British Broadcasting Corporation (Licence Fee)

Part of the debate – in the House of Commons at 11:52 am on 19 December 1980.

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Photo of Michael Meacher Michael Meacher , Oldham West 11:52, 19 December 1980

I wish to discuss the funding and role of the BBC at a time when significant cuts are being forced on public service broadcasting. The background is provided by the director-general's letter to all BBC staff in February this year, stating that over the next two years the corporation was aiming to make cuts in planned expenditure of £130 million.

It is proposed to achieve those savings by cutting back on new items of budgeting expenditure and by deferring indefinitely improvements that the BBC had proposed to make in the conditions of service of its staff. Even so, £40 million still had to be saved by cuts in existing services. While they were spread over all areas of domestic service, those cuts were particularly heavy in the regions and in local radio.

I wish to raise the question of the Government's responsibility for driving the BBC into this position, the justification or otherwise for the policy, and the alternatives. In particular, I wish to raise the question of the role of public service broadcasting in an era of cuts, without conceding—because I do not—the case for the Government's misguidedly monolithic obsession with the public sector borrowing requirement and public expenditure cuts in general

I shall leave aside that essential wider point. I wish to question, within the constraints of the cuts, the whole direction of Government policy on broadcasting. My hon. Friend the Member for Derby, North (Mr. Whitehead) wishes to speak briefly after I have finished and I hope that he will be able to do so.

The background to the present position lies in the Home Secretary's publication a year ago of the BBC's forward plan. It acknowledged that the BBC's productivity had improved markedly over the past decade. For example, it showed that, at constant prices, expenditure in 1978–79 had risen by nearly 5 per cent. compared with the figure in 1969–70 but that during the same period the hours of output had increased by 20 per cent. in television and 38 per cent. in radio and, since 1971–72, by 63 per cent. in local radio. The plan also indicated that the cost of each hour of output had reduced during that period by 13 per cent. in television and 25 per cent. in radio and, since 1971–72, by 22 per cent. in local radio.

Nevertheless, the Home Secretary chose to award a licence fee increase which, while it was the highest-ever percentage increase, provided a licence fee for colour sets of £6 or £7 less than the right hon. Gentleman knew was needed if the BBC was not merely to begin the first two years of its 10-year plan but to maintain even existing services. I contend that, as a result, the BBC remains under-financed, even though its output remains substantially greater than that of its competitor.

For example, net advertising revenue to ITV is expected to be about £550 million this year, while the BBC's total income for the year will be about £500 million. The BBC therefore has less money to operate two television channels, four radio networks and 22 local radio stations, as well as all the regional services, than ITV has to run a single network. In addition, the average production costs of an hour of network BBC television is less than half the cost of an hour of network ITV.

I do not believe that anyone can defend those huge discrepancies as a fair and justified distribution of the nation's resources. They reflect purely the anomaly of different forms of financing. The implications are profound. The Government's decisions on the fourth television channel, the expansion of independent local radio and the licence fee imply a significant shift in the balance of resources away from the BBC and towards independent broadcasting. Those decisions raise the fundamental question whether the BBC will be able to maintain its charter obligations to educate, inform and entertain. So far, the BBC has shown clear signs of retreating from regional and local broadcasting and from its commitment to educational programmes.

There are two aspects to the central question. The more important is to determine what should be the BBC's role in the 1980s and, hence, what is an adequate level of finance to meet that role and the most appropriate form of funding. The other aspect, which is a shorter turning point, is to maintain the fabric of the BBC and its existing services and to prevent what could otherwise be a precipitate adoption of a course of action that would transform the BBC into a London-dominated organisation primarily concerned with competing with independent broadcasting for mass audiences.

On the first issue, it cannot be stated too strongly that what is wrong is that the enforced so-called economies of £130 million have evolved not from the presentation to the public of a coherent or structured plan for the future of the BBC but as a resigned reaction by BBC management to political pressure. The Government's policy on cash limits is being used to shift the balance of influence from the public to the private sector by hamstringing the BBC.

Can it really be claimed that it is a considered strategy for survival to cut back on regional broadcasting, and to finance a half-hearted local radio expansion at the expense of existing stations, at a time when the commercial sector on both television and radio is set for unprecedented expansion? Can our foremost national cultural institution really hope to survive if its response to commercial expansion is to shrink back into its metropolitan shell and reliance on big city production centres? Can it be right that the BBC's news gathering operations, which are second to none, should be crippled in some of its key elements by cutbacks in the regions and in local radio? Surely, this is a classic example of sacrificing in the interest of short-term cost-cutting appeal assets which are crucial to the BBC's very survival as an organisation.

I am aware that there are two possible objections to this line of argument, and I want to deal with each. The first is to ask whether it is justified to put such emphasis, which I and others have, on the preservation and expansion of the BBC's present position. I believe that the answer to that question is positive, because there is clear evidence both that the BBC is cheaper than independent broadcasting and that it is run more efficiently. I am not saying that the BBC does not suffer from many faults. I am not making a "commercial" on its behalf. I am saying that the comparisons are clearly in its favour, and that should be taken fully into account by the Government in their funding proposals.

