Cynulliad Cenedlaethol Cymru

I'm a member of the BBC national chorus. I don't think that will come up in today's session, but I'd better declare it just in case. We've had apologies from Hefin David. We've also had apologies from Tom Giffard, and Peter Fox is joining us in his place, so thank you very much to Peter.

I will move on to item 2, which is public service broadcasting in Wales. We have an evidence session this morning with the BBC. I will ask our witnesses to introduce themselves for the record. I'll go from left to right, so I'll go to Elan first.

Diolch yn fawr iawn, Elan. Tim.

Tim Davie, director general of the BBC. It's a pleasure to be here. It's great to see you all and be here in person. Thanks.

Thank you so much. Rhuanedd.

Diolch yn fawr iawn. If you're all happy, we'll go straight into questions. There are a number of different areas that we would like to cover with you this morning. Firstly, if we talk about the draft Media Bill. We're aware of all of the challenges being brought in with the digital age. Do you think that that piece of legislation will modernise media regulation sufficiently, or are there any other changes that you would like to see included, please?

Thank you. Overall, it's definitely a welcome step forward, the Media Bill. I do think that we're in an age where regulators—. We have to decide what kind of public service broadcasting we want in this new landscape, and we're going to have to intervene. The Media Bill is a step forward. We're extremely supportive of the fact that people recognise that, in the digital world—and you've all got your smart televisions, I suspect—we now decide that there is prominence for public service broadcasting and that things like listed events have the right prominence. What we're into now is specific and detailed analysis of how this actually plays out.

What I've got in front of me is probably nine or 10 specifics, where you say, 'Okay, is "appropriate prominence" the right statement, or "significant prominence"?' In that gap between those two words could be something quite significant in terms of overall public service broadcasting. So, we are strong advocates of 'significant prominence', because we have to decide are we going to protect what I think is a unique media landscape.

If I may, I don't think we're spending enough time on 70 per cent of the world not having a free press at the moment. If you go around the world, and I'd say go anywhere in the world—. We have our own joyous debates around the BBC, all the things we care about, all the things we'll debate, but, actually, public service broadcasting is on the back foot around the world. I'm really worried in terms of the implication for democracy.

Therefore, getting to the question, the answer is that there are specific things within the Media Bill we would like to see addressed as we go through to legislation. That would be 'significant prominence', that would be things like are there going to be controls over remote controls and what you put on there, because we do know that—. Frankly, I come from a commercial background, where if money talks—. Just say you were a television manufacturer and the biggest cheque got you the biggest button on the remote control—would that be acceptable? Are we okay with that just being led by the market? I've spent a lot of time enjoying the benefits of markets, but you have to be in a situation where you've got the right controls.

I think there are other things we could go into detail on: audio prominence, how that's actually going to work in cars. I can talk in a little bit more detail on listed events if you want to, in terms of digital rights there. But essentially, overall we're supportive. We think the devil is in the detail a little bit now, and making sure that we don't have unwanted consequences as we finally get the thing done.

Thank you very much for that. By the way, the three of you don't have to answer every question, but if you did want to come in on something, if you just indicate in some way. But I won't assume that you each want to come in on every question. Alun has indicated he wanted to come in here.

I'm grateful to you for that. It was an interesting answer to the question, actually. I'm sorry if that's not a good thing. You spoke about public service broadcasting and its relationship to democracy. I actually think that's fundamental to public service broadcasting, and I'm thinking the democracy of it is evolving in the United Kingdom. And we've had this debate; we had the debate at S4C when I worked there 20 years ago. When you, Rhuanedd, worked in this building, we had that debate then. So, it isn't a new debate. And I think all broadcasters—and the BBC has probably led the way—are evolving the way they operate to reflect changing democracy in the United Kingdom. And that evolution needs to continue. Rhuanedd will know better than the rest of us, actually: when she worked here, there were far more journalists working here than there are today. There was, it seemed to me, far more content produced at that time. I am wondering whether the BBC is not simply culturally London-centric, but becoming increasingly, structurally and resource-led, centred in London and in Westminster. And I'm thinking, in terms of what you just said, Mr Davie, about the role of public service broadcasting in democratic terms, does the BBC need another period of evolution?

We definitely need another period of evolution; I'd say transformation. I mean, the scale of change—. I think there are two things you're hitting on there. The first is the general threat to democracy, which I think is profound. I'd recommend the Reith lectures; I was in Sunderland this week talking about this very topic in terms of what holds us together. And then you've got this question about, if you like, devolved power, how that works, and representation of the whole UK and its nations. They are utterly related topics, by the way, so you can definitely put them together.

Just very quickly, I won't drone on too much about it, but I am pretty obsessed by it, which is this threat to democracy, and if we don't support our—. I mean, analysis shows the things that hold a democracy together: strong institutions—there are a couple in the room today—which is most important; shared stories, which will probably resonate with this room; and also social capital, where we get together across political divides. I think it's very important that we support those institutions.

If I may come to your question directly, I think we're in the opposite position to moving the BBC's power, resources and money towards London. That's exactly the opposite of the strategy I've set. In fact, the 'across the UK' plan, if I may—and I will be defensive on this, because we've pushed £700 million out—. There's more drama happening in Wales than ever before. I see Central Square, I see all the things going on, and I've been in the regions—. We're not perfect, and the question is—

I don't expect perfection. Nobody expects perfection.

The question is also it's not just about bodies on the ground; it's also not just about creating more and more and more. It's about sustainable creative industries and making sure we've got provision absolutely deployed across the UK.

The final point is—. The evidence is overwhelming, by the way, in my view, but don't take this as complacency, because I think we've got a lot more to do to your challenge. But you now can get to a network-level editor in the newsroom in Cardiff—network level, so you're a UK—. Career-wise, that is completely transformational from where we were. And I couldn't be more personally proud of what we're doing in this area.

I think that Rhuanedd might want to come in before you come back.

I totally understand what you're saying, though. I was here as a journalist when this place began, and sat there with Evening Post and Echo journalists, Western Mail journalists, ITV journalists, even Mirror journalists at the time. That has certainly changed, and that saddens me. Plurality is a good thing. It is healthy for a democracy to be covered by many platforms and many institutions. In terms of our role, I see it as absolutely critical, and I think Tim's point is really important. I think having more network journalists based in Wales is starting to make a real, real difference. I was watching the 10 o'clock news last night and saw Faisal Islam reporting from Milford Haven on inflation; having the climate and science team based in Wales, I've seen them reporting in Pontypridd, on Rhigos mountain in the Cynon valley about wildfires, bringing expert, new voices, from Welsh universities to speak and to interpret things from the prism of Wales. And I think that is critical and a really, really important contribution.

But another thing that's changed, if I may: I think the way we distribute our news has changed. Back in the day, we didn't have BBC Wales news online, which is the most read online forum platform for the people of Wales. And 4.2 million people are coming to BBC Wales content online for their news every single week, and that is a different contribution to what’s been.

And that's fascinating and I don't necessarily disagree with the thrust of what either of you have said there. My question goes further than that, and I'd like to put it in, say, twofold. First of all, culture, and culture is important in any institution—and the BBC has been through the same issues as other organisations, and I don't want to go down that road this morning—but, culturally, when I listen to the BBC News at Ten, or when I listened to Today this morning, it's 'the Government', as if there's only one Government in the United Kingdom; 'the Secretary of State for health' without the explanation that that person works in England and doesn't work in the rest of the kingdom. And there's that sense that London is the centre and everybody else are exceptions. And that cultural thing, I think, is more difficult.  And you're right, and I don't disagree with you about the placement of different units and people, but the culture is more difficult to change and it's that centricity of London culture that I think we need to address.

And the second issue, and it's interesting that you bring up BBC online as I use it every day, and I think most of us do—I think almost everybody in this building does—but I also use Nation.Cymru every day and I also look at WalesOnline every day, and I like the difference between them and I think that difference is important—plurality is important. But can a country like Wales be slotted into a UK system and structure online, if you like, that is essentially focused on London with the regional opt-outs? And I'm wondering, and I'm thinking—and I don't know the answer to this by the way and it would be good if you could help us—do we need to have different structures to represent, say, Wales or Scotland and the rest of it, in the future? Because you can't shoehorn all the policy decisions, all political decisions on all those issues, into the same space as you'd have for a region of England.

And just after you've answered this, I think Llyr will have a supplementary that is similar as well, but, Elan.

Can I make two points?

Yes, certainly. 

Because I think that 'across the UK' is a project, but it is a six-year project—a five-to-six-year project—and it's building on the work that was done over many years to try to shift programming and money, but the one essential difference this time is the level of seniority that moves, and when you move whole departments—

Yes, I accept that, I accept that.

—and whole units, like the business unit to Salford, Radio 6 Music to Salford, climate change to Cardiff, what you do is you engage at a seniority level and then, when you've shifted the money, as Tim has explained—. The first two years has seen a significant shift; on the next two years, and this is the board-level question: how do you then measure whether representation has changed through that shift of money? So, in other words, is climate change coming from Cardiff something that actually then is a mechanism to engage with Cardiff University, with Swansea University to have different accents, different voices, and, by that cultural engagement, something that educates the centre as well, as to the level of intellectual ability, if I can put it bluntly? Because it's a passion of mine that—. I do not want to see a BBC that thinks that somebody who remains in Cardiff can’t hack it in London.

I agree.

Yes, totally right.

That is the cultural shift that has to happen over the next four or five years. It’s something I’ve been passionate about. I haven’t been a caretaker over the last few months, I’ve been passionately behind Tim's—. Actually, I had the privilege of being on his appointment panel. And, as you would expect—sorry, I'll try to spare your blushes here, Tim—

Deconstructing my interview live. [Laughter.]

She was on my appointment panel as well. [Laughter.]

I’m sure I’m breaching all sorts of confidentiality by saying this, but as you’d expect from an inside candidate, he brought to the table a plan for his DG-ship, and the plan was 'The BBC Across the UK', and the plan was to extend seniority, rather than a simple lift and shift of programmes. So, let’s say, I would want the BBC to be here annually, not just for an in-depth look at broadcasting, as you’re undertaking at the moment, but with our annual report and with our projects. And I think you should track us on this two years hence.

If I may, very quickly, I think you’re absolutely right to get to culture. It’s usually a cliché, but it is the thing that really will take a bit of changing. I think we’re definitely moving—we’re definitely moving to a sense—. You are preaching to the choir in some ways, in that I’m out there all the time saying, 'Let’s not even use the word "centre".' The BBC is absolutely something that is there to represent—and this is in our interests, by the way. It’s not just because it’s the right thing to do, it’s in the BBC’s interests.

There is something that I want to say very quickly, which is that I do think that it’s really interesting that the traditional construct of a broadcast channel, where you say, 'Okay, we have the opt-out', which is utterly critical—the biggest programme in Britain, the UK, is the 6.30 p.m.—but online, then, we’re going to get more and more people going online, and at that point we can begin to understand what your preferences are, not be led wholly by a broadcast construct that says, '80 per cent is UK wide, 20 per cent here', or whatever the percentage is; you can actually begin to be much more in tune with what your interests are. And what I would say is that we are audience driven in that.

If I could just add briefly to that, the big development for me this year is the change in the BBC News app, which has allowed us to put stories from Wales right up there, underneath the main UK international headlines, the stories from Wales are there on the front page. I think that’s a really, really important development, and that prominence I think is critical for the people of Wales, that they can see themselves on those devices, on those platforms, straight away without having to go and find it.

Diolch for that, and—

I've found that more difficult to navigate as—

Yes.

That’s interesting.

Llyr wants to come in on this, I think.

