House of Commons Welsh Affairs Committee S4C Fifth Report of Session 2010–12 Volume 1: Report, together with formal minutes, oral and written evidence Written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/welshcom Ordered by the House of Commons to be printed 27 April 2011 HC 614 Published on 11 May 2011 by authority of the House of Commons London: The Stationery Office Limited £20.00 The Welsh Affairs Committee The Welsh Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Office of the Secretary of State for Wales (including relations with the National Assembly for Wales). Current membership David T.C. Davies MP (Conservative, Monmouth) (Chair) Stuart Andrew MP (Conservative, Pudsey) Guto Bebb MP (Conservative, Aberconwy) Alun Cairns MP (Conservative, Vale of Glamorgan), Geraint Davies MP (Labour, Swansea West) Jonathan Edwards MP (Plaid Cymru, Carmarthen East and Dinefwr) Mrs Siân C. James MP (Labour, Swansea East) Susan Elan Jones MP (Labour, Clwyd South) Karen Lumley MP (Conservative, Redditch) Jessica Morden MP (Labour, Newport East) Owen Smith MP (Labour, Pontypridd) Mr Mark Williams MP (Liberal Democrat, Ceredigion) The following Members were members of the committee during the Parliament: Glyn Davies MP (Conservative, Montgomeryshire) Nia Griffith MP (Labour, Llanelli) 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 Publications 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/welshcom The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volumes. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee is Adrian Jenner (Clerk), Anwen Rees (Inquiry Manager), Jenny Nelson (Senior Committee Assistant), Dabinder Rai (Committee Assistant), and Jessica Bridges-Palmer (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Welsh Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 3264; and the Committee’s email address is [email protected] S4C 1 Contents Report Page 1 Introduction 3 Our inquiry 3 2 The importance of S4C to Wales 5 Context 5 Remit 5 Funding 5 Publisher-broadcaster 6 S4C’s distinctive place in Wales 6 Economic importance 7 Cultural impact 9 3 Performance of the channel 11 Reliability of viewing data 11 Viewing time, share, and reach 12 Viewing time and share 12 Audience reach 14 Programme output 18 Audience perceptions 19 Efficiency and value for money 20 The provision of private healthcare to staff 22 4 The Government’s proposed changes to S4C 24 A new funding model for S4C 24 Guaranteed funding for S4C 26 Independent producers 27 The S4C-BBC partnership 28 Management and oversight of S4C 29 Current arrangements 29 Changes in senior personnel 30 Arwahanrwydd 32 Ensuring the independence of S4C 33 5 The future accountability of S4C 36 A fundamental review 38 Conclusions and recommendations 40 Formal Minutes 45 Witnesses 48 List of printed written evidence 48 2 S4C List of additional written evidence 49 List of Reports from the Committee during the current Parliament 50 S4C 3 1 Introduction Our inquiry 1. We undertook this inquiry into S4C (Sianel Pedwar Cymru) in response to concerns about the current performance and future status of the publicly-funded Welsh language broadcaster. The broadcasting environment in Wales, as elsewhere in the UK, is undergoing significant change. The ongoing evolution of broadcasting from analogue terrestrial channels to the digital age, with huge volumes of content available through a wide range of platforms and services, continues to proceed rapidly. Adapting to this changing landscape has provided a significant challenge for broadcasters, not least S4C. In addition, S4C has come under scrutiny in respect of its funding, management, accountability and the quality of its output. 2. The Government of Wales Act 2006 did not devolve broadcasting matters to the National Assembly for Wales (NAW) and responsibility for English and Welsh language broadcasting remains with the Department for Culture Media and Sport (DCMS). In recent years our predecessors on this Committee undertook an inquiry into the declining provision of English language broadcasting in Wales.1 However, this is the Welsh Affairs Committee’s first major inquiry into S4C, the nation’s primary Welsh language broadcaster, for a number of years. 3. There have, however, been a number of initiatives which have considered aspects of S4C in recent years. In 2009, the “Hargreaves Review” of the creative industries in Wales was published by the Welsh Assembly Government.2 In 2010, the BBC and S4C undertook a joint review of their working relationship and in the same year S4C commissioned an independent review of its corporate governance by Sir Jon Shortridge, a former permanent secretary to the Welsh Assembly Government.3 Ofcom, the broadcasting regulator, has also considered S4C in its reviews of public service broadcasting. 