Culture, Media and Sport Committee

– in the House of Commons at 11:43 am on 26th February 2015.

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Select Committee statement

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

I will briefly remind the House of what is still a fairly new procedure. Mr John Whittingdale will speak on his subject for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to put questions, and Mr Whittingdale will respond to these in turn, as is the case for any normal statement. Members can expect to be called only once, and their interventions should be questions that are—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

Brief. The hon. Gentleman challenges me, but questions should be brief. Front Benchers may briefly take part in questioning, and we all look forward to that.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee 12:21 pm, 26th February 2015

I am pleased to have the opportunity to present to the House the Committee’s report “Future of the BBC”. Our major inquiry began well over a year ago, and I express my thanks to my colleagues on the Committee, our Clerks and our specialist adviser, Mr Ray Gallagher.

As is well known, the BBC charter expires at the end of 2016. The renewal process provides an opportunity to examine all aspects of the BBC—scale, scope, governance and funding. Since the previous charter renewal, huge changes have taken place to the way in which people watch television. At the time of that renewal, most households had access to only four channels, but since then we have had analogue switch-off, meaning that everyone has access to 40 or more digital channels. Many people also access catch-up television through the iPlayer or some of the new streaming services. The whole media landscape therefore looks very different from how it did 10 years before.

The Secretary of State has said that it will be for the next Government to consider the future of the BBC and charter renewal—I understand his reasons—but the Committee points out that at the time of the previous review, an independent panel led by Lord Burns conducted a long public consultation before reaching conclusions. We think that this matter is so important that a similar process should take place this time, and there is no reason why that could not be initiated as soon as possible. Either way, I hope that our report will set the agenda for the forthcoming debate.

There is no question but that the BBC produces many outstanding programmes. Many of our witnesses told us that it is the finest broadcaster in the world. Its reach is 96%, it has an unrivalled reputation for accuracy and impartiality, and it is hugely respected, but any organisation that gets £4 billion of public money should be subject to close scrutiny. There have also been significant failures in recent times: the episodes of executive pay-offs, pensions and severance payments; the loss of £100 million on the digital media initiative; the disastrous acquisition and then sale of Lonely Planet; and, of course, the editorial failures regarding programmes about Jimmy Savile and then Lord McAlpine.

When one looks at the BBC, one must first ask what it is there to do. There are six stated public purposes, which are pretty broad and uncontroversial, although we thought that they could be expanded to take in training and the development of skills, and the need for collaboration and partnership.

When we looked at the scale of the BBC—what the BBC does—we were unconvinced by the argument that it should continue to try to provide something for everyone. Instead, we say that its principal focus should be on its public service remit and that it should not be afraid to do less when the market is clearly providing a lot of existing content. The BBC has already embarked on some radical thinking, which we welcome. For instance, it has decided to make BBC Three a purely online service, which we generally support. BBC Three has cost something like £1 billion during the decade in which it has been in existence, yet it has not been especially successful at reaching its target audience, so it is right to consider other means of doing so. However, we do not support establishing a BBC One+1 service in its place, especially given that people can already see programmes that they have missed through means such as catch-up services on the iPlayer.

We welcome moves to remove the in-house production guarantee and to open up all BBC commissioning to competition. We also support allowing a separate BBC production house to compete for commissions from other broadcasters. However, if the BBC production unit is to remain within the BBC, there must be full transparency and no cross-subsidy so that there is fair competition with the independent production sector. We think that the time has come for the charter review to consider the terms of trade. There have been huge changes since those terms were originally put in place, given a large number of acquisitions of independent production companies by American studios, so they need to be looked at again.

We want more partnership and collaboration with the private sector, and we specifically want more support for local media. They play a vital role in supporting local democracy and ensuring that electors are aware of what happens in council chambers and local courts, but because of economic conditions, a lot of that activity is no longer happening. We think that the BBC could play a role in supporting that, perhaps by using some licence fee payers’ money for local media and by extending the independent production quota to cover local news.

