Education, Lifelong Learning and Culture Committee, 24 Sep 2008

Meeting date: Wednesday, September 24, 2008

Official Report 288KB pdf

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Scottish Broadcasting Commission

Good morning and welcome to the 22nd meeting this year of the Education, Lifelong Learning and Culture Committee. We are joined by two additional members: Ted Brocklebank is here and Claire Baker is appearing as a committee substitute. I remind everyone that mobile phones and BlackBerrys should be switched off.

The first item is our continued consideration of the Scottish Broadcasting Commission's final report. I am delighted to welcome to the meeting Blair Jenkins, the chair of the commission. Mr Jenkins, we have a number of questions that we wish to ask, but do you have any short introductory remarks to make before we do so?

I want only to thank you for this opportunity to come back and talk to the committee at this important point in the process. We have now published our unanimous report, which contains 22 recommendations, and we are pleased that it has been received in the way that we hoped it would be. People have approached it with fresh eyes and open minds, and so far they have been broadly positive.

Thank you again for your invitation. I am keen to answer the committee's questions.

Initially, I was very impressed by the report, which contains many important and positive features. For example, it talks about the "explosion of creativity" and the

"global audiences awaiting those with global ambitions";

sets out a vision for

"a very substantial increase in investment";

and refers to

"a greater volume of high-quality Scottish programming",

the "development of opportunities" and

"the chance to take risks and innovate".

I have to say, though, that what emerges later in the report contradicts a lot of the ambition that is shown at the start.

Funding is critical to some of the issues that are raised in the report. In paragraph 34 of the executive summary, with which I am sure you are very familiar, you said:

"Recently the BBC has quantified the additional sums that will be spent in Scotland on network television programmes. In 2007/08 the total spent on original production in the UK was around £850 million. A share of that budget equivalent to Scotland's population share of about 8.6% would be between £70 and £75 million".

However, the BBC spends money in other areas. Can you give me an idea of the total amount that the BBC spends in Scotland? I understand that the licence fee is £139 and that there are about 2.3 million households, so by my rough calculations about £320 million is generated in Scotland through the licence fee. However, we are talking about increasing spending on production from £30 million or £50 million—depending on whether we take the BBC's figures or other figures—to only £75 million.

The figure that you gave for the revenue from licence fees in Scotland is broadly correct. I do not know the exact figure for this year, but it is about £300 million. As I recall, the most recent figure from last year for direct expenditure in Scotland was in the region of £140 million. Of course, that figure will go up in light of the new commitments on network production. If your broad point is that there is no absolute correlation between the licence revenue that is collected in Scotland and direct spending in Scotland, then you are right: that is true. The explanation for the difference lies in the fact that Scotland benefits from many United Kingdom-wide services. The key point is not whether there is a direct correlation but whether Scotland secures a fair and appropriate share of production spending.

I agree. Under the current structure, it would not be realistic to think that the amount that is spent in Scotland should be the same as the amount that is generated by the licence fee. However, the gap between £140 million and £320 million is big, and must represent several thousand jobs in the creative fields. People who want a career in the media and related professions might have to go south of the border or elsewhere.

The BBC envisages an increase of a mere £20 million in its expenditure in Scotland by 2016. Is that not somewhat timid of the BBC? You said in your report that 2012 should remain the deadline for hitting the target, but should we be more ambitious about the amount of programming that comes to Scotland, so that the lofty ambitions that I mentioned can be achieved?

The key point is that, as I think the director general said about a year ago, the 8.6 per cent share of the budget that is envisaged, which would be £70 million to £75 million, is very much a floor and not a ceiling. The proposed 8.6 per cent share represents a guaranteed underpinning of the creative production sector in Scotland. It is certainly not the summit of my ambition, and I do not think that it is the summit of ambition of anyone else in the industry.

We made the broad point that the BBC is in the process of trying to reinvent or reimagine itself as a genuinely UK-wide broadcaster. In the report we sought to encourage the BBC further in that direction. One of our recommendations, which would partly address points that you made, is that there is a good case for relocating the management of one of the four main UK-wide BBC television channels to Scotland. That would be an important symbol—symbols are important—that would enable the BBC to demonstrate that it had got the message about the need to disperse influence, power and budgets around the UK. That is one of our key recommendations.

I endorse that recommendation, although I understand that you would be happy for control to remain in London.

I understand that S4C in Wales gets £95 million. Wales is a country of three million people and Scotland is a country of five million people. Even under the approach that you describe in the report, which is not desperately ambitious, Scotland would still get less money than the Welsh channel gets.

In paragraph 39 of the executive summary, on the future model for Channel 4, you said that it is envisaged that only a pitiful 2 per cent of the budget will be spent in Scotland—I accept that you expressed disappointment about that. Will you comment on those issues?

We thought that it was worth including the S4C figure as a benchmark and a comparator, but we were not necessarily trying to draw a direct comparison. For one thing, S4C has been around for a long time—as long as Channel 4—and was launched with a budget and level of expectation that reflected the age in which it was launched. Some television costs have probably gone down since then, which would allow the figure to be pitched a little lower.

