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 5 interruptions. For the purposes of Hansard I will be ensuring that we do not have two people speaking at once. 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 10 how long you have been in that role.

The Minister for the Treasury (Mr Cannan): Alfred Cannan, Treasury Minister, appointed October 2016.

15 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?

20 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 25 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?

Mr Randall: I honestly do not know – it was before I started.

30 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. 35 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. 40 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 45 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. 50 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 55 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 – ?

60 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. 65 What is that for?

Mr Randall: For minor capital works.

Q312. The Speaker: Such as? 70 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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75 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? 80 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? 85 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?

90 The Minister: Above and beyond, yes; capital works.

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? 95 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 100 there has been absolutely no reason for us to discuss with Manx Radio progressing that matter.

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. 105 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, 110 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. 115 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. 120 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?

125 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? 130 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 135 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? 140 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. 145 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 150 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 155 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? 160 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 165 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 170 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 175 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. 180 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.

185 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. 190 The Minister: That is correct.

Mr Randall: They are appointed by the board, the non-executives.

195 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. 200 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 205 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 210 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 215 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. 220 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 225 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 230 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?

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 235 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 240 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. 245 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 250 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 255 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 260 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 265 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, 270 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 275 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 280 Treasury, we would be looking to obtain from a radio station. And I fully support the fact that

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actually there is no reason why we should not look to extract more value, say, for the TT coverage. Certainly when you look across at the UK now, a lot of sporting events have gone from the national broadcaster, for example, and are now spaced out on a commercial basis with whoever is paying, I suppose, the most money to access that event. Although it is a slightly 285 different model, nevertheless it has not been a detriment necessarily to the coverage of such sporting events, and arguably it has actually enhanced the presentation and analysis that has gone on around those events. So I think that is actually a very good example of where we should be demanding more value and clearly where we believe that £250,000, that kind of bid, needs to be certainly put out to 290 tender, and certainly assessed against other people's proposals. There may be other radio stations, for example, or other broadcasters, who may feel that they can deliver it for much better value. So why shouldn't that principle also then start to apply to perhaps the service that is being delivered, or certainly review the service levels that are being delivered at the moment, in order to obtain best value for the taxpayer? 295 I think that is really at the heart of what Treasury are saying – when you go back to the core Budget – ‘Look, we are in a changed situation, it is not pre-2008. We have gone through an extensive budgetary reform process with the Government, we are all aware of financial restraints, we are all under significant pressure to deliver within limited budgets, let’s see your dynamic ideas for change, performance’. And I think we have not really seen those or received 300 them.

Q331. Mr Crookall: Minister, on the back of that then, can I just ask: Manx Radio is obviously, as we know, currently funded by the subvention and partly by commercial income. What is Treasury's view on that? 305 The Minister: I am not sure we do have a view, other than the fact that we view with concern that the commercial income has dropped away, and is not as high as it has previously been. I understand the reasons for that, that are being presented to us. Again, I do not think we necessarily have a view on how the radio station goes about raising 310 its additional finance that it is undertaking through its commercial operations. I think they are probably more of a political view from the pure finances of it. It is a concern. We have settled on a level of subvention. Arguably, if the radio station needs more funding and its sales are dropping away, clearly we would be asking why that is and what are people going to do about it to address the imbalance 315 that is occurring? One has to question of course if the sales are dropping, is that because there is less interest in the services that the radio station are offering, or is it because the competition are doing it better? But, Hon. Member, we do not really analyse in Treasury what we think and believe the radio station could or should be doing. We are really interested in them fulfilling their responsibilities 320 to deliver best value, and for our responsibilities in making sure that we are happy that people are on board with delivering that.

Q332. The Chairman: It was resolved in March 2014, and I quote:

That in the interests of transparency the Treasury as shareholder of Radio Manx Limited should arrange for the station to show in its accounts which activities are funded from the public subvention and which from commercial income; and that similar accounting should be required under the proposed new statutory framework.

We have talked a little bit about Treasury involvement, but has this clear separation been 325 done, do you think?

Mr Randall: Yes, it has. It is in their accounts.

