Public Service Broadcasting (2018)

S E L E C T C O M M I T T E E

O F

T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L
B I N G E R – L H E H T I N V A A L

P R O C E E D I N G S

D A A L T Y N

Public Service Broadcasting (2018)

HANSARD

Douglas, Thursday, 10th May 2018

PP2018/0092

PSB18, No. 3

All published Official Reports can be found on the Tynwald website: www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings,
Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2018

SELECT COMMITTEE, THURSDAY, 10th MAY 2018

Members Present:

Chairman: Dr A J Allinson MHK
Mr T M Crookall MLC Hon. J P Watterson SHK

Clerk:

Mr J D C King

Assistant Clerk:

Mr A Cooke

Contents

Procedural.................................................................................................................................... 105 EVIDENCE OF Hon. Alfred Cannan MHK, Minister, and Mr Caldric Randall, Financial Controller, Treasury ....................................................................................................................................... 105

The Committee sat in private at 3.35 p.m. .................................................................................. 121

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Select Committee of Tynwald on Public Service Broadcasting (2018)

The Committee sat in public at 2.30 p.m. in the Legislative Council Chamber,
Legislative Buildings, Douglas

[DR ALLINSON in the Chair]

Procedural

The Chairman (Dr Allinson): Welcome to this public meeting of the Select Committee of
Tynwald on Public Service Broadcasting. I am Alex Allinson, MHK and I chair this Committee. With me are the Hon. Juan Watterson, Speaker of the House of Keys, and Mr Tim Crookall MLC.
Please ensure that your mobile phone is off or on silent so that we do not have any interruptions. For the purposes of Hansard I will be ensuring that we do not have two people speaking at once.

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On 16th January 2008 it was resolved:

That Tynwald reaffirms its commitment to public service broadcasting and is of the opinion that it should be provided in an efficient manner using a variety of channels; and that a Select Committee of three Members be appointed to review the current licence conditions, delivery model and funding thereof, and connected matters, to take account of technological advances and demographic changes; and report with recommendations by July 2018.

This afternoon we welcome representatives of the Treasury.

EVIDENCE OF
Hon. Alfred Cannan MHK, Minister, and Mr Caldric Randall, Financial Controller,
Treasury

Q303. The Chairman: For the record, please would you each state your name and role and how long you have been in that role.

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The Minister for the Treasury (Mr Cannan): Alfred Cannan, Treasury Minister, appointed

October 2016.
Mr Randall: Caldric Randall, Financial Controller, April 2015 – it was a long time ago. Q304. The Chairman: Welcome to the Committee and thank you very much for taking the time to come along today. Would you like to make any opening statements at all?

The Minister: No.

The Chairman: Okay, thank you very much.

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Q305. The Speaker: If we can move on to the funding of Manx Radio, and starting with the subvention. Tynwald agreed in March 2014 that the subvention should be £850,000 in 2014-15 plus CPI thereafter. It was raised in 2015-16 to £875,000, an increase of 2.9%: was that CPI in that year, do we know? Was it uplifted by CPI in 2015-16?

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Mr Randall: I honestly do not know – it was before I started. Q306. The Speaker: Okay. But then in 2016-17, 2017-18 and 2018-19 it remained at
£875,000. (The Minister: Correct.) Why wasn’t it uplifted by CPI?

Mr Randall: The way that the budgeting works is in a similar way to as it does with other parts of Government where the previous year’s amount is assumed in the budgeting process. We then ask for bids through from the bodies and when those bids come through they are assessed by the Treasury. So there is no automatic uplift.
But I will have to check back on the records for 2015-16; like I said, that was before I started.
But I suspect that would have been an increase on the basis of a bid rather than an automatic inflationary increase. That would be the case with the other years as well.

Q307. The Speaker: So it appears that the Tynwald resolution of March 2014 was effectively ignored by the previous Treasury Minister?

Mr Randall: I thought that the previous recommendation, as amended, was that it would remain as it was with periodic reviews –

Q308. The Speaker: And were there any periodic reviews?

Mr Randall: – and not to be uplifted by inflation – it was not amended. Q309. The Speaker: What were the periodic reviews? Were there any periodic reviews done within Treasury at all since 2014?

The Minister: Clearly we have an annual budgeting process, so that is effectively a periodical review.

Q310. The Speaker: So there is an active process where the Manx Radio budget, specifically that line, was reconsidered and it has been reconsidered at – ?

The Minister: There is a specific process where Manx Radio have to put in a budget submission on an annual basis.

Q311. The Speaker: And we will return to that theme a little later, I am sure. Turning to the capital costs: the 2018 Pink Book includes an allowance of £150,000 in 2018.
What is that for?

Mr Randall: For minor capital works.

Q312. The Speaker: Such as?

Mr Randall: Sorry, I have not got the details of exactly what it is for, but it will be for works to do with … Yes, ongoing minor capital works for maintenance of Broadcasting House and other sites allocated to Manx Radio. But it is not in relation to the extension. So it would be other essential works that are required.

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Q313. the Speaker: And it is not to do with the transmitter network?

