to get now. combat piracy. I think we have to recognise, as I Dr Coffey: Mr Chairman, I have very two random mentioned earlier, we are the second largest producer questions. Can I fit them in now? of digital content in the world, if you look at what our Chair: Please do. TV industry, our film industry, our music industry, our video games industry between them produce, so this Q25 Dr Coffey: Next year DCMS will be facilitating is a big business opportunity and the internet for us is two national/international events. The year 2014 is the a new trade route. It enables us to sell that content World War I centenary, and I understand that Australia with virtually no transaction cost or distribution cost is already very advanced in its preparations for that to every corner of the world, and so piracy for us is particularly poignant moment. Has any work started hugely damaging. We need to have a system on the in the UK yet on that? internet where people who wish to give away their Jeremy Hunt: Yes, it has, and we are looking very content free are able to do so, of course, but people closely at what is possible. We are very keen to make who wish to sell their content are able to get a fair sure, for obvious reasons, that we mark that centenary return for it. in the appropriate way. I am happy to write to you Ed Vaizey has been doing a lot of work getting with some details as to what we are thinking of. together all the stakeholders. Going back to the earlier discussion on the threat of legislation with football Q26 Dr Coffey: Thank you. My other random governance, that is another area where we are question is about BBC financing. It is nothing to do absolutely clear that we will legislate in the new with the licence fee—apart from the actual cash flow Communications Act, if we need to; but it does feel of the licence fee. I noticed the financial audit findings like people are willing to co-operate and we are did their first ever fee trust statement audit with an inching towards a solution that I hope will happen unqualified opinion, so no problems there. Just a much sooner than that. I think the Newzbin judgment query really: why is it necessary for the BBC to that we got yesterday about BT will strengthen the collect the fee, hand it over to the Treasury and then hand of people who think that everyone involved in the Treasury pays them? I know it helps the BBC with the internet industry and the broadband industry needs their cash flow, but why don’t we just cut out the to play their part in combating piracy. middle-man of the Consolidated Fund and allow the BBC to collect the money and manage the money it Q29 Chair: Obviously the actions being taken by the raises through the licence fee? rights owners in the courts have made some progress. Jonathan Stephens: I think that would be an What appears to have made absolutely no progress is interesting and bold suggestion, which we could pass the Digital Economy Act. Here we are 18 months on, on to the Treasury. The serious point is that this counts none of the letters have gone out, and none of the sites as revenue, and there is also the important point of have been blocked. We were told at the time of the parliamentary control over spending out of the legislation’s passage that this was absolutely essential Consolidated Fund, so this is actually part of voted to protect the interests of the creative industries, and expenditure. yet it just has gone into the sand. Jeremy Hunt: I think that is perhaps not an entirely Q27 Dr Coffey: Is that because Parliament agrees fair summary of what we are doing to tackle piracy. through DCMS? I am not quite sure how Parliament We are pressing forward with the Digital Economy agrees that. Are you saying it is part of the Act and Ofcom is shortly going to conclude its comprehensive spending review? consultation, which will allow us to move to the next Jonathan Stephens: It is part of the request for stage and for the letters to be sent out, but I would resources. It is not part of the departmental just make two points. First, that process is only part expenditure limit, which is set in the spending review, of the solution; it is not going to solve the problem. It so it counts as part of the other spending, but has an impact, it helps, but it has become clear to me cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 9