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Q333. The Chairman: So you are happy with that, that the accounts are quite transparent in terms of what comes from public subvention – ? 330 Mr Randall: What we do know is there was a lot of work done, so they would have been completed. That was a recommendation of the Committee.

Q334. The Chairman: And you are happy that has been done? 335 Mr Randall: Yes.

Q335. The Chairman: Okay. I think Manx Radio sees a conflict of interest with the Treasury being its shareholder but also 340 being the Department responsible for controlling expenditure. How do you see that conflict?

The Minister: Bear in mind that the radio, as I understand it, used to sit with the Department for Enterprise and was recently in the last few years transferred to Treasury. So it has not always 345 sat with Treasury.

Mr Randall: The shares have always been owned by the Treasury, but the sponsoring body was DCCL, which transferred to DfE and then into Treasury.

350 The Minister: So there was a slightly different relationship. But I think, Chairman, it is as we have really summarised. The Treasury has a relationship with Manx Radio which, arguably, I would say it has with everybody else in Government. We are effectively the guardians of the public purse in the sense that we are a point that demands and seeks to get best value, but also recognises that people have public service duties to perform, 355 and we seek to prioritise and deliver those. I think it was interesting you asked before were there any priorities, and I said no more than any other Department. But clearly that is probably slightly inaccurate in that if I had bids before me from the Department of Health and Social Care or the Department of Home Affairs for frontline service staff or frontline service costs, and a bid from the radio station, then clearly the 360 radio station would be the last priority in terms of how we would be determining where money should be allocated. So perhaps I would leave you with that thought and reflection in terms of the relationship that we have with the station.

365 Q336. The Chairman: In terms of responsibility, has any thought within your Department – have you had any thought about shifting that responsibility to another Department, or are you happy with the status quo?

The Minister: Quite happy to see it shifted to another Department, but I am not sure 370 whether it is necessarily going to change the dynamics, Chairman. I think we have a crunch point clearly where you either support the fact that yes the public sector broadcasting needs more money to deliver the broadcast service that we have, or that actually there could be other models available and we should choose and seek to pursue those. Treasury has a limited say in that process, because I think that broader issue is one for 375 Tynwald. But again I go back to my point, that in terms of Tynwald’s requirements to Treasury for the budgetary allocation, Tynwald has made a stated case that has not changed since that debate took place, and we continue to fulfil our obligations. But we are not prepared to look at further funding over and above that, without having achieved and gone down the route we believe of getting clarity of purpose, a clarity of vision for the future, and I think getting some

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380 clear evidence that the station has looked imaginatively at its service delivery and how it can actually save money.

Q337. The Chairman: Do you think the move from what is now the Department for Enterprise into the Treasury was perhaps to try to instil that financial responsibility into Manx 385 Radio?

The Minister: I am not really aware, actually. I could not comment on that, Chairman.

Q338. The Chairman: Mr Ron Berry from 3FM gave us evidence beforehand and it suggested 390 to us that the Government should decide what it wants in terms of public service broadcasting and then go out to tender for it. Would you like to make any comment on this proposal?

The Minister: In terms of a straightforward proposal for public expenditure, then you would 395 normally look to tender for such a service, but one has to clearly accept that in doing so you would be looking for a provider who clearly had the ability to deliver a national service. I think this goes probably more to the politics: do you believe in having a national broadcaster? I can see that there still remains a need to have a national broadcaster, particularly living on an Island, and retaining a unique sense of identity in doing so, and having an opportunity to 400 understand what is going on in and around our Island. Clearly the name ‘Manx Radio’ aligns itself, as much as the British Broadcasting Corporation does, to that sense of national identity. Whether you would allow different partners to deliver perhaps under the name, is a possible scenario. I think probably it is unrealistic to think that you would be able to put out to tender the national broadcaster, but I think certainly there are elements of the service that are being 405 delivered that could well be put out to tender for others to deliver.