Mr Randall: No.

Q314. The Speaker: And is that a typical figure for annual capital works at Manx Radio? The Minister: I was going to tell you that capital approval 2010-11, £200,000; 2011-12,
£250,000; £50,000 in 2012-13; £250,000 … So up to £400,000 in 2015-16, so slightly down –

Q315. The Speaker: It is not untypical?

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The Minister: So, in the last eight years there is some £800,000 worth of – Q316. The Chairman: And just for our clarification this is above and beyond the subvention? The Minister: Above and beyond, yes; capital works.

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Q317. The Speaker: The 2018 Pink Book also refers to a sum of £969,000 for Broadcasting
House subject to future approval. So in conjunction with the £800,000 worth of capital spend, plus another nearly £1 million to come, is Broadcasting House really value for money?

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The Minister: Well, I think that is why we have been delaying bringing forward the capital plans for Broadcasting House. We at Treasury are keen to get more clarity over what the future is for the radio station and have tried to extract from the directors what plans that they have to modernise the radio station. And obviously since this Select Committee was established then there has been absolutely no reason for us to discuss with Manx Radio progressing that matter.

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Q318. The Speaker: We understood from evidence given by Mr Pugh that the budget submission for Manx Radio was never discussed with Treasury – that it was submitted but then Treasury did not pick that up.

The Minister: Well, I think the £955,000 is a capital project – it is not in that budget submission. But their budget submission, you are correct, I think there has been a slight error.
I understand, and I am sure the Financial Controller will confirm this, but in the initial submission on the covering page it asks for what additional bids, how much is being asked for, and it had ‘non-applicable’ or n/a on there; and as a result, the initial assessment put that to one side because there were obviously a number of bids coming in which had stated amounts on. So that is why that was missed, I would suggest.

Mr Randall: So that is the revenue bid, that is in addition to subvention. Obviously the business case for Broadcasting House, the next element of that, was fully considered. I think it was submitted with evidence of timeline, so that went through numerous groups, through the Business Case Working Group, through the SACIC – the Strategic Asset and Capital Investment Committee – and then through into Treasury. So certainly that full business case has gone through.

Q319. The Speaker: So as far as Treasury is concerned, is there any reason that Manx Radio’s case for Broadcasting House should be considered any differently from any other Government Department’s premises requirements through Strategic Asset Management Unit?

The Minister: No.

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Q320. The Speaker: Finally from me on this particular part: it was in the Pink Book again that
Manx Radio’s funding for 2018-19 includes £80,000 for the maintenance of AM transmitters, which you say in your submission is transferred to them from DHA at their request. Was a reason given for that?

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Mr Randall: It was also part of the recommendation of the report. There was a Commission into looking at the business case that came in for just ordinary broadcasting. I think Manx Radio had also argued for quite a long time that they were the primary users of it. The provision of the services for maintenance etc. was provided by Manx Radio and it would make sense for them to sit within the Department, so we made that happen.

Q321. The Chairman: Thank you very much.

I would like to explore, if I may, the wider relationship between Manx Radio and the
Treasury. Where does Manx Radio sit on your priority list?

The Minister: Obviously there are a number of active priorities that will be on my desk at any one time, but Manx Radio are treated equally in terms of allocation of time, allocation of budgetary submissions, and we will deal on an as-and-when basis with the directors when required.

Q322. The Chairman: Obviously these questions were written before the press conference earlier on this week and all the other work that you are doing.
Both you and Manx Radio have provided us with extensive documentation including correspondence between the two of you. Stepping back from the detail: how would you describe the relationship between Treasury and Manx Radio?

The Minister: I think there has been much talk of a disconnect – that was highlighted in a letter that we received from the Chairman and indeed was highlighted in a letter I sent to the Chairman on 3rd October 2017. And there is a sense of a disconnect in that one side wants to spend more money and one side does not want to spend more money!
So if that is disconnect, then it is true.

Q323. The Chairman: Would it be true to say that the relationship with Treasury is very much that you are constantly being asked for money? Do you find that burdensome?

The Minister: I think there is a sense of frustration at the moment. I referred the Chairman to the fact that we had set out a clear Financial Programme for
Government over the next five years, a clear budgetary programme, and contained within that was the need to find £25 million worth of savings at that time. Yes, I accept that has been readjusted to £12 million in the last Budget.
And just like every other single Department, everybody has gone through quite an extensive process of analysis, through the SAVE campaign in particular, and that was extended out to the public to call for ideas for saving. Manx Radio was not exempt from that process and was not exempt from responses suggesting that we looked to find savings from the broadcaster. We, as a Treasury, agree that we wanted to determine what new direction could be found for the radio, along with every other Government Department, to find efficiencies and deliver their services on alternative models.
If there is a disconnect, I think it is because we feel there is probably a sense of frustration that we are not really getting that from the directors, in terms of understanding what other alternatives can be pursued at this current time to help meet the budgetary requirements. And that, I think, has been the key sense of frustration from our side, and clearly on the Manx Radio side. We have met the directors and they have been in to see us en masse to express their

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frustrations. They see their duty, I think, to protect the radio station and to perhaps develop their services.
So I think we are clashing to some extent in that Treasury wants to define new ways, to find new ways to deliver services, and I think we have a board who feel that their absolute duty is to protect Manx Radio rather than perhaps find the new initiatives that may be possible to deliver their services in a changing and modern world.