In proposing the figure of £75 million, we were concerned with trying to do something that is high quality and not necessarily with populating an entire schedule with original productions. Sometimes, if money is spread too thinly, we do not get the quality that attracts audiences, so we felt that the key issue is to strike a balance between quality and quantity. I am confident that, with £75 million, an attractive schedule of programmes for Scotland could be put together that would attract high audiences.

As I said, the reaction to our work has been generally positive—it has been welcomed within the industry and by all political parties. One interesting point about the reaction is the balance between people who say that we have pitched the figure too high and those who say that we have pitched it too low. Initially, some people thought that the figure was much bigger or more audacious—or whatever the appropriate adjective is—than they had imagined, but others have now said that we could do more with more. A correlation always exists between the amount of money that is spent on a network or television channel—I include in that the important online dimension—and how good it is.

If we launch a channel that is well received and high quality and is seen as providing a valuable and important public service, a case can be made to augment or add to the service in future. We did not go into this level of detail in the report, which is pitched at a more strategic level, but there would be opportunity to earn revenues outside the country. That would be an additional source of revenue for the new service. As we said in the report, the service would lend itself naturally to co-production opportunities with other countries and broadcasters, so any material on the new service would not necessarily be funded 100 per cent from the core budget. On that issue, as on others, we tried to strike a balance.

We would like to have co-production so that we get more bang for our buck, but there is a bit of a chicken-and-egg situation. If we do not start with a high-quality, fully funded service, it will not make the high-quality programmes that will attract further funding. That is an issue.

I have a final, slightly different, point on funding. Paragraph 10 of the executive summary states:

"Importantly, a channel which is not pursuing advertising revenue would not be competing for the main source of income of Scotland's existing commercial media".

Surely if the service took viewers away from the commercial channels and their viewing figures fell, that would impact on the revenue that they brought in from advertising.

That is true. There would be an impact on commercial media as a result of taking viewers away from them. We tried to outline a proportionate impact. We think that there are compelling public service reasons for having a Scottish network, which justifies intervention in the market to secure certain public policy outcomes that the market, left to its own devices, would not deliver. The main reason why our model does not envisage advertising revenue as an income source for the channel is the potential impact on the main revenue source for the commercial media.

I have a further brief point on funding. At the level at which we have pitched the funding, the cost per hour for the Scottish network would be a little less than the current cost per hour of BBC Scotland's programmes that are made for Scotland and considerably more than the average cost per hour that STV currently spends on its programmes in the Scottish service. I am in no doubt that, for the price that we have outlined, an attractive schedule could be put together.

Kenny Gibson mentioned that the BBC trust has extended the deadline to hit Scottish targets from 2012 to 2016. Your report states that you have not heard a convincing argument to explain why that should be the case. Will you say a bit more about those arguments and why the commission did not find them convincing?

To some extent, I am making the BBC's case—although it might feel that it would do so better than I can—but its main argument is that it wants there to be a sustainable switch in resources and that it will take time to develop the sector in Scotland to a point where the BBC can deliver that level of production. However, I think that the BBC's view is unduly conservative. One thing about television is that you can move pretty quickly. Once the money is moving, everything else can be put in place fairly quickly. With the level of talent that we have in Scotland, the sector as it is currently constructed and the injection of additional resources, I am in no doubt that the BBC could hit the target within four years, so it is being unduly conservative.

The BBC has gone through a lot of internal and structural change in the past couple of years, so maybe it would rather avoid going through the additional internal change that would result from moving faster than it wishes to go. So my interpretation is that the reasons behind extending the deadline were largely internal to the BBC, and were not to do with the state of the production sector in Scotland.

Paragraph 36 of the report says that £20 million per year will be lost. Was the BBC not encouraged to see that if it moved faster, it might help the process of improving broadcasting in Scotland?

The BBC accepts the point that it has to get to a proportionate 8.6 per cent share of network television production spend in Scotland. The only issue is with the timing.

One thing that the commission did not go into but which is worth saying is that the sector in Scotland has suffered for many years because it has not been accepted that there ought to be a population share of spending in Scotland. We have not got into the debate about compensating for the deficits of the past. Rather than focusing on that, we have said, "Let's fix the future as quickly as we can." I believe that, collectively, across the political parties, within the industry and with public opinion, we ought to try to persuade the BBC to move a bit faster.

Kenny Gibson mentioned Channel 4, but there are reports in today's news about Channel 4 shedding jobs. How damaging will that be for Channel 4 in reaching its mandatory targets for Scottish output?