Q339. The Chairman: Thank you for that answer. The 2011 Select Committee concluded that better value could be obtained for the money the Island spends on broadcasting, if the resources available for the development of broadcasting 410 and related media policy were increased. That seems to be part of the conflict, that you are being asked for money without seeing that development. Would you like to comment on that?

The Minister: I would have to go back to that Report. 415 Would you mind, Chairman, just repeating that last couple of sentences for me so that I can just make a better judgement on the question?

Q340. The Chairman: Yes, it is that the money the Island spends on broadcasting, if the resources made available for the development of broadcasting and related media policy were 420 increased then better value could be obtained if the related media policy was developed.

Mr Randall: I think it has been a question that has been put to Tynwald on a number of occasions, hasn’t it? There was an internal audit report that was done in 2012, I think, which I did, which looked at Manx Radio and the funding issues behind it. Certainly, the conclusion from 425 that time, I think from other Select Committee reports, was that if you can define what you want from your public service broadcaster then you will be able to determine the funding behind it. I think what we have struggled with – and I am not saying it is an easy thing to do – is for an articulation to come through at what sort of a service, what it might look like, at different levels of service. So it has been difficult to make an informed judgement about what you would receive 430 at different levels of funding.

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Q341. The Chairman: One of the statements from the managing director of Manx Radio was that their budget bids were never discussed and no feedback received. We have touched on that before, but what is your reaction to that statement?

435 The Minister: I think really, Chairman, I would probably incorporate that into some of my previous answers. I think actually this sense of frustration has not just been with the existing Treasury Minister and his team, but I think it does extend prior to that. Certainly I have seen an email from the previous Treasurer Minister seeking to get relations on to a more cordial level. Whilst you have two different views about what needs to be achieved, then I think you are 440 going to have conflict. But I do think to a certain extent I can understand the frustrations of the directors. I do not doubt their motivation that they want to do what is best, what they believe is best, for the station; but perhaps, maybe, they have become so entrenched in that view and perspective they have perhaps forgotten where the station sits in the broader context of public funding – available funding – and our priorities. 445 Clearly, as you will know, we have had a lot of talk in Tynwald about priorities and making sure we get the money to the right areas. And, yes, the public service broadcaster does not sit that high on the list when you reflect on it. Certainly, as I have said, other matters really would be higher on my list of matters needing attention than necessarily what was happening at the broadcaster. I think I would reflect on that by saying I feel Tynwald had determined a way 450 forward the last time this was debated, had set the criteria around the Budget; and as a mechanism it was a way for us, as with other budgetary allocations to other Departments, of almost forcing the radio station and the directors into making changes to their service delivery to meet budgetary restrictions.

455 Q342. The Speaker: Just to pick up perhaps on Mr Randall’s comments about defining what you want and then making sure you get what you pay for. In 2014 the previous Select Committee recommended that any future public service broadcasting licence should come with a guarantee of funding at this level throughout the licence term. The link between the licence term and the funding term should be enshrined in public service broadcasting legislation. 460 At that time the Treasury Minister tabled an amendment to disconnect those two, to remove that link. Is that still Treasury’s view? And do you really think that is fair, to have a contract which specifies service level but without guaranteeing any income for it?

The Minister: Well, I think arguably, Mr Speaker, I would argue Tynwald has set what it 465 believes is the right financial target to meet the services that Manx Radio is delivering, and they did that when they agreed to the level of funding that they have set now going forward. So arguably that has already been done, the last time this debate was publicly aired.

Q343. The Speaker: Although it is fair to say that the funding of Manx Radio does not tend to 470 get an awful lot of coverage in the Budget debate – because that is where this is set, realistically, that is the, quote, ‘annual review process’ that is undertaken, and yet it is in the context of £1.2 billion worth of Government funding rather than something that is considered separately. Manx Radio have said in a submission to us that the Communications Commission sets the station format, but has no dialogue with any part of Government as to the station format and 475 how it is to be financed. So it could be that your colleague, Mr Malarkey, sets an unrealistic station format in terms of expectations of speech, for example, and yet the funding is already predetermined at £875,000, there or thereabouts. Is this not the worst possible example of silo mentality?