4. This Report and the evidence we publish with it are our contribution to the public debate on S4C. Chapter 2 describes the cultural and economic importance to Wales of S4C. Chapter 3 examines the broadcaster’s performance and output. Chapter 4 considers the management of the broadcaster and the implications of the proposed changes to S4C’s funding and its relationship with the BBC. The final Chapter looks at suggestions for improving the accountability of S4C. 5. We took evidence from a wide range of individuals and organisations including Arwel Ellis Owen, Interim Chief Executive of S4C and Rheon Tomos, Vice Chairman of the S4C Authority, Professor Ian Hargreaves, Geraint Talfan Davies, Ron Jones, the Welsh Language Board, the Welsh Language Society, TAC (the Welsh independent producers association), Ofcom, Mark Thompson, BBC Director General, Hywel Williams MP, Ed 1 Welsh Affairs Committee, Eleventh Report of Session 2008–09, English Language Television Broadcasting in Wales, HC 502 2 The Heart of Digital Wales: a review of creative industries for the Welsh Assembly Government, 19 July 2010. 3 Shortridge Review of the Corporate Governance of S4C, 11 February 2011. 4 S4C Vaizey MP, Minister for Culture, Communications and Creative Industries, DCMS, and Alun Ffred Jones AM, Welsh Assembly Government Heritage Minister.4 6. We also met with officials of MG Alba, the Gaelic language channel, at their headquarters on Stornoway, Isle of Lewis. We are grateful to those who helped with the arrangements for our visit. 7. We were assisted in this inquiry by our Specialist Adviser, Ray Gallagher.5 4 For a full list of witnesses see page 49 5 See Formal minutes of 26 October 2010 www.parliament.uk/business/committees/committees-a-z/commons- select/welsh-affairs-committee/formal-minutes/ S4C 5 2 The importance of S4C to Wales Context 8. S4C began broadcasting in November 1982, the same year that Channel 4 was launched, following a concerted campaign in Wales over a number of years for the establishment of a dedicated Welsh language television broadcaster.6 Established after initial reluctance by successive UK governments, the creation of S4C was seen by its supporters as vital to the aim of preserving Welsh as a living language. Since 1982 the channel has established a distinctive identity in three particular ways. Remit 9. First, S4C is the world’s only publicly-funded Welsh language television broadcaster. S4C’s services are provided under statute by the Welsh Authority, also known as the S4C Authority. Its remit is set out in successive Broadcasting and Communication Acts since 1980. Within that remit, the broadcaster is expected to provide a broad range of high quality and diverse programming in which a substantial proportion of the programmes overall, and the majority of programmes in peak-time viewing, consist of programmes in Welsh.7 Since 2003, Ofcom has been responsible for independently regulating certain aspects of the Authority’s public services, including compliance with requirements and quotas agreed with or set out by Ofcom.8 Funding 10. Second, S4C has distinctive funding arrangements. For the first fifteen years of S4C’s existence, its Government grant was linked to the level of UK television advertising income in the previous year. The Broadcasting Act 1996 replaced the link between S4C’s income and the level of UK television advertising revenue by a new link to retail price inflation, based on S4C’s share of advertising revenue in 1997. In 2009–10 this comprised approximately £100 million of public funding. In contrast, the BBC is funded primarily through a television licence fee while Channel 4 does not receive direct public funding but generates all of its income commercially (principally through the sale of advertising time and programme sponsorship). S4C’s funding has also been linked to changes in the Retail Price Index (RPI) under provisions set out in the 1996 Broadcasting Act. This surety of funding is complemented by additional commercial income (approximately £3 million in 2009–10) derived principally from advertising. Further public funding for S4C’s activities is provided indirectly through the BBC which supplies S4C with at least 10 hours a week of programming financed by the television licence fee (to the value of approximately £20 million in 2009–10) rather than by S4C’s budget. 6 Including acts of civil disobedience, refusals to pay the television licence fee, sit-ins in television studios and a threatened hunger strike.