It should not have any impact. Tomorrow, the Office of Communications will publish an outline of its latest thinking on the future of public service broadcasting, and Channel 4 is pinning its hopes on a favourable response and treatment from Ofcom. I interpret yesterday's announcement as Channel 4 demonstrating publicly that it is doing all that it can to help itself by achieving efficiencies in the organisation. It is not simply looking for additional public funding; it is trying to reduce its cost base. However, in itself, that should not have any impact on where Channel 4 spends money on programmes. It is spending a certain amount of money on programmes around the UK, and whether it spends it in one part or another does not have any financial impact on the channel. It should therefore be able to match the BBC's commitment and get to a similar level within the timeframe that the commission has outlined.

The commission recommends that creative Scotland should have a vital leading role. Why does the commission think that that is important?

On a previous occasion when I came to talk to the committee, I mentioned that one of the emerging key issues was that it was hard to see who would get everyone in the room. The industry has suffered from the lack of a collaborative approach to many of the issues. Although it is not always possible for different broadcasters or production companies to collaborate, there is and ought to be shared objectives and a shared direction, which is good for the industry as a whole. No one seemed to be holding the ring in that way, and almost everyone whom we spoke to seemed to back off from the idea of taking a leadership role and moving things forward. As our investigations progressed, we were always conscious of trying to identify who would bring all the parties together and move us forward.

Our report goes into detail on the key role that Scottish Enterprise will play in the economic development of the broadcasting industry. That will be Scottish Enterprise's focus, but there is much more to the industry than just that, vital though it is. It seems to us that creative Scotland is the natural choice to bring together the broadcasters, the production companies, the development agencies and the skills agencies, to ensure that a coherent and integrated approach is taken.

The role of creative Scotland will be different from the role of Scottish Enterprise, because Scottish Enterprise wants to look at a spreadsheet, not a script. Different agencies will have different roles, but creative Scotland will have what we describe as a "muscular" role in ensuring that ideas are driven forward.

This committee will have a role in driving forward many of our recommendations—we might come on to discuss that. I also foresee, for example, creative Scotland taking on some of the work that the broadcasting commission has been doing, to ensure that recommendations do not fall by the wayside.

It appears that the Government is still committed to the establishment of creative Scotland, but it has been delayed. Are you concerned that a leadership vacuum could be damaging for the industry? Nobody is bringing all the parties into one room and showing leadership.

There could be a gap between now and the spring of next year. Collectively, we will have to ensure that that is not a problem. However, it is not that everyone will simply wait around and that no progress will be made, because it is clear that matters will progress in this forum. Broadcasters obviously are in dialogue and are taking things forward, and Scottish Enterprise—as we suggested that it should—is developing its strategy for the sector, which will be completed by the end of the year.

You are right to suggest that there could be a gap in implementation while we wait for the launch of creative Scotland. The most likely outcome is that the creative Scotland transition team will work on some of the implementation issues.

When this committee scrutinised the Creative Scotland Bill, we were concerned about a lack of detail and certainty. We wanted to know exactly what the role of Scottish Enterprise would be in relation to the creative industries and broadcasting in particular. What is the commission's view of Scottish Enterprise's role?

Scottish Enterprise should have the economic role for the sector. Some issues relating to sector development and business development are generic, and Scottish Enterprise's generic skills could be applied to them. However, a degree of specialist knowledge of the creative industries is required, so we suggested in our report that Scottish Enterprise might have to add to its skills set so that it can engage properly with the creative sector.

Great opportunities will arise. Scottish Enterprise must define the sector properly, ensuring that it includes creative content and is not just about information technology and technology-based companies. It must take a flexible approach, bearing in mind that the sector includes a large number of small and diverse businesses that will not all follow classic models for business growth. It must also take a sector-wide view of how to develop the industry. Scottish Enterprise will have a central role in the economic development of the sector. No one should be in any doubt that it will have that role.

Congratulations, Blair, on your report and its recommendations—not least because so many of them were contained in the proposals that were put to you in a Conservative document. Our proposals included, of course, the new digital channel, and my questions this morning will relate specifically to it and to your proposed funding method. You rightly said that the proposed new digital channel should be run on a public service model. Is there any reason why that should exclude commercial funding or partial commercial funding?

To respond to Ted Brocklebank in similar spirit, I am grateful to him for the way in which he and his colleagues have engaged in the commission's work, which was positive from the start. We have turned up on many of the same platforms in the past year, and I have heard him talking about a Scottish digital channel more than anyone else, so I acknowledge his point.

For us, the point of principle is not whether the channel should take advertising revenue. If the model that was settled on included an element of advertising revenue, that would be perfectly compatible with the vision that we outline for the Scottish network. We took a pragmatic view, partly because, as I said in response to an earlier question, commercial media in Scotland are under severe pressure on revenue and costs, so if we introduced a new Scottish network that not only was substantially funded with public moneys but was going after the commercial media's advertising revenue, it would be tough to sell it to the current media market in Scotland. It would also raise issues at European level about state aid and proportionate impact on the market, although those are not insuperable.

