The BBC: what is really going on?

Is the BBC spinning a big lie over the need to find cuts of between £550 and £700 million a year to fund the cost of the over-75 licences?

David Elstein
1 December 2015
 Deatonphotos / Shutterstock.com

Credit: Deatonphotos / Shutterstock.com

 Yet the “big lie” from the BBC Trust – carefully not contradicted by BBC Corporate – prevails amongst media commentators. Enders Analysis issued its “red alert” warning. Media editors at the Telegraph and the Guardian – and even the ultra-reliable Roger Bolton on Radio 4’s Feedback programme – persist in claiming that the BBC needs to find somewhere

Our Beeb has recently published the full text of Tony Hall’s speech in Cardiff about BBC creativity and independence. It’s always good to see a top executive paying tribute to the creative teams in his organisation, but his remarks on independence seemed to me particularly dotty.

Citing the precedent set by the Royal Charter for the press (to which not a single newspaper, national or local, has yet signed up, despite large financial incentives to do so), he argues for a “dual lock” in Parliament to prevent any government of the day from making “fundamental” changes to the BBC, such as cancelling its Royal Charter or altering its funding mechanism, without a two-thirds majority in both Houses of Parliament.

So a majority in the Commons that can “fundamentally” change our taxes, our armed forces, our health service, our universities, our schools, our police system, our foreign policy, our environmental policy, our judiciary, our pension systems, our telecommunications, our power supply and even our currency would not be able to move the BBC’s funding from a licence fee to a household tax if 350 members of that absurd institution the House of Lords chose to block the proposal (most of whom, being over-75, are currently exempt from paying the licence fee but would be liable to pay a household levy). I am assuming here that a two-thirds rule requires two-thirds of those eligible to vote, not just two-thirds of those who happen to turn up for the day (which could be as few as two, if only three vote).

Indeed, given the unlimited power of the Prime Minister to nominate new peers, a majority of the Commons could force through abolition of the House of Lords if it so chose: but not abolition of the BBC’s Royal Charter (which would then, indeed, remain permanently in place in the absence of the Lords, unless the last act of the Lords before their own abolition was to abolish the Charter, too). Really.

Similarly, Hall calls for the use of online polling to involve the public in major BBC decisions, without giving us a clue as to how that could work. Let’s say there is a question of sport: how  much should the BBC spend; more or less than currently, and if more, at the expense of what; which sports should the BBC seek to cover; in what fashion; how should sport be scheduled; who should be the presenters and pundits; how could the graphics be improved, and so on. On which of these questions could the public make a useful collective contribution to BBC decision-making? And given the complexity and inter-locking character of BBC budgeting, what likelihood is there that the BBC could take any meaningful notice of “public” opinion? After all, on the two most recent consultation exercises – the closure of BBC3 and extension of hours for CBBC – the BBC simply ignored the majority of responses.

All of this “sand in your eyes” from Tony Hall is simply designed to distract us from the basic underlying truth: the one decision that could safely be left to each household or individual – whether or not to pay for the BBC – is the one that Hall is resolutely opposed to granting. Instead, he and his managerial colleagues blether on about what wonderful value the BBC represents, whilst utterly refusing to allow any of us the right to make such a judgement for ourselves. At the same time, he deplores governmental interference in the BBC, without acknowledging that replacing the licence fee with a voluntary payment system, made possible by encryption technology, would take ministers out of the equation once and for all: leaving BBC financing entirely as a matter to be decided between the BBC itself and its customers.

As long as the licence fee persists, and is part of the public spending system, it is inevitable that ministers will decide its overall level, and what – if any – priority spending obligations will be attached. The notion that “Parliament” – or some parliamentary committee – could make these decisions is fantasy. Indeed, the current Culture Media and Sport Committee, with its Conservative majority, would be much more likely than Secretary of State John Whittingdale to make arbitrary cuts in the licence fee.

Perhaps the least attractive aspect of the BBC’s response to Charter renewal has been its persistent dishonesty. No sooner had the government’s Green Paper – anodyne in almost every page – been published than BBC Corporate issued a statement that the document presaged a much diminished BBC (it did no such thing). The BBC encouraged those who regard it least critically (often, those who benefited from its patronage) to utter dire warnings about the dangers represented by Charter review (as if there had not been half a dozen such reviews in the past).

Astonishingly, a member of the BBC Trust uttered the biggest lie of all, unchallenged, on a BBC programme. Richard Ayre, when asked which he thought was worse, the 2010 licence fee settlement, or that for 2015, unhesitatingly said the latter – much worse. Yet the 2010 settlement cost the BBC the best part of £500 million a year, ongoing, in the shape of new spending obligations: a total bill over the 5 years 2010-2015 of nearly £2.5 billion.