The two key aspects, however, are governance and funding. On governance, almost every single witness from whom we heard was highly critical of the BBC Trust model. Not only is there an in-built conflict between the two roles of acting as a regulator and arbitrator of complaints, as well as providing the highest level of oversight and management of the BBC, but there is confusion about the trust’s responsibilities. There have been public arguments between the director-general and the chairman of the trust, as well as the management failures to which I referred.

The Committee is clear that the trust should be abolished and replaced by a unitary board with a non-executive chairman and a majority of non-executive directors. Responsibility for all aspects of the BBC’s operation would lie with that board, as is the case for many big organisations. We accept that there would need to be external scrutiny, but we are determined that we should not recreate the BBC Trust with a different name. We suggest that there could be a smaller public service broadcasting commission to scrutinise the overall strategic plan of the BBC and assess performance, as well as to determine public funding and perhaps withhold it, in the event of failure.

The National Audit Office should be given unfettered access. The Comptroller and Auditor General complained about the difficulties that he still faces and we see no reason why the NAO should not have statutory access. We also believe that Ofcom should have responsibility for all content regulation.

Funding was always going to be the most controversial aspect of the inquiry. The licence fee is simple and universal, and it arguably maintains arm’s length independence from the Government, but it is regressive, compulsory and expensive to collect, so we considered various alternatives. In the short term, we found that there is no realistic alternative to some form of licence fee or household tax, although we support a number of changes. The arrangements should immediately be amended to cover catch-up services as well as live broadcasting.

We also see the case for decriminalisation of failure to pay the licence. The penalties that are in place are anachronistic and disproportionate, but we think that decriminalisation may create a risk of much greater evasion, so we see the case for a move towards a household levy, perhaps similar to the German model, which will be simpler to collect and much harder to avoid.

In the longer term, we think that, as viewing habits change, the licence fee becomes harder to sustain and justify, and that we should at least consider introducing an element of subscription to give viewers the choice of whether they wish to subscribe to all the BBC’s services. There would still need to be public finance for the core services—radio, news, public service programming—but the more premium content would be available as a matter of choice for the viewer through a subscription model. That would need conditional-access technology in the home and it certainly cannot be put in place immediately, but that is the direction in which we believe the Government should look as we begin the process of the charter renewal.

Again, I thank my colleagues for their assistance and contribution. We had some fierce arguments in the Committee and we did not always obtain agreement on every point, but I hope the report will stand as a working document to allow the extremely important debate on the role of the BBC in our country. That debate is starting and will continue, I have no doubt, until charter renewal at the end of 2016.

Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

Does the hon. Gentleman agree that we in Britain do broadcasting and the creative industries more generally extremely well, and that politicians tamper with our successful mixed economy, with the BBC at its centre, at their peril? Will he therefore join me in urging all the political parties to make clear in their manifestos their intentions towards the BBC, so that the British public, who value the BBC and its public service ethos, can make an informed choice when they cast their votes on 7 May?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I thank the right hon. Gentleman for the part he played in preparing the report, which was considerable. I agree with him about the importance of the creative industries, on which the Select Committee has concentrated. I do not entirely agree with his second point, because it is important that there should be a genuine debate and a public consultation. We recommended an independent review panel, and all that would be pre-empted if the political parties set out their conclusions in their manifestos, which are to be published in four or five weeks’ time.

Photo of Damian Green Damian Green Conservative, Ashford

As chair of the all- party BBC group, I congratulate my hon. Friend and his Committee, particularly on their ideas for preserving a universal funding mechanism at a time when the licence fee is becoming technologically more difficult to justify, because it is that universal funding mechanism that has provided the basis for all the good things about the BBC that he and his Committee rightly praised. If universal funding is preserved, as I hope it will be, has he considered the importance of the BBC working more in partnership in future, especially with local newspaper groups, in order to preserve other aspects of the media culture such as local news, which are more fragile than they used to be?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I very much agree with my right hon. Friend. We made it clear that we see a greater role for partnership arrangements between the BBC and private sector organisations, and I welcome the fact that the director-general has already indicated that that is a direction in which he wants to move. As I suggested earlier, I also agree with my right hon. Friend about the need to find ways of supporting local media, which are under tremendous pressure, and the BBC has a very important role to play in that.