The core point is the public service ethos. The most important point of principle is that the channel be set up—as we believe it ought to be—as a not-for-profit broadcaster with a clear set of public service values and with a public service mission and ethos. The other model that we have in the United Kingdom is a not-for-profit public service broadcaster that derives its income from advertising revenue. The channel that is run on that model is Channel 4. It would be fair to say that, over its history—particularly in the past 10 years—there has been a great deal of concern about the fact that it has deviated from its remit in pursuit of larger and larger audiences. One concern that I would have about a public service channel that also sought advertising revenue is that it would inevitably be drawn to doing things for bigger ratings rather than because of its core values. We came to the view that, on balance, it was best to propose a model that did not include advertising revenue as an income source. However, if the network went ahead and the political decision was that it should be partly funded by advertising revenue, our view would not be a fundamental obstacle or point of principle.

Your first argument was that, in an already rocky commercial situation, you did not want to add to the problems of the commercial companies in Scotland, so it is surprising that STV itself has expressed some disappointment that you decided to go for the publicly funded model that you have outlined rather than allow the commercial companies some kind of access to the new channel.

I certainly envisage STV being a supplier of programming to the channel. I would be surprised if it was not one of the leading bidders for a news contract for the new channel, for instance, and I am sure that it would be keen to supply other forms of programming.

In thinking about who would run the channel and how it would be set up, we thought that it was highly important to establish it from the start as something new that was imbued with a clear public service mission. For perfectly understandable reasons, STV is a commercially driven broadcaster and is likely to become even more so under the various pressures that it faces. STV's role in the Scottish network would almost certainly be as a supplier of programmes and, possibly, of the transmission service as well. I imagine that one would not set up a separate transmission operation but would invite offers from the BBC, STV and whoever else was interested in supplying a transmission service to the new network. STV could be a supplier, but it is not the right organisation to run the new network.

You could have gone for a hybrid model, such as there is in Ireland and Spain, where there are channels that are partially commercially funded and partially state funded. In the same way as the Gaelic channel takes a certain amount of funding from the Scottish Government's culture budget, part of the Scottish network's budget could come from the Scottish Government and the remainder could come from commercial interests. In that way, not only would you have direct control of your public service ethos but you would have opened up the market to other players, such as STV or the city TV concept that I have gone on about quite a bit.

I have touched on some of the practical difficulties of a model that takes public funding and is competing for advertising revenue. Structurally, that is becoming a more difficult model to launch and to get public support for. I suspect that such a model might run into legal challenge from some of the commercial media operators in Scotland on the basis that it would look like an unfair competitor in the market. Scotland has a limited advertising market, and one of the things that make it more difficult to launch, for instance, a new commercial television venture is the very existence of the UK public service broadcasters that take advertising revenue. I do not have the exact figure, but I estimate that Channel 4 must take about £50 million in advertising revenue out of the Scottish market, and I think that Channel 5 is not terribly far behind.

There are people who are more specialist in advertising than I am—obviously, I know a bit about the market, particularly as it affects broadcasting—but I do not hear anyone saying that it is possible to grow the market for television advertising revenue in Scotland significantly, so if you introduce something new that is also after that revenue stream, you are talking about the cake being sliced ever more thinly. It is a pragmatic calculation. From my point of view, and from the point of view of the commission, if the model that is favoured at the end of the process in the Parliament, at Westminster and in public debate includes an element of advertising revenue, that would be acceptable. However, we said that, on balance, we did not think that that was the right way to go.

We make the point in the report that the Scottish network could pursue advertising and sponsorship revenue outside the UK. Distribution within the UK ought to be on a public service model, without advertising, but with regard to the online dimension and marketing to the Scottish diaspora and other interested parties overseas, it would be possible to earn advertising, subscription and sponsorship revenues.

You say that there is not much room to expand Scottish advertising revenue, yet a number of players think that it could be expanded, particularly if you went down the route of having a core schedule that was run as a new digital channel, and allowed for city TV or local TV to take part in that new channel by taking opt-outs for news and current affairs programmes in local areas. There is a view that there is a substantial television market if you take television back to its very local origins. As we know, regionality is starting to go in ITV, and the new channel would have been an opportunity—it might still be an opportunity, depending on who decides whether it will go ahead—for television to go the way it is in America, Canada, Australia and elsewhere.

You are probably right that potentially there are advertisers at a very local level who are not using television as an advertising medium. If a model was developed that allowed lower-cost entry to city-based or more localised television than we are accustomed to in this country, I am sure that new revenue would be created, although one would have to be slightly sceptical about how much genuine additional revenue would be available.

As the debate goes on, it will be interesting to involve other commercial operators, and not just from within television, because advertising is substitutable and big advertisers often use different media for advertising and switch from one to another depending on the strategy, the brand and what they are trying to achieve. The big change at the moment is the shift of advertising revenue away from linear broadcasting and towards the internet. In common with most other people who examine the industry, I think that that is a structural change, not a cyclical one—it is an almost permanent and on-going change in the industry. I do not have a closed mind on advertising revenue, but on balance it seemed to us that it was right to recommend a model that was derived only from public funding.