Yes, if I may just say something on this. It's really critical, and the answer to your question is that we consider it deeply, and I'm not interested in the BBC not being part of a thriving, plural, creative industries. And I have the deepest respect, by the way, for operations like Reach; WalesOnline is an excellent service. You'll never hear me criticise what I know are outstanding services that provide excellent journalism. We have a record—I mean, personally, you know, slightly defensively—in radio, opening up digital audio broadcast, that, actually, we don't need, necessarily, a share. So, we don't need to be 90 per cent of the market or 80 per cent; that's not what we want. We want to be part of a plural market. All I need is enough of people's time to justify the licence fee. Okay? And that doesn't mean, you know—. As you described, going through three sites every morning, welcome to my—. You know, we all—. And I think we've got to be careful about zero-sum conversations that go, 'Actually, someone's interested in the news, you know, in St David's, they may go around and go to a couple of sites.'

What I actually think we should be more worried about, for what it's worth, are a couple of things. One is that people are disengaged from news totally and not that interested. So, actually, I think people that are interested in local news are more likely to go to WalesOnline, to BBC, and we should make sure we're doing all we can to support that ecosystem. The second thing I'll say is that these are massive structural changes in the market. So, I say it with some caution, but have a look at local print trends around the world, have a look at what's going on, map them against the UK and let's have a data based conversation about where we are in terms of the local press. It's ferociously difficult. Having said that, I do think it's right that public service is part of the offer at local level and at country level, and it's important we get that balance right.

But the answer to your question is, very, very much, we do not see—and not in any way—our objective is not to lead to a situation where plurality—. In fact, we're interested in having those partnerships with the—. You know, we're talking to various bodies, we're talking to all the—. I mean, there is a lot of angst because the business models are under enormous pressure, and I think companies like Reach are doing a fantastic job, versus—. You know, if you look at it globally, they are remarkable. But also, our broadcasters—look at ITV, Channel 4—everyone has got—. You know, it's tough going through digital transition. That's just—. I mean, that's what the internet's done to so many traditional businesses.

And, of course, the slump in the advertising market, which has also been a major factor for—.

But I'll say this very bluntly: I do not see success as the BBC just sitting in an area of the market because the rest of it has failed. That would—. And, also, precipitating that failure. That would be completely the wrong thing for us to do.

It's interesting that you said that you're not sort of necessarily looking for market share; all you want is enough market share to justify the licence fee. Well, we could ask you to quantify that, couldn't we, but, you know, that's—?

No, I can—. Enough time. It's not even market share, it's time.

I see. Yes, okay.

It's really—. It's a very simple construct, the BBC, at its heart, which is, we talk a lot about, appropriately, the huge societal benefits of having a public service broadcaster, what it brings, but at the end of the day, what it really comes down to is a household in Port Talbot that's on a really tough budget; they've got a tough budget, do they think it is a good use of their money? That is why our strategy is called, 'Value For All', and this is about serving those audiences. And all I need to do is make sure that we are performing, that we're delivering our purposes—. So, this isn't just about doing anything to get that—it's important—anything to get that scale, we need to do it against our public purposes. That's what makes it fascinating and difficult, because if you just wanted to get scale, your news output might be slightly different to what we're doing, because we all know that, unfortunately, it's often the cat falling off the fridge that's getting the most volume. [Laughter.] No, I'm serious. So, the question is: how do you get enough volume, and how do you make sure you're getting that reach, while making sure we preserve the excellence and quality of public service broadcasting? That's the game. That's the game.

And, of course, hope that the cat is all right after it's fallen off the fridge and that it did land on its feet. Before Llyr carries on, very briefly Alun wanted to come in—very briefly, please.

I was interested in the way that you answered that question, Mr Davie—

I feel like I'm being decoded here. [Laughter.] Yes, the word 'interested' is a very interesting one in itself. Thank you for that. 

Sorry to use it. I want you to do more than simply get market share, you see, and I—

Sorry, you want me to—?

Do more than get the market share.

Absolutely.

I'm less concerned, frankly, about organisations like Reach, who have taken enormous resources out of Wales over the years and haven't put much more back in. There's an issue there about regulation, frankly, but we won't go there this morning. I'm interested, then, in that family in Port Talbot. The numbers tell us that they simply don't know about a lot of the decisions that are taken around their lives. That's a matter for the BBC to review and to reflect upon. How do you ensure that people are empowered in terms of holding people like us to account? I want those people to feel that they have the knowledge, they have the background, they have the information they require, to then say, 'Do you know that Llyr Gruffydd, he's far better than Alun Davies—I've seen him perform in committee.'

They say that already, Alun. [Laughter.]

They say it already. But, you know, how do we empower those people through your work?

And before you answer, forgive me—. You were talking earlier about the threat to democracy worldwide. I wouldn't want to in any way compare it in the same way to those grave threats to democracy in other parts of the world, but there is a very subtle apathy towards democracy in some parts of Wales because people are not empowered. People are not aware of these decisions. If an evidence session like this were happening in Westminster, I'm pretty sure it would be being covered live on BBC news. I'm guessing we're probably not live on BBC news right now. The people in Wales—. These are real decisions that are going to be affecting them, but they're not as aware. So, what do you think could be done more to bring that out?

I genuinely think it has to be a cross-platform approach, first of all. You will have seen recently that we have changed our breakfast offer on Radio Wales, with the real intention of holding people to account, holding feet to the fire, asking questions, inviting you regularly to answer questions on the decisions that you're taking in the name of the people of Wales. Across the board, we still have our political offering as well, but it is about the day to day. It is about Wales Today, and, thankfully, Wales Today is still outperforming most other news programmes at 6.30 p.m. every evening, and it's very valuable to the people of Wales. It's about offering in both languages and it's about our online offer, which we keep developing in order to ensure, as I say, its prominence and its relevance.

Now, if you take the people in Port Talbot, funnily enough I think they're probably very well served this year on entertainment, on news, on information that's directly relevant to them. If you take the recent events and announcements around Tata, we had network news reporters there at the time. We had news reports across our platforms. The people of Port Talbot also have three network dramas being made this year, and broadcast this year, within two square miles of where they live, which is quite something. They're seeing themselves on the screen. They're seeing stories about their communities on the screen. Now, what I want to ensure is a consistent rhythm of that throughout our services and across our platforms. Obviously, we can keep building; my target is year-on-year growth in that effect. But we're starting from a place where I think we're doing fairly well. Obviously, it's for you to judge us on that.

If I may, I think it's a great question because it's a real challenge, and the challenge is not necessarily that—. I think the BBC's appetite for demonstrating democracy in action, holding all of us to account appropriately, remains robust, thriving. It may not be quite as many hours sometimes, but you've just got to get the impact, and we've got to get the online right, and I think all of that has to work. If I'm honest, I'm more concerned about the research that says a lot of people are just disengaged. I think this is a more fundamental challenge, if I may, which is how do we find formats, how we do find the right online story, how do we get them interested, because, if I may be so bold as to say, if this were live or not, I can tell you one thing, not many people are watching the select committees live.

No.

It's not an insult, I'm trying—. I care so much about this. It's actually, 'How do we get those people?' And I think this is about making sure we've got boots on the ground locally, the local networks, we get the right story-telling, because, actually, so-called young people in Port Talbot will have particular stories that they're interested in. And I think we've really got to work hard on relevance as much as some of the stuff that we've done for years. I think that's a real challenge—I think that's a real challenge—and we take it as something daily to think about how we do that. 

Because, I suppose—and I promise, Llyr, I will come back to you now; you've been very patient—there's a duality to it. It's of course making sure that news that is relevant to people reaches those people, but it's also the issue of prominence that's been raised—that people see stories that are relevant to them being displayed prominently. So, I suppose, it's not just making sure that the news reaches people; it's making sure that the people of Wales see that they're given an equal stage. 

You're totally right. This is where digital, actually, rather than being just a threat to the old order in the broadcasting sector, becomes unbelievably attractive. So, the fact that we have a strong iPlayer means, once we've got accounts, we can begin to serve up content based on location. Now, we're not intending on being a kind of Big Brother, using your data like a commercial operation; we can literally use AI and data for good. Now, if we know where you are located, we can begin to serve up stuff of greater relevance, and that, actually, could—. And we're beginning, we're at the foothills of that, and we're learning as we go on that. But that could transform, I think, the relevance of the BBC in a wonderful way. 

We need to make sure we've got enough scale and prominence, going back to the Media Bill, so that everyone in Wales gets to see that and gets served that up. And that's a real job for us. By the way, just to keep the technical people to build those products is a huge fight. Netflix have—I don't know what the number is; I was going to say, 'Don't quote me', but it's probably not the right place for that [Laughter.]—I would say, north of 5,000 technical engineers. They're the kind of estimates; we're talking 5,000 to 10,000. This is a real battle. And we haven't talked about overall BBC funding, but if you take 30 per cent of our funding in real terms over 10 years, and then you flatline for a couple of years, you really are putting pressure on the system around that digital transformation. 

Thank you, all, so much for that. 

Okay, we'll move on now to Peter Fox.

Thank you, Chair, and good morning, everybody. It's been an absolutely fascinating conversation so far, and I'm really pleased to see the enthusiasm for further investment and things in Wales, and that's where I'd like to just focus a little bit on financial performance. The committee would like to understand, I know, in looking back a year, why less was money spent by the BBC in Wales through 2021-22 compared with what it raised from licence fees in Wales. And linked to that, then, how do you assure yourself that the network spend in Wales is with companies with a genuine Welsh footprint? I hear that commitment to Wales. How do you demonstrate that?

I'll come in, if I may, Chair. First of all, yes, that year was a very unusual year where the BBC spent, I think, £2 million less than it raised in the licence fee. And I believe that was COVID related. Of course, we had no live events, no live sport, and so forth. So, it was a very difficult time to manage. But, of course, it was unusual. If we look across a number of years, the situation's been very, very different. So, it's probably worth saying as well that the licence fee, of course, doesn't just pay for BBC Wales services or for BBC services in Wales; it also paid for S4C in that year. So, if you total that money, it was probably about £262 million. So, it's worth looking at it in the round. And, since then, so to build on the story since then, we have succeeded in attracting more money for network TV, and, indeed, we've doubled the investment, as I've said, in network radio in Wales. So, we've been in a slightly better position. 

I think, if I can move to the question on ensuring that companies have a genuine Welsh footprint, of course, the assurance point comes from Ofcom, because there's regulatory assurance set around this and we ensure that we conform to that at every point, from commissioning to production to broadcast. But it's not about the regulation itself; it's about acting in the spirit of the regulation, and I'm so passionate about supporting our sector in Wales. I'm really proud of the fact that over 95 per cent of all our commissioning money from BBC Wales is spent in Wales, with companies with substantive bases here. In terms of network, it's over 90 per cent.

So, there are exceptions to the rule. There are exceptions. Those exceptions are sometimes made because, say, a specific company has intellectual property over a certain format, and they've decided that they want to reflect or portray Wales, but they only IP for that, and we may engage with them. I can give you another example, where there was a brilliant Welsh dramatist, playwright, who worked with a company over the border, but we really wanted that idea, and we worked with that company. But they are exceptions, as I say, to the rule.

I think what's important is, if we changed that framework, and we prevented any working with companies over the border, then obviously our companies here in Wales would be at a massive disadvantage because they also compete for contracts in England. But the principle is important. I want to support the sector in Wales; I believe the BBC wants to support the sector in Wales. There's more money than ever before going from the BBC to the Welsh production sector, and long may that continue.

Well, thanks for that, and I really appreciate your enthusiasm for that investment in Wales. I was pleased to note that you've met your targets around spend on English-language TV services, especially through 2019-20, and I just wonder: how do you plan for coming years in that regard? How do you envisage your future targets?

