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British Film and Television Industries (Communications Committee Report)

My Lords, I congratulate the right reverend Prelate the Bishop of Gloucester on his interesting maiden speech and on being the father of four girls. Like the noble Baroness, Lady McIntosh, I, too, am one of four girls. It is a good thing to be. I also thank the noble Lord, Lord Fowler, for being such a wonderful chair of not only the Communications Committee but also the BBC Charter Committee, which I also sat on. I thank the clerks, special advisers, committee specialists and the one member that has been through the whole process, committee assistant Rita Logan, for everything they have done. I also thank the Minister, who has politely found so many different ways to disagree with me over often the same point, which I kept bringing up in our various debates. Occasionally he would agree with me, which was nice. I am not sure how appropriate it is, but I take the opportunity to thank him and his officials for the constructive approach they took to that section of the Digital Economy Bill that I was involved in, pertaining to television. Like the noble Baroness, Lady Howe, I hope that it survives the wash-up. A great deal of what I want to say has already been said so I will be brief. The British film and television industries have a lot to be proud of as major contributors to our creative economy and a valuable means of representing Britain to the world. They provide employment and, as the noble Baroness, Lady McIntosh, said, the people they employ are a great national asset. While we politicians languish at the bottom of the popularity charts, actors, presenters, directors and producers are lauded as national treasures. As our report and everyone who has spoken today point out, both industries are facing huge challenges, due largely, in ways that affect them differently, to the internet. It is interesting that, in all those futuristic films and television programmes—my noble friend Lord McNally mentioned "Dr Who"—no one predicted the internet. By now, we would have colonies on Mars; talking, walking robots; and man-eating plants. One of the greatest sci-fi films of all time, Stanley Kubrick's "2001: A Space Odyssey", had a murderous computer called Hal, but not one that connected individuals in the way that the internet has, thereby affecting the future and very existence of industries that until a few years ago thought they had a watertight financial model. As one of our witnesses, Charles Sturridge—who at the age of 28 directed "Brideshead Revisited" for ITV and was given the time and money to do it over 11 episodes—put it, we are, ""a generation of cavalry officers trying to work out tank tactics"." We are moving from one system to another. I will start by talking about the British film industry. As others said, the Government are to be congratulated on the tax credit system that they introduced in 2007. However, I agree with the noble Lord, Lord Inglewood, that there are problems with it. We on these Benches are concerned that the narrow definition of "UK expenditure", which applies only to money spent within the UK and not on UK elements abroad, has had negative consequences, in particular for co-production deals. Co-production deals are more often than not vital to secure sufficient capital for lower-budget and independent British films. However, this often means British talent making what are clearly British films abroad, as the noble Lord, Lord Inglewood, said. The present definition of UK expenditure makes it hard for such films to achieve the requisite UK spend for tax relief. We agree with the report that there should be a change to the "used and consumed" provisions that would extend the tax credit to production expenditures overseas. We are disappointed at the Government’s response in acknowledging simply that this is something to look at. The change would chime with the DCMS's original stated aim for the cultural test—namely, that: ""The flexibility of the new system will allow producers to clock up points if they use UK content, facilities and personnel, but is not intended to penalise them if they look to source some of their film making outside of the UK"." For television, the new world brings with it problems for the old. Broadcasting has historically made a hugely important contribution to the British creative economy. The inspired creation of the BBC, followed by ITV, BBC2 and Channel 4, has played a crucial role in sustaining and fuelling British creativity. The creation of Channel 4 and more recently the changes in TV terms of trade have seen remarkable growth in the independent production sector. Britain currently exports more than 53 per cent of the world's TV format hours, while the UK is only 6 per cent of the global market. However, I recognise the point made by the noble Lord, Lord Gordon, about the size of the independent sector. We all know that British broadcasting has reached a critical point; the transition from one age to another, from the analogue to the digital. The statistic that is most relevant to today’s debate about British content—my noble friend Lord McNally brought this up—is that the five terrestrial channels that are universally available and free are responsible for about 90 per cent of the investment in UK-originated content, while the new players, the digital channels and the internet, contribute less than 10 per cent. This is despite the fact that together they receive two-thirds of the income coming to UK TV. The British creative industries need our public service broadcasters. We must protect the BBC. We on these Benches strongly welcome the Digital Economy Bill's commitment to, and explicit support for, Channel 4. The recognition of the need to update its remit will help to secure its role as the main public service competitor to the BBC. As the noble Baroness, Lady Howe, and my noble friend Lord McNally, said, an essential element to ensuring a healthy future for the BBC and public service broadcasting is competition. Currently Channel 4's remit relates only to linear TV and ignores the growth of digital media. We welcome the Digital Economy Bill’s extension of this to new formats and platforms, where the channel is already pioneering PSB. We also welcome the new obligation placed on Channel 4 to produce content for older children and young adults, and the fact that a commitment to the making and showing of British film is enshrined in the Bill. However, it is very important that these new arrangements do not lead to any diminution of PSB on Channel 4's main terrestrial channel. An essential element to the continued success of the British television industry is its public service broadcasting, but it must not be relegated to digital channels with small niche audiences. We have seen with the expansion of the BBC into digital channels some great new PSB programming—indeed, through BBC4, a whole new channel of it. However, I am concerned that the BBC is increasingly using the existence of these digital channels, whose audiences are tiny compared with those of a terrestrial channel, as an excuse not to commission programmes for the channel that they should be on—namely, BBC2. For instance, Michael Cockrell's latest series, "The Great Offices of State", was broadcast on BBC4. It should have been on prime-time BBC2. As noble Lords who took part in the Digital Economy Bill will know—although they did not agree with me —we on these Benches are concerned about Channel 4 being allowed to produce PSB programmes, or online content, in-house, provided that it is not for the main channel. We worry that this could have negative consequences for the independent production sector. We support the idea of independently funded news consortia to provide regional and local services. We cannot understand the Conservative Front Bench’s commitment to scrapping them, which will simply leave the BBC as monopoly suppliers—something that I thought none of us wanted. Finally, many noble Lords have mentioned training. The fact of the gap between demand and supply emerged very strongly from our inquiry. I was told of a post-production house which hired 60 people between July and September last year, half of them from abroad—at a time when jobs, particularly for graduates, are so scarce. Mr Bullough from Aardman Animations, which makes Wallace and Gromit films among other things, told us: ""We probably take more graduates from Superinfocom in France and from the Filmakademie in Ludwigsburg than we do from UWE"—" the University of the West of England— ""which I could walk to from my office"." Aardman tried to set up an academy in Bristol, in partnership with local universities, to plug this skills gap, but found that the nature of higher education funding meant that it made no financial sense for it to do so. What a missed opportunity. At a time when the Chancellor of the Exchequer has admitted personal experience of youth unemployment through his son, the Government should listen to what employers want and need. We hear often—this was touched on by the noble Baroness, Lady Howe—about the decline in the take-up of sciences at school. The post-production and games industries are experiencing a skills shortage. If boys and girls were told that if they took maths and science they could end up making video games or doing special effects for Harry Potter, I am sure that things would change. Kate O'Conner of Skillset told us that, ""there is a blockage in the system, to get that careers information through the schools, about the range of careers and kinds of skills people might need ... We need to make sure that people understand"." In conclusion the question posed was about decline or opportunity. I will quote my old friend Charles Sturridge again: ""What is exciting from the point of view of the creative originators ... is that ease of access to the audience, which offers enormous opportunity to those people who create content"." We must nurture and back those people who create content—and protect them. The old joke that the BBC would be an efficient, well oiled machine if it were not for the pesky programme makers is not the way forward.