480 The Minister: Well, in any normal situation you would look at your services, people would come and set their budgets according to what they were going to deliver. And yes, I agree the radio station does seem to have a bit of a dichotomy in terms of the fact that the

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Communications Commission, and the dialogue they have with the radio station is separate from the dialogue that they have about funding levels. 485 So yes again, but to me that is the responsibility for the directors to communicate that properly – to communicate that with Mr Malarkey and then to look at how they can deliver the service in line with their requirements, in line with their budget. I would argue that is happening across Government to some extent, in that people are being asked, Departments are being not given the financing they perhaps needed previously to fulfil tasks in the way they were fulfilling 490 them, and so they have had to look at different ways to fulfil those tasks and change their operating and delivery models to suit. You can see these sorts of pressures going on the whole time. You obviously are well aware at the Health Department, for example, we have got reviews going on to check and assess their budgetary allocation against their delivery demands, and the Health Department have gone 495 through a number of stages of trying to reform the way they are delivering their services to still deliver those services, but in a different way. I think that is equally applicable to the radio station.

Q344. The Speaker: I think the distinction I would draw though, is that whereas Departments 500 do not tend to have service levels specified in statute, the licence is issued under the Broadcasting Act and a part of the licence is the station format, so effectively written in through the legislation is the service level agreement but without any connection to the funding model. And that is just not like any Government Department that can cut its coat according to its cloth. 505 The Minister: I find it hard to disagree with what you are saying.

Q345. The Speaker: Yes, so what would your view be of a more tripartite licence-setting approach which actually included Treasury, the Communications Commission and Manx Radio as 510 a three-party system actually putting that together, so that there is a balance between what is being expected, how much there is, and what can be delivered?

The Minister: Well, in principle, there is necessarily no objection to that. But it of course depends on what Tynwald stipulates in terms of the public service broadcasting requirement. 515 Q346. The Speaker: That is true. However, as I say, it is the Commission that actually sets the station format rather than Tynwald. Just to move on to something far more fashionable: what about a shareholder agreement to set out the funding commitments and expectations? 520 Mr Randall: Could I just take the opportunity to correct something I said earlier about the appointment of directors? What I meant was we do not get involved in the recruitment process around directors, but obviously ratify their appointment at the Annual General Meeting. Sorry, that was just to correct something I said earlier on. 525 Q347. The Speaker: Right, okay, but not actively part of the recruitment process? There is no seat at the table for Treasury?

Mr Randall: Well, we have not been; we have been arm's length. Sorry, I just want to clarify. 530 Q348. The Speaker: So no seat at the table for Treasury during the recruitment process? So it is –

Mr Randall: We have not had in the past, no.

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535 Q349. The Speaker: So it is eminently understandable why there would be a disconnect of thinking between recruitment and the view of the shareholder. Right, okay, thank you. So just, again, to put the question about whether another model potentially to try and bridge this gap is about a shareholder agreement to set out funding commitments going forward and what expectations are – as it is the new model of choice for arm's length Government business. 540 The Minister: Well, I think we might be jumping the gun slightly, but again these are potentially an option. What I would say to you is that the Treasury, the budgets, are open to change on an annual basis; and whilst we do set out five-year plans, as you know things can happen within a 545 12-month period – economically, internally, externally – that require perhaps a change to the budgetary plans to overspending, to underspending. So I would agree, but of course I would caveat, as ever with public funds there will be a change in priorities, possibly within a short space of time, and those priorities will be to some extent determined on the floor of Tynwald; and setting out that sort of arrangement would not 550 necessarily resolve the issue if the Treasury then had to turn around and say, ‘Well, I am afraid there is no more money next year and you are going to have to change your plans for your service delivery.’

Q350. The Speaker: Well, you would expect me to say that it might be open for you to 555 change the Budget, because it is not open for Tynwald Members to change the Budget. The final question I suppose then from me is, what input the Treasury has had into the draft Communications Bill, to make sure that again there are not the silos and the disconnect between what one arm of Government is going to be doing in terms of issuing licences and expectations, and what Treasury is going to be doing in terms of funding them? 560 Mr Randall: So there have been various discussions, since I think it was brought up in the 2004 Select Committee, between Manx Radio and the Communications Commission in reviewing what is going into the Bill and that has progressed through now.

