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It’s something of a mystery. For weeks before the government’s plan for the future of the BBC was published on 12 May, newspapers were full of speculative scares. These claimed that Culture Secretary John Whittingdale was planning all kinds of punitive measures to constrain the Corporation: limiting its ability to commission and schedule popular programmes, diverting part of the licence fee to other broadcasters, forcing disclosure of the salaries of all freelance employees earning more than £150,000 and changing its historic Reithian mission mantra: “inform, educate and entertain”.
There was precious little truth in any of this: just as similar kites had been flown in the weeks between Whittingdale’s surprise appointment to the Department of Culture Media and Sport (DCMS) in May 2015 and the publication of his Green Paper on Charter renewal two months later, only to be exposed as ill-informed rumour-mongering. The question arises, inevitably: who was spreading this stuff, and why?
The spate of stories last year was more understandable than this time: newspapers were simply offering a read-through from past remarks of Whittingdale’s when he was on the backbenches, offering trenchant critiques of the licence fee and the BBC’s seemingly unstoppable expansion. Even the BBC seemed unnerved by this anticipatory glee, greeting the actual Green Paper with the doom-laden verdict that it “would appear to herald a much-diminished, less popular BBC”. In fact, there was a scarcely a hint of that in the document, and a slightly chagrined BBC Director of Strategy in due course admitted to an over-reaction.
This time round, it seems reasonable to assume that the newspaper “leaks” were inspired, rather than journalistically delusional. There were only three possible sources of leaks: the BBC, the DCMS and 10 Downing Street. Understandably, all deny any involvement, but it helps to ask “cui bono?” (who benefits?).
Here we need to note the role of the EU referendum in the process. This giant issue is casting its shadow over a wide range of political disputes, with a somewhat unnerved government, facing a stubborn “leave” near-majority in the polls and seemingly unimpressed by the scale and volume of “Project Fear”, steadily ditching any initiatives that might alienate key interests.
For Cameron and Osborne, not only does it make no sense to antagonize a bedrock of voters who treasure “their” BBC, let alone the highly visible and vocal “leftie luvvies” (as Whittingdale has dubbed them), but Whittingdale himself is a readily disposable Brexiteer, whose dumping soon after June 23rd becomes ever more predictable as he voices his anti-EU opinions. Astonishingly, on the very day of publication of the White Paper, Whittingdale took it on himself to criticise ITV for failing to consult the Vote Leave campaign before signing up Nigel Farage to debate with Cameron (so seeming to allow itself to be suborned by Downing Street). Coming from a Gove or a Grayling, that might have been unremarkable: but the Culture Secretary is in a very different position.
There is ample evidence that Cameron was heavily engaged in the White Paper, as the BBC appealed to him to over-rule Whittingdale on important issues. For instance, Whittingdale had proposed that the number of freelance employees earning more from the BBC than £150,000 per annum should be declared, within a series of levels (just as the number of staff in such earnings bands is declared). The BBC was wholly opposed, but accepted a Cameron compromise: the threshold would be £450,000 (i.e., the salary of the Director-General rather than the Prime Minister). The BBC continues to object, arguing that its stars might be poached by rivals as a result of publication, but this is simply laughable: there is zero likelihood that the agents for such people would have failed to test the market for their clients at every contract renewal.
Where else Cameron made a difference is not obvious, but it simply makes no sense to attribute the kite-flying to Whittingdale: he could not possibly benefit from it. The stories that emerged in the press all referred to changes that never materialised, but certainly provoked strong reaction from the BBC’s most passionate supporters. The leaks might have come from Downing Street: but their beneficiary was without exception the BBC, and the BBC’s corporate affairs team should not be shy about taking credit for the outcome.
For the White Paper could scarcely have been more pleasing for the BBC. Its proposal to make the next Charter period 11 years rather than 10, so breaking away from the timetable for general elections, has been accepted. The licence fee will be retained throughout the period, with index-linking from 2017 onwards. There will be no “top-slicing” of the licence fee to fund other broadcasters (apart from S4C, as is currently the case). The so-called i-Player loophole (whereby watching BBC programmes on demand rather than live does not require a TV licence) will be closed. The BBC will be allowed to appoint a majority of its own governing body – a new unitary board combining executives and non-executives, replacing the current split between the BBC Trust and the BBC Executive Board. Ofcom will become the external regulator of the BBC, but will have no power to control the BBC’s choice of programmes to commission, or how to schedule them.