Photo of Michael Weir Michael Weir Shadow SNP Spokesperson (Business), Shadow SNP Spokesperson (Energy and Climate Change)

I was slightly concerned by what the hon. Gentleman said about a household levy to replace the licence fee. Whatever the difficulties associated with the licence fee, there are many people who do not have a television licence or, for various reasons, do not want to watch the BBC. If we go down the household levy route, there is a real danger that we will be creating a BBC poll tax.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

The household levy, which would be a short-term measure to deal with the problem of evasion, is just a small change to the way of collecting the licence fee. The licence fee is essentially a household levy, but there is quite a high evasion rate which could increase following decriminalisation. The one area where the hon. Gentleman is correct is that there are some people who say that they never watch the BBC, never listen to BBC radio and never go online to access BBC services, so they do not pay the licence fee. Since 96% of the population have BBC television and a lot more have BBC radio, the number we are talking about is very, very small. There is arguably a case for saying that the public service content that the BBC provides is good for society and for the nation and it is right that everybody should contribute towards that.

Photo of Angie Bray Angie Bray Conservative, Ealing Central and Acton

I congratulate my hon. Friend on his chairmanship of our Committee and the publication of the report. I am delighted to see that it recognises the inexorable move towards subscription television. I believe that people should pay for what they want to watch, rather than for what they do not watch, but may I express my reservations about some kind of household levy? I am uneasy about creating new taxes, which are easier to create than to abolish. Does my hon. Friend concede that there is some danger that that in itself could endanger the independence of the BBC and make it more dependent on politicians?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I do not want to overstate the household levy because it is essentially the licence fee by a different name. The reason that it is attached to a household is in order to make it easier to collect than the existing rather draconian process, which suffers from an evasion rate that could increase with decriminalisation. On the setting of the level, the report makes it clear that we see a role for the new public service broadcasting commission in assessing the amount needed to provide the services that the BBC is there to produce, and I do not think there is a greater danger of political interference or Government involvement than there is already under the process of setting the licence fee.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

This is the first time, sadly, that I have voted against a report in my 10 years on the Committee, and that was only because I disagree strongly with the proposed replacement for the BBC Trust. The preference of the Chair and the majority in the report is for an Ofbeeb, less involved up front, more of an after-the-fact regulator, but does the Chair agree that another possible model could be a strong ex ante regulator, as proposed by Lord Burns and reflected in my amendments printed at the back of the report? In the words of David Liddiment, a founding member of the trust, the BBC is simply too big and important a beast for light-touch regulation.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I share the hon. Gentleman’s sadness that he was unable to support us. It was interesting that three of my colleagues felt unable to support the final conclusions in our report, but I think it fair to say that each of them did so for entirely different reasons—it was not necessarily a meeting of minds. On the point that the hon. Gentleman makes, there is going to be a lot of argument about the different models, and we saw considerable attraction in the original proposals made by Lord Burns. Most—I suspect all—of us thought it a pity that the previous Government did not adopt the Burns model, rather than create the rather unsatisfactory BBC Trust. The BBC Trust has failed and we do not want to create a body that is basically another BBC Trust. His idea of the ex ante regulator is in danger of falling into that trap; personally I think there needs to be a very clear responsibility for the oversight and running of the BBC, and a single unitary board is the best way of achieving that.