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens since taking office that there are other things that Lord Justice Leveson has his committee, which is matter just as much, such as the fact that it is so easy reporting at the moment. I don’t want to prejudge to find people who are distributing illegal content on what he says but my own view is that we do need a search engines. That is not covered in the Digital system where the body that is regulating the press has Economy Act at all, and that is something we need to credible sanction-making power, so that if a make progress on. newspaper steps out of line they can be credibly I think we have made progress in those areas. I think sanctioned, and I think there is cross-party agreement the site-blocking measures that were in the Digital that we need to do that. Economy Act, as they stood, were unworkable, but I When it comes to defamation in particular, we have strongly defend the right of the Government, through to get the balance right between freedom of elected representatives in Parliament, to make it more expression, which is one of the most important difficult for people to access sites that are set up to benefits of the internet. It has made freedom of make it easy to distribute illegal or unlawful content. expression much more possible in regimes that have We need to think about a new way to do that because traditionally sought to control free speech, whether it the technical advice that we got on site blocking was is Syria, China, Egypt or wherever, and I think that is that it was not going to work: people would just be strongly to be welcomed. So we need to be very able to sidestep it, in the way that it was envisaged in careful in any measures we take that we don’t restrict the Digital Economy Act. We are doing a lot of work that freedom of expression but by the same merit, I on that, and I think rights holders are much more completely agree with you: we need to find a solution optimistic now that the problem is being tackled, but that gives redress to people whose reputations are we just need to follow every avenue. unfairly damaged. I think these are all issues. I am sorry not to give you Q30 Chair: As I recall, it was in the wash-up that a definitive answer, but perhaps that shows you the the Bill was amended and it was at your instigation approach that we are taking to it. that site blocking was inserted into the Bill. Are you still hopeful that a way can be found to achieve that? Q32 Jim Sheridan: Would that factor in accessibility Jeremy Hunt: I think it is part of the solution but I and affordability for people who cannot afford to go don’t think it is the whole solution. You are absolutely to court? right: I was involved in negotiations with Stephen Jeremy Hunt: I think it goes without saying, although Carter about that. It is the “wild west” in parts of the in most cases the difficult issues have been around internet at the moment, and I don’t believe that the whether or not newspapers are allowed to publish rule of law should apply in the offline world but not stories about celebrities—particularly about celebrity in the digital world. It has to apply equally sex—as far as I can tell, but there are examples where everywhere. We would not allow a shop to be set up people who are not celebrities have suffered in the high street that was selling fenced goods, and it grievously and we need to make sure that they have is exactly the same in the online world. But perhaps proper redress to justice, yes. regrettably, because the last Government gave the Digital Economy Act such a short period of time, it Q33 Mr Sanders: My apologies for not being here was not possible to have the scrutiny that would have earlier. I came up in the ballot and had a question allowed all of us to work out what measures might downstairs. You have said that half the population will work, and I think that was the issue with the site- have access to a good-quality local TV service within blocking clauses. four years. How will you ensure that it is good quality? Q31 Jim Sheridan: Secretary of State, can I ask a Jeremy Hunt: I have said that I hope—I am just going question that you may or may not have responsibility slightly to qualify what you said—that half the for but I would certainly welcome your opinion on? population will have access to a good quality TV The recent joint report on a draft Defamation Bill says service. The reason I say this is because we are not in the summary: “Cultural change: defamation law providing these TV services ourselves as a must adapt to modern communication culture, which Government. We are making available local TV in 65 can be instant, global, anonymous, very damaging and towns and cities which cover more than half the potentially outside the reach of courts.” They also say, population, and I am confident that we will get good “Accessibility: defamation law must be made easier bids to run those franchises in our larger towns and for the ordinary citizen to understand and afford cities. It is too early to say whether that will be the whether they are defending their reputation or their case in some of the smaller towns that are on that list. right to free speech.” As it stands just now, unless you In terms of quality, I do not want to be too are a millionaire or a famous footballer you cannot prescriptive. This is a new sector. If it is going to afford to take these defamation cases. Do you have a succeed it has to run on ultra-low cost and I am view on what they are saying? encouraged that I think we are getting a lot of interest Jeremy Hunt: This is an issue we are looking at very now. It has taken a while but we are getting interest closely. We are waiting to hear from the Joint now from the local newspaper industry. They might Committee, which your Chairman is also chairing, to be involved in running those franchises. But the hear what Parliament’s view is on the way that we licences will be awarded by Ofcom and all the proceed with respect to privacy law. But I think licensees will have to follow all the regulations laid because of the phone-hacking issue, we are looking out by Ofcom in the broadcasting code, in terms of much more broadly at the way press regulation works. taste and decency, broadcasting standards, political cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 10 