I take as an example a straight comparison between the BBC and ITV for the year 1978–79. I draw the ITV figures from those that have been published by the IBA. One sees that the BBC has an operating cost of just over £19,000 per hour while ITV has an operating cost of nearly £35,000 per hour. The cost advantages are in the BBC's favour by almost two to one. Furthermore, there is no question but that the BBC operates with manning levels that are far below those of its commercial competitors, and it works with substantially fewer facilities. For example, in 1977 it had 10 fewer studios and six fewer outside broadcasting units. The situation certainly has not improved since then.

Not only that; the private sector makes almost no contribution to training, and ironically it receives substantial indirect public financial support from the fact that the £385 million spent on television advertising is tax-deductible. Indeed, Annan itself concluded that: The BBC's production costs are three times lower than those in America, and it is more economical in resources, costs and output than ITV ½ we conclude that the public is getting good value for money for the licence fee. Therefore, I submit that the efficiency argument tells only in favour of the BBC.

I recognise that there is a second objection that may be used against the argument that cash limits should not be the basis of forcing the nation's single important cultural institution to change its identity in an unplanned manner. It is that the nation cannot do otherwise because the money is just not available. That is simply not true, for two reasons. First, money is available, but it is not distributed appropriately according to the national interest. The BBC is being depleted, and is asked to compete with a new television channel and a great many new independent local radio stations, when its competitors have soaring profits and an enormous cash flow. The problem is not the overall lack of national resources but rather the unwillingness of Governments—the previous as well as the present—to grasp the problem of dealing with the disparity of resources available to independent broadcasting and of those available to the BBC.

Secondly—this is an absolutely central point—this whole situation of cutbacks arises out of the inadequacy of the current licence fee funding. If, since the colour licence was introduced in 1968, the licence fee had kept up with wages, it would now be £54 instead of £34. If it had kept up with the cost of a newspaper such as The Daily Telegraph, it would now be £72. In fact, out of 13 European countries, the BBC's black and white licence fee is the lowest, Only two countries have a lower colour licence fee, while no fewer than eight countries have colour licence fees ranging from £40 to £67. To save the BBC from cuts, decline and even rundown as a public service broadcasting institution would require only an additional 2p a day on the licence fee. At 11p, which is what it would then be, it would still be cheaper than The Daily Telegraph, and in the view of many a great deal better.

What is the alternative to the present policy of forcing the BBC to cut its cloth according to arbitrary cash limits? It is to the great credit of the unions—the Association of Broadcasting Staffs and the National Union of Journalists—that they have faced this question and begun to provide positive answers at two levels, both on the primacy of the question of role and on alternative systems of funding. The unions have insisted above all that the BBC must remain the major instrument of broadcasting in this country. It is they who have insisted that the BBC must provide television and radio programmes of high quality for both majority and minority audiences, operate throughout the United Kingdom and be provided with the finance to enable it both to maintain its position and to compete effectively with independent television and radio.

Having said that, it is only fair to add that the unions have by no means rejected the idea of economies as such in the public sector. Both the ABS and the NUJ have made it clear that in their view—I entirely agree—economies can be made only when there is a political consensus on what the role of the BBC should be in the 1980s.

The other crucial matter, which the unions and others as well have rightly stressed, is the need for an urgent reappraisal of the way in which the BBC is funded. The licence fee is far from satisfactory, in that it is obtrusive and hard to collect, unfair, regressive and hard to adjust. Many consider that at the very least it ought to be index-linked. An alternative proposal, which would achieve the same goal of buoyancy, would be an extra percentage on VAT sufficient to finance the BBC's requirements as agreed. It would be unobtrusive and easy to collect via the existing machinery and it would have the attraction of being close to the way in which ITV is financed, since the cost of advertising on ITV also puts up the price of goods.

An even better suggestion, perhaps—one that retains those benefits but adds a further important one—is that a small percentage, perhaps 0.3 per cent. would be about right, should be added to the current level of national insurance cintributions. That has the extra advantage that it would be paid exclusively by the working population, and it would thus exempt pensioners from what has for many of them become quite an onerous tax.

I ask the Minister to confirm his support for the several points that I have raised—first, that there is an urgent need for a public debate to achieve a political consensus, which I do not believe exists at present, on the role and coverage of the BBC in the 1980s; secondly, that the BBC has been chronically under-financed and that comparative efficiency indicators justify a substantial improvement in funding; thirdly, that serious examination of alternative methods of financing should now be set in hand, and in particular the drawing of a percentage from the national insurance levy should be considered; fourthly, that whatever alternative system is adopted, Government control over the finances of the BBC should be phased out either in favour of an automatically inflation-proofed system or reviewed by an independent "buffer" committee which could protect the recipients of public money from political control as is already done—the Minister should not laugh—in the case of the University Grants Committee and the Arts Council.

I very much hope that the Minister will be positive on all those points.