Well, it's a little uncertain at the moment. It's a really tough financial climate, of course, with a flat licence fee, and, obviously, with inflation having been so high, we've seen hyperinflation as well in drama and other parts of the production industry. So, obviously we're able to buy less with our money, as households know; it's exactly the same position. However, despite that, we have managed to increase our spend on English-language television last year, and this year I believe we'll see further growth. And that's really my aim: if I've got a target, it's year-on-year growth so that we can continue to make an impact, not just on linear television, but on iPlayer. Increasingly, our audiences are finding their way and looking for content on digital platforms, and I want to be sure that there's a strong representation of BBC Wales content there and available for them.

If I may just add a couple of things, one is just to echo what Rhuanedd was saying on the independence and how we want to work. We've got no interest at all in trying to—. Some of the stuff about gaming the system and whatever, it's nonsense; we absolutely want production companies based in the locality doing the work. But you've heard the answer, which is, at 95 per cent, 90 per cent, you're going to have a couple of examples where common sense says, 'That's the right way to do it'. But, absolutely, following the guidance, doing our work—that's success for us, to be very clear.

On the English-language television, obviously you've got your Welsh programming, but I'd say you have the finest champion, a very vocal champion within the BBC ecosystem, and if I had a little bit of money for every time someone says, 'How did Wales get so much drama? How on earth did you make it happen here?'—. From Roath Lock all the way to this year, where we've got so many titles in production, I think you should be proud; it's a great achievement. It is quite an interesting game, because no-one wants to see that grow more than me, but I also want to get. So, what I won't do, as director general, is say, 'Look, I'll tell you what, we'll ring-fence seven dramas here, we'll do two in the north-east', because, creatively, that would be so limiting, because, unlike Netflix, which makes a lot of drama, we only make 30, 40 titles a year. It is incredible, because we're the biggest drama supplier in the market in terms of viewership, but it is a different game to just spreading our money far and wide. Therefore, you have to have a really clear—and this is where it does get to a broader discussion than the BBC—plan around the creative industries, this incredible sector that can give high-value jobs. All our learnings are: you put the BBC in—. So,Russell T. Davies does amazing work, Roath Lock happens, but, guess what, then you've got His Dark Materials arriving, then you've got other Netflix projects. So, our vision for success, to be clear, is to get these hubs moving and get more than just individual dramas.

I think the future is—I'll use the word 'interesting', because I think our confidence in Wales as somewhere to produce network drama has never been higher. The quality of titles coming through, the ratings, are fantastic, you can be very proud of it. And, yes, you'll get some duds, but, overall, I think it's absolutely been fantastic what's happened over the last few years, and this year looks exciting. I think the future would be that we've just got to keep getting those—. We are an editorial business, we're a creative business, so getting those scripts, getting those ideas in, we're definitely leaning in as the BBC, to make stuff in Wales. And by the way, I really do believe the centre is not London for this. We've said and set as a strategic target—. We set that, by 2027, 60 per cent of network's commissioning spend is to be out of London. Guess what? We were 58 per cent last year. So, we've already kind of hit our 2027 target. So, the question is: how far can we go? These are big changes in terms of how the BBC feels and the stories we tell.

A last question from me at the moment, Chair, is that we sometimes feel like we're a little bit, in Wales, perhaps less important than other areas, and we're trying to get our heads around why, in comparison to the spend in Scotland, Wales perhaps didn't receive the same sort of proportion of investment—albeit I hear the great news of what we're planning here—but why would that be? Why isn't there a similar formula for investment in Wales in comparison to Scotland?

Can I just say? I was in Scotland on Monday night and Tuesday, attending the Scotland committee and seeing members of staff. They would give their eye teeth for the sort of money that is coming in to Wales. This year, for the very, very, very first time, I think in probably a decade—correct me if I'm wrong—they have hit 98 per cent of the licence fee that they are bringing in. Now, we consistently bring in more money than the licence fee raises. So, when you look overall at the picture, when you take in that the orchestra, for example, the only full-size orchestra in Wales, is provided by the BBC, and Radio Cymru, Radio Wales, the opts, we are significantly above the licence fee that we raise here, and Scotland isn't, and hasn't been for a long time.

That's excluding the S4C investment, which, of course, is essential.

But that's not a fair comparison.

Well, I feel reassured about that.

Sorry, what's not a fair comparison? 

Oh, forgive me. Peter, what was that? And then we'll go to Alun and then we'll go to Llyr.

I felt reassured by that, so I was pleased to hear that.

Diolch, Peter. Alun and then Llyr. Alun.

I'm less reassured. You can't compare the spend in Scotland and Wales on the basis of S4C, because—

No, we weren't. We weren't.

I'm not. I'm not.

Actually, you raise more money—. You spend more money in Wales than you raise, without S4C.

That was my point.

Okay, that's fair.

And where we were adding S4C to it, it becomes exponentially so.

That's fair. There was a really interesting conversation that took place about five or six years ago with Tony Hall, who I thought was a first-class director general, and we had a really interesting conversation about different routes, if you like. And in Scotland, there was a very clear demand for a dedicated channel—BBC Scotland. I'd like to know, since you've been to Scotland recently, how you think that is performing in terms of reach and in terms of delivering on the remit that you've set for it? 

And the decision they came to in Wales—I think it was Rhodri Talfan at the time—was very clear about, 'We want to invest in programming and we want to invest in creating content, rather than creating a channel.' As Elan knows, I used to work at S4C, and part of my responsibility was marketing, and I know how difficult it is to create a market, an audience for a dedicated channel. And so my instinct was to invest in programming as well, rather than to create a new service. And it would be interesting now to revisit that conversation, I think. You know, were we both right in different ways? Was one of us right and one of us wrong? I don't know, but I'd be interested to understand how you believe BBC Scotland as a channel is performing.  

I think Scotland deserves to have a view as to what it wants. 

Yes. 

And we have a view as to what we want, and I don't think I should be in a position of trying to dictate to Scotland that they should have something else. They've taken a very clear decision that they wanted something significantly—. Although there, actually, is a lot of time shift as well; it's not simply originated. 

Yes, I get that. 

At the time, because of the percentage difference in population, I don't think that the money coming to Wales would have been sufficient to run a proper channel, and we all know even the £30 million that is Scotland is still significantly quite a small amount in terms of what S4C gets, for example, which is about £88 million plus £19 million programming from—

Which is insufficient in itself. 

Which may not be sufficient in itself, but it's still significantly more than the Scottish channel. So, there was a deliberate decision to go for high impact programming, in particular, drama, so as to create in Wales a creative sector and an expertise and a centre of excellence for a particular genre, which I think we have managed. And, in that, in the Keeping Faith, in the Steeltown Murders, in everything we've seen on screen, there has been significant representation. And that representation, unlike the Scottish channel, actually goes out to the whole of the UK so that there is a greater understanding of what Wales looks like and feels like. 

So, that was a decision then. I'm sure this is an argument that—. We are not people, at the top of the BBC, that leave things in a cupboard and never revisit them. 

I accept that. 

Fortunately, we debate all these things all the time. And so this is an ongoing discussion. If it occurred to us that the drama strategy was not working, then we'd be the first people to go and revisit.  

I think the answer is that horses for courses seems to be a reasonable decision based on where we're at, and it will develop. But, certainly, with regard to Wales, the ability to ensure we've got proper funding going into our core radio networks, the English-language television programming, the very strong position in drama and network television that we've got here, I think we've made the right choices, bluntly. 

And on that—. Very briefly, because I think Llyr wants to come in on this. 

I'd like to push you a little further, if I could, on that, because you're absolutely right. No decision is settled and we can always revisit things, and we can always learn and learn from each other in different ways. I'd be interested if, for example, the Scottish The Nine is working in reaching a great proportion of the Scottish people with dedicated in-depth news, for example, then surely that's something we should be learning from in Wales, given the democratic deficit that exists in this country. 

I certainly think—. What it tells you, by the way, is the need. It's not just the audience for the linear slot, which will always be within bounds on a digital channel. What I do know is having that bespoke journalism, that investigative capability, is what's everything. So, I would be—. I'm less shaped by exactly the slots and more the journalism, and making sure—. That's the learning, by the way. 

Okay. I'll need to bring Llyr in now, I'm afraid, sorry. 

But the numbers that Llyr quoted are correct.

Again, if you take something like River City, for example, which comes from Scotland, you've got a long-running series there. What is not counted, I believe, in these figures, is Pobol y Cwm, for example. So, if you want—

That's Welsh language content, isn't it? We're talking about English language content here. 

Forgive me, but Scotland doesn't have two languages in the same way. It has got a very distinct and very well-loved language, the Gaelic language, but the democratic will of the people of Scotland is not to break the budget into 50:50, which we do in Wales in terms of radio, for example.

I just want to focus in on answering Llyr's question, because I agree it's important. Is the £72 million versus £36 million a correct figure on English language content?

I'd need to check those figures, but I can't do it now. 

Okay. But on the proportionality, we're talking about the same ballpark. And I think that's really important, the point that Llyr's raised there, and really fundamental. Because I accept the point that you make—

I think what I'm still trying to land is there is a difference between very high-impact, very high-quality, very expensive drama, which resonates, and which is on iPlayer and actually has a very long tail of people viewing it, and a long-running, slightly more moderately priced—. So, you can do hours and you can do quality—

I don't think any of us have got any issue with any of that. I'm probably one of the few people who does watch BBC Alba every so often, and it's a great service for what it is. I accept the differences between the two countries and I don't think you can be too slavish in making those comparisons. However, the English language audience in Wales, as Welsh people who speak the English language, with their cultural expression and the way we are, and the way they are, and the rest of it, deserves that recognition as well. How you do it is a matter of question and debate, and I don't have strong views. I thought it was a really fascinating debate we had about additional content over all those different services or a dedicated channel, and I'm interested to pursue that debate, but I have no strong views on it.

What I do have strong views on is the creation of content, and content in the English language. My constituency in Blaenau Gwent is a largely—almost entirely—English-speaking community. Rhuanedd, the community that you grew up in, the Cynon valley, is very similar. That cultural expression needs to find a place. I happen to think that the BBC has been incredibly badly treated by successive UK Governments. I don't expect you to comment on it. I want to see more resource going to the BBC, but I want the BBC also to put more resource into serving my constituents and their cultural expression in the English language. I don't think that you can say that because we do something in Welsh, we don't have to do it in English.

I completely agree. Serving the non-Welsh speakers of Wales must be one of our missions. I think that it is absolutely critical, in terms of that identity and those cultural reasons that you say, and for the sake of democracy. I think what I would say—. And I can confirm that the spend figures are correct. What I would say is that, if we were seeing a trajectory where volume was down, where spend was down, where impact was down, I would be really nervous right now. But what we have, in fact, done is increase the number of series, increase the number of titles. We have grown our impact on iPlayer by 16 per cent. We are moving in the right direction, but I don't deny—. The ambition is there, obviously, in order to keep making that impact and keep serving the people of Blaenau Gwent and the Cynon valley very well indeed.

And, indeed, Caerphilly and the rest of the south-east. Just briefly, I suppose it depends on how you define 'prominence'. You could look at visibility and what proportion of a nation watches different content or, indeed, all nations in the UK, or the platform and the status that a particular channel has. The debate is still open and ongoing about that. It's not just about locking it in a cupboard, as you said, Elan. Do you think that the creation of BBC Scotland, as you are aware of it—. What link was there with the 2014 referendum?

I can't see it being—. Obviously, it is part of the environmental factors, but I'm struggling to see a direct line there. I think that that conversation has been going on for a long time.

It predated it.

It predated it, in terms of what—. You can imagine that I'm going to be saying that it's horses for courses, and that there are lots of reasons why, in Scotland—. Scotland, politically, but also from a BBC point of view, said, 'Look, there's content here that we could do it with. This could work.' Now, you only get to a certain scale with a digital channel. It's not nirvana, to the earlier points. There are clearly learnings, but, broadly, what you are doing is that you are also creating a block of content.

