Second Standing Committee
on Delegated Legislation
Tuesday 13 July 2004
[Miss Anne Begg in the Chair]
Draft Community Radio Order 2004
9.55 am
John McDonnell (Hayes and Harlington) (Lab): May I declare an interest? I chair a voluntary organisation that is applying for charitable status and that may, in due course, apply for a community radio licence.
The Minister for the Arts (Estelle Morris): I beg to move,
That the Committee has considered the draft Community Radio Order 2004.
This is the first time that I have served under your chairmanship, Miss Begg, but I hope that it will not be the last. I look forward to doing so.
Community radio, as many hon. Members know, is a new and potentially exciting tier of very local radio. Such services will be an invaluable addition to the radio ecology, supporting and complementing the commercial sector and the BBC. We support community radio because it will encourage and support social inclusion, local education and lifelong learning, training and work experience, and wider access to broadcasting opportunities for communities.
Before going any further, I pay tribute to local commercial radio. As we all know, particularly as constituency MPs, it has for a long time provided an invaluable and popular service in the areas that it serves. Whether we are talking about big stations in the capital city or small stations in rural areas, it contributes strongly to an area's sense of identity and gets involved in all sorts of worthwhile social activities on and off air. We do not for a minute underestimate or undervalue the important role of local commercial radio. However, there is room for an additional tier of very local radio services along the lines of community radio.
Properly introduced and regulated community radio will complement existing commercial radio stations rather than compete with them. Community radio can provide a pool of talent for the commercial sector. It can encourage very local advertisers, which may in due course grow on to the local commercial stations as their business expands. It can also serve different audiences from those served by the commercial sector.
Above all, to have real and lasting value, community radio must be distinctive from commercial radio. There are some interesting examples of that among the pilot radio stations. For example, Takeover Radio in Leicester has broadcast with and to children, and Angel Radio in Havant broadcasts to an older generation. Awaz broadcasts to the Glasgow Asian
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community. There is also Sound Radio in Hackney, which describes itself as the world service for east London.
I will explain the regulatory regime under which the new sector of radio will operate. The Communications Act 2003 allows the Government to make an order that modifies the radio provisions of the Broadcasting Act 1990, so that they apply differently in some respects to community radio services. That is what this order does. In effect, it says that if someone is dealing with community radio, they should read the existing legislation with the modifications set out in the order.
I will go through some key provisions of the order. It sets out what characteristics community stations must have. They must be primarily for the benefit of the community or communities that they serve, and must deliver social gain, which the order defines. That means, for example, that stations must provide services to otherwise underserved groups, encourage discussion and expression of opinion, strengthen links with the community, and provide education and training opportunities.
Community radio services must be not-for-profit or non-profit distributing. Any profits must be ploughed back into the station or the local community that it serves. Community radio stations must provide opportunities for the community to which they broadcast to become involved in the running of the stations and the production of programming. They must be properly accountable to the communities that they serve. Those characteristics will ensure that community radio stations are distinct from existing commercial local radio services.
The order places certain restrictions on ownership. In particular, it ensures that community radio licences cannot be held by the commercial radio sector. That is another way in which we aim to ensure that the two sectors remain distinct. The order also provides that no one can hold more than one licence, which will prevent the development of chains. The schedule to the order sets out the modifications to the existing legislation, which are in line with the characteristics to which I have referred. I want, however, to draw the Committee's attention to a few aspects of the order.
First, the licences for community radio licences will be limited to five years. There are good arguments for a longer period, mainly on the grounds that it gives stations a longer period in which to plan. Against that, the demand for licences is likely to exceed supply. Anthony Everitt looked at this question in his excellent evaluation of the pilots and concluded that five years
''would provide sufficient security of tenure for a licence holder both for delivering social gain and for fundraising, while at the same time creating adequate opportunity for new community radio entrants.''
We agreed with that conclusion.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The length of the licence is very important because it takes time and investment to get a community radio station off the ground. Will the existing applicant be able to reapply after five years to renew his licence?
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Estelle Morris: Yes. We envisage that they would be able to apply again. The hon. Gentleman makes a fair point. We will want to review all the provisions in two years' time anyway to see whether they are working well.