Photo of Philip Davies Philip Davies Conservative, Shipley

I commend my hon. Friend as an outstanding Chairman of a Select Committee and a perfect illustration of why the two-term rule for Select Committee Chairmen should be scrapped immediately. He will be aware that I was in a minority of one in calling for the licence fee to be replaced by subscription. Given the number of channels that are now available, those of us who believe in freedom of choice must surely believe that people who want to watch the BBC should be able to do so and pay for it, and those who do not want to watch the BBC should not have to pay for it and should be able to exercise that choice too. Has not the time come for that? If the licence fee represents such wonderful value for money, as the BBC tells us, surely it has nothing to fear from moving to a subscription model, because presumably everyone will be queuing round the corner to buy their subscription.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I am grateful to my hon. Friend, who has always acted as my Thatcherite conscience on the Committee, and I have a lot of sympathy with what he has just said. However, I will make two observations. First, we are not yet able to move to a subscription model because that would require big changes, such as the installation of conditional access in every household. Secondly, I think hat there will always be some content that should be provided and publicly financed, because there are certain things that might not be viable on a subscription basis but are nevertheless important for the public good. I therefore think that there will always be an element of public finance, but I can certainly see the attraction of moving in the direction of having a growing proportion of content paid for by subscription.

Photo of Anne Begg Anne Begg Chair, Work and Pensions Committee, Chair, Work and Pensions Committee

The BBC is different, and that is why it should be funded differently, as I think most people accept. It has always stuck me that there are actually more negatives than positives to going down the subscription route, compared with the present licence fee arrangements. Did the Committee find that? What problems did it identify with moving to a subscription system?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

We took evidence from many people, and certainly a number of our witnesses were not in favour of a subscription model. I think that their argument can best be summed up in the phrase “paying more and getting less”. That is the BBC’s argument, but I am not convinced. I agree that the BBC produces outstanding programmes that are extremely popular. Indeed, I tend to sympathise with the argument made by my hon. Friend Philip Davies that the vast majority of people would choose to go on paying in order to receive them. I do not think there would be a massive drop, but it is an important principle that, where possible, people should be able to choose whether to pay.

Photo of John Leech John Leech Liberal Democrat, Manchester, Withington

We disagree with the long-term future of the licence fee and whether non-payment of the licence fee should be decriminalised. Does the Chair of the Committee accept that any moves to decriminalise non-payment before 2017 would be contrary to the agreement reached with the BBC in 2010, when it accepted the licence fee freeze in return for guaranteed funding? Given that the Committee found clear evidence that decriminalisation would lead to more evasion and therefore less money for the BBC, surely that contradicts the agreement reached in 2010.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

As my hon. Friend knows, the Committee has concerns about the consequences of decriminalisation, which is why we said that other measures would be needed to try to prevent an increase in evasion. The matter is now subject to consultation. It should certainly be part of the charter renewal process, and I think it probably will be. It will probably be for the next Government to decide whether to wait until the end of 2016 before decriminalising.

Photo of Paul Flynn Paul Flynn Labour, Newport West

Does the report recognise the unique character of the BBC, which has made a priceless contribution to Welsh culture and language and given us the most trusted news service because of its duty of balance, which must greatly irritate the Daily Mail and the Daily Express? Can we take it that the report is not influenced by the scurrilous accusation made against the hon. Gentleman in a tabloid newspaper when he was first appointed to work for Margaret Thatcher, in which he was described as “Maggie’s Toy Boy”?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I am afraid that the hon. Gentleman is correct; it was a very long time ago and I had rather hoped that people had forgotten that particular headline. I did not mention this in my statement, but of course we recognise the BBC’s important role not only in providing BBC Wales and Welsh programming, but in supporting S4C, which was a creation of the Conservative Government. That is very important. The BBC’s reputation for accurate news reporting is absolutely essential, and no member of the Committee would ever want to see that put in jeopardy.