By contrast, the 2015 licence fee deal was – in management’s own words – cash neutral over the five years 2015-2020. Of course, our attention was drawn initially to the government’s decision to transfer, progressively, a share of the cost of free TV licences for the over-75s to the BBC, so getting it off the Treasury’s books by 2020, as part of Osborne’s July budget announcement. However, a swift exchange of calls and letters between Hall and Osborne and Whittingdale saw the £700m cumulative cost of this transfer almost entirely offset by allowing the licence fee to be index-linked from 2017, and reducing the cost to the BBC of broadband roll-out and support of S4C. Indeed, because the concessions will continue after 2020, but the obligation to fund free TV licences for the over-75s disappears in 2020, the settlement is actually rather favourable. By 2020, the licence fee will have risen to £160 a year, and BBC licence fee income to £4 billion: far beyond the expectations of the Tory press immediately after the election result (and no doubt much to their dismay).

Yet the “big lie” from the BBC Trust – carefully not contradicted by BBC Corporate – prevails amongst media commentators. Enders Analysis issued its “red alert” warning. Media editors at the Telegraph and the Guardian – and even the ultra-reliable Roger Bolton on Radio 4’s Feedback programme – persist in claiming that the BBC needs to find somewhere between £550 million and £700 million A YEAR of savings to fund the cost of the over-75 licences. This is simply untrue. The over-75s issue is a red herring: the total cost to the BBC of partially taking over that obligation for three years has been almost completely offset. Any cuts that the BBC might choose to announce in the next 12 months would have been made if the over-75s issue had never been raised. According to the BBC’s own documents, they are the result of the anticipated impact of inflation (which the BBC reckons could cost it £400 million between now and 2020), reduced take-up of the licence fee (£150m pa, as more households switch to on-demand viewing) and the desire to invest in new content and ventures (£150m pa). This has nothing whatsoever to do with the over-75s.

Of course, it suits the BBC’s narrative (“nasty Tories threaten wonderful Beeb”) to leave the media errors uncorrected. Indeed, it came as something of an embarrassment when George Osborne agreed in November to increase the BBC World Service budget by 25% - the biggest boost to the World Service since 1938: how do you fit that into the narrative?

Meanwhile, Hall dolefully announces a series of “painful cuts” (BBC3, red button content) as if they were the result of government interference, rather than managerial incompetence.

Let us not forget the sheer scale of the BBC overhead: pension fund deficit reduction £188 million a year, technology costs £166 million, property £162 million, cost of maintaining the BBC divisional structure £85 million, finance and operations department £85 million, marketing £70 million, HR and training £41 million; plus £201 million of online spending and £83 million on development. Last year, the number of BBC employees rose by 300 to over 21,000, and the salary bill rose to nearly £1.3 billion. The BBC has nearly £2 billion in finance lease obligations, and a continuing pension fund deficit of nearly £1 billion. And we are asked to wring our hands over the need to “save” £30 million a year by closing BBC3.

Nobody in Westminster or Whitehall told the BBC to take on these massive costs and obligations: that was all the result of BBC hubris and inertia. Of course, it was a blow to the BBC when the coalition imposed those new spending obligations in 2010 (BBC World Service, broadband rollout, S4C, local TV, BBC Monitoring), but it had been an open invitation to a tough public spending review when BBC Director-General Mark Thompson had published a document the previous year acknowledging that the BBC could easily save £600 million a year from its bloated cost structure for investment in new content and infrastructure. Why not, reasoned the coalition, spend it on existing content and infrastructure obligations, at that point funded directly by other government departments?

And when Hall complains about governments using licence fee money for non-BBC broadcasting objectives, he starts the list with the digital switchover fund: yet that was additional money, added to the licence fee, to help terrestrial broadcasters (most obviously, the BBC) make the transition from analogue to digital transmissions. The BBC supported the whole notion of a ring-fenced fund within the licence fee, despite multiple warnings about the precedent it was creating, partly because it wanted to be closely involved in the transition process (as the government’s expert resource) and partly because it hoped for the switchover element in that licence fee settlement to remain in place after the switchover process was complete, with the BBC enjoying the proceeds. That, in practice, is what has happened, though the long freeze in the level of the licence fee has disguised it. It is history – not hypocrisy –that Hall needs to spend more of his time honing.  

Tony Hall seems to be able to make speeches and announcements almost every week, but he has still to come clean in relation to the over-75s after 2020. Will the BBC hand out free TV licences to them all, despite being under no obligation to do so, and despite the 20% cut in disposable resources it would thereby suffer? Or will it quietly inform all 4 million such households (it has all their addresses) that from May 2020 they will be liable to buy their own licences? Perhaps the BBC quietly hopes that the licence fee will have been replaced before 2020, such that the whole issue can be quietly buried: but if so, it should say so, rather than continuing to allow so many media commentators to mislead the public in such a prejudicial way.


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