I listened to Rhuanedd and others say, 'Look, we are here to deliver on our mission.' A part of that is for English language speakers in Wales to have a proper, full feast of English language content on the iPlayer and on linear. Linear is only going to be so much now, by the way. So, it's also the value on iPlayer. 

I would caution about just hours. I am not being defensive about that. The money question is, I think, the right one, if I may, because hours are not really—. We obviously need a lot of hours. We are going to be a broad BBC. But you really need impact, because when you sit down now, you have got infinite choice, on your sofa. You have got infinite choice, and cutting through and being really realistic about what cuts through and what's being watched—.

The other thing is that we have a limited budget, and I thank you for your remarks, by the way. I can go and say, 'I think that disinvesting in the BBC has been a real problem, in terms of us—.' I think that we are defying gravity, frankly. We are doing incredibly well on keeping our reach numbers—practically all of the population in every month. We are doing well. But the point is noted.

I think that you hear, strategically, from the team here, 'If you had further investment, where would you go?' You would go into high-impact programming, more than on distribution costs at the moment, and make sure that you have got the right position on the iPlayer.

I'm going to go to Elan next, and then I think that we will probably have to move on because of time. 

Just going back to Alun's question on English language programming, I really welcome the focus on English language programming in Wales. You and I, Alun, have been working in S4C. We support it. We are passionate about it. But whenever we have a debate about broadcasting, usually within these kinds of committees, the debate always segues to Welsh language broadcasting. And there is a real understanding of the 30 plus per cent of loss of income that they suffered over a decade. What is not so well understood or received properly is that the BBC has also lost 30 per cent of its income over that decade, and I think support for the licence fee, support for restoring inflation within our licence fee, is a necessity if we are to serve and to proceed with universality, so that we reach every corner of the United Kingdom, whether it's Blaenau Gwent or the Cynon valley, or anywhere else. We need the money. And at some point, I think the UK Government also has to take a decision that it wants a broadcaster of scale operating throughout the world, and then it has to figure out how to pay for it.

Diolch. Good morning. Earlier, you mentioned relevance to people in Wales. I just want to go back to how you ensure that devolved issues are covered suitably in Wales and that Welsh life is covered suitably, to keep it relevant to people in Wales.

I think it's critical, both in terms of our BBC Wales services and in terms of our network services, because we know that our audiences are consuming both. And part of that is, for example, ensuring that we have journalists based right across Wales in order to cover stories from all parts of Wales, and to give them that context and that explanation as to which decisions are made, for whom, by whom. That's really, really important. That's why we have bases in Wrexham, in Bangor, in Aberystwyth, Carmarthen, Swansea, and so forth—to be a national broadcaster and to cover those areas. So, it's boots on the ground, first of all. It's ensuring that, when it comes to our network programmes, our journalists and our editorial teams have a voice in the decisions made by the network news teams, for example. And that's why you get coverage of things like the 20 mph speed limit recently, and reinforced autoclaved aerated concrete in Wales and Dŵr Cymru all featuring quite heavily on network news.

And then, it's also about ensuring that we explain to people the difference, the divergence of decision making. Now, in some ways—. Gosh, I mean, COVID didn't help in many ways, but it certainly helped in explaining where power lies. And I think, during that period, we really pulled out the stops to explain which Governments were making which decisions, why and how it affected people—you know, having special broadcasts so that we could put the First Minister or the Prime Minister on air where and when that was relevant. And I note that, after that, there was a report by Professor Stephen Cushion and Dr Richard Thomas looking at the reporting of devolved nations in their entirety and I was really pleased to see that, in that analysis, they'd seen that the BBC had really made progress, actually, in its reporting of devolved issues, in its explanation of how devolution works and where decisions are made, and also in terms of how we cover the whole of the country through our journalistic teams. So, it's about that whole package.

I think during COVID, it was a revelation for people that decisions were being made in Wales differently, and that really highlighted it.

I just want to ask if you can point to any material improvements in BBC performance for audiences in Wales that have been driven by Ofcom's regulation of the BBC since 2017.

That's probably good timing, because I'd point to our decision today on Radio Cymru 2, which I think is a great one in terms of ensuring that we can provide that radio service, as I say, for less fluent Welsh speakers, for younger audiences in Wales. Obviously, we also operate within a regulatory framework and that ensures that we have to provide a certain amount of hours of news and so forth. But we're a purpose-led, purpose-driven organisation; we have our charter, and we're here, we have a mission to serve audiences in Wales, which is our primary driver, but now and again—. We've recently had visits from Lord Grade and from Melanie Dawes, popping in to ask us about issues around diversity, about portrayal. So, it's a regular dialogue, certainly.

Thank you. Can I just also mention, earlier—slightly off the subject—Tim talked about the importance of having technical engineers? We've got the creative centre in Wales and expertise really building up in Wales, but how do people know about these pathways into this service area to make sure that you can get those important jobs filled?

Shall I come in first of all? So, it's really interesting. I think it's done in many ways. First of all, I'm really passionate that our BBC Wales workforce becomes more representative of the audience it serves. I think to achieve that, what we've needed to do is do a lot more outreach work, a lot more public engagement, getting out in our colleges, getting out to the wider networks, building new partnerships beyond, perhaps, the usual suspects, and ensuring that we're speaking about career opportunities within BBC Wales. In fact, in the last six weeks, I'm really proud to say we've been and visited 21,000 schoolchildren just to talk about exactly this, that the BBC can be a place for you to develop a brilliant career, and it doesn't have to be in journalism, it doesn't have to be in presenting. We need technical engineers, we need people who are experts in software, as Tim says, we need people who are brilliant at hair and make-up. There are all sorts of career paths within BBC Wales.

I think one of the more really positive developments over recent years has been the decision to increase the number of apprenticeships we have in BBC Wales. We've currently got 36 apprentices working with us. Over the past two years, we've had another 60 on top of that, and, do you know what, I think they're just brilliant. I love working with them. They bring new ideas, they bring creativity, they bring a diversity of voice, of background, of opinion to the organisation, and I think that's really critical. So, slowly but surely I think we are becoming, like I say, as a workforce, more representative of the people of Wales.

If I may, this is very central to who we are and what we are in the future. Firstly, there's the obvious, which is making sure all our jobs are advertised. I know it sounds almost like the basics, but making sure all jobs are publicly advertised, that the process is open to all rather than any sense of, 'It's who you know', because this industry has had troubles in the past, I think, in terms of truly opening up, or also the risks of a BBC type. The type of people I want are extremely talented, curious and absolutely willing to take, often, actually, later on in their career, a big salary sacrifice to come and work in public service because they care about it. By the way, we're doing well on that. But I would say that I do think we needed some major interventions to make sure the workforce changed in terms of the nature of socioeconomic diversity, let alone all the other ones in terms of gender, protected characteristics, black, Asian and minority ethnic, et cetera.

So, just for what it's worth, I think the BBC now has—. Three years ago, I set some really punchy targets: a 50 per cent, for instance, gender target. We're now just over that in terms of there are more women than men in the organisation, so we've hit that target. We are one of the only organisations in the UK that's set publicly a target for socioeconomic diversity, which is parental occupation at 14—that is the measure; you can choose a measure, but that's probably the best one—at 25 per cent. I think my latest number is 21.3 per cent, not that I'm obsessed by it. So, I think, absolutely, we're driving against that.

Now, the other thing, across the BBC, we've said we're going to try and get to 1,000 apprentices in the charter, which is pretty punchy, particularly bearing in mind the budget situation, the fact we're moving a lot of people around. We're doing well with that, and I would say to Rhuanedd's point, it's incredible. If you ever want to come and meet some of the apprentices, I can tell you, it's revelatory, and we're tracking, very much, their socioeconomic background. We've got work to do on that, but I'm positive about it. I think the industry needs to change.

Just to add, I was in Birmingham about a month ago, and I took the time to have a round-table of apprentices. I think what we mean by that term needs to be understood more widely. We're actually talking not just about entry-level, lower grade jobs, we're actually talking about degree-level apprenticeships that provide you with a clear qualification and Master's level apprenticeships that give you a qualification. And it was quite interesting to hear people say that they came into an apprenticeship for different reasons; some of them wanted to be more practical than a normal degree would allow them, and others often had some neurodiverse problems, which actually allowed them to be in rooms where there was more of a one-to-one tuition than in a large lecture hall, and they felt more comfortable there.

So, there was really a range of reasons, but I just want to leave you with the thought that these are often high-level apprenticeships, bringing in the workforce at a level of skill, and not just at the lower end of the spectrum.

Thank you very much, Carolyn. Okay, we're into our final 14 minutes. There is quite a significant area we wanted to cover, so I'll go finally to Llyr.

I think there's absolutely no doubt of the value of sport and rugby. You're talking to someone who's had some traumatic times at the Millennium Stadium as an England fan, but I don't need any convincing of how important sport is and rugby, particularly to this nation, how enormous it is to public service broadcasting. The environmental factors around sport are extremely challenging, and I don't want to sugarcoat this, because I think it's really important. I was in the US a couple of weeks ago, where you see the streamers. These are trillion dollar entities coming in and just buying rights, so the first thing we've got to do is, and it goes above the BBC to a public free-to-air sports provision—. So, I am a vociferous proponent of listed events. I think they’re utterly critical and they will shape our culture and what brings us together and our shared stories. And, yes, I know I’m speaking to people who probably get that, but that is really critical. It’s important this, because I want to make the point with regard to the Media Bill. So, that includes digital rights; that includes this committee and others having a firm view on what a listed event is—what you get and what you don’t get.

Then I think there’s, interestingly—. And it’s one of the wonders of this country, but also the UK, that we come together around sport, right, like no-one else? And you come together around rugby like no-one else globally, I think—maybe the Kiwis, but you could get there, yes? And I think the point here is that we absolutely have a hard case with the sports bodies that, actually, that balance between a game not going behind the paywall—you fundamentally change what a sport is in terms of its participation, the public support. Everything changes if you go fully behind the paywall. So, you’ve got the listed events, but you’ve also got, I think, very compelling case studies.

Now, we do have a limited budget. We need no convincing at the BBC across all the senior team about the value of rugby in this nation. We don’t need convincing. We do have a sports budget. I could spend the whole licence fee on sports. We are ducking and diving a little bit in terms of sharing events—with ITV on the rugby. We are going to have to do that to keep within the constraints of our budget. But, absolutely, we need no convincing about the power of rugby.

It's rugby, for the Welsh nation in particular, that I'm taking from what you're saying that you would agree that it has a particular resonance—

I don't think that's even—. That's not for negotiation, is it? [Laughter.]

And do you think that in terms of the listed events schedule—because there are some exceptions that are made sometimes for Scotland—that rugby should be considered differently?

Six nations particularly.

Particularly the six nations.

But if I may, I'm going to stop short of getting into the crosshairs of exactly where listing stops and starts, because I think, at the end of the day, that is for you—for Government and everything else. I think what you're hearing firmly from me is very strong support for the listed events regime and the value that brings.

The ask would be the six nations. I don't think we'd realistically be looking beyond that. But you've no issue either with differentiation between some listings being relevant to nations or regions, particularly because, obviously, we have the Scottish FA Cup Final particularly for Scotland, so the precedence is there really, isn't it?

I think I'll leave that to you.

Yes. That's fine.

Yes, if I may. I mean, you've heard where I am strategically. It's very clear and the benefits of listing, I think, are very clear.

Okay. Alun, you wanted to come in on that question.

Yes. Can I take us back to the licence fee? I'm a strong supporter of the licence fee. I think for the whole of my life somebody's been making a speech saying it's not sustainable—

Indeed.

—and that this is the last round of the licence fee.

Welcome to my life, yes. [Laughter.]