How sure are you about the finance from the cleared digital spectrum, which you describe in your report? You claim that it will raise billions of pounds for HM Treasury. How did you reach the conclusion that billions of pounds could be raised from the sale of cleared digital spectrum?

You cannot come up with an exact figure until the auction is held so, by definition, you cannot know what sum will be raised. Everyone who comes up with a figure comes up with a speculative one. I have heard no one suggest that less than billions of pounds would be raised from the auction. Ofcom describes it as the best spectrum that it has ever auctioned—it is prime spectrum, universally accessible and of high quality. When it sold off spectrum to the phone companies some years ago, correct me if I am wrong, but I think that about £30 billion was raised.

It is true that market conditions have changed, and it looks likely that the impending auction might take place in the midst of an economic downturn, so it is hard to say what sum will be raised. The point that we made in the report is that, whatever sum is raised, there is about to be a huge windfall to the Treasury from the sale of a UK asset. There is at least an arguable case that part of the windfall should be used to address what is a clear public service deficit in Scotland.

I welcome you back to the committee and congratulate you on a robust report with excellent recommendations that seem to have been received well across the sector. That is certainly the impression that I have from the people to whom I have spoken in the past week. Unless I am much mistaken, you will agree that the majority of the submissions, including the SNP's submission and the Conservatives' submission, called for a digital channel.

My specific question is about the long-running debate on a "Scottish Six". It is really important to have quality news production in Scotland that looks at Scottish, UK and global news from a Scottish perspective. Will you give us a wee insight into some of your experiences of running a news network in Scotland? How would you use that experience as good practice?

I will resist the temptation to wander too far down memory lane. One of the key things that have happened in the past year is that the BBC did two things once the Scottish Broadcasting Commission was set up: first, it moved quickly to try to promise increases in network television production, which we have touched on; secondly, it launched a major inquiry into how well or otherwise the BBC reports the increasingly devolved and evolving UK.

The report that came out a few months ago, of which members are aware and that you have probably read, is a landmark report. For the first time at an official and corporate level, the BBC acknowledged what many practitioners in television news and current affairs have known for years, which is that it is becoming very difficult to make single news programmes that work for the whole of the UK—it is a real challenge. There has been a division in the BBC between the people who had always acknowledged that challenge and the people who were willing to say, "Actually, everything's fine, we're doing a fantastic job so what's the problem?"

It is encouraging that the report commissioned and published by the BBC Trust lays out in blunt terms just how difficult it is to make single news programmes that work for the whole of the UK and some of the problems that have been encountered. The view that we have taken is that the BBC Trust and executive are now engaged in the process. Having admitted the scale of the problem, they have come up with a long list of actions that they are implementing over the next months and year.

Drawing on my experience of being involved in debates and discussions over the years about network television news and how well, or otherwise, it serves Scotland, I would say that the response from the BBC is the most substantial response that I have ever seen from the organisation. To reduce it to simple terms, the BBC has got it now that a large part of the audience, not just in Scotland but in other parts of the UK, find that network television news programmes do not work for them in terms of how well they report our part of the UK or events in England to the rest of the UK. Those are all issues of which committee members are aware.

It is important that in the coming year the BBC completes the process, tries to remedy the problems in the existing service and comes back to have an honest look at the options.

Given the huge amount of evidence that came to the commission—including from the BBC Trust, as you just mentioned—that was in favour of a "Scottish Six", how can we progress that issue?

My personal view is that we should drop the name "Scottish Six" as it hinders rather than progresses debate. In my experience, as soon as the phrase is used everyone puts on their tin hats and gets in the trenches. Everyone has a fixed view on it. In his report, Professor King came up with the handy phrase "parallel programming". He discussed the need for the BBC to engage with whether the smaller nations of the UK might welcome parallel programming, which would provide additional choice by giving them a UK and international news programme as well as their own national news.

When the BBC comes to discuss the issue next year—in what it has said will be a very open and transparent way—it will need to examine a number of factors. A key factor is choice, because digital television offers greater choice. As our report shows, the news on all five main UK television networks is presented from London—there is a uniform service for the whole of the UK on those five channels. There are also two 24-hour news channels that, similarly, present a uniform news service for the whole of the UK. There is an argument for the consideration of choice: for the BBC, as a public service broadcaster, to consider whether to offer something different.

We have set out the arguments and the evidence that we have collected—including the fact that a small majority of people in Scotland are in favour of structural change to the early evening news—and we have urged the BBC to keep thinking about the issue and to complete that process next year. One of the reasons we have done that is that it is important that the BBC makes its own decisions. There are important reasons why the BBC is set up to be independent of pressure from Governments or political parties—or, indeed, from broadcasting commissions—but the BBC trust and the BBC executive have a clear responsibility to discharge their duties and provide the best possible service to viewers in Scotland. I certainly do not want to prejudge the outcome of their deliberations. We have urged them to come at the issue with fresh eyes and open minds. One could come up with models other than the status quo or the "Scottish Six", and that is what we hope the BBC will do next year.