565 Q351. The Speaker: And which particular parts of the Bill have been through Treasury?

Mr Randall: Nothing has formally come through Treasury as yet, but there have been discussions between Treasury officers and the Communications Commission.

570 Q352. The Speaker: On which parts of the Bill?

Mr Randall: I cannot recall, I do not have that information with me at the moment but I can –

Q353. The Speaker: It is not something that you have been personally involved in? 575 Mr Randall: No, not me personally, but other officers have been.

The Speaker: Okay, thank you.

580 Q354. Mr Crookall: With regard to Manx Radio’s commercial activity, we heard from another witness that Manx Radio sells advertising at a cheaper rate than the other radio stations on the Island. Do you believe that the subvention allows them to do this? Is it a fair use of taxpayers’ money, if that is the case?

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The Minister: I would argue that is not fair use, if it is the case. If they are selling cheaper 585 advertising than others because of public subvention, then clearly there would have to be questions asked about that, because it really does create unfair competition in the marketplace.

Q355. Mr Crookall: Okay. And has Treasury considered moving to a ‘pure’ public service broadcasting model where Manx Radio would not be allowed to operate commercially? 590 The Minister: Well, again that is a broader decision for Tynwald, I would argue, rather than just for Treasury alone. Certainly since I have been the Minister we have tried not to directly interfere in the day-to- day running of the station, or the model, and what we have focused on instead is trying to drive 595 and ensure that we have got, as I have talked about, the value for money. And I am not going to go back through the conversation. So what I would suggest to you if we just purely went on that basis, based on the current model, it would seem to me that we are going to require a substantial amount of funding – more funding from the taxpayer. 600 Q356. Mr Crookall: Or from elsewhere?

The Minister: Or from elsewhere.

605 Q357. Mr Crookall: And can I ask then, have you been involved in any of the conversations with the BBC, at all?

The Minister: No, not directly.

610 Q358. Mr Crookall: You haven’t. And have you had conversations with the Cabinet Office, who have been dealing with the BBC?

The Minister: I am aware of this option of getting more from the BBC. I am very supportive of that. I do feel arguably that the Manx taxpayers, Manx residents, are paying twice for a 615 broadcast service because we obviously receive the BBC and pay the licence fee for that service, and pay additional money directly from taxation to support the station. So I would absolutely have no hesitation in welcoming further intervention from the BBC in terms of alleviating the financial pressure that is on us to subvent the radio station.

620 Mr Crookall: Okay, thank you.

Q359. The Chairman: We have talked around public service broadcasting. What definition do you think Tynwald should adopt for this?

625 The Minister: I think public service broadcasting is a necessary requirement to inform the public of day-to-day events, politics, news that is happening on the Island and to provide information to the public about events and happenings on the Island. Above that, I am not sure that any of the other areas that they are delivering could not be delivered equally by other radio stations. 630 So I think actually as a public service they have a duty to deliver the news, the relevant information around the current affairs, and relevant information around events and other happenings on the Island. Certainly, one would assume that a public service broadcaster would have that absolute overriding responsibility to be communicating to the public in the event of a major event of some description that was unforeseen.

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635 Q360. The Speaker: So from what you said, public service broadcasting is so much around just news. What about aspects of cultural identity, or providing areas of minority interest and things like that? Is that not part of public service broadcasting, or is it just not part of what you want out of public service broadcasting?

640 The Minister: Well, this is all personal opinion – (The Speaker: It is, absolutely.) and I am not asking … We are engaging now on just political levels outside the realms of what Treasury's views are. I have really been very clear on Treasury’s views. So yes, some element of culture, some element of affairs – but I think part of that would be covered around promoting the events that were happening on the Island – and of course giving 645 equal weight to the cultural identity of the Islanders as well.