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens impartiality, so they will have to follow those brilliant way of the local population getting to see the standards. All I would say is that even now there are people who are seeking their support. some internet-delivered local TV stations of surprisingly high quality. There is one called Q37 Mr Sanders: There is almost a sad irony, in that Helensburgh TV. I think Helensburgh is a town in you can have this great move forward with local TV Scotland with a population of under 20,000, and you at a time when local radio is under threat—obviously, look at the local TV that they are doing on I mean the BBC in particular—where you do have Helensburgh and it is very high quality. I think candidate debates in the run-up to elections, but that technology makes it possible to deliver high quality is unlikely to be able to happen given the cutbacks. I local TV at low cost, which is why I think this time, don’t know where you may be able to intervene—if local TV will take off in a way that it has not in the indeed you are able to intervene—and to put the case past. that you eloquently and rightly put for local TV, for local radio also. I don’t think there is any great move Q34 Mr Sanders: How will quality be measured? forward if one comes in and the other goes. I think That is not something Ofcom does; they do not together, there is a future for both, but it does mean a measure the quality. change of decision making by the BBC. Jeremy Hunt: They don’t measure quality. They have Jeremy Hunt: Let me be clear, I consider myself to regulations to protect abuses of quality, but we have be a champion for all local media, and the reason I fantastically high quality TV output from the BBC, have particularly focused on local TV is because that ITV, Channel 4, our major broadcasters, because we is where the gap is. We are one of the few countries have created an environment in which people want in the world that has very little TV provision. But I high quality. All the people you speak to who are am a localist. I want local radio, local newspapers to interested in investing in local TV will tell you that thrive, and in fact I think the important thing going unless they have a high quality product, they do not forward is that we develop new business models stand a good chance of getting advertisers to want that—to use a tacky phrase—are platform to invest. I think that, because we have high quality independent, so you get someone who is providing the broadcasting in this country, consumers have an news locally and that will be delivered perhaps on an expectation about quality, which local TV companies iPad, perhaps on a TV, perhaps online, perhaps will need to match. through a radio service. That is the kind of model that we need to move to in the digital age. I want to Q35 Mr Sanders: Are you talking about technical encourage our local media companies to be the first quality or the quality of the content? generation of those types of companies anywhere in Jeremy Hunt: Both. the world, because I think that is what the future is for local news provision. Q36 Mr Sanders: You have also said that by using With respect to local radio, I think Ed Vaizey said DTT and IPTV there could eventually be as many 60 yesterday that DCMS Ministers see themselves as local TV stations in any one area. How difficult will candid friends of the BBC, but it wouldn’t be right for it be to regulate and to ensure quality—both technical us to tell the BBC what to do because one of the and other? things that matters to most people about the BBC is Jeremy Hunt: I said 60 across the country—we could the fact that it operates at arm’s length and that license up to 65. It might well be, I agree, as IPTV Ministers don’t tell the BBC what to do once we have takes off—and I think that’s the next big revolution done the licence fee settlement. I negotiated that that we are going to see in communications over the settlement, which I obviously take full responsibility next couple of years with the launch of YouView— for, and that included a 16% efficiency saving over a that increasing amounts of broadcasting content will six-year period. I would suggest that anyone in the be consumed, without people necessarily knowing it, private sector would bite your hand off to get to have over broadband lines rather than through satellite and to cut their costs by as little as 16% over six years, DTT. I think we are moving to the stage—I don’t say but the understanding with the BBC was that this it is in the next two years; I wouldn’t want to predict would mean that they would protect front-line services exactly when, but certainly in the next decade—when to listeners and viewers and seek savings through it will be virtually as cheap to set up a local TV station back-office efficiencies. as it is to set up a local website. It is true that in that What the BBC will say on local radio is that 86% of situation we could have a dozen local TV stations in their listening is happening at breakfast, mid-morning Shipley or Torbay, and some of them could be and drive-time, and so where they are seeking the focusing on sport, some on local schools, some on savings is in the other parts of the day that are not local shopping, and in a way the chaos of the internet listened to by large numbers of people. They are in a will arrive in our living rooms. This is a new sector consultation that is going on until Christmas. We had for the creative and digital industries so I don’t want 50 MPs yesterday speaking very passionately in the to stifle it by imposing too many regulations right debate about local radio and we had a debate earlier from the start. But what would success look like? this year. I would strongly encourage you to engage Success for me might not be what all MPs welcome, with the BBC, because I am sure they will listen but look at the way the leaders’ debates transformed carefully to what parliamentarians say. the general election. I think it would be fantastic if Jim Sheridan: Chair, just for the record, Helensburgh MPs did local TV debates in their own constituencies is indeed a seaside town in Scotland, at the heart of in the run-up to elections, because I think it is a the Clyde nuclear submarine base, so that may impact cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 11