Your report stops short of calling for full devolution of broadcasting to Scotland. You say in the report that there may come a time when devolution would be essential. What would be the tipping point?

We have taken quite a pragmatic approach. The important thing was to outline what we feel is required in Scotland in terms of programmes and services and what needs to change in terms of the economic, cultural and democratic importance of broadcasting, so that we can consider the issue honestly and ask whether those things can be accommodated and achieved within the existing framework or whether the framework needs to change.

We have gone through the existing framework in—I hope—a detailed and methodical way. We have considered what needs to be changed to make it work better for Scotland, and what it is sensible to leave at a UK level. We have argued that there are good reasons why the legislative powers over broadcasting should remain at a UK level. It is equally clear, however, that there is a need for greater accountability and greater influence over policy and programmes in Scotland to ensure that people get the services they want.

We have tried to strike a balance and provide a model of joint accountability that captures the aspiration in Scotland. It is primarily concerned with programmes and services—not many people said that they want telecoms to be regulated in Scotland, spectrum allocation to be determined completely at a Scottish level or, at this stage within a UK model, a separate BBC charter for Scotland.

We have suggested quite a major shift in emphasis in where broadcasting is discussed, and described a much more prominent and active role for this Parliament in broadcasting matters. We suggest what we think are the best possible set of recommendations for broadcasting in Scotland within the existing model. As we say in the report, if it turns out that we cannot get a satisfactory solution for Scotland within the existing model, the devolution of legislative powers will come back on to the table and the debate will move on and take on a different shape.

What specifically would tip it over the edge?

I have not thought it through to that level of detail. With good will and good faith, and with everybody in this part of the UK pushing pretty hard, what we have outlined in our report is deliverable and I think that it will happen. I take an optimistic and positive view of that. Nevertheless, I imagine that if, four or five years down the road, the UK broadcasters had not delivered their network commitments and there was a glaring public service broadcasting deficit in Scotland and general unhappiness with the services, the Parliament would want to bring the issues back to the table.

You say that although we have at least got it, the broadcast news in Scotland must be improved. I read recently that "Reporting Scotland" will have only one presenter from 29 September. How does that stack up? Could it be seen as a further downgrading of the service? We can talk about the spectrum, but the average person in their house watching the news will see one presenter where they used to see two, which is what the news output has when it comes from London. What do you think about that?

I would not want to express a strong opinion on whether news programmes are best presented by one presenter or two. There are different opinions on that. For the 6.30 programmes on the BBC, some parts of the UK have always had one presenter whereas others prefer to have two. I incline towards a two-presenter approach, but I would not pretend that there is unanimity in the industry on the matter—people have different preferences. I would hate to say that broadcasting is susceptible to the flavour-of-the-month approach, but it is a bit like whether presenters should sit down or stand; fashions change, and I would not want to comment on that in detail.

As we say in the report, there are legitimate concerns about the level of funding of BBC Scotland programmes. We think that that is connected to the perceived lack of ambition or aspiration of some programmes. Therefore, one of our recommendations is that the BBC should review the funding of its television programmes for Scotland.

Paragraph 5 of the executive summary of the report states that

"Scotland has undoubtedly benefited from being part of the overall broadcasting ecology of the UK",

but it goes on to say:

"However, Scotland has always been rather marginalised within this generally successful UK framework and that needs to change."

Paragraph 32 states that

"the levels of television production from Scotland had been in steep decline. Most of the difficulties seemed to stem from the heavily centralised nature of broadcasting in the UK. All of the UK network channels and all of the key decision-makers are based in London."

Paragraph 37 adds:

"The metropolitan culture is firmly entrenched, as is the notion that London is the natural centre of things and the proper location for positions of power in broadcasting."

The summary goes on to say that only 2 per cent of Channel 4's budget is spent in Scotland, although you have just mentioned that £50 million comes from Scotland in revenue.

When I started to read the report I thought it was great and that it was heading towards what we, or at least SNP members of the committee, believe should happen—the devolution of broadcasting powers to Scotland—but we come up against a brick wall because you stop at the last moment and say, "Oh, well, right enough. We do not really want to go as far as giving the Scottish Parliament control over broadcasting." The reasons for that are fairly feeble and timid. For example, you state:

"We do not believe, at the present time, that broadcasting should be devolved. Convergence of platforms and new technology developments intrinsically link broadcasting to telecommunications where there also appears merit in a UK approach."

That is gobbledygook. Denmark has a population of 5 million and is half the size of Scotland. Finland has the same population as Scotland but is three and a half times the size. I am not aware that those countries have any difficulties with such technological issues. I do not see the telecommunications in Denmark feeling the need to be run from Berlin or the telecommunications in Finland feeling the need to be run from Moscow.

