Is the BBC licence fee still up for grabs?

John Whittingdale says the July agreement did not settle the BBC licence fee: is this a Government U-turn?

Mike Flood Page
28 October 2015
flickr.Robert Sharp / English PEN. Some rights reserved.

flickr.Robert Sharp / English PEN. Some rights reserved.This week Culture Secretary John Whittingdale dropped what appears to be a bombshell about the financial settlement agreed with the BBC in the Summer. “What happened in July was not the licence fee settlement,” he told the Media Show’s Steve Hewlett. “We made it quite clear that the future level of the Licence Fee would be dependent on the outcome of Charter Review.”  This apparent reversal of Whittingdale’s previous position will come as something of a surprise to the BBC whose Director-General Lord Hall told staff in July that: “Now we have fixed the funding settlement, the debate moves on to what the BBC does with that funding.”

 At the time the Government did nothing to correct the impression widely shared by the BBC, the Trust and the media that a definitive licence fee settlement had been reached. Indeed, Whittingdale told the House of Commons the agreement gave the BBC: “some of the guarantees it needs about its future financing and the system by which the licence fee is raised.” (Note that “some”)

The debate then focussed on the question of whether the BBC should assume responsibility for implementing Government social policy (the free TV licences for the over-75s) and financial implications of the settlement: was the Corporation about to be cut to ribbons, or had it emerged relatively unscathed?

What’s really going on here? Let’s examine what the Government actually said back in the Summer.  On 6th July after a weekend of hard bargaining John Whittingdale and the Chancellor George Osborne sent a letter to the BBC which committed the Government to raising the licence fee in line with the consumer price index subject to “the conclusions of the Charter Review, in relation to the purposes and scope of the BBC” and the Corporation making adequate efficiency savings.

 The point Whittingdale appears to be making is that the “scope and scale” of the BBC is still up for debate.

 He went on to make his concerns clear. Talking about BBC News online he said: "If they are going to... provide news content that looks like newspapers - that's where I think newspapers are entitled to express concern." In this he is echoing the frequently raised complaint from media owners and his own backbenchers that the BBC getting too big for its boots, and is this having a damaging effect on its competitors on air, in print and in particular online.

This claim was indeed implicit in the way the Government framed the questions in its consultation on the Green Paper.  As any student of research methods knows: if you ask the right questions you get the answers you want.  You can get an idea of where the Government is going from question 4 which asked: “Is the expansion of the BBC’s services justified in the context of increased choice for audiences? Is the BBC crowding out commercial competition and, if so, is this justified?”  

The question is interesting because it is loaded, misleading and based upon a false premise, actually two.

 Is the BBC expanding? Again no, its been shrinking.  The Government knows this since it slashed the Licence Fee somewhere between 16-20% in 2010, and according to some estimates possibly by as much again this last July.

Is the BBC crowding out the competition? This question though much repeated is not new. It was raised ten years ago during the last Charter review.  The same arguments were made: the BBC is growing too big, its ambition is unchecked, it is using licence fee payers’ money to compete unfairly.

It does on the face of it make sense. After all the BBC established Europe’s leading news site in the late 90s, and by 2000 it was claiming 40 million uniques and in the top five globally.

As both Angela Phillips and Mariana Mazzucato have recently argued this view is mistaken. However “crowding out” is the lie that won’t die. So persistent is the belief that researchers have taken the trouble to “science the shit” out of the question. Recent reports from Enders Analysis, the BBC Trust and interestingly by Oliver and Ohlbaum on behalf of the newspaper industry body the New Media Association all came to the same conclusion. Is the BBC just so big that it’s sucking the air out of the news market? Well no, actually. There is no evidence that it is.

One reason for this is that a new regulatory mechanism the Public Value Test was imposed upon the BBC in the last Charter settlement with the explicit aim of preventing it treading on the toes of the competition. Every proposed new BBC service had to be assessed to see if it offered genuine “public value”, and more importantly it had to undergo a Market Impact Assessment by Ofcom to see ensure it had no adverse impact on the market.  The result quite rapidly was that the BBC abandoned all sorts of proposals including its £150 million Digital Curriculum project to the relief of print competitors including Pearsons and the Guardian

So what’s changed? Google, Facebook and Gum Tree, which didn’t exist back then, have hovered up all the ad revenue, national and local. Buzzfeed, Mail Online and Huffpo have used SEO to grab the lion’s share of the news eyeballs, none of which can be laid at the door of the BBC. Indeed, look at America without a BBC to compete with, where the mortality rate among newspapers has been even worse. As one of the leading UK newspapers online with around eight million daily uniques The Guardian’s problem isn’t being crowded out, it’s that it can’t find a way to monetise those readers.

Evidence however is not what this argument is about. The claims of a BBC with “imperial ambitions” crowding out the competition are driven by a neo-liberal conviction that the market knows best and the market will provide.

What Whittingdale has done is politics as usual. He is reminding the BBC that his original announcement left him the kind of wriggle room that any prudent politician would ensure he had before embarking on the long and sometimes bruising process of Charter review. Indeed, the last Charter Review process was knocked off course by an early morning two-way on the Today Programme, which led to the Hutton Report and the loss of the BBC Director-General, Chair and ultimately Board of Governors. Whittingdale appears to be playing a long game (unlike Chancellor Osborne whose lack of wriggle room contributed to the tax credits fiasco). He is warning the BBC that the argument isn’t over yet. Depending upon the balance of political forces at the decisive moment the scope and scale of the BBC could be further reduced. By the same token, with an effective campaign in its defence the BBC’s hand could be strengthened.

There remains everything to play for.  


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