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens on the reason why it will be good, or maybe not so as well. I think that for all of those sectors we want good, quality. to do everything we can to support them. That means Jeremy Hunt: I think it is great quality, by the way. helping them to embrace new models that are going to work in the digital age. That is why people talk Q38 Steve Rotheram: I was going to touch on a about my plans as being to champion local TV but point that Mr Sanders raised and perhaps just tease it that is just part of the picture. One of the things we out a little further. The Secretary of State did say that did was get rid of the cross-media ownership rules that he was encouraging good quality local TV services by prevent a local newspaper owning a local TV station, 2015, and the paradox is that by 2015 the cuts to local because we are trying to make it possible for those radio will have bitten and there will be a reduced new business models to emerge to make sure that we service. There is real concern in areas such as have strong local voices. Liverpool, in that Radio Merseyside, which I am sure you are familiar with, does something that other Q39 Damian Collins: Following on from that point stations don’t do. Local radio covers various things. about local media—local newspapers in particular— There have been a number of tragedies locally—we in Kent there has been a recent story that the Kent won’t go through them—that only a local radio station Messenger Group, the largest newspaper group in the could do justice to, and it did so at the time. It was county, has put in a bid to acquire seven titles in east the voice that was fighting against other media outlets Kent which cover my constituency and are owned by at the time and supporting the city of Liverpool and Northcliffe Media. The Office of Fair Trading has the families who were bereaved. Perhaps now been looking into this and has decided to refer it to momentum is on our side and things are starting to the Competition Commission. The Kent Messenger come full circle. If we hadn’t had that lone voice at Group, as a regional newspaper group, is concerned the time, it would have seemed that everybody in the that the costs of following this through are going to media world was against us. The BBC did an be prohibitive and that the deal will collapse. A lot of excellent job, along with other radio stations. Don’t local newspapers are making a loss and therefore you understand the depth of feeling, Minister: that some consolidation in the local news market, no people are genuinely concerned about the loss of that matter how regrettable that might be, may be voice; the loss of a friend, if you like, certainly to a inevitable. Do you have concerns about whether the lot of older people? You seem to be concentrating on way the OFT approaches these sorts of local media introducing new things through the Localism Bill— consolidations is appropriate, given the economic regarding TV, for instance—while something that is climate? established may well be lost to those people. Jeremy Hunt: We have a system in this country, Jeremy Hunt: I wholeheartedly agree with your which I think is the right system, where mergers are sentiments, and that is exactly why I am so committed considered by independent, arm’s length bodies, not to local media. I would strongly urge you as well to decided by politicians. I think that is right, so it engage with the BBC over Radio Merseyside, and I wouldn’t be right for me to comment on a specific think the arguments you make are very powerful about instance, but in terms of the way the technology and the historic role that it has played for the people of media industries are evolving in general, I very much Liverpool. What I would say is that what you have in do hope that our authorities take due note of the fact Liverpool and what we have as a country in terms of that technology is changing very fast. I remember the local media provision is not good enough, and if you European Commission spending years trying to decide had had proper local TV provision in Liverpool you whether Microsoft had a monopoly with Windows, would have had a much stronger local voice even than and by the time they got to the decision no one was you had. I don’t want in any way to minimise the really worried about Microsoft any more because good work done by Radio Merseyside, but it is Google had arrived on the scene. I think we have got completely crazy that a city like Liverpool hasn’t had to be careful that we don’t underestimate the scale its own thriving local TV station. Cities much smaller of change in those industries, and that does involve than Liverpool, in Canada, have not just one TV allowing a degree of consolidation. station but a choice of TV stations—cities that have a very strong sense of identity. In my experience, all Q40 Damian Collins: Do you think the regulators cities think they have a strong sense of identity, but I need—you have talked about this in other areas—to think Liverpool has a particular identity. It seems to consider the cross-media nature of news now? In the me that the Hillsborough issue in particular is a past, local newspapers would have dominated the perfect example of where proper local media can do local news markets in a way that they don’t quite any a much better job than the sort of two-minute or one- more, because of perhaps more local television, but minute clip that you are going to get on national certainly local radio, community radio and websites media. in particular. Just to warm to my theme and make a final point, I Jeremy Hunt: Absolutely, and I think we need to take think for the future my worry is not just about BBC account of the fact that in the internet world, the cost radio services but about local newspapers, which are of entry is much lower for new competitors. So, no, I incredibly important in local communities as well, and think we completely need to take account of the way which are losing money hand over fist. A number of the media industry is working. It is increasingly less them are doing very well—I don’t want to say that is logical to think of local news provision on a medium- the same for all of them—but I worry about the local by-medium basis, because that is not really how the newspaper industry and the commercial radio sector advertising market works, increasingly. As I say, I cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 12 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens think it is right that they decide these things Q43 Damian Collins: This is my final reference to independently of politicians, and I wouldn’t want to your RTS speech. You talked about whether there second-guess that, but I am a champion for should be more consistency between media merger understanding the way that technology is changing law and competition law, with particular reference to things very rapidly. the BSkyB takeover. Do you feel you were put in an almost impossible situation in the end with this bid, Q41 Damian Collins: You talked a bit about cross- trying to reconcile public interest and the advice you media regulation in your Royal Television Society were getting from the authorities? speech and particularly that a physical printed Jeremy Hunt: I had a hot potato in my hand for quite newspaper is not all that they produce. I recently did a while during that process, but I was satisfied that we an interview about the Dungeness power station in my followed it in the way that was appropriate, given that constituency with the FT, and that was in the it was a quasi-judicial process. One of the points that newspaper, on their website and in a digital audio clip struck me throughout that process was that, here you that they generated as well. Do you think inevitably had a politician making a decision—no Cabinet we will go towards a one-stop regulator—maybe collective responsibility; not a Government decision Ofcom—that will oversee everything? being done in a quasi-judicial way—about something Jeremy Hunt: By the way, thank you for reading my that was directly affecting a big media baron. I tried Royal Television Society speech. Three people have to give the public confidence in the integrity of the mentioned it so far, so it was obviously worth process by asking Ofcom for independent reports at speaking to RTS. That is, I think, the big opportunity. every stage of the process, which I didn’t have to do, We look at our newspaper industry, and they have so but however much I did that, many members of the many challenges at the moment. Their business model public were likely to doubt the fact that I was doing is moving to digital, but advertisers don’t want to this following due process, and would think that I was move to digital in terms of spending the same amounts making my decision on political grounds. of money they were spending in print. Our national You then look at competition law, which we talked media are incredibly important to our democratic about previously. These decisions were removed from lifeblood and they have to look at new models. A politicians back in the 1980s, when the Secretary of couple of years ago, they weren’t particularly engaged State at the DTI would make a decision on a big with that. I think now they really are; the iPad has merger. That is now decided at arm’s length by the changed a lot in the way that they think about the Competition Commission and the OFT, and I think future. So the question is, what should we do as the there is a good argument to say that in very specific Government? situations, the public is more likely to have confidence I believe that today or yesterday was the 25th in the decision-making process and the decision itself if it is taken at arm’s length from Ministers. anniversary of Big Bang in the City of London, which was the moment when regulatory structures were changed in the City in a way that gave it a huge Q44 Chair: I am interested that in all your answers competitive advantage. I think we need to look at about cross-media ownership policy and competition what the regulatory structures are that would allow policy in the media sector you haven’t mentioned Lord Justice Leveson. I think some of us were rather our much-respected newspaper industry to develop surprised to discover that Lord Justice Leveson’s remit new models in a world in which their news content is included these areas. We could see why a judge should going to be consumed as much on an Android or an carry out an investigation into what appears to have iPad as it is through a physical newspaper. So the offer been potential criminality—too close links with that I made to the newspaper industry is, if they can politicians and the police and so on—but suddenly the come up with a successor body to the PCC that has whole area of future media policy seems to be thrown the confidence of the public in terms of being able to into his brief as well. respond to issues such as the phone-hacking issue we Jeremy Hunt: I think the Prime Minister was very had this summer, if they can come up with something determined when the whole phone-hacking events that has the confidence of the Government and the emerged to give the public confidence that Lord confidence of the public, we will back that as a one- Justice Leveson would be able to look at any areas stop regulator. That could cover not just their that he thought were relevant to the issues that arose, newspaper content but their online content, their video and that any attempt to constrain the areas that he on demand, their broadcast content, and I hope that looked at would be seen by the public, or might be might pave the way for them to develop really radical, seen by the public, as the Government trying to fix interesting new business models that will mean that the process. I think the Prime Minister himself was they don’t just survive but thrive in the digital age. acknowledging that one of the elements of that is cross-media ownership. Media plurality laws are one Q42 Damian Collins: But if they fail to meet your area, and I think there are a number of things we can challenge, is the veiled threat then Ofcom being asked learn about that—not just the process but also the fact to look at how they would do it? that the law at the moment is particularly geared up Jeremy Hunt: Ofcom regulates all TV-like content, so to look at cross-media ownership. It tends to look at that is the status quo that we are in. They spend a lot a concentration of ownership on particular platforms. of time complaining about not wanting their TV-like So I think that is one area, but another area where I content to be regulated by Ofcom, so I think that is think there was public concern is the closeness of the why it is a big opportunity for them. links between leading politicians and media barons. cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 13