However propitious the political timing may have been for the BBC, it would be churlish not to acknowledge its tenacity and political skills in securing so much of what it wanted for the next Charter. I would personally have wished for something a little more radical, especially on the funding mechanism, but there was no realistic possibility of forcing a replacement for the licence fee, especially after the public consultation had shown minimal enthusiasm for a household levy as the alternative. As for subscription, the BBC will be encouraged to experiment with premium services, but these are highly unlikely to serve as precursors for a complete switch.
The BBC offered a largely positive response to the White Paper, but that has not stopped various critics from condemning the document (including those who used the BAFTA awards ceremony on the Sunday before publication to condemn the government in apocalyptic language for its supposed planned “evisceration” of the BBC). This shameless bluster was clearly planned, and constituted something of an abuse of the BBC’s relationship with BAFTA: but it’s a free country, so why the critics are wrong merits spelling out.
The BBC had some reservations about the White Paper, of which the largest was in relation to the unitary board. The long overdue replacement of the BBC Trust with a combined board of executives and non-executives was conceded by the BBC last year. Yet the BBC (and, worse, its self-styled supporters) seems unable to grasp the nature of a combined board.
Somehow the BBC has got it into its head that the editorial issues that hitherto might be discussed at the Executive Board would now come before the combined board, threatening the BBC’s editorial independence. This is what philosophers call a category error.
That the current Executive Board may discuss editorial policy does not mean that the future combined board need do so. Indeed, at Channel 4 – which has had precisely this governing structure for 34 years – the main board never debates programmes prior to transmission. Whittingdale went out of his way to make clear that the proposed structure would leave editorial decisions entirely in the hands of the Director-General. The unitary board would have no more power over editorial matters than the current Trust: review only.
Frankly, the likelihood is strong that most editorial decisions are taken at the level of Director of News, Director of Television and Director of Radio, or below. Notoriously, the last two Director-Generals, Mark Thompson and George Entwistle, respectively knew nothing about the Newsnight segments on Savile and McAlpine. The fear that the unitary board might pre-emptively interfere in programme matters is bogus, but it is being used to suggest that the BBC’s “independence” might be under threat if the government is not entirely removed from the selection of non-executive directors (what Peter Kosminsky – the ultimate luvvie – calls the North Korea danger).
That for 90 years every single member of the BBC’s supervisory board has been appointed by ministers (in recent years, after a reasonably transparent arm’s length process) seems to count for nothing. By this argument, Rona Fairhead, the current Trust chair, is some kind of political stooge (which – for anyone who does not know her – needs emphatic denial).
Indeed, even when known political supporters have been appointed to chair the BBC Governors or Trust, there is ample evidence of their leaving their politics behind them. Before Fairhead there was Lord Patten, a Tory peer, but one who has been outspoken in his derision of Whittingdale; before Patten, Sir Michael Lyons was a solid Labour man, but gave no hint of that in his behaviour at the BBC; likewise, Michael Grade (Tory) before him and Gavyn Davies (Labour) before him. Davies – along with his fellow Labour-supporting Director-General Greg Dyke – was actually forced out from the BBC after a huge fight with the Labour government. Joining the BBC at any senior level requires leaving your politics behind.
What makes the whole argument even more surreal is that the BBC itself has agreed to Fairhead continuing in place, as chair of the unitary board under the new structure, well into 2018, and also accepts that the government will appoint her deputy. However, it baulks at the government appointing the four non-executives representing Scotland, Northern Ireland, Wales and England, even though in practice the first three anyway require the involvement (and implicitly the consent) of the respective devolved assemblies. Does the BBC really think it would make any significant difference if Rona Fairhead rather than the DCMS undertakes the necessary search? They would both appoint headhunters, who all work from similar databases.
There are those who think that the government should not be involved in any appointments to the BBC board: suggesting Ofcom instead (which appoints Channel 4 board members, subject to DCMS approval of the chair and deputy chair – and which, in turn, has its board members appointed by the DCMS).