And nobody's come up with an alternative. But there are two things I'd like to ask you on the licence fee. First of all, I would support a considerable uplift in the licence fee to deliver on the public service remit that you have. But I'm also aware that there was an increase in my constituency of 23 per cent of people accessing foodbanks in the last year. So, I want to see that increase; I want to pay more, and, Mr Davie, I want you to pay more. But I'm not convinced that it would be fair to ask people who are struggling to buy presents for children and who are terrified by the prospect of Christmas to pay more. And I'm interested as we move forward in agreeing the principle, shall we say, of a licence fee as to how we then potentially make that fairer into the future.

And the second question is about S4C and the relationship with S4C. Now, I actually think it's a good thing that S4C is funded out of the licence fee, and we’ve got a strong public service remit there to do that. I would support funding other public services out of the licence fee as well, but I don’t want to go down that rabbit hole this morning. At the moment, there seems to be that situation with S4C, where I don’t believe that the S4C budget out of the licence fee is sufficient to deliver its public service remit—I simply don’t, for many of the reasons we’ve discussed already. So, how do we ensure that the BBC has the funding in a fair way, and, secondly, how can we guarantee increased—significantly increased—funding to S4C out of the licence fee?

Just to warn witnesses, there are four minutes left of the scheduled time, so over to you with those four minutes.

Well, I can answer the second question first, perhaps. This is—and this is a fact—a matter for the Secretary of State. I think, if this organisation wants to make their views clear on where S4C’s funding could be increased, then I think that’s up to you, because we will deliver the money to S4C that is our duty in law, in the charter and in the agreements that belong to the charter.

As to the first, we have got the next four years—practically, I suppose, the next two and a half or so—to try to work out what sort of licence fee is required. As I said right at the beginning, I think, first of all, you have to make the determination that you need a broadcaster of scale working worldwide, which is the first principle, and, after that, the second principle is how you pay for it and what are the fairer ways of paying for it, if there are practical ones open to us. The modelling for that will have to happen over the next two years.

I think that’s exactly right. Clearly, we already have some degree of progressiveness in there in terms of our decision—and it was our decision—to say that over-75s on pension credit don’t pay. The question is getting those balances right in terms of the funding. As a board, with Elan and everyone, we’ve set out some very clear principles about funding, and they don’t say, 'You have to have this particular mechanic or this level of progressiveness'; what they say is, 'Do they support our mission? Do they safeguard impartiality and independence?', because different funding mechanics can entangle you in that. And these are really important. Is it sustainable? The ability to plan for the long term is critical here, rather than being—. We can’t do digital transition if we don’t know what our budget is. That’s really important. Do they help the creative economy? I.e. how does that work?

And then my job, being provocative, is not just to get the licence fee up as high as possible; it’s actually to make sure everyone supports the BBC as an institution and gets great value from it. Now, in that, the licence fee has curiously been robust over all the years, in all the debates we've had. And it is the one to beat, and the good news is that we have reached numbers and usage numbers at the BBC that are extremely high and are holding up despite this intense competition. Broadly speaking, the BBC is used by nearly all the population, and the value that they receive is good. That’s our biggest job. And then, within that, there’ll be some debates, absolutely, as we head towards charter, and the board is open-minded, I think, in terms of some of the questions you’re talking about.

The BBC is a participant as well as a recipient of these debates, and I think it’s important that the BBC—

Indeed.

Well, we’ve set up the clear principles, and then we participate in those debates, absolutely.

Can I just add that I think that the licence fee in itself is a kind of cohesive force—

I agree with that.

 —in a very individualistic society that simply says, 'If I don’t watch it, I’m not paying for it'? This is almost an old-fashioned assumption of social good—that everybody pays in and everybody gets something out. And so the mechanism itself delivers cohesion, and we have got to find an equivalent method that delivers the same cohesion if we are moving away from the licence fee.

I think the critical thing that I would say, and we talk about it a lot here—and, by the way, you’re absolutely right on the challenge and being a participant, and we will be participating—is that you can’t separate what we will do editorially in the purposes from the funding mechanic.

No. I agree.

You can’t; they are utterly linked. And I hear some in the debate going, 'We can pay it like this or this', and, meanwhile, we probably should have the conversation about what the licence fee gets spent on, because I do like the fact that there is a clear correlation and that people can understand what it's being spent on, and that direct accountability, I feel it every day—I like that. That direct relationship with the audience on the licence fee, I would argue, is highly desirable for us, and could be frayed if we do the wrong thing in terms of using the funding for the wrong thing.

I agree with that.

There are some big consequences.

Thank you. And on this, because time is against us, the final word to Rhuanedd.

I will use 10 seconds to talk about what we do in the meantime to reach out to those people, to those communities, and I have no better example, actually, than in your own constituency, when, last year, we took the BBC National Orchestra of Wales to work with the Tredegar band, working in—

Oh, I know, I know.

—local schools and working with some families coming from very, very poor backgrounds to give them experiences that they wouldn't have had if the licence fee didn't exist, and I'm so proud of that. And I think it's those sort of stories that will strengthen the argument for the continuation of this fund.

And it was great to see Tredegar band in the BBC Proms.

It was indeed.

Excellent.

Diolch yn fawr iawn. Well, thank you so much. A transcript of what's been said will be sent you to check that it's a fair record of accuracy. There were some areas that we haven't had time to reach this morning. If it's all right, we'll write to you with those further questions.

Thank you very much for making the time this morning.

Thank you very much. Thanks for your time.

And we'll be live again at 11:10 with ITV Cymru.

I'll go to you first, Phil.

I'm Magnus Brooke. I'm director of strategy, policy and regulation for ITV.

Hi, I'm Phil Henfrey. I'm the head of news and programmes at ITV Cymru Wales.

Thank you, both, so much for making the time to be with us this morning. We'll go straight into questions, if that's all right. There are a number of different areas we'd like to cover with you, but we're looking firstly at the draft Media Bill. Phil, you've spoken a number of times to the committee and to predecessor committees on the challenges that come with the digital age and prominence issues to do with that. Do you think that the Media Bill in its draft stage does enough to modernise regulation, or are there further changes that you would like to see?

We really welcome the draft Media Bill, and we particularly welcome the fact that the Government has proceeded very rapidly to the First Reading, and then, I think, the Second Reading next week. There's an awful lot to welcome in the Bill. The problem, as you say, is that we're moving to a world where, effectively, in reasonably short order, a lot of people are going to get most of their television online, and you're going to end up with a small number of online television platforms who determine what people can see, determine what people watch, and also the commercial terms on which those services are offered. So, it really is fundamental that the regime is updated, and there's an awful lot to welcome in the Bill.

I have to say, we would rather the Bill got through quickly and effectively before the election, so we're certainly not, I think, going to press for lots of amendments. We don't think that's necessarily going to be terribly constructive. I think there are some technical amendments that could probably be made. We're in dialogue with the Department for Digital, Culture, Media and Sport about that. I don't think they're significant. In some respects, actually, it's an enabling framework, and so one of the things we look at, for example, is the role of Ofcom. Ofcom is going to have an incredibly important role in enforcing the new regime, and one of the things we would like, I have to say, is Parliament to make very clear, and the Senedd indeed to make very clear, that it's important Ofcom is muscular in its enforcement of the regime, because in effect it's going to be confronting global players—Amazon, Google, Samsung and so on. It's really important that they are emphatic about what Parliament wants in terms of prominence, in terms of making sure the terms on which we are carried are appropriate. For example, you may know that Amazon's global terms at the moment are to require 30 per cent of revenue from all players on their platform. That's the end of commercial PSB in the UK. So, there are some fairly chunky conversations. It's not that you need a legislative amendment to do that, but you do need Ofcom to think it's got political cover.

A different issue would be around the platforms that are covered. So, again, the Secretary of State has secondary powers to decide how broad those platforms are defined as, and we would certainly suggest that is defined quite broadly. So, to give you an example, I think about 6.2 million households use gaming consoles as their primary means of accessing television—often younger households. I think there is a debate on this. That's more than streaming sticks, actually, amazingly. I think there is a debate to be had about whether they should be within the scope of the regime, and, again, that's a secondary legislative issue for the Secretary of State, as they define the secondary legislation. I think there are some issues that Tim may have mentioned around listed events, particularly digital rights, where the Government has had a review and hasn't provided any enabling power to enable it to extend the listed events regime to include digital rights. I think we would be very supportive of a proposal to give power to the Secretary of State to enlarge the regime. For example, you could cover clip rights from listed events, because you can imagine a world where you could put a whole series of clips together and end up with something that looks a bit like live coverage. So, we would be very supportive of that sort of amendment. But the headline is that we welcome the Bill, we want to get it through, we would urge against mass amendment that makes it difficult and more contentious and slows it down. 

And I suppose, from my perspective, I think, as Magnus says, it's an important step forward, because what it will mean in future is that audiences are able to find content, news, current affairs and political programming about the country in which they live on these global platforms, and I think that's hugely significant in our context. 

Thank you, both. In terms of the negotiations that are going on with the different platforms about how this could all work, do you think that that is happening in a way that's fair? Are you happy with how those negotiations are being conducted?

We're not currently negotiating under the new framework with any platform. We have negotiations all the time with platforms. I think the thing that's worried us is the increasing—. Well, two things have worried us. One is the sale of prominence, so, effectively, auctioning of prominence, often on global terms. So, if you turn on a smart tv, or a streaming stick or whatever, what you tend to find are the same apps, in the same positions, globally, on most devices. And that's not an accident; that's the product of a global deal, where tens and tens, or hundreds, or maybe billions of dollars have changed hands for those positions. And, exactly as Phil says, one of the things that I think Parliament and, indeed, the Senedd are rightly concerned about is how do people find content that speaks to them, that speaks to their lives, that helps inform democracy in a particular territory. And so I think we worry about that. 

We also worry about the commercial terms, because of the sense that, actually, as I said, Amazon's standard terms globally now are to have 30 per cent of your entire advertising inventory effectively made over to them for them to sell. Again, that's twice our margin. That's the end of any commercial PSB. We simply couldn't afford to do it in those circumstances. So, there does need to be some control, I think, which is what the Bill, we hope, is going to do. 

But—forgive me, Phil—you feel confident that the negotiations, when they happen, will be undertaken in a fair way. 

I think the Bill provides a framework for that to happen appropriately. And again, slightly back to the Ofcom point, under the proposed Bill, Ofcom will have to draw up guidance that will inform those negotiations, and then, in the end, will have to adjudicate if there's a dispute. If we can't reach a commercial arrangement, Ofcom will have to adjudicate one way or another as to where the right deal lies. But one of the key criteria in the Bill is that those deals shouldn't adversely affect our ability to deliver our remit. And that's the most important bit. But it goes back to the point of Ofcom feeling it has the backing of politicians, bluntly, in making what could be quite difficult decisions for some of the global platforms. And those can become political issues. I can understand why Ofcom sometimes feels under pressure to split the difference. And that's the danger, I think, because this has to be enforced in a really muscular way. 

I'd just add that the framework—. ITV is not standing still in this marketsplace. There's a growing audience for streaming—we can see that—and ITV has invested heavily in ITVX, for example, to take a share of that. The Media Bill creates a framework in which a product such as ITVX can thrive. And that's really important too, because ITVX in the future is going to be the way that you can access ITV content—and not just ITV broad content, in terms of Coronation Street and so on and so forth, but also ITV Wales content. And I'm really pleased to be able to tell the committee that, in a few weeks' time, we're very hopeful that we'll have ITV Wales programming on ITVX. I think that's a really significant step, and I hope that will be quickly followed by the regionalisation of ITVX, and you'll be able to watch ITV Cymru Wales live on ITVX. So, yes, the legislative framework is really, really important, but ITV itself is not standing still. It's investing in its own platforms too, and it's putting Welsh content right at the heart of that as well. 