Q361. The Chairman: You have repeatedly referred to Manx Radio as being almost treated the same as other Government Departments. Do you have any sympathy for the argument that public service broadcasting is so important – particularly to democracy in terms of reporting 650 what goes on in Tynwald – that it deserves special protection from the overall public sector financial pressures that we are faced with at the moment?

The Minister: I think there is some element, but it goes back to defining what exactly you want from a public service broadcaster. You talk about Tynwald: live broadcasting, I would have 655 thought, could easily be done via the internet in some sort of arrangement, rather than necessarily have it broadcast on the radio. I mean, if people want to tune in – and I am not talking about the Questions, sure, I think they are definitely of public interest. A lot of what goes on in Tynwald, I suspect a lot of members of the public do not necessarily want to listen on a day-to-day basis, but if they want 660 to tune in I would say the majority of the public are perfectly adept now at technology, and can click or find the relevant link to click on to listen. I do not think that has to necessarily be broadcast by one radio station. And of course there are other providers now who are actively interested in what goes on in Tynwald, who do not receive public subvention, and who spend a lot of their time either filming 665 proceedings or seeking out politicians for interviews. The fact is that I do not think necessarily that Manx Radio should have 100% of the claim to that. I think what you have got to remember– and I think that it is an important point – is that technology is changing, and because our use of technology and our access to information is changing, we can communicate with the public in a huge number of ways now. Arguably, you 670 could probably communicate with the public faster and more quickly via Facebook, for example, than you could via the radio station. And more people may well actually look at Facebook or Twitter, or whatever modern forms of communication are in vogue at that particular time, to receive public information, to hear public debates – and indeed, more importantly, to actively engage in public debate. 675 So just to necessarily ring fence the radio station like that in a changing modern world, and to pour everything into that particular facility, when you are talking a vast array of technology, and indeed more and more interest from the public in interacting these days with politicians, you have to argue whether in fact Manx Radio is fulfilling the purpose you are indicating – that it is as efficiently and effectively as it could be. 680 Q362. The Chairman: So you perhaps agree that, rather than talk about public service broadcasting, we should perhaps be talking about public service media?

The Minister: I think more broadly. I mean, does it have to be formally categorised into that? 685 I think what we need to properly align ourselves to is, we talk about ‘media’ and I think it could be that individuals can for very low cost align themselves or even set up their own portal,

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or radio station, or web or Twitter accounts, and effectively through those sorts of mediums if they could perhaps find a little bit of sponsorship; or if we said, ‘Well, actually, instead of giving £857,000 to the radio, I tell you what, there are four people here who have put their names 690 forward to be public providers of information in television, or video, Twitter or social media, and one in radio, and actually you could probably find with today's technology that it could be delivered very successfully with very little cost.’ Clearly you would have to do a bit more work around that, but yes I do not think that necessarily today's world has to be the sole responsibility of one particular organisation, when 695 there are so many mediums to communicate with the public – and more importantly to communicate back and forth between the public and politicians, and the whole democratic process.

Q363. The Chairman: So that monopoly provider, particularly in terms of payment from 700 Government, of one provider of public service content, you think is perhaps old-fashioned?

The Minister: I think things are changing at a rapid pace and that whilst the radio fulfils a function and it is an easy function, and it is an easy thing to put on and listen to when people are getting out of bed and going about their chores, beyond that as we all know, the regular tool of 705 communication of news broadcast is podcasts, is Twitter, is Facebook. So you would expect to reflect that these days and see it reflected in terms of how other democracies are perhaps looking to communicate. I certainly think, even in our Tynwald, many politicians can quickly and easily access the public and can communicate their message without having to go to the radio station and say, ‘I 710 would like an interview, please.’

Q364. The Chairman: And a personal question: do you listen to the radio a lot?

The Minister: From a personal perspective, I would listen to the radio in the situation I have 715 described. I certainly get up and flick the radio on, go about the usual business – getting the kids off to school etc. and will listen to the radio. But I have to say after nine o'clock, rarely.

Q365. Mr Crookall: Just carrying on with technology really, but in a different form: Manx Radio has put a number of business cases to Treasury recently regarding DAB radio. 720 What consideration has been given to funding of new technology and how will this affect the broadcasting on the Island?