This seems a remote prospect. After all, the licence fee is classified as a tax (technically, the Treasury is not bound to allow the BBC to keep all the money it raises). It is enforced by criminal penalties, pursued through the court system. The BBC has property liabilities – capital and interest payments – of nearly £2 billion, underwritten by the last Labour government. Its pension scheme deficit is nearly £1 billion. All this is on top of the £18 billion committed to the BBC in the latest licence fee deal. It is surely quixotic to expect this quantum of public funding and liability to be managed without any ministerial involvement in its oversight – that, not the BBC’s journalism, is the public interest that is being protected by the governance structure.
As the BBC could at any time take full control of its revenues, by stepping away from the licence fee, and thereby swapping accountability to Parliament and ministers for accountability to subscribers, it is hard to sympathize with its somewhat synthetic objections to the four appointments, especially as Whittingdale has explicitly agreed that the BBC itself (presumably through a nominations committee led by the chairman) could fill up to eight seats on the board, with executives and non-executives.
Perhaps the compromise that might defuse this issue would be for the government to appoint the four “national representatives” initially, but for all subsequent appointments (other than for chair and deputy, for as long as a funding system enforced by criminal sanctions prevails) to be undertaken by the BBC itself.
Two other points still unresolved between the government and the BBC are the role of the NAO and the idea of a mid-charter “health check” (to see if the governance system is working as intended) at the time of the next licence fee negotiation.
The National Audit Office is regarded with some leeriness by the BBC (“the provisional wing of the anti-BBC Commons Public Accounts Committee”, as one BBC sympathizer put it). Reluctantly, the BBC has acceded to ministerial pressure over the years to allow the NAO scrutiny of certain areas of activity. Now, it is proposed that the NAO become the BBC’s auditor, which begs the question as to whether its first duty is then to its client (the BBC) or to Parliament. Even if that wrinkle can be straightened out, the BBC is reluctant to allow the NAO to audit or scrutinize its commercial arms, on the grounds that they do not use public money.
Whittingdale’s retort to this is that one of the heaviest financial losses suffered by the BBC in recent years was as a result of the purchase of the Lonely Planet business by BBC Worldwide: his point being that money raised by Worldwide is fed to the BBC, so logically money lost by Worldwide is at the expense of the broadcast services. As at least one of the BBC’s existing commercial businesses is loss-making (so presumably at some point dependent on licence fee income to survive), and thousands of BBC staff are about to be spun off into another commercial undertaking, BBC Studios. Whittingdale seems ahead on points with this one.
One thing the NAO will not be allowed to do is to interrogate the BBC’s journalism: fears to that effect were expressly answered in the White Paper.
The mid-term review is regarded with some suspicion by the BBC and its supporters. The language of the White Paper needs to be tightened before it is inserted in the next Charter, to ensure that the clause cannot be used to open up issues of scale and scope: but if Whittingdale’s assurances to the Commons on the day of publication were genuine, that should not be much of a problem.
A number of critics of the White Paper have seized on the repeated use of the word “distinctive” – a virtue to which BBC services will in future be expected to aspire – as some kind of Trojan horse, whereby the BBC might be forced to give up popular programming. This knee-jerk response is distinctly puzzling. Tony Hall, the BBC’s Director-General, has himself called for BBC output to be “clearly distinguishable from the market”, and the BBC Trust has regularly questioned whether this or that service is sufficiently distinctive. A requirement of the new Charter will be for the BBC “to serve all audiences”, so there can be no question of limiting the scope of BBC entertainment. As the current Charter requires all BBC programmes to be “high quality, challenging, original, innovative and engaging” (or at least one of these), it is hard to see how adding “distinctiveness” can be some kind of hidden threat.
Another “slippery slope” spotted by critics is the authority for the BBC to explore premium services to be funded directly by consumers (provided these do not siphon off content that has been hitherto available to licence fee payers). As this was expressly supported by the BBC Trust in its response to the Green Paper, it is hard to see the problem: especially as the BBC is already committed to charging for archive material through the i-Store (a commercial version of the i-Player). A joint venture with ITV (“Britflix”) has already been mooted as a UK version of Netflix.
Well before that, of course, will come the so-called “closing of the iPlayer loophole”. In the run-up to Charter review, the BBC conceded the replacement of the Trust, and external regulation by Ofcom (the two biggest changes in the White Paper), but won the battle over decriminalisation of licence fee evasion, which had been supported by Parliament, but was then parked by an independent reviewer in favour of the status quo. At the same time, the BBC secured government support for users of the iPlayer watching BBC content after its live transmission to be required to pay for a TV licence.