None of this matters if we're not making content people want to watch and providing services and investing in those services that provide that content in a way people want to consume it. Without that, then prominence or dispute resolution makes no difference at all.

Thank you, both. That's very welcome news about ITV Wales content being on ITVX. Thank you very much.

Good morning. How has the value of the channel 3 licence in Wales changed since it was last granted in 2014?

The way PSB works is that we're a commercial company and we are asked by Parliament, by the regulator under our licences, to do a series of things that, as it were, our competitors don't do, whether that's nations and regions news, or whether it's the independent quota or the out-of-London quota—a whole series of things that we deliver. And one of the things we have to do as a commercial company is, obviously, justify to our shareholders why it is we're doing all these things that none of our competitors do, which don't necessarily make us money. The deal we've had under the licences for a long time is that we've done those things in return for two elements. The first is spectrum—so, digital terrestrial television spectrum, Freeview spectrum. And the second has been prominence. Those are both benefits that fundamentally rely on the consumption of television delivered in linear form on broadcast platforms. We've seen over the last five, 10 years or so, since the last licences were granted, a drift away from consumption of broadcast linear television, and that's had two effects. It's reduced the value of DTT capacity. So, we know that, to buy capacity for a channel on terrestrial television, on Freeview, the price to do that has gone down a lot, and, therefore, the benefit of having that spectrum for free has gone down too. And the value of prominence, arguably, has gone down, because, essentially, fewer people are using a linear grid electronic programme guide that you would expect to find on a traditional television set—so, literally, channel 1, channel 2, channel 3. Fewer people are accessing their content in that way. They're using apps, they're using all sorts of other methods of finding content, and the result of that is that the prominence is therefore less valuable. So, in aggregate, because of changing consumption habits, the licences are less valuable. But the truth is that's the history of ITV since competition was introduced, if you like, because the licence, originally, literally gave you a monopoly, because there was no other commercial competition back in the 1950s and 1960s, and so the trajectory has been about introducing competition to ITV, which, inevitably, has eroded the value of the licence over time.

Probably what I'd add to that, though, is that what the licence does provide in Wales is really large and significant. We do create news and programmes, public service content, that the market would not otherwise provide. Because it's ITV, we bring a mass audience to that. There's no plurality if no-one is actually watching the content. The audience that ITV brings to news and current affairs in Wales is a different audience to other broadcasters, and that content provides a different perspective on Wales as well than what you might get from other broadcasters.

I think I'd also say too—sometime this is overlooked in a Welsh context—that it continues to be a mass-watched platform. That's really important for Welsh brands. If you want to build a Welsh brand, if you want to build your company in Wales, then advertising on ITV is really important to that. And equally too, if you're an organisation that wants to get your message out there, if you want to inform the people of Wales about something that's happening—let's say a change in the law from this Parliament—then again you would go to a trusted platform such as ITV.

But then on top of that, because we've created a centre of excellence for news and current affairs about Wales, what that provides is also a security of supply for other broadcasters. So, that enables us to make news and current affairs for other broadcasters, most notably S4C. We produce much of S4C's current affairs and political programming in the Welsh language, of course. And because we're creating that pool of trusted news and current affairs about Wales for television, it gives us a pool of content that we can distribute on other platforms. So, for example, our news website has grown dramatically over the last 10 years. That same trusted journalism can now be accessed by new audiences on new platforms. We get around 2 million page views a month on that.

And then, lastly, I've always felt too that the access and the stories that we're covering because we're a news and current affairs provider in Wales sometimes can be supersized for a UK audience. There's an opportunity, because of that access, to tell stories about Wales for a UK audience, and we've seen a growth in us doing that, I would say, over the last few years as well. So, yes, I understand the point about the decline in the licence, but I would want us to also see the view that, actually, what ITV provides in Wales is really quite significant. There's more than 400 jobs, creating, together with our sister studios company Boom Cymru, 400 jobs, making over 800 hours of content in news, current affairs, children's, drama and factual entertainment. So, we continue to play a really significant role in Wales.

For the avoidance of doubt, we're proud to be a PSB. We've been a PSB since the 1950s; it's in our DNA. It's one of the reasons why we pressed really hard for the Media Bill, because, to some extent, it's going to update the benefits of being a PSB for an on-demand world, precisely because the benefits under the old licence are declining. Actually, the new licence will help to at least maintain the level of the benefits, or at least top them up. That's another important point, I think, about the Media Bill.

Thank you. Carolyn, was there anything else you wanted to ask?

No. They were very interesting answers there. I was very interested to know about the prominence of content made in Wales on ITVX as well. So, yes, very good news about ITVX. Thank you. You covered everything.

Thank you very much. Briefly, when that change is made, how would you quantify what value you think that would bring, to have that ITV Wales content being available on ITVX? I don't mean necessarily to quantify it in monetary terms, but has that been a battle that you've had to push for internally, to get that? Obviously, we welcome the fact that it's going to happen.

What I would say is how ITVX differs from catch-up is that it's a destination in its own form. So, yes, you can catch up with content that's been on ITVX, but equally it becomes a destination for a streaming audience, and I think that what you're looking for in that kind of marketplace is that—. ITVX launched with news at its heart last year—one of the only streaming platforms available free to audiences to be able to do that. And ITV does something pretty unique in being a public service broadcaster and creating nations and regions news. So, to make that a part of the offer helps to make the platform itself distinct for audiences, and helps to offer something different in the marketplace. But, ultimately, ITVX will be judged on its ability to make money. Frankly, it is in that space in order to futureproof ITV, and that ultimately will be its measure of success.

Thank you.

Well, you're making money out of me. I enjoy the programming that you make and particularly some of the dramas that you make network-wide. I think they're excellent. And Phil's work here in Wales is first class. I want to see more of it, if I'm quite honest with you. I'm interested as to the answers to those first two questions about the Media Bill and that you want to get that on the statute book—I don't think there's any disagreement on this committee with that aspiration—and also the answer to the question on the value of the channel 3 licence falling in value and the rest of it. I've had this conversation with Phil for most of the last 20 years, and I admire ITV's ability to argue that the channel 3 licence is basically worthless to regulators, and fair play to you for doing that. But you can't on the one hand argue that the channel 3 licence is losing value and the rest of it, and then argue that you want the Media Bill on the statute book because of the prominence that you get as a PSB in the new digital world, because you get that as a consequence of the channel 3 licence.

At the moment, the only prominence we get is on broadcast linear channels. If you look at consumption, increasingly consumption is being driven online by streaming or—

But the Media Bill will put you on smart tvs as well.

It will put us on smart tvs for the on-demand service, and, in a sense, what that's going to do is, if you like, top up the value of the licence and help us. There's an awful lot of detail we don't know. So, for example, how will Ofcom define 'prominence'? Where will we be? We know we're going to get 'appropriate prominence' under the current drafting of the Bill, but there's an awful lot of detail then for Ofcom to fill in. One of the things we welcome about the Bill is it's not just about the app—so, we will get some form of appropriate prominence for our ITVX app—but actually also individual bits of content. So, if there are recommendation functions on a platform, we would expect to get some degree of appropriate prominence. But how that's defined and therefore what value it creates—

But it has enormous value.

Well, it has value, but, if you could tell me now what Ofcom's guidance is going to be, it would be much easier for us to figure out what all that was going to be worth.

But it has value to it—

It does have value.

—which is why you want it.

Which is one of the reasons why we want it, yes.

And it's why we would support you having it, quite frankly. We've got no issue with that, but I think we would probably say it generates a significant value in its own right. And that's interesting, because, the content, the expenditure in Wales has been reasonably flat over the last few years, and you had those significant cutbacks—. It feels like a long time ago now—was it 2009, something like that, you had a significant reduction in spend at that time. So, we seem to have plateaued, with quite a low spend in Wales, and of course that's been eroded by inflation in recent years as well, so it's actually reducing in real terms what it buys in the marketplace. So, I'm interested in how ITV, corporately, intends to reinvest in Welsh content, to ensure that the budget that Phil and his colleagues have to make programming is actually a realistic budget, able to serve the audience.

Well, look, I think the first thing—I'll let Phil come in on this, but the first thing I would say, I think, is that Phil and his team do a terrific job in Wales.

Yes. There's no debate about this.

But, look, we're the only commercial PSB providing the service in Wales that we do in terms of nations and regions and nations news, but also other programming for audiences specifically in Wales. So, that's the first thing I would say. I mean, Channel 4, Channel 5, both commercial PSBs—

We know that.

—both with the same benefits, aren't providing that service, and I think that's a really important contribution that we can make, and do make, willingly and enthusiastically to life in Wales. I think one of the things happening in that whole area of television is there have been quite a lot of efficiencies, and the use of technology has enabled us to manage those budgets. So, if you think about the old world of sat trucks—and this is more you than me—we have far more modern ways of gathering news now, and getting news back and multiskilling of journalists—I don't know, Phil, whether you want to talk a bit about that. But it's a transformed operation. You no longer need to have the scale of fixed infrastructure that we used to have, and that has created some efficiencies. But, look—. I mean, that's the first thing I'd say.

I think that we're very committed to serving all audiences across the whole UK with the best content that we can find, from wherever it comes from in the UK. One of the things we're doing at the moment, for example, we've got a programme called 'Amplify: The Regions', where we've got, effectively, a competition we're running for producers across the whole country to apply for development funding to help develop ideas that they've got. And we know there are quite a few producers in Wales who've applied to that, and we'll pair the successful companies up with a commissioner to help them fund the development of their ideas, and we'll either commission it or we won't commission it. If we don't commission it, they can go to other people and take those ideas. Because development funding is a really difficult thing for people to get.

Another thing we're going to do is, next year, we're going to have our producers forum in Wales. So, every year, we have two producers forums—one in London, one outside of London. This year, we've held it in Manchester; next year we're going to have it in Cardiff. And, literally, we'll bring all of our commissioners to Cardiff and we'll have a day with producers from Wales. And they will hear what the commissioners are looking for, they'll be able to meet the commissioners, they'll be able to pitch. It's a big opportunity for producers in Wales and, obviously, we're going to push that out really, really hard, to make sure that people have really good access to ITV and our network commissioners.

And just to build on the point, I'm not going to sit here and say, 'Look, I don't want any more money', right, but, in terms of is the money sufficient for what we're here to do, how do you judge that, I suppose I would look at it in a number of ways. So, television viewing, viewing to the television channel, is, as Magnus says, declining, but, in the first half of this year, the share of viewing to Wales at Six, for example, actually went up—only by a small margin, but it went up, so it's bucking that trend. If the programme wasn't of sufficient quality, wasn't reaching all parts of Wales, then audiences would vote. They have got other choices that they could make and they choose not to. Sometimes—. We've won the British Academy of Film and Television Arts Cymru news and current affairs award back to back for two years. This year, we also won the Royal Television Society Cymru award for the same sort of programmes. So, in the minds of our peers when they look at the content that we produce, they're saying 'Yes, that's first-class quality content.' And we're also innovating too.

So, yes, you're right; the big change was in 2009 in terms of our licence commitment, but we absolutely doubled down on the genres that were most important to audiences in Wales, current affairs, politics, and we put those in the heart of peak, and that helps to maintain audiences around them. But we're innovating around what programmes too. So, we're the only broadcaster in Wales to do an arts programme, for example. I'm very proud of that fact. I think it's absolutely fantastic; it's a terrific programme, and that's in the heart of peak. 

So, yes, you're right; if we had more money we could do more, but with what we've got—and we've always got to cut our cloth—I think we're doing an awful lot with it, and we're looking to be innovative. And, as Magnus says, technology does enable us to do more with what we have as well.  