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens

The Prime Minister thought that it was important that process worked. In particular, the point that they drew Lord Justice Leveson should be able to look at those to my attention was the fact that public interest areas and come up with any suggestions that he could, intervention by a Minister on media plurality grounds in order to give the public confidence. can only happen if there is a corporate transaction to consider. It can’t happen if someone develops a huge Q45 Chair: So in actual fact the position is that Lord market share organically, and Ofcom felt that that was Justice Leveson should not feel restrained from a flaw in the process as it stands and I committed to making recommendations affecting ownership laws, look into that. So I think even before Hackgate there and potentially cross-media ownership, if that is his were things that emerged that we thought needed conclusion, but you are not expecting him to provide looking at. you with recommendations on how to change the law, unless there are specific suggestions he feels he wants Q48 Dr Coffey: A lot of the focus earlier in the year to make? was about certain media groups coming together, Jeremy Hunt: I am not sure I want to say what I am including the BBC, to try and raise their concerns expecting him to say or not, because he is just at the about the potential takeover of BSkyB by Newscorp. start of the process. It is certainly within his remit to However, Mr Richard Desmond already has a cross- look at those issues if he chooses to, and we will media ownership and he withdrew from the PCC. I certainly look very carefully at what he comes back think it is fair to say that his stable of papers seems with. I have sought to contribute to that debate to be a huge promotional tool for Big Brother and through my comments in the RTS speech as to some various other things on Channel 5, and then of course of the specific things we might want to think about there is the Health Lottery. Does any of this worry with respect to media ownership rules. you? Jeremy Hunt: I am worried about the Health Lottery, Q46 Chair: I think people would find it a little bit because protecting the income for good causes is a surprising that the Government is looking to a panel, very important responsibility that this Government which is not expert in competition policy or media has. The National Lottery was set up in a way that law, to make recommendations for the future would generate money for those good causes, and Government strategy in this area. I am slightly society lotteries are allowed on the basis that they are reassured by what you say—that that is not his main local lotteries. I want to be sure, and we are doing brief. You are just drawing his terms broad enough some work at the moment to look at what the impact that, if he felt the need to make recommendations, he of the Health Lottery might be on good cause could—that he should not feel confined from doing so. revenues. Jonathan Stephens: Yes. There is absolutely no To answer your broader point, first of all I am not suggestion that this constrains the Government from against cross-media ownership. I think it is the future. thinking at the same time. It is indeed an obvious part I think a newspaper in Liverpool needs to be broader of the work that the Secretary of State has set in train than just a newspaper in terms of its footprint if it on the communications review that includes the whole is going to survive in the digital age and I think the area of regulation at large, including competition and newspaper industry needs to modernise. But by the cross-media ownership regulation; but obviously, as same merit, in a democracy we need to make sure that the Secretary of State says, if the inquiry has no one person or organisation has too much control of something relevant to say on that, we will listen to it the media in a given area, and that is why media and take account of it. plurality laws need to take account of cross-media Chair: I think Lord Justice Leveson himself was a bit influence and not just influence within any individual taken aback. I think he felt he had been given quite platform. enough already without having to rewrite the entire I think the particular issue raised by Richard Desmond media competition law. So I hope he will take some is the fact that it was so easy for him to opt out of the comfort from that as well. PCC and just to say that he didn’t want to be part of it any more. If we are going to have an industry code Q47 Steve Rotheram: I wanted to ask now not just of practice that the whole of the press adheres to, then about process but about timing, because if Hackgate we need to look at ways to make sure that it is not so had been six months later then the merger or the easy for people just to walk out of something when takeover by Murdoch of BSkyB would have already they don’t like a particular ruling. One of the things been through. How would we have unpicked that once we talked about earlier was the ability to have credible it had already happened? sanction-making power, but if people can just walk Chair: Or should we have done, perhaps? away and say, “I don’t want to be part of this any Jeremy Hunt: I think the answer to that is that with more,” then that undermines the credibility of any the law as it stands it is a quasi-judicial process and sanctions. I am hoping the newspaper industry will you can only deal with the facts as they are. It would come back with some sensible proposals on how we have been completely inappropriate to consider things address that; but I do think that is one of the areas of that were suspicions or allegations but not things that the PCC that is unsatisfactory, to say the least. were established as facts. Even going through the process that we went through, even before Hackgate Q49 Dr Coffey: I am trying to think how best to happened, Ofcom had made recommendations, which pursue it further. I think there is this element of I had acknowledged in Parliament, and said that I complete almost obsession with certain TV shows that would look into as to some flaws in the way the happen to be owned by the same person. Is there cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 14 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens something there about the code of practice, when we Jeremy Hunt: Yes, but the reality is that we have are talking about cross-media ownership, which I taken a decision as a Government that if we are going understand and fully support—that we need to be to secure a decent future for all hard-working families, careful to make sure that it is still a competitive then we need to get to grips with our deficit and that market and not just free advertising? means the whole of the public sector going through a Jeremy Hunt: Yes, I think that is right. very difficult process. Because I am passionate about making sure that we have the highest quality Q50 Chair: Turning to one thing which sparked my broadcasting, I negotiated a deal with the BBC, which interest in your response just then, I know that is essentially about efficiency savings rather than Camelot are very unhappy about the Health Lottery impacting on their output, and I think that was the and have suggested that they are not absolutely sure right thing to do. that it is legal. Have you taken a view on this yet? Jeremy Hunt: We are looking at that at the moment. Q54 Chair: Can I come on to another matter linked to getting to grips with the deficit? We receive letters Q51 Chair: But you therefore do not rule out taking about many issues that your brief covers, as you will action if the advice is that this is illegal? appreciate, but one of the ones generating most Jeremy Hunt: It is a matter for the Gambling concern at the moment concerns what is happening in Commission, I am informed by my Permanent local authorities with library services. There is the Secretary in a hushed voice; but let me say that if they Public Libraries and Museums Act, which requires concluded that what was happening was not legal, I local authorities to provide a comprehensive and would expect them to take robust action. efficient library service. Presumably you judge whether that is happening or not. What do you think Q52 Jim Sheridan: Apologies if my question has is a comprehensive and efficient library service? already been asked in my absence. Secretary of State, Jeremy Hunt: The original definition of wearing your champion’s hat for local media, can I comprehensive and efficient came, I believe, in ask that in the fullness of time, when you get a something called the Roberts Review in 1959, which moment, you look at early-day motion 2255, which preceded the 1964 Public Libraries and Museums Act. talks about the £16 million cut to BBC Scotland’s That was set up basically to say that “comprehensive” budget, with a consequential loss of 140 quality jobs? in that report was really about having a good selection Is there any possibility in the near future that the of books at a time when books were more expensive, licence fee settlement could be reviewed, and have and “efficient” was about reducing the number of you had any representation whatsoever from the library authorities to reduce administrative costs. We Scottish Government about these cuts? take our responsibilities under that Act very seriously. Jeremy Hunt: I am not aware of representation from Our basic position is modernisation yes, vandalism no. the Scottish Government about those cuts, but I will We have had extensive discussions and engagement get back to you with the details of any contact we with Brent, Lewisham, Somerset, Gloucestershire and have had with the Scottish Government about them. the Isle of Wight about their programmes and it is I think it would be wrong to reopen the licence fee agreement. We did cover a bit of this ground earlier, probably not appropriate for me to comment in detail but what the BBC had was a 16% real-terms cut over on the individual cases because a number of them are six years. I think that is a good settlement in going through judicial review proceedings. I think we circumstances where many other parts of the public are going to hear about Somerset and Gloucestershire sector are facing much greater cuts, and I think it at the end of this month, and I think we will hear from should be possible to find savings from back-office the Court of Appeal about Brent next month. The only functions and improvements in efficiency over a six- thing I would say is that there are 151 library year period to meet that 16% cut; that was the authorities and around 140 of them are managing to understanding between ourselves and the BBC. In modernise and deal with very difficult cuts in public terms of hard-working families who are finding life expenditure without having to have large library extremely tough at the moment, they strongly closure programmes. By the same merit, what we are welcome the fact that as a result of that licence fee here to protect under the 1964 Act, I am absolutely settlement we have frozen the licence fee in cash clear, is not library buildings but library services, and terms for the next six years, so that is one bill they I think it is very important that we don’t stand in the don’t have to worry will go up year after year. So I way of sensible modernisation but we make sure that think it would be very unpopular with the public if we the local authorities are doing everything they can were to reopen that. through their library plans to make sure that they are But I completely understand and welcome the support able to maintain good library services. that you and many of your colleagues have expressed today regarding the importance of local radio and of Q55 Chair: Your website says, “The closure of one more localised TV throughout the UK. As you know, or even a small number of library branches is not that is something that I am trying to promote as much necessarily a breach of the 1964 Act”. That suggests as I can. that the closure of quite a large number almost certainly is. Without wishing you to go into individual Q53 Jim Sheridan: The hard-working families you authorities, you will be aware that a number are refer to—140 of them are losing their jobs at BBC proposing quite substantial cuts in their library Scotland. provision. Do you think that some, without naming cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 15