The schedule sets out a number of restrictions relating to the funding and location of community radio services. The order provides that a community radio service must not take more than 50 per cent. of its income from any one source. This is based on Anthony Everitt's conclusion that a mixed funding model is best as it avoids undue dependence on one source of income. Stations will not fall under the influence of a dominant funder and will be more resilient if one form of funding ceases for whatever reason.
The order also sets out restrictions on the location of stations and the extent to which they can take advertising and sponsorship. They are as follows: no community radio stations are to be licensed where they would overlap with a commercial radio station with a potential audience or ''measured coverage area'' of up to 50,000 adults; a community radio station will not be allowed to take any advertising or sponsorship if it overlaps with a commercial station with a measured coverage area of between 50,000 and 150,000 adults; and, where advertising and sponsorship is allowed, there will be an upper limit of 50 per cent. of total income from those sources.
That is by far and away the most controversial part of the order. Many of those in the community media sector feel that it is too protectionist towards the commercial sector. We understand that view, but we do not share it. We have tried in the order to strike the right balance between the sometimes conflicting wishes and desires of the community and commercial sectors. Taken together, the measures that I have just described would affect only 13.5 per cent of the population of the country. Only 0.9 per cent. would be prevented from having a community radio station.
There is no benefit to anyone in putting small stations out of business or in seriously damaging their business. We are not talking about simple, head-to-head competition. Community radio stations will be able to access various sources of funding, including Government funding, which are not available to the commercial sector. That will amount to £500,000 for each of the next two years. That means that they could sell advertising at a rate that undercuts commercial stations and deprives them of revenue. We need to have in place measures that ensure that the two sectors can happily co-exist.
This document represents a change from the draft order. The draft order placed a duty on Ofcom to have regard to the impact of community radio stations on the commercial sector. Whichever route we took, whether in the draft order on which we consulted or the order before the Committee now, the result would have been substantially the same. There would still have been areas where the existence of a small commercial station would have meant that Ofcom would not license a community radio station in that area.The order tries to make transparent and
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unambiguous what was implied in the earlier draft. It reflects the responses from both the commercial and community sectors to the consultation document.
The community radio journey is an open one. We have formally asked Ofcom to conduct a review of the community radio sector two years after the first community station is licensed. If that review concludes that the restrictions are unnecessary or too burdensome, we will remove or modify them by bringing forward a further order for Parliament's approval. I repeat, therefore, that this order is not necessarily the final word on the subject. Once we have better knowledge of how the sector is developing, we will revisit the restrictions in this order to see if they are still necessary and desirable.
We should welcome this order, which is the start of a potentially very exciting journey for local radio. I hope that I have said enough for it to receive the support of the Committee.
10.5 am
Mr. Boris Johnson (Henley) (Con): Conservative Members welcome this statutory instrument and the setting up of community radio. Many of us will have had direct experience in our constituencies of the benefits that community radio can bring to people. I recently had a wonderful time at Huntercombe young offenders institution listening to ''Thug FM'', or whatever they call their excellent radio station. Radio stations in sixth form colleges and in other communities do a lot of good in informing people what is going on in their community and educating them in the ways of the media—I am not sure we need too many more people to be inducted into that profession, but it is good that they get the training.
The Minister has already covered the issues relating to competition and funding, which formed a large part of the debate during the consultation period. I hope that she will not mind if I go over them again. I was fascinated to read in the Department for Culture, Media and Sport paper that there will not be any public funding. However, in one place, it stated that there will be no call on the Exchequer, but in another place it said that £500,000 would be given. Is that an accurate representation of the extent to which public money will be made available to community radio? According to the order, only 50 per cent. of funding for community radio stations will be derived from sponsorship and advertising. It follows that the rest must come from some kind of subsidy, which must ultimately be from the taxpayer.
I echo the words of Baroness Buscombe in another place when she said that she wanted more clarification about what means would be found to push public money into community radio. I can think of a few examples off the top of my head of bodies that might fund community radio—for example directorate-general 10 of the European Commission is always willing to pump out money to those who will pump out good news about Europe. I am also told that there will be a community media fund—I do not know what that body will do or how it will work, but quite a lot of taxpayers' money will be available.
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