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Q324. The Speaker: Can I just ask why that strategic meeting of minds has not happened during the process whereby Treasury appoints the directors? That does not seem to have been explored, or at least an agreed stance come upon when appointing directors.

Mr Randall: The Treasury does not appoint the directors anyway, I do not think.

The Minister: That is correct.

Mr Randall: They are appointed by the board, the non-executives. Q325. The Speaker: Well, some of the directors are appointed by the Treasury, aren’t they?
No?

The Minister: Not to my knowledge. Certainly since I have been in post, Mr Speaker, I have not appointed or signed off on an appointment.

The Speaker: Thank you.

Q326. The Chairman: In terms of funding, we were interested in what they had been deliberately asking you for, but you have just said that on the previous budget application it was not applicable. Have you had that specific request for funding, or that specific finance for innovation or for changing things that you have been looking for from them?

The Minister: I would argue no, but in that last submission Treasury received they did request a further £200,000, I think, worth of additional funding requirements to further develop the service levels, but effectively arguing that they needed that money to meet their commitments as a public service broadcaster.
I do not regard there as being new, significant innovations contained within that budget bid.

Q327. The Chairman: So they were not showing you those alternative models or alternative things that you were looking for?

The Minister: I certainly think, and the Treasury board think, that we have not seen delivered
– as we have with other Departments – new options, new alternative methods of delivery or willingness to find new proposals.
In fact not much, we feel, has been changing in terms of the radio station where its position, for example, and the service that is being delivered. To us and to me it has been a sense that really they have been looking to develop and expand and grow these services to meet their commitments; that is what they have needed the extra funding for. Clearly, as the Treasury Minister, whilst we are pushing other Departments hard Manx Radio should not be immune from a level of demand from us to deliver on cost savings. And effectively because they have had no increase to their budget they are, unlike other Departments, receiving effectively a cut to their budget on an annual basis, and like other Departments we are expecting them to deliver. Clearly the board feel that they cannot deliver on that basis and hence the disconnect.

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Q328. The Chairman: Can I ask to your knowledge have they ever approached the Treasury for advice in terms of things from the SAVE campaign – any advice that you or your executives could give them in terms of working more efficiently or saving money?

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The Minister: I think, and I did outline in my letter at the time on 3rd October to the
Chairman, my belief is that is what the board is there for. That is why we have a board, to deliver and to come up with the new ideas in order to meet the funding that the radio station actually has.
I think actually I quoted in my letter, ‘In contrast to the views of the directors, the view of the
Treasury is there may be radical ways in which delivery could be configured so that the station could operate more effectively at lower cost and deliver a streamlined vision for the future, in line with our budgetary aspirations’.
I think I indicated that effectively these were the views of Treasury and that the board should set about delivering on that.

Q329. The Chairman: Okay.

The next question really is: what do you think you are paying Manx Radio for, and how do you assess whether they are actually delivering it?

The Minister: We recognise that Manx Radio is the acknowledged public service broadcaster.
We acknowledge that they have commitments to meet in terms of the speech content and other aspects of their delivery. That does not mean to say that even with those restrictions we should not be demanding, or seeking at least, enhancements or improvements to the delivery model in order to meet those requirements.
I do not think it is really for Treasury to overanalyse particularly how they are going about delivering the requirements. I think again that is a responsibility for the directors. We had this debate and Tynwald required us to carry on providing subvention at the requested amount and we have been doing so.
We have now got to a stage where the radio and the board feel that they need at least
£200,000 a year more, it would seem, to deliver their requirements. And again I go back to my original point: we do not believe we have had back the same level of engagement that we have had from Government Departments to find new alternative ways of delivering services.

Q330. The Chairman: Coming on to those new alternative ways of delivering services, one of the things we have talked to other people who have come to give us evidence is about their TT coverage. Do you think the amount of money you are paying Manx Radio should cover that as well? Or do you feel that their approach for extra money to provide those extra services is valid?

The Minister: Well, I think it was a shock for us to receive a request for an additional
£250,000 to provide the TT coverage. At the time we did support a recommendation accompanying that paper that the radio entered into a competitive tender process for the TT, because we were not convinced that we were actually getting best value from Manx Radio for delivering that service. But more importantly, again, if other Departments were coming to us to deliver that kind of service in any area, we would be expecting them to deliver projects, or capital works, based on proper tendering, so that we could be assured we were getting the best value for our money. So in the end we passed that bid to the Council of Ministers, who effectively concurred and rejected that – and I do not know how far the last discussion you have had previously went – but in the end settled on a figure I think of around about £100,000 to deliver the TT coverage.
But you see I think that does reflect the wide differences of where the radio station believes the level of investment should be, and the level of investment and level of value that, as Treasury, we would be looking to obtain from a radio station. And I fully support the fact that

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