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens names, are likely to breach or potentially in breach of agreed, finalised in the wash-up in 2005, which the Act? appears not to have been entirely satisfactory either, Jeremy Hunt: We are monitoring it very closely the which is the Gambling Act? I do not know if there is whole time, but if I look at the five authorities that we a theme there. Is it your view, is it the Government’s have spoken to, the Isle of Wight looks like it has view, that the Gambling Act 2005 has been largely found a way for the communities to continue running a failure? the five libraries that it has withdrawn funding from. Jeremy Hunt: I think the truth is that it has not been Lewisham also is in the process of finding a a success and as a result, on things like casino policy, community-led alternative and Somerset and we are in a kind of limbo at the moment, which I don’t Gloucestershire are trying to do that. Brent has taken think is healthy. I don’t see any prospect of getting a different approach, but they are extending library legislative time for a new Gambling Act in the opening at the weekends to seven days in the six immediate future, given the pressures on the libraries that they are keeping open. I think it is not Government’s legislative programme, but I think that about the number of buildings that are being closed; it there are a number of unanswered questions in terms is about the availability of the service, going through a of the way the Gambling Act is being implemented. proper process and us satisfying ourselves that local authorities are taking responsibility for their statutory Q59 Philip Davies: Given that you don’t think it has responsibilities to provide a good library service. But been a success, if there were areas maybe that this it is something that we are monitoring very closely Committee could recommend that would improve the the whole time. situation, does the Government have an appetite to tackle some of those issues or is it paralysed by what Q56 Chair: For the time being at least, do you still might be known as the Daily Mail syndrome? see the provision of a wide range of actual hard, Jeremy Hunt: I think the issue that is at the heart of physical books as being important? There will come the concerns expressed by the Daily Mail, but by a point—you mentioned the iPad revolutionising so many other organisations as well, relates to problem many aspects of life—where it might become much gambling. The area we need to make progress on— easier to digitally distribute. and I don’t think this is just a Government issue—is Jeremy Hunt: I personally have a great emotional understanding how, if we were significantly to change attachment to books. I am sure all of us do, because the licensing structures for gambling, we could if you are brought up reading books you think they contain any growth in problem gambling. I think that are wonderful, but I think we have to accept, as the is the big question that needs to be addressed before world changes, our commitment must be to reading it is going to be possible to make progress. and to people exploring and enjoying literature in a broad sense. We probably will have increasingly less Q60 Philip Davies: If that was addressed, the commitment to an individual way of reading, but I Government wouldn’t have any objection to finding think libraries and library services have a very ways to improve on the regulations that exist at the important part to play in the new digital world as well. moment? There are certain anomalies, aren’t there, So I don’t think that is a reason for not having good and certain arbitrary things like, for example, numbers library services. of machines allowed in certain casinos, numbers of machines allowed in a betting office? People can play Q57 Chair: While we are on libraries, can I just on only one machine at a time—two if you are touch on—I am declaring my interest as the chairman particularly proficient—so whether there is 10 in there of the all-party writers group—the public lending or 20, that can’t lead to an increase in problem right? You will remember the Government was going gambling per se, can it, because you can play on only to extend this to digital distribution. That didn’t then one or two at a time? happen, and indeed the PLR was cut back and the Jeremy Hunt: Let me say that we have, as a distributing authority dispensed with. Can you give us Government, nothing whatsoever against responsible an update on where you stand and whether or not you gambling and we recognise that it is a huge pleasure hope to be able to restore the PLR to where it was for many people to have a flutter and that is part of our before? national life, but there are inconsistencies in gambling Jeremy Hunt: The Permanent Secretary may wish to legislation. I think a lot of the reluctance to change correct me, but my understanding on this is that we things is because of people’s concern that in some protected funding for the PLR. I think they had the countries that have liberalised gambling laws, they efficiency cut of 15% that we imposed on all the have seen quite significant growth in problem bodies for which we were protecting spending gambling at the same time. Sorry to repeat myself, but allocations. I don’t think we had the budget to expand that is the central issue that the gambling industry it to digital usage, but perhaps I could write to you to needs to address before we are going to be able to give you some more detail on what is happening. make any progress. Chair: That would be helpful, if you could give us an update. Q61 Philip Davies: Does your Department see itself as a champion of the gambling industry within Q58 Philip Davies: The Chairman mentioned a Bill, Government or not? an Act, earlier that was concluded in the wash-up in Jeremy Hunt: I think gambling is a very important 2010, which appears not to have been wholly responsibility that we have. Because of the issues successful. Can I just refer to another one that was around problem gambling, I think we see ourselves as cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 16 Culture, Media and Sport Committee: Evidence

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens a champion of responsible gambling but, as I say, awarded the sale to the bid that best met the criteria there are these issues that still need to be addressed. that were set out.

