ourBeeb

Lose the licence fee, abolish the Trust

A new House of Commons report sets out the issues for the forthcoming review of the BBC Charter. It calls for the abolition of the BBC Trust and a long-term replacement for the licence fee. 

David Elstein
26 February 2015

Today's publication of a report on the 'Future of the BBC' by the House of Commons Culture, Media and Sport Committee marks a major step in the process of renewing the BBC Charter. A formal review will not be officially triggered until after the election - despite the Charter only having 18 months life ahead of it at that point - but the key issues are already clearly defined.

One of the Committee’s recommendations is that, should it be determined that a properly conducted review requires more than 12 months (leaving the BBC and ministers too little time to implement any major proposals before the current Charter’s expiry), there could be a short-term extension of the ten-year Charter period, by up to two years. That seems sensible.

At the same time, it should be recognised that the Committee has done an excellent job in defining that review. The great bulk of its findings have been based on cross-party consensus. Three of the MPs (Lib Dem John Leech from a strong pro-BBC stance, Tory Philip Davies from an anti-licence fee approach, and Labour Paul Farrelly offering a re-written governance section) proposed a series of amendments to the text, but in almost every case each proved to be the only supporter of their respective positions. At the end, all three voted against the final report, though presumably in the full knowledge that doing so would not affect the outcome.

With nearly 70 recommendations, it could be argued that the Committee has actually done a great deal of the work that any Charter review would entail: at the very least, in setting out all the key debating points.

For instance, on finance, it has looked at the new funding system for YLE, the Finnish equivalent of the BBC (0.68% income tax surcharge, over-18s only, all charges below 51 euros excused, cap of 143 euros) and at the new German system (a broadcasting levy on all households, irrespective of whether any actual TV is in the household, nor how many people live there).

The Committee plumps for the German idea, even though it discriminates against single-person households and those who choose to do without a television (though there can be very few that lack even a radio, let alone a device by which video can be viewed).

That would be a short-term fix, as the Committee accepts. Beyond that, they say that the licence fee has “no long-term future”, that conditional access technology needs to be deployed, and that the BBC needs to prepare for the 2020s without any assumptions about a household tax of any kind.

The report also supports decriminalisation of the licence fee, urging that enforcement should be no different than for non-payment of council tax, even though the BBC warns its revenues might be reduced by some £200 million a year in the absence of criminal sanctions.

Given that both the Commons and the Lords have now voted for decriminalisation - whether in 2016 as preferred by the Commons, or 2017 as backed by the Lords - the BBC needs to get its thinking cap on. Although a formal review of decriminalisation will not be completed till June, this Committee’s report is likely to prevail. With encryption of the i-Player now almost a certainty, perhaps the conditional access route for all future TV sets, and plug-in modules for existing sets, is the best route to avoid a revenue meltdown.

The report also recommends that at least part of the licence fee, for however long the system lasts, be used as a contestable fund in support of public service content from a range of suppliers, particularly those offering regional and children’s programming. It takes up a proposal dating back to 2005, from the panel set up by then Secretary of State Tessa Jowell and  chaired by Lord Burns, which had called for a Public Service Broadcasting Commission, whose brief would be to address the overall need for public service content, the level of finance required, and the way it should be allocated.

The Committee tweaks the Burns formula by making its relationship with the BBC advisory rather than regulatory, but otherwise follows his urgings that the BBC Trust be replaced by a unified BBC board of non-executives (in the majority, and holding the chair) and executives, with Ofcom regulating quotas and content and competition issues, and the PSBC judging the BBC’s success in meeting its agreed public service objectives.

This would also allow S4C, as a client of the PSBC, to recover its independence of action, by no longer being beholden to the BBC. The Committee also argues for giving the National Audit Office much fuller access to BBC accounts, as a further means of reforming BBC accountability.