Look, I don't make any criticism of the programming in terms of what is produced. I enjoy watching it as a consumer. Every so often, I even make an appearance to frighten your viewers. [Laughter.] I've got no issue with any of that, and the quality that is produced by ITV centrally I think is first class; I've got no issue with any of those matters at all. My question is a slightly different one, and it's about the investment that's being made in this country in order to deliver programming that is designed for Welsh audiences. And that's where I think there is an issue. I accept the points about, you know—. I remember organising student demos in the morning in order to bike tapes down to Cardiff. Those days are gone. Those days are gone, and we are operating in a very different environment. You're not going to open another Culverhouse Cross ever again, and neither is anyone else. Those days are gone. I accept all of that.

However, that does not mean that you can get away with spending less in Wales, and I think that is the really key thing, because, in delivering a service, you do require both the ability to programme in peak hours—I'm not convinced that 10:30 on a Monday is normally regarded as peak, but we can have that conversation—. So, you need both peak hours, high-quality programming and investment in the development that you have described in your previous answer. And I'm not convinced that ITV centrally is committed to that, and I say that because of my experience of living in this country and being a consumer of your programming. I would like to see ITV centrally invest more in Phil and his colleagues to deliver more of the excellent content that they are providing. 

Yes. Well, look, I'd say—. There are a couple of things to say. I think the first is that, in the end, ITV is a national player competing now in a global market. 

Yes, but my nation is Wales. 

I appreciate that, but, in the end, as a commercial company, to pay for news we have to make £70 million of revenue, profit, in order to pay for nations and regions news service, even before we've started doing anything else at all—paying for any entertainment programmes or anything else. So, we are a commercial broadcaster. Our competitors—Netflix, Amazon, Sky and all the rest of them—are all now global companies. They are spreading all of their costs across the whole world. We're doing this for the UK. And so, there is a balance between what we can provide in public benefit, whether that's nations and regions news or other public benefits, versus having to make some money in order both to be able to pay that but also to make a return for investors, who have the option of investing in any company they choose to across the world. 

And I would slightly dispute the point about investment in Wales. At the moment, if you just take drama, for example, we've got two big commissions with Bad Wolf, which is a Welsh drama producer—The Winter King launching very soon. Do watch it—it's a terrific running-up-to-Christmas show. I'd really recommend it. We're filming in Wales a thriller at the moment called Out There, which has a Welsh-born director, Marc Evans. We're filming that in the Black Mountains. We're using local talent, cast and crew. Until I Kill You is another drama commission we've got that is filmed in Wales. So, I think there are quite a lot of examples, actually, of where we are filming and creating economic activity in Wales in the screen sector.  

But those are two different issues, aren't they? And I accept that, by the way, and I make no criticism of ITV's output in terms of the global output. I think the numbers demonstrate that people actually enjoy what ITV produces. I've got no issue with any of that. But it's a slightly different issue, isn't it, about making programmes in Wales that are for Wales and a Welsh audience? The news programmes you produce are excellent; I've got no issue about that. My concern is where they are in the schedule, and the investment that ITV is making into them. I'm not convinced by the argument that, because you compete with Netflix, in the same way as everybody else does, you therefore cannot make more programming for a Welsh audience. Because I would turn that on its head and say that provides you with an opportunity rather than simply a threat.

One thing I would add in there, sometimes it all does also look—. It depends on your viewpoint, and where you look from; if I was, say, sitting in an English region looking at what ITV provides in Wales, I would see Wales getting, Welsh viewers getting, a lot more from ITV than I might be getting as a viewer in England. Now, my view would be, 'Absolutely, and rightly so', but I think it is about recognising that—that we are delivering four hours of nations news in Wales, for audiences in Wales. If you were in an English region, it would be much lower than that. There is no programming outside of news as part of the nations and regions offer by ITV in the English regions. So, if you took a per head sort of calculation, and asked the question, 'Does ITV spend more per head of population on public service journalism and content in Wales than it does in England?' the answer would be 'yes'. 

But that person sitting in front of that screen in a region of England doesn't have decisions on public services, for example, and governance taken in that region. So, I think there are particular issues in Wales and Scotland about the delivery of—. For example, if we just narrow it down to news programming, just for the ease of conversation, then people like ourselves need to be held to account, Ministers need to be held to account for their decisions, and there is the development of that deficit, isn't there, that we've described on many occasions, that a Welsh education or health Minister isn't held to the same account as an English Minister because there isn't the space and the time and the opportunity to do that. That is then a question of democracy and governance and accountability, which is a much wider and bigger question, which isn't comparable with an English region. 

No, but I think that's what the offer in Wales actually looks to do. We put a half hour of dedicated news about Wales where we will hold the Welsh education Minister or the Welsh health Minister to account in Wales for the policies in Wales, and then that, on ITV, will be followed by an hour of UK news, and that extension of that—I mean, that used to be a half-hour programme. That's now an hour-long programme, and that has given, I think, much more scope within that programme, too, to cover issues in Wales. So you're getting more coverage of Wales from the UK media or the UK ITV news—network news, as we call it—than you might have got in the past, because it's an hour-long programme. And now that programme too has a dedicated Wales correspondent, which you didn't have a few years ago.

I accept that.

So, I accept that Wales should have more scrutiny than regions of England, but my view would be that, given what we do as part of our licence in Wales, together with what the wider ITV does in terms of its commitment to the UK news, I think, compared with everyone else in the commercial sector, we do that pretty well.

Thank you, Chairman, and good morning. I'd like to follow on from Alun's theme about investment in Wales, but more focused on the network content. Because it's quite a stark fact, then, that your 2022 network spend in Wales plummeted to virtually nothing—of the qualifying spend, that is. Do you think that's appropriate? Have things changed, or are things going to change in that regard? You've probably covered a bit of that.

I have covered a bit of it. The first thing I'd say is that those numbers don't include the substantial spend we make on Welsh programmes that Phil oversees, so it doesn't include nations news, and it doesn't include those other regional programmes, which is the first thing to say. That, for us, is a very substantial spend and not replicated by any other broadcaster. That's the first thing that I would say.

The second thing, I think is that, look, these numbers do fluctuate over time, and I have given you a few examples of a couple of dramas that we have commissioned from Bad Wolf. Drama is a big number, inevitably, and, as I say, we have got two big commissions with Welsh drama producers—one about to launch, which will be in this year's numbers, I would imagine. We are also filming substantial amounts in Wales. Now, interestingly, the two that we are filming in Wales are actually commissioned not from Welsh companies, but they are being filmed in Wales. As I talked about, Out There is using a Welsh director, it is using Welsh talent and crew, and so on. So, it's a bit more complicated. I suspect, in the end, that Out There—. I don't know whether Out There is going to qualify as an out-of-London production technically on the Ofcom guidance, but I can certainly say that there is a big contribution to the Welsh creative economy, but it's being made by a company that's not based in Wales. Equally, actually, the Bad Wolf dramas may be returned as Welsh productions, but I don't know, because of the way that the criteria work. So, I think that I would urge you to look slightly beyond any particular year's numbers. It is slightly more complicated, and I think that, in the round, our contribution to Wales is significant.

But, look, we are not complacent about that. We do look at these numbers, and actually it is one of the reasons why we are going to have the producers' forum in Wales next year. Actually, what we don't want is for producers outside London to feel that they have to come to London in order to pitch ideas. Actually, we should go to talk to people outside of London, and it's actually why we are going to bring all of our commissioners to Cardiff next year. I would really urge every producer in Wales to tip up for that, because it's a fantastic opportunity to meet people who have got money to spend, and who are going to be there, telling Welsh producers what they want to buy, on what timescale, and making those crucial connections. It's the cup of tea, it's the invitation to have a further conversation, and all of that stuff—the networking—that is really, really important. That's one of the things that, in the day that we had in Manchester this year—. Almost the most important bit of feedback that we got from the producers who came was that it was a fantastic opportunity to get face time with people who are, otherwise, very difficult to access, or can feel difficult to access. I don't think it's quite as inaccessible as, maybe, people think, but, actually, to have them there in the room, to be able to talk to them and have a cup of tea and pitch things informally, is a great opportunity.

I'd add to that as well ITV's coverage of sport. Obviously, sport is one of our national identifiers. It's really important to us. ITV's coverage of six nations rugby is vitally important to the nation and the nation's mood. The Rugby World Cup, which you have all just enjoyed—. The game against Argentina—okay, the score didn't go quite the way that we were all expecting or hoping—85 per cent of the television-viewing public in Wales watched that game on ITV. So, the power of ITV to bring the nation together around really big events is there.

Just building on the ITVX thing, what's been really exciting about X is that it has started to give different opportunities as well to potentially show different live sports. In December, for example, Wrexham against Yeovil in the second round of the FA Cup will be live on ITVX. So, you can see how these things can potentially build in the future as well. Sport is a really important part of ITV's network offer.

[Inaudible.]—any other outlet in the ITV family?

I think that that is purely going to be an ITVX exclusive.

One thing that I'd add just about sport, actually, is that we have got a really constructive relationship with S4C. So, what we did in the world cup in Qatar is that we made available—. Effectively, we were the rights licence holder with the BBC, and we had a very sensible conversation with S4C, as we always do, about Welsh language rights. We are perfectly happy to grant them a sub-licence, effectively, with the Welsh language rights so that people could watch the national team in Welsh. I have to say that that's quite a significant benefit because I think that it's difficult for S4C to buy the Welsh language rights separately from the overall contract with FIFA. So, it's an area where, again, ITV is, I hope, a constructive partner for Wales and for Welsh broadcasting.

Thank you. Peter, Llyr wants to come in with a supplementary, and then we will come back to you. Is that all right? 

Fine.

Just on that, I always welcome those kinds of relations and working across channels. Just coming back to the Wrexham-Yeovil game—

I knew Llyr's ears were going to prick up when you said that.

No, I'm just thinking—and I know that we will be coming on to sports broadcasting in a moment—when Amazon took on the rights for the autumn internationals, they actually provided their own Welsh-medium feed of commentary, et cetera. Is that something that you could consider in relation to, for example, stuff being broadcast on ITVX?

I don't think specifically for that game, no—I'll be honest. ITVX is in what we call a year of launch, as it were, building things out. There is possibility of that in the future, but I couldn't say any further than that.

Okay.

Okay. Diolch. Peter, back to you for now.

Only one more question, really, just looking for your perspectives. A previous Senedd committee recommended—and we talked about the channel 3 licence quite a bit, earlier—that it should require a greater proportion of network content in Wales and that the Welsh Government should take more of a formal role in that process. I just wondered what your observations were on that and how you have reflected on that since those days.

Sorry. Are there two questions there and one is: should there be a network quota for Wales? Or is it about the role of the Senedd? Sorry, I'm happy to do either or both.

No, it was that a previous Senedd committee recommended that the channel 3 licence should require you to produce a greater proportion of network content in Wales and that the Welsh Government should have a formal role in the process—I'm not sure quite how they thought that might happen—and I just wondered what your reflections were on that.

I think, on the obligation, I don't think we would want to have more obligations when we have an awful lot of obligations already of a whole variety of different sorts, and there are constraints on flexibility. As I hope I've explained, we are very conscious of the need to try and source programmes from across the whole of the UK, including Wales, in addition to the work that Phil's team already do in ITV Wales. But I don't think that further obligations—. We already have an out-of-London quota, so we already have a 35 per cent spend and hours quota for out-of-London content. So, we're already having to source very substantial amounts of content, and that does force us to make decisions that may not be profit maximising to source programmes from out of London. I think further restrictions and further obligations would be difficult in terms of our freedom to commission or not and the constraints that we face, in particular alongside our competitors, because, again—I'm sorry to bang on about the competitor set—we do face global competition in tech and in programming and that's really tough for a national company, because we're spreading our tech cost across one service in one country, in contrast to Netflix, which spends probably $1 billion or $2 billion a year on tech, the costs for which they spread across the whole world. Netflix has 400 people in the UK and there's no chance of them providing specifically Welsh content or news and current affairs from Wales any time soon. They've said, 'That's not the business we're in'. And these are our competitors. So, there comes a point when I think more obligations just become really difficult for ITV to be able to survive as a business. 