Q62 Philip Davies: I think you mentioned that there Q65 Philip Davies: Part of the deal was that 50% of is great competition at the moment—or seemingly the proceeds would go to racing in some shape or competition—for which is the worst-governed sport in form, and I know that there are some complications the country. If I may, I will just throw horse racing in terms of state aid rules and whatever. Can you give into the melting pot for you to reflect upon at the us an update as to where we are in terms of addressing moment. Do the Government have any opinions about those state aid issues, and when racing is likely to get the recent controversy over the use of the whip in its 50% and in what form? horse racing, and the controversy that has been caused Jonathan Stephens: We are working very closely by it and the sport potentially losing some of its with racing on the best form of that, and on their biggest draws, like Ruby Walsh and Johnny Murtagh proposals for how best to do that. Whatever comes as jockeys in this country, as a result of that? Do the forward will need to be compliant with the state aid Government have a view on that? rules. Racing have a number of options that they are Jeremy Hunt: We don’t, although we are obviously exploring regarding how that might best be achieved, concerned when we see nationally important sports particularly focused on supporting charitable purposes running into difficult issues that have the kind of or non-commercial areas of racing’s activities. implications that you suggested, but we do very strongly think that it is for sports to decide the rules Q66 Philip Davies: Thérèse asked to be indulged in under which they operate and not for Ministers, and a random question, Chairman, and I am hoping you we respect that. might indulge me in one random question as well. If you are talking about what is on my plate when it What caught my eye was the National Audit Office’s comes to the racing industry, you may recall from a summary of your Department’s activities. Coming previous appearance at this Committee that I seem to from an organisation before I got elected to Parliament get an annual birthday present from the gambling and that was very big on staff surveys—colleague surveys, racing industry, which is a failure to determine the we used to call them—I did have a quick look at the levy. My birthday is next week, and the day before it one that was published in here. I wonder if you could is the last day they have to present to me an agreement explain why, under the heading of, “When changes on the 51st levy; otherwise, it becomes—it will be my are made in the Department, they are usually for the second birthday present from the racing and gambling better,” only 12% of employees could either agree or industries and I am very much hoping that they won’t strongly agree with that sentiment. It seems rather low feel it necessary to give me that present. that only 12% of your employees can agree with the proposition that when changes are made in the Q63 Philip Davies: Have you had any indications as Department they are usually for the better. Is there to whether they are likely to come to an agreement anything particularly driving that low number? or not? Jonathan Stephens: I don’t think that is particularly Jeremy Hunt: No, so we will have to wait and see. surprising at a time when inevitably, the organisation is having to shrink and make some very challenging Q64 Philip Davies: Just linked to that, one thing that and difficult adjustments. In the same staff survey, the Government has achieved, which previous when asked, staff had very high scores for whether Governments threatened to do and didn’t, was the sale they feel that they are well informed about what is of the Tote. I just wondered to what extent you felt happening. I think, despite the very challenging that the sale of the Tote represented value for money difficulties of the past year, we were one of the few for the taxpayer and also a good deal for racing. Departments, if not the only Department, whose Jeremy Hunt: I will ask my Permanent Secretary to scores for leadership and managing change across our comment in a bit more detail on that. I think it was policy departments increased year on year last year. fantastic value for money for the taxpayer, who netted Steve Rotheram: Maybe the change in Secretary of £90 million from the deal overall, and I think it is a State—that is why it was so low. very big opportunity for the Tote itself. It will have the support of an organisation that will be able to invest in Q67 Philip Davies: That score had actually gone it going forward and is totally committed to the Tote, down. It was low enough as it was and it went down so I am very hopeful that that will end up being a three points from the previous one. I accept that there good deal all round. has been an improvement in many instances, but it Jonathan Stephens: I agree. We set very clear criteria was from a pretty low base, wasn’t it, some of these for the sale. The first was to make sure that there was scores, to be fair? a complete exit. Strategically, it is not appropriate for Jeremy Hunt: Could I make a comment, following the Government to own or run a bookmaker, but the Mr Rotheram’s generous suggestion? We do have a overriding criteria for the sale and priority was to new Secretary of State, and we have immensely achieve value for the taxpayer. Alongside that, we also challenging targets in terms of our own costs and set criteria around support for racing and indeed also administration. I think we should be judged on what taking account of the interests of employees of the that survey says in a couple of years’ time, when we Tote, and we had a very healthy competition. We have implemented those changes and gone through achieved significantly above the estimated value that what is a very difficult and challenging period. I think our advisors put on the business beforehand, and we that our success as a Department should not just be cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 17

27 October 2011 Rt Hon Jeremy Hunt MP and Jonathan Stephens how happy people feel working now, although that is Q68 Philip Davies: But in all seriousness, are these a very important element of it, but it should also be important factors for you and for your Department, what we have delivered for the public. What I will be these survey results; or do you just dismiss them as, looking at is—I hope you will challenge me on this “Well”— when we get to that stage—have we delivered the best Jonathan Stephens: No, far from it. We take them super-fast broadband in Europe; have we got the very seriously. That particular survey is part of a civil school games being played by a majority of schools service-wide survey that is done once a year. It has as a permanent sporting legacy from the Olympics; just been repeated this year. We don’t have the results have we had the most ambitious tourism marketing for it for this year. In addition to that civil service- plan ever, building on 2012 and all the opportunities wide survey, which gives us the opportunity to that presents? All the other things, the objectives I compare and contrast different strengths in different have set in the last year, very deliberately have departments, we also do a lot of work internally tangible outcomes that the public can notice. So it is within the Department—sometimes surveys, important that we get our nose to the grindstone on sometimes giving people the chance to contribute and that, and then I think that will in turn help to motivate comment on changes that are happening in the staff to feel that they are in a Department that is Department, because it is really important. All the making a difference to the public. work we do comes down in the end to what our people Jonathan Stephens: Could I just perhaps add one are doing; and giving them the right structure, the thing? I don’t in any sense want to suggest that it right resources and the right ways of working that isn’t a difficult and challenging time, certainly for our enable them to do their best is really important. They Department but across the civil service and the public have responded to that—for example, they have sector as a whole. Against those challenging times of improved our correspondence rates dramatically, at pay freezes and reductions in the number of posts, I the same time as we have reduced the number of take enormous pride in the way that people have people working on that. That, in the end, is down to responded to that and have continued and improved the people doing the process and coming up with the their performance, as I was saying earlier, and secured answers themselves—coming up with ideas and better strong commitment and progress on delivering on the ways of doing it. Government’s priorities. That is the measure that I Chair: I don’t think we have any more questions. We take most pride in, and it does reflect a very strong have ranged pretty widely. Can I thank you both very sense of commitment, engagement and dedication by much for coming; and Secretary of State, can I in our people, who are very committed to the issues that advance wish you happy birthday for next week? they work on. Jeremy Hunt: Thank you very much, Mr Chairman.