Mr Randall: We received the business case relating to DAB; Treasury does not have the expertise to be able to assess it. So in conjunction with the Communications Commission we 725 appointed a consultant to give us a view on whether or not they thought that the proposal put forward by Manx Radio was the correct one. The consensus was that from the Business Case Working Group, the Communications Commission, and the Strategic Asset and Capital Investment Committee they were not persuaded that at this stage DAB was the right approach to replace AM; or that, certainly in the short or the medium term, if there was a requirement to 730 continue with AM then some money put into maintaining the mast, which was seen to have been neglected over a number of years, would be a better short-term solution where further work could be done and that would reduce the cost of running FM and DAB at the same time. But it would also enable advancements in internet technology etc. and we would go back and revisit it in a number of years afterwards. 735 So that was what happened to the business case.

Q366. Mr Crookall: Okay, so just to clarify, then: short- to medium-term, it is AM and FM which was the recommendation for the time being?

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Mr Randall: That is right; that is correct, yes. 740 Q367. Mr Crookall: Okay, thank you. Manx Radio have said in their submission to us that: ‘Whilst there will always be some who choose to listen to radio via the internet, internet distribution is not a robust delivery platform, is likely to fail in times of emergency and places a gatekeeper between the listener and 745 broadcaster.’ Would you agree with that?

The Minister: I am not technically advanced enough to rebut, or otherwise, that but I would just go back to my previous comments and the comments before that. In the event of a national 750 emergency then one expects one would want some form of ability to communicate. Perhaps one might say in the most old-fashioned of methods, yet a method that we understand would be unlikely to be interfered with and certainly could be received without the need for, say, electrical power which of course, if that had gone down, you would be relying on people with batteries in their radios to communicate – a wind-up, Mr Speaker, you are particularly good at 755 those, aren’t you. (Laughter)

Mr Randall: And to take the opportunity to look at different forms of channel. You have got two broadcast channels on AM and FM at the moment. One of them could be internet.

760 Q368. The Chairman: Just to conclude the session – and again I would like to thank you very much for coming along today because I know you have had a busy week. We have invited the BBC along to give evidence to us. Is there anything you would like us to ask them?

The Minister: Yes, why they are not putting some more money into delivering the radio 765 broadcasting on the Island, given the contribution from the Isle of Man taxpayer to the television licence/broadcast licence?

Q369. The Speaker: Just radio?

770 The Minister: I think realistically – and I think you have to be realistic about these things – and yes, I would just point to the radio as being a critical area. Again, I mean this depends on how … I think it is vital that we do get some clarity on what we want from the broadcaster, because that would serve again in solving perhaps some of the issues that we are experiencing. There is a lot to think about there in terms of how that can be resolved and what alternatives 775 are available. I certainly welcome the current Committee process. I think it is very helpful and I think that from what I have heard, there has been some very interesting evidence. I hope we do get to a position where we can take a thorough assessment of the critical credentials, because it will help eventually define whether or not we are on the right track in terms of financing. 780 Q370. The Chairman: Is there anything else you would like to say to the Committee today?

The Minister: I don't think so. I do want to just highlight to the Committee, in terms of just in case this gets raised. We have 785 talked about the disconnect, perhaps one side feeling we are not engaging seriously, and on another side obviously we feel that we need more from more delivery, if you like, or delivery options from the directors. I actually wrote yesterday to the Chairman of the Directors to ask him to stop the process of recruiting a permanent replacement managing director until after this process had been completed. I have done so because I believe that you may have 790 recommendations that could impact on the need to have such a role. But clearly if those

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recommendations are such that the process needs to be recommenced then we will ask for that to start again.

Q371. The Chairman: Okay. Would it be possible to have a copy of that letter for the 795 Committee?

The Minister: Absolutely.

The Chairman: Well again, thank you very much for your time taken today, and thank you 800 very much for giving evidence in a very honest and transparent way. The Committee will now sit in private.

The Committee sat in private at 3.35 p.m.

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