And, look, the second bit of your question is a matter for politicians. I mean, we will come and account as you and the Westminster Parliament agree that we should.

Thank you, Chair.

Okay. Diolch. We'll go back to Llyr on sports rights.

Diolch. Yes, I just wanted to ask about sports rights, then. Obviously, there's been an indication from the Minister, John Whittingdale, that if Wales were to request adding certain sporting events in Wales to the list of free-to-air, then he'd be open to having that discussion. You mentioned the Rugby World Cup coverage that ITV broadcast recently, but we're also aware that the CEO of the Rugby World Cup has suggested that maybe, in future, those games will be behind a paywall. So, can you tell us a little bit about where you're at in terms of your ability to compete for the rights of various sporting events and how, potentially, maybe losing the Rugby World Cup, the six nations and other significant sporting events would impact you?

Yes. So, let's deal with those two events slightly separately. The Rugby World Cup final is listed as a category A, I think, so I think there's a reasonable likelihood that that stays on free television, but the rest of the tournament isn't, and the six nations is also a category B. So, effectively, most of the Rugby World Cup and the six nations are category B. So, fundamentally, as long as there's a highlights package in place, you could put those tournaments entirely behind a paywall.

Look, from our point of view, we are always on the lookout for events and sporting occasions, particularly, that bring the whole country together, or bring an individual nation together. So, we're very supportive of the list events rules, we think they're really important, and we think they're the only way in which we can afford to buy certain sporting competitions that would definitely end up behind a paywall. By the way, they don't give us a free pass; we have to pay loads of money for the rights. All it does is, effectively, put a ceiling on the maximum price. It's a form of price regulation, if you like, because it essentially says, 'As long as you have offered a reasonable amount of money for you as a free-to-air broadcaster, whether that's us or the BBC, it's difficult then to get consent for a broadcaster if you're a paid provider.' But we have to absolutely offer up to the max that we can possibly afford. But, look, in the end, what's on the list is a matter for politicians to decide, rather than commercial companies. If one of your objectives is to secure universal free coverage, you're clearly going to increase the chances of that if it's a category A event than if it's a category B event.

But, given your earlier statement, you do recognise the relative importance of rugby here in Wales—

Totally.

—and the six nations games particularly.

Totally.

So, would you go as far as saying that that would warrant a different status? The Scottish FA Cup final has category A status in Scotland. There's a parallel there, isn't there, in terms of the significance of rugby, given that rugby matches with Wales often generate the highest audiences for broadcasting.

To take the first part of your question, the numbers are astonishing. When you look at the numbers of the share, I think it the Wales-Argentina game in the Rugby World Cup had an 85 per cent share of the audience in Wales. Almost everybody in Wales seemed to be watching it. So, that's very attractive, and it's exactly what we want to do. As a broadcaster, one of our missions is to try and bring as many people together as we can. So, we're an enthusiastic supporter of listed events. We see a similar sort of debate happening in Scotland, actually, around the Euro and world cup qualifiers.

The truth is I can see there are some competing public interests here. One is about grass-roots sport and money, and so on, and it's the association argument, and then there's a broadcaster argument about bringing the whole nation together. Fundamentally, that's a political question for politicians to ultimately decide. Do we want to go one way or the other, do we want to try and see if there's a middle way to go? It's not, ultimately, a decision for ITV. I think you can probably work out where we think our interests lie, but, in a way, the decision about what we list and what's the scale of the list and so on is, ultimately, I think, a matter for politicians.

Diolch. But, certainly, you can see—. From your answer, I think you've spoken powerfully about the fact that rugby in Wales brings the nation together in a way that couldn't be said to be the case for the other nations in the UK in the same way.

Yes, I would agree. I would agree.

Okay, diolch. We will move on now to Peter.

Thank you, Chair. Just a couple of points around the expert panel and I just wondered what your view was. Did you agree with the analysis of media provision in Wales in the report that came out, and, perhaps linked to that, what impact could £1 million of annual funding from the Welsh Government do for the provision of content for our Welsh audiences?

Ultimately, this, again, is a matter for politicians. Certainly, when I read the report, I was pleased to see the recognition in the report of the value of public service broadcasting and what it brings to Wales. We absolutely look forward to engaging with the Welsh Government on whatever its recommendations might be, coming out of that report. But, really, it's one of those areas where this is very much a matter for politicians, but, as with all things, we're always very grateful for the interest in the future of public service broadcasting, and I, for one, was very pleased to see that people recognise the value it contributes and continues to do so.

Any views on what would an extra million quid invested in Wales—? What could we expect if you did that, or could do that?

Not really, in the sense that many millions of pounds are spent by public service broadcasters to create the content that's already created, that the market wouldn't otherwise do. Any addition to that is always helpful, of course, but I think you have to see it in sort of the broader spend.

It wouldn't be a big amount? It wouldn't make a huge amount of difference?

Well, as I say, I think all additional funding is of course helpful, but it has to be seen in, you know—. Creating trusted news and current affairs on whichever channel is very expensive.

No, I understand. Thank you, Chair.

Okay. Diolch, Peter. Okay, we are into our final 10 minutes. I'll go to Llyr first and then to Alun.

Just on the same subject: so, without asking you to express an opinion, objectively, from an ITV point of view, what do you think the advantages or the disadvantages, or the advantages and the disadvantages might be of devolving broadcasting to Wales?

Oh, gosh. [Laughter.] So, yes, heavy caveat then that we don't have a view about that subject—

No, no, I appreciate that.

—and that is a matter for politicians, and as a result, I'm not sure we have a terribly strong view. I think one thing I would say, though, is be careful of the economics of broadcasting, because broadcasting is globalising, and tv content production distribution is globalising. It's getting harder for ITV at a whole UK level to do what we do, and we've just gone through the process with ITVX, spent a lot of money on the tech for ITVX for one country, and that's challenging enough, to be honest, for quite a big market like the UK, but, actually, sometimes we can feel big and sometimes we can feel really small, so I would just be careful that you work through the economics of what a devolved arrangement looks like before you take the plunge, would be all I would say.

Yes, okay? Alun.

It'll take some time to decipher that for a while. [Laughter.] Can I take you on, though, in that conversation, because we're going to be debating in the next few years the future of the BBC licence fee? Now, ITV may or may not have a view on that, and I won't ask you to prejudge that this morning, but I'm interested in the conversation we've been having about—as you've just referred to—the economics of broadcasting, and one of the themes of our conversations this morning has been the balance that ITV makes in terms of serving audiences and its revenue issues.

So, taking Peter's last question about public funds: at the moment, the licence fee funds the BBC and S4C. If the licence fee were to be a public service broadcasting fund, rather than simply a licence fee, what view might ITV potentially take—I'm caveating the question there, to allow you to caveat your answer, I think—to having a contestable fund that would enable ITV potentially to produce more programming for particular audiences, shall we say?

So, we're big supporters of public funding for the BBC. We recognise there's going to be a debate around the licence fee, about whether it's the licence fee or is it some other mechanism of raising money, and actually, we're very lucky in the UK to have had a fairly mixed funding system, so you've got free-to-air advertising, you've got public funding, and you've got subscription, and that's created an immensely vibrant ecology. And I think, again—sorry, it slightly sounds like my previous answer—I think we need to think carefully about starting to mix that up. Because I think if you go down a road of contestability, potentially, the BBC will then say, 'Well, in which case, we need to take advertising, or we need some other form of intervention that enables us to make up the difference,' and you start messing up that system, and it's a system that's tried and tested; it's worked quite well, so I think we would be cautious, I have to say, about going down that road.

But, look, as you said, there is a debate coming, and the economics of PSB are strained, and we may need to be imaginative in due course about how we look at all of that, but we certainly don't start from a position of saying, 'We need a portion of the licence fee' at all, partly because we've had a system that's worked really very effectively over time.

It hasn't worked overly effectively, though, has it? Because you've made the cuts to regional funding, to regional programming, in the way we discussed earlier, so I can understand you saying—and I don't disagree, actually, about the mixed economy; I don't have an issue about that—but we've seen reductions in ITV spend in Wales in real terms—

Yes.

—over successive years, and when I think back to—. And I don't want to get too rose-eyed specs about this, but when I think back to the old days, there was a HTV that was an absolutely rock-solid Welsh broadcaster, and it was incontestable. Now, we have an ITV with Welsh opt-ins, which is a very different beast. I don't want to go back to the 1980s and lovely national anthems at 11 o'clock, or whenever it was, but I do want to go forward into the future with an ITV that is able to serve Welsh audiences. And if there is a means and a mechanism of maintaining the absolute independence, which is important, whilst at the same time having a mixed ecology of funding that would enable ITV to better serve particular audiences—and I don't simply mean Welsh audiences here—then perhaps that is something that may be a useful additional tool. 

Yes, look, I would slightly dispute the premise of your question that we don't serve Wales effectively, because I think we think we do, but—

It's the reductions I'm talking about.

Yes, okay. So, do we do as much as we did in the pre-internet era? No, we don't. 

Of course you don't, and I'm not pretending—

And so, in a sense, if you want to switch off the internet in Wales, then that's obviously a different conversation.

That wasn't my question, was it?

Well, but I think, in a way, as a society, what we've chosen is more competition over time, effectively, and that has eroded the ability of commercial public service broadcasting to deliver all the things it used to do. And that's a choice, that's a very deliberate choice, and people really enjoy having a much broader choice of services compared to just having two channels, and so on. But where you are right is: do we need to have a debate about how much PSB we can fund and afford and where the money comes from? That's a perfectly reasonable political debate to have, and we would obviously participate in that debate. But I think we need to think carefully about is it the licence fee or is it some other mechanism of funding, I think. 

Okay. I think we're not going to get any further there this morning. 

Okay. We have a couple of minutes left. Is there any final point that the two of you would like to make that hasn't been made already this morning?

Look, I think the only point I would make is just to thank you for your interest in public service broadcasting. I've spent most of my career in public service broadcasting, and I happen to think it's really important. I worked at the BBC and I've now obviously been at ITV for quite a long time, and it's important that we all pay attention to what's happening, because it's not a given. So, I think it's important that you continue to, in particular, put pressure on things like the Media Bill and making sure that the Media Bill delivers the things that we need it to deliver in terms of the sustainability of PSB.

And I'd just echo that. I think your attention and championing of Welsh public service broadcasting as a whole is very, very welcome, as is asking us questions. We don't get everything right, and it's always good to get feedback about where you think we can improve. That's always really helpful to get. And, as Magnus said, the Media Bill is a really important next step, but we're not quite there yet. So, I would urge you, over the coming months, to maintain that vigilance to make sure that Wales is, in fact, as well served by the Media Bill as we hope it will be. 

Thank you both very much. A transcript of what has been said will be sent to you for you to check that it's an accurate record of our discussion this morning, and slightly into this afternoon. Diolch yn fawr iawn. Thank you very much for your time today, we really appreciate it. Diolch yn fawr iawn. 

Diolch yn fawr. 

Thanks very much.

Members, we will be moving on in a moment, but I'll give our witnesses a moment. Thank you so much. Thank you. Diolch yn fawr iawn.

I don't see that Carolyn or Peter are indicating that they want to speak. I will take that as no disagreement. Carolyn, did you want to say something in public? No. Okay. Iawn. Great. Okay. By the way, I think that we've lost Peter's sound at the moment.

Under Standing Order 17.42—.