Letter from the Rt Hon Jeremy Hunt MP, Secretary of State, Department for Culture, Media and Sport

Further to my session with you and the Committee on 27 October, both Jonathan and I agreed to follow up our evidence with a letter clarifying points raised during the discussion. I have, inserted my responses below under relevant headings.

Resource

The change in plans is mainly driven by S4C’s new funding arrangements, which start from 2013–14. Under the new scheme, DCMS only pays for around £7 million per annum for the last two years of the SR period as opposed to £90 million and £83 million for the first two years. The difference in funding after 2013–14 is made up by TV licence fee monies.

Capital

Both broadband roll-out and the spectrum clearance project begin being factored into the plans from 2011–12, rising during the SR period and then falling at the end as the main bulk of the work has been completed. The broadcasting and media capital plans therefore rise from £11 million in 2010–11 to a height of £201 million in 2012–13 before falling back down to £25 million in 2014–15.

BBC Scotland Jobs

You asked whether I had received any representations from the Scottish Government about the reported cuts to BBC Scotland’s budget and the loss of jobs at BBC Scotland. I said to the Committee that I was not aware of any representations from the Scottish Government and I can now confirm that this is correct. The licence fee settlement is fair to the BBC and how the BBC allocates its funding in meeting its objectives is a matter for them. As the BBC is independent of government under the terms of its Charter and Agreement, there is no provision for government to become involved in the BBC’s day-to-day activities. cobber Pack: U PL: COE1 [E] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Ev 18 Culture, Media and Sport Committee: Evidence

Public Lending Right

The resource grant-in-aid budget for PLR will fall by 15% in real terms over this spending period (a reduction of £262k between 2011–12 and 2014–15). This is in line with the allocations awarded to our other bodies and, in the current circumstances, represents a fair Spending Review settlement and demonstrates a real commitment to the importance and value of the PLR scheme. An extension of PLR to audio books and e- books will not be implemented at this time.

You will be aware the Registrar of Public Lending Right is responsible for making payments to registered authors in recognition of the public’s use of their work in the form of loans from public libraries in the UK. These payments are made on the basis of a rate per loan, the level of which is determined annually following consultation. The rate is dependent on the total number of loans nationally, the number of authors registered and the size of the fund available.

In 2011 the rate per loan fell from 6.29 pence to 6.25 pence. That reduction was as a result of an unexpected increase in lending during 2009–10 in conjunction with a decrease in grant-in-aid. Although the number of loans fell in 2010–11, the number of registered authors increased slightly and, in addition, the grant-in-aid budget for PLR has reduced. The Department is consequently currently consulting on a proposed reduction in the rate per loan for 2012.

The proposed transfer of the Registrar of Public Lending Right’s statutory functions of distributing the PLR fund to authors to another existing body, effectively abolishing PLR as a separate organisation, will help to reduce the costs of administering the PLR Scheme and maximise the fund available to authors within the spending round settlement. The transfer of functions will be subject to public consultation in due course. Until then there will be no changes to the administration of the PLR Scheme and I can assure you that the right of authors to receive payment when their books are borrowed from public libraries will continue.

Football Club Ownership

We strongly endorse the Committee’s recommendation in their report on football governance that more robust rules are needed to address the lack of transparency surrounding the ownership of some clubs. Furthermore, in our view, these rules should form part of a new licensing system which has strong Football Association scrutiny and oversight to ensure it is consistently applied throughout professional football.

It is our firm belief that fans of every club in this country have the right to know who own their football clubs, and to be assured that the appropriate inquiries and due diligence as to the identity and circumstances of potential buyers is carried out, as is required in all good business practice, before ownership is allowed to change hands. While Leeds United fans will be pleased to finally know who owns their club, the whole episode preceding this signified the disconnection between supporters’ legitimate expectations to know who owns their club and the requirement to publish that information.

In our response to the Committee we have stated that the football authorities have until the end of February 2012 to work together to agree proposals for fundamental changes to the game. If these proposals do not meet with our expectations then we will introduce a legal requirement on the FA to achieve this.

The Centenary of World War 1

Traditionally, we mark the anniversary of the conclusion of a conflict rather than its beginning. So the main commemorations will be on the centenary of the end of the First World War in 1918. However, given the importance of the centenary of World War I, a number of anniversaries of key events from 2014 to 2018, including the beginning of the war, will be marked in an appropriate way. The Prime Minister has asked his hon. Friend the Member for South West Wiltshire (Dr Murrison) to act as his Special Representative and Coordinator for World War I Commemorations. Dr Murrison will work with international partners to ensure that the UK plays a full and active role and will coordinate the cross-Whitehall effort in respect of the commemorations.

Cultural sectors will no doubt have a major role to play in any commemorations, and are uniquely placed to provide a significant and meaningful contribution. The Imperial War Museum will open new First World War galleries at its flagship branch in London in June 2014 to mark the centenary of the Great War. The new galleries will mark phase one in the implementation of a masterplan to redevelop the IWM London site. The Museum will also be running a First World War Centenary Programme between 1914 and 1918 (across its branches, and with partners nationally and internationally). They have set up the extranet www.1914.org as a resource for the programme, which will include a range of events, activities and exhibitions. At present, over 220 member organisations, including museums, galleries, libraries, archives, schools, universities, local groups, historical societies, broadcasters and production companies from across the country and the world have expressed an interest. cobber Pack: U PL: COE1 [O] Processed: [06-03-2012 09:41] Job: 018139 Unit: PG01 Source: /MILES/PKU/INPUT/018139/018139_w001_michelle_Rt Hon Jeremy Hunt 14 Nov 2011.xml

Culture, Media and Sport Committee: Evidence Ev 19

Finally, after reading through the transcript of our session with you I would like to amend a comment I made about the amount of staff there would be in the department after the Olympics. I mentioned that we would go down to a Department of around 250. The actual figure is 340 so I just wanted to correct the record. If you have any further queries please do not hesitate to contact my Department. 14 November 2011

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