However, this may be a Pyrrhic victory. It is impossible to distinguish between the use of a computer to watch the iPlayer, and its use to watch YouTube, or Netflix, or any of the free-to-air catch-up services offered by ITV, Channel 4, Five or a multitude of others. It will therefore be impossible to prosecute anyone for watching the iPlayer without a licence, unless the user provides a confession.
The assumption, therefore, is that some kind of verification – the number printed on your TV licence – will in future be required to gain access to the iPlayer, which will need to be encrypted for the system to work.
The upside of that is the possibility that licence fee payers may then be able to gain access to BBC output, on catch-up, whilst abroad (notably, in Europe), in the same way as those who pay for daily use of the internet whilst abroad are typically enabled, by using the relevant code, to operate up to five different devices for a single payment.
None of this implies that the licence fee will be substituted by subscription during the Charter period (unless use of TV sets is substantially replaced by internet access over the next decade). Indeed, the White Paper seems to have misunderstood the point of subscription, in claiming such a funding device “risks distorting BBC priorities”. That, of course, would be the point: to focus the BBC on high quality entertainment, factual programmes and news, sufficiently successfully as to generate significant VAT revenues from its sale of subscriptions, so enabling a proper public service broadcasting fund to be established, operated on a fully contestable basis, with access for all broadcasters, including the BBC.
Instead, there is a tiny £20 million annual contestable fund set aside for public service content, financed out of the under-spend of licence fee revenues ear-marked for broadband roll-out. I predict that it will be hugely over-subscribed, with a plethora of outstanding proposals, just as Channel 4 was nearly swamped in its early days when the independent production market-place was opened up.
If the BBC can feel that it has achieved 80-90% of what it wanted from Charter review, there still remains one very large risk factor: the role of Ofcom. Ofcom is a plausible economic regulator, and runs an orderly programme complaints operation through its monthly bulletin. It is also long overdue for Ofcom to be dealing with complaints about BBC impartiality, just as it does for all other UK broadcasters.
However, the scale of operations Ofcom will inherit from the BBC Trust, with virtually no handover period, is surely a cause for concern. Ofcom has no-one on its staff, and almost no-one on its Content Board, capable of making programme judgements (other than in relation to breaches of programmes codes) in the way its predecessor regulator, the Independent Television Commission, did.
Perhaps all 60 Trust staff will transfer across to Ofcom. Perhaps all the current service licences will also transfer, unchanged, awaiting re-definition by Ofcom. Perhaps the requirement for “diversity” to be embedded in these service licences will be straightforward. But the volume and nature of the work required will change Ofcom significantly. The Content Board – recently re-inforced – will become much more prominent within Ofcom’s activities.
It may all go without too many hitches: but I am not holding my breath. In the past, the BBC was scathing in its dismissal of Ofcom as a content regulator, but had to swallow its words when Ofcom did a far better job of investigating fake competitions and phone-ins on BBC programmes than the Trust managed.
It is even possible that, once Ofcom has digested its BBC workload, it might finally deliver a strategy to rescue public service broadcasting from the steady slump it has documented every three years, but for which it has offered no remedies, not least because the system depended so heavily on the BBC, over which Ofcom had no relevant jurisdiction. That now changes: but expectations of a revival in PSB – whether delivered by the “distinctiveness” requirement in the new Charter, or by a suddenly dynamic Ofcom –must be quite low.
Finally, it is startling to note how many commentators – even including former Director-General Lord Birt – seem to believe that the BBC is committed to funding free TV licences for the over-75s after May 2020. That is simply not the case. The BBC has agreed to contribute some £700 million towards the cost of this concession during the current licence fee deal, in exchange for various benefits, of which the most notable is index-linking of the licence fee. But as Whittingdale has repeatedly made clear, after the next election, the BBC can do as it likes. For it to spend – as Birt fears - £750 million a year on a public welfare policy, rather than on content, would surely be the biggest waste of money in its entire history.
For the moment, the BBC is lying doggo on this issue, having hired a consultancy to advise on its options. With the election four years away, there will be ample time to warn the over-75s that the freebie is ending; but in the meantime, Tony Hall is driving through a hefty programme of cost savings, and it would be counter-productive to show his hand on the over-75s too early. But I confidently predict that all – or nearly all – of that £750 million a year will not be spent on the over-75s when the time comes.