The report is scathing about the 2010 licence fee settlement imposed on the BBC by the coalition as part of the public spending review that October. It says the BBC Trust should have rejected the demand for all kinds of government expenditure to be absorbed by the licence fee. Arguably, say the Committee, the BBC Trust acted in breach of its duties by caving in to over £500m of costs  imposed on the BBC without any public consultation.

The Committee is also highly critical of the BBC for allowing its commercial subsidiary, BBC Worldwide, to buy the Lonely Planet business (which lost the Corporation some £100 million), and calls for a tightening up of investment criteria in the future.

On the broad issues of BBC purposes, and  scope and scale, the Committee lays down some guidelines for the formal Charter review, not least tightening up the definitions of public service “characteristics” which all BBC programmes are required to meet, in at least one of five respects. As one of those is “engagement” with the audience, and as all BBC programmes are viewed or listened to by someone, it is not surprising the report quotes the verdict in my evidence to the Committee: the definitions of success are such that “you cannot fail the test”. The test needs to be much more stringent, says the Committee.

The report rejects one of the planks in BBC management’s case for dropping BBC3: a desire to re-deploy the available spectrum to accommodate a “+1” channel for BBC1. The Committee sees no public need for such a service, and recommends that the BBC Trust turn down the proposal, if need be returning the vacated spectrum to the DCMS for disposal to another public service provider.

Other acute points the Committee have picked up include the fact that all the BBC’s attempts to move production to the North and to the nations means that the Midlands has been left providing 25% of licence fee income in exchange for 2.5% of network spending; and that BBC management has a sneaky habit of burying poor indicators of performance in a mass of verbiage, whilst trumpeting any successes. The report calls for more rigour and honesty.

The section on BBC Director General Tony Hall’s proposal to create a commercial production subsidiary within the BBC is perhaps the least fully rounded. The report can see cost advantages (and sharply notes that all the BBC’s cost-cutting so far still leaves it with £400 million of savings to find); but it feels that public service content (even if it cannot define it) might lose whatever locus it enjoys as a result of all BBC production currently being in-house.

In hedging its bets, the report argues, even if a commercial entity is created, for retaining an in-house production arm, “where its output is distinctive from the market” and “where it makes economic sense to do so”. As the latter is never going to be the case, and the former is the subject of a much wider debate addressed elsewhere in the report (please define output that is “distinctive from the market”), this chapter parks itself without properly resolving the arguments.

The Committee cites a range of expert witnesses, many with close experience of the BBC: former chairmen Gavyn Davies and Lord Grade, former D-Gs Lord Birt and Greg Dyke, Professors Barwise and Barnett, Ofcom bosses Ed Richards and Colette Bowe, and  - most impressive of the bunch – Lord Burns himself.

Where Davies worries that the BBC spends too much time thinking about reach, share and ratings, in the absence of any other currency, Burns is more incisive: the BBC’s output is too “driven to the middle ground” because distinctiveness has lost out to the claims of reach and universality. Trying to be all things to all people – because “everyone pays the licence fee so everyone is entitled to something however mediocre” – is something the BBC has to change, says the report. Do fewer things better, is the verdict.

Two small points. The report cites some of my oral evidence, including a “statistic” I corrected in written evidence: licence fee revenues rose by 25%, not 50%, as a result of the increase in the total number of households in the last 20 years (a fact always omitted by the BBC when it claims the licence fee has been flat in real terms during that period).

And the Committee, in noting how the BBC developed a 'Delivering Quality First' project in 2011, ostensibly in response to the 2010 shotgun licence fee settlement, failed to remember that the BBC had foolishly published a 'Putting Quality First' document in 2009, describing how it could make internal savings of £600m a year to re-invest in content (almost precisely the amount the coalition seized in its ambush of the BBC in October 2010).

This is a must-read document for all followers of Our Beeb: although the Committee chairman, John Whittingdale does not feature in any of the voting lists (as is traditional, unless there is a tie), his deep knowledge of the issues, supported by that of advisor Ray Gallagher (warmly thanked in the report), shines through the document. This is an important ground-clearing exercise.

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