The draft Legislative Reform (Renewal of Radio Licences) Order 2020 (the LRO) is subject to the affirmative resolution procedure. It is due to be considered by the House of Lords on 27 November 2020.
What do the orders do?
The Department for Digital, Culture, Media and Sport (DDCMS) has explained that the LRO is being made to extend analogue radio licences due to expire from 2022 for a further ten-year period. This is on the condition that they also provide a service on an appropriate digital radio multiplex. A digital radio multiplex is the means by which a digital radio service is broadcast. A multiplex “consists of a number of stations bundled together to be transmitted digitally on a single frequency in a given geographic area”.
Analogue FM or AM commercial radio licences are issued by Ofcom under section 86 of the Broadcasting Act 1990. The DDCMS has explained that over recent decades stations broadcasting analogue services that also provide digital services have been able to benefit from a series of licence renewals:
Since the mid-1990s, the analogue licences of stations that also provide a service in digital form (in practice, either via digital audio broadcasting (DAB) or its successor technology, DAB+) have benefited from an entitlement to claim a series of renewals, in accordance with amendments made to the Broadcasting Act 1990 by the Broadcasting Act 1996, the Communications Act 2003, the Digital Economy Act 2010 and the Legislative Reform (Further Renewal of Radio Licences) Order 2015.
However, the DDCMS has stated that a number of radio stations will reach the final expiry of their analogue licences “over the coming decade”. This includes “the three national licences—for Classic FM, and the AM licences for Absolute Radio and TalkSport—as well as around 100 local licences”. Without the LRO Ofcom would not have powers to renew the licences further and would have to re-advertise them. The LRO would amend the Broadcasting Act 1990 to provide Ofcom with the power to further renew licences. The DDCMS has said re-advertisement would incur “significant costs” for both potential new entrants and incumbent stations who would have to write up new licence applications.
[T]he vast majority of consultation respondents were in favour of a further renewal of licences, given the significant cost and uncertainty for the industry that would be involved in re-advertising. There was no expressed public desire for licences to be re-advertised, and in any event, there remain sufficient routes to market for new entrants – including by acquisition of one of the existing analogue licences or the creation of a digital station, given the increased availability of DAB capacity with the launch of the second national multiplex in 2016 and the expansion of local DAB coverage.
The LRO would also enable Ofcom to allow applicants to nominate a small-scale radio multiplex service. At present the renewal applicant would only be able to nominate a local radio multiplex or make a national nomination. The DDCMS has explained the difference between these multiplexes as follows:
[R]adio multiplex licences are awarded either for national (UK-wide) or local (generally county-sized) coverage; a small-scale multiplex service would enable stations to broadcast to geographic areas smaller than those covered by existing local radio multiplexes.
The DDCMS believes this provision would be “likely” to enable applicants to reduce costs because “carriage on a small-scale radio multiplex is likely to cost less than carriage on a local (or national) multiplex”.
Following its initial consultation period, in light of challenges the sector faced because of Covid-19, the DDCMS sought the views of Ofcom and key stakeholders on two additional proposals. These were removing “the requirement for stations to provide a service on digital as a condition of any future analogue renewal” and allowing analogue licences to be renewed for a further ten years (the consultation had previously looked at options including five year and eight year periods). The DDCMS said that the response to the ten-year period was positive. However, the response to removing the digital requirement was mixed:
Although some respondents saw this as a significant simplification in legislation which would reduce regulatory burdens, organisations representing local multiplex operators were less convinced. Radiocentre [the industry representative body for UK commercial radio stations] thought that more time was needed to consider the wider implications, and suggested that this be looked at as part of longer-term plans for radio deregulation.
The DDCMS therefore proposed to “allow a further extension of all analogue licences for ten years on the basis that the licensee also provides a digital (national, local or small-scale) service”.
Further details and discussion of the LRO can be found in its explanatory document.
What are legislative reform orders?
The draft Legislative Reform (Renewal of Radio Licences) Order 2020 is proposed to be made under section 1 of the Legislative and Regulatory Reform Act 2006 (the 2006 act). The 2006 act allows a minister to make ‘legislative reform orders’. Legislative reform orders (LROs) are a type of statutory instrument. They may be made to remove or reduce burdens which a person may be subjected to as a result of legislation. Under the 2006 act a burden means any of the following:
- a financial cost;
- an administrative inconvenience;
- an obstacle to efficiency, productivity or profitability; or
- a sanction, criminal or otherwise, which affects the carrying on of any lawful activity.
- the policy objective intended to be secured by the provision could not be satisfactorily secured by non-legislative means;
- the effect of the provision is proportionate to the policy objective;
- the provision, taken as a whole, strikes a fair balance between the public interest and the interests of any person adversely affected by it;
- the provision does not remove any necessary protection;
- the provision does not prevent any person from continuing to exercise any right or freedom which that person might reasonably expect to continue to exercise;
- the provision is not of constitutional significance.
In section 3 of the LRO’s explanatory document, the DDCMS has set out why it believes the LRO meets the requirements set out in the 2006 act. The 2006 act also requires the government to consult on the draft LRO. The Government consulted on the LRO between December 2019 and February 2020 and responded in July 2020.
The Department for Business, Energy and Industrial Strategy has published detailed guidance for policy officials on how to make LROs:
- Department for Business, Energy and Industrial Strategy, ‘Legislative reform orders: guide for policy officials’, May 2016
LROs are considered by the Regulatory Reform Committee in the House of Commons and the Delegated Powers and Regulatory Reform Committee in the House of Lords.
When the government lays an LRO before both Houses it proposes the statutory instrument procedure it should go through. In the case of the Legislative Reform (Renewal of Radio Licences) Order 2020 the Government proposed the affirmative procedure.
Both of the committees were satisfied that the LRO was appropriate and agreed with the affirmative resolution procedure. In its report on 24 July 2020, the House of Commons Regulatory Reform Committee stated that:
We conclude that a satisfactory case has been made in favour of the proposal and recommend that the draft order be approved using the affirmative resolution procedure.
In its report on 23 July 2020, the House of Lords Delegated Powers and Regulatory Reform Committee concluded that:
In the light of the information provided by the Department, we are satisfied that the order meets the tests set out in the 2006 act and is not otherwise inappropriate for the legislative reform order procedure; and also that the affirmative resolution procedure proposed by the Government is appropriate.
Review of digital radio
In February 2020, the Government announced the scope of a Digital Radio and Audio Review. This would look into issues facing radio over the next ten years. The review will examine future trends in digital radio and audio, including the growth of smart speakers and online audio platforms. The Government is working with industry on the review, including, amongst others “the BBC, Bauer Media, Global, Arqiva, Radiocentre, tech UK and the Society of Motor Manufacturers and Traders”.
The reviews terms of reference include to:
(a) assess future scenarios for the consumption of UK radio and audio content on all radio and online platforms and assess the impact of these scenarios on access to UK radio services.
(b) assess the impact of likely models of future listener trends on current and future distribution strategies for UK radio groups and industry.
(c) make recommendations on further measures and collaborative actions to strengthen UK radio audio and industry for the benefit of all listener groups and to promote innovation.
The Government has said the review would produce a report (or reports):
[S]etting out sector commitment and options for future Government support linked to level of ambition and assessed benefit. The Government will need to consider recommendations for future Government action.
The Government has said that the review will be completed by March 2021.
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