Given the arguments that the commission made throughout the document—until the last moment—surely we should devolve broadcasting to Scotland if we are to see an increase in employment in the media in Scotland and better programming and if the global ambitions that you talked about are to be achieved.

Some months ago, I attended a reception that Ted Brocklebank hosted on behalf of STV. I spoke to a number of executives who said that there is absolutely no way that Scotland will be able to compete in the global marketplace unless there is real control over programming in Scotland, rather than the metropolitan bias that we have at present.

You asked quite a lot of questions. If I may say so, I think that you are missing the point on the issue of devolved powers. The European examples that you cite are of independent countries.

Indeed.

As I am sure the committee understands, we were not asked to consider what broadcasting would look like in an independent Scotland; that was not part of our remit, so we did not consider such a model. It is much easier to construct a model for broadcasting in an independent Scotland than it is to construct a model of devolved broadcasting that is fully consistent. In good faith, and with a degree of thoroughness, we considered how to get the existing framework to work best for Scotland.

Very few members of the public come through the door talking about devolved broadcasting; they talk about the improvement of programmes and services. That is where the interest lies. Almost everything that we heard was about those issues.

The framework has worked well for Scotland. If you talk to people up and down the country—which we did endlessly—you find that the existing system has delivered very good programmes and services at a UK level, from which Scottish viewers have benefited, such as fantastic drama, comedy, documentaries and all the rest of it. However, there is no doubt that, for historical and technological reasons, the industry has been overconcentrated in London. Many of those reasons are now disappearing and it is important that broadcasting reflects that. The publicly funded broadcasters such as the BBC and Channel 4 should move to a much more dispersed model of power, influence and programme commissioning than they have had hitherto.

The approach that we took was honest and pragmatic. We looked at how to get the best outcomes for Scotland in terms of the programmes and services that are available to viewers here.

I was not party to the conversation that you had with people at the STV event, but I am not sure that devolved regulation of broadcasting would have any impact on the international appeal or success of Scottish programmes or on the ability to grow that part of the creative economy. The key thing is to get a fair share of the UK spend on network television programmes and to do things to grow our indigenous sector. Our main recommendation was the creation of a Scottish network. If we can make those two significant public interventions—to have that additional UK network production and to have the underpinning from the Scottish network of the production sector—I am in absolutely no doubt that we can have an internationally successful production sector in Scotland.

But without the devolution of budgets and decision making to Scotland, you will always be at the whim of the metropolis in terms of future decision-making processes. I realise that other members want to speak, so I will ask one last question. How many people are employed by the BBC and, of those, how many are employed in Scotland?

I do not have an absolutely up-to-date figure on that. The last time I looked—I am pleased to be corrected if I am wrong—there were about 24,000 BBC employees, although that might have decreased, because the BBC has gone through a lot of cost cutting. I think that BBC Scotland employs in the region of 1,100 or 1,200 people.

Perhaps the questions about the BBC can be put to its representatives when they come before the committee. They have already indicated their willingness to do so.

You have referred to the talents that we have in Scotland. The commission identified the need to develop skills and training further. What are the gaps and how should we address them?

One consequence of the steep decline in network television production in Scotland in recent years is that a great many people have relocated—not just people on the creative side, such as directors and writers, but people with technical skills, such as those who work in post-production or make-up for drama. Understandably, people have moved to other parts of the UK where they can make a career and a living. We need to plug the gaps in traditional production skills.

A large part of the growth opportunity lies in the growing and emerging digital media sector, which includes design agencies, advertising agencies, companies that design websites and so on. We need more people to come through with skills in new media as well as skills in traditional media. One reason why we say in the report that there is a co-ordinating role for creative Scotland is that, in the next five to 10 years, we need to start shaping up the demand profile and what we think the industry will achieve. We can then start to ensure that we match our skills profile to that demand. We have discussed that with people in the industry and they agree.

In the short term, because we expect—indeed, we are insisting on—a pretty fast acceleration in the level of network television spend, some production talent will be bought in from other parts of the UK. We hope that, in time, we will develop the indigenous talent base to the point at which we can do things within Scotland.

What discussions have taken place with the education sector to address those needs?

Skillset would say that it is in pretty constant dialogue with further and higher education. I am not suggesting that such discussions do not happen, because they do, but we envisage a pretty substantial expansion of activity, even if we simply consider the BBC commitment in isolation. It is important that we start to shape up the sector properly to cope with the new level of demand. As well as the BBC commitment, we hope to get a similar commitment from Channel 4. I hope that there is support from the committee and others for that. It would be unpardonable if, having secured major new commitments from the network broadcasters, we were unable to deliver.

Is the education sector gearing up for that appropriately? Will it be able to meet what we hope will be the increasing demand?

It is keen to be involved and it has a key role to play. Some of the most impressive and best informed people about where media, communications and digital content are going are people in our higher education sector. I have no doubt that they are key partners. We identified further and higher education as a key partner for the Scottish network. Apart from all the economic benefits that we think would flow from the initiative, major economic benefits will also result from it.

You and the commission also recognised that things are changing even as we speak. How can we ensure that we continually develop the necessary skills in a way that supports the industry as it changes?

The key thing for the sector and everyone who is involved in supporting it is to be fast and flexible. You are right—things will change quickly. Organisations such as Scottish Enterprise must be geared up to respond quickly to opportunities that arise suddenly and could be lost quickly. It is important that people across the piece are fast and flexible in how they respond.

To maintain an optimistic note, I believe that this year marks a turning point in the debate. I sense that there is now a collective determination. We let things slip, and things went backwards rather badly. In the industry and among people who gravitate towards it, there is a general determination that that will not happen again. I believe that everyone will play their part and that we will have a co-ordinated and thorough approach to developing the sector in the way that it should be developed.

In your response to Mary Mulligan, you touched on the issue that I want to raise. A few weeks ago, I visited Skillset, where people were very excited because they were about to publish the sector skills agreement. How will the agreement and Skillset's professional ability and experience support the higher education system in delivering what we need for the future?

Skillset's role is crucial. I now have a copy of the new sector skills agreement; it is 84 pages long, so I will not pretend that I have digested it completely. There is no doubt that Skillset and Skills Development Scotland have a key role. Skillset focuses largely on the freelance part of the industry; increasingly, the industry's workforce is constituted on a freelance basis. It is important that Skillset works with creative Scotland, Scottish Enterprise and the broadcasters to ensure that we do not have skills gaps. As well as skills gaps, there is the issue of leakage, which was highlighted earlier. If a great deal more money is to be spent on building up the sector in Scotland, we do not want to have to fly in too many people to fill jobs. We would much rather develop an indigenous skills base.

The commission has published its final report. Where do we go now? What would the commission like to see happen as a result of its report?

To some extent, the reaction for which we hoped is already under way. There has been a heartening, positive response to the report, which is good to see. In part, it is for the committee to take forward some of the measures that we have discussed and recommended. For example, the suggestion that the main broadcasters and Ofcom report at least on an annual basis on performance and what they are doing for the industry and audiences in Scotland is important. It will also be important for us to influence positively the Ofcom public service review, which has run more or less in parallel with the commission's work and will be very important in shaping the debate and outcomes. As I mentioned, it will issue a publication tomorrow, which will go out to consultation. It is important that as many people as possible in Scotland make clear to Ofcom what Scotland expects from broadcasting in this country in the future.

We identify to some extent who is responsible for taking forward each of our recommendations. The debate has moved on to a new level of ambition and engagement, and it is important that it does not slip back. As we say in the report, the Parliament should become the primary forum in which Scottish broadcasting issues are pursued and discussed. To that extent, responsibility rests here, across the parties; I believe that a high degree of consensus is achievable. It is important that these matters are progressed.

I am sure that the committee will take its role seriously and will have various people appear before it. Aileen Campbell has a constituency question.

I am one of the MSPs for the South of Scotland, which is mentioned in your report. How potentially damaging are the proposals to merge Border Television and Tyne Tees Television? Is there any merit in the suggestion that the boundary of the STV area should follow the Scottish border?

Effectively, the suggestion is that there should be a local opt-out for the south of Scotland. In our report, we suggest that the area would sit more naturally in the "Scotland Today" programme, as most of the domestic policy and legislation that affects viewers in that part of Scotland is determined at Scotland level. We are aware that Ofcom has carried out a lot of consultation and audience research in the region and is building up a picture of what people there want. I think that it will have more to say about the matter in the publication that will appear tomorrow. I understand that the latest ITV proposal is that there should be a guarantee, more or less, of six minutes a day of news from the south of Scotland in the new merged programme. Tomorrow we will hear what Ofcom has to say about that.

You are right to say that having the licence boundary reflect the national boundary at some point seems to be a logical outcome. I am not sure what is in tomorrow's report; like the committee, I await it with interest.

Did you pick up any anecdotal evidence on the issue in your research, which was carried out prior to the publication of the Ofcom report? There are other areas in the south of Scotland that do not receive Scottish news; Ulster Television broadcasts to parts of Galloway, for example.

From years of BBC public meetings in the south of Scotland, I know that transmission and reception have always been a big issue in that area. Other parts of Scotland have difficulties, but the issue arises more often in the south of Scotland than elsewhere. Strictly speaking, transmission and reception issues were not part of our remit, so we did not go into them in detail. It is fair to say that viewers in the south of Scotland—like viewers in the north of Scotland, where I come from—are concerned that their part of the country is overlooked and is not fully reflected in broadcasting. One key part of the Scottish network's remit should be to reflect the geographical diversity of Scotland more than existing broadcasters have done. We should show our country more fully than is sometimes the case at present.

That concludes the committee's questions to you today. Thank you for your attendance. All members are grateful to the commission for its willingness to engage with us at various stages during its work.

I suspend the meeting until 11.15, to allow a changeover of witnesses.

Meeting suspended.

On resuming—