Photo of Bob Neill Bob Neill Parliamentary Assembly of the Council of Europe (Substitute Member), Vice-Chair, Conservative Party

Does my hon. Friend recognise that one advantage of decriminalisation is that it would be welcomed by many magistrates and their staff, because it would stop their work loads being clogged up with cases that are often uncontested and result in non-appearances, which wastes time and money? On the other hand, in relation to the household levy, does he recognise the concern among local authorities about one idea that was posited, which is that it might be collected using their resources, perhaps along with the council tax bill? Does he agree that it would be unfair to force hard-working local authorities that have kept council tax down to become the vehicle for passing on a levy over which they have no control?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I am grateful to my hon. Friend for both points. The collection mechanism currently costs about £100 million. If we moved to a different system, perhaps by attaching it to council tax, we could probably provide an incentive to councils to take on that responsibility and still save money. His point about magistrates courts is entirely right, as there are about 150,000 convictions every year for failure to have a licence, and that clogs up the courts. It is one of the many reasons why there is a strong case for decriminalisation.

Photo of Steve Rotheram Steve Rotheram Labour, Liverpool, Walton

I find myself in the invidious position of agreeing with something Philip Davies said, which was that Mr Whittingdale should be able to stand to be Chair of the Committee again—everything else he said was barmy. He actually argued that we should be looking at a voluntary subscription model. I am sure that would work well, because everyone likes paying taxes. The BBC would not exist in its current form under his proposal. We visited several European cities and looked at their models. Despite what has been said from those on the Government Benches, the public service broadcasters in Europe that have moved to a hypothecated tax system, such as the household levy, actually saw the amount of revenue they received increase. Does the Chair of the Committee agree that the model that we have suggested would strike a balance and give some time for a review of what might be better for taking the BBC into the next part of the 21st century?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I am grateful to the hon. Gentleman, who has just illustrated that—I think this is true of all Select Committees—although there might be strong disagreements within the Committee, they are conducted on a very friendly basis. I entirely agree that we were impressed by the model that has been adopted by Germany. Rather to Germany’s surprise, it has led to an increase in revenue, because the previous system had an even higher level of evasion than it had realised.

Photo of Matthew Offord Matthew Offord Conservative, Hendon

I worked at the BBC for nine years. In 2007 I moved from news production to the strategy side and tasked myself with asking whether the licence fee was sustainable in the digital age. I think the report gives me the answer—it is not. I found that the biggest roadblock to any kind of reform is the BBC itself, because there is a culture of dependency and entitlement to the licence fee that simply will not go away.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I have some sympathy with those comments. We found it slightly odd that the BBC officials who appeared before the Committee said that they had an open mind about the governance structure and the scope and scale, but that one thing they were absolutely certain about was that the licence fee had to stay. There is resistance, and perhaps that is reflected in the comments we have already heard from the BBC. My hon. Friend draws on his experience of working at the BBC, so I thank him for his support for what we have said.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

May I commend my hon. Friend for being an exemplary Select Committee Chair and for his superb report? The report confirms the power of BBC news. It states:

“Last year 82% of UK adults consumed BBC News… across television, radio and online.”

Given the power of the BBC’s news coverage, is it not even more important that the trust, or whatever the successor body is, enforces the BBC’s own guidelines on fair news coverage, particularly in relation to the BBC’s 2005 Wilson report, which found that the BBC needed to do far more to represent accurately the range of opinions on this country’s membership of the European Union and that the BBC’s news coverage was far too pro-European?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I am grateful to my hon. Friend, because he allows me to talk about another very important point made in the report. At the moment, complaints about accuracy and impartiality are dealt with by the BBC Trust, and I think that there is dissatisfaction with the fact that the BBC is judging itself. We have made it clear that we think that should change and that, with the abolition of the trust, responsibility for all content regulation, including complaints about accuracy and impartiality, should go to Ofcom. It already carried out that function for Channel 4, and we see no reason why it could not also do so for the BBC.

Photo of Sarah Wollaston Sarah Wollaston Chair, Health and Social Care Committee, Chair, Health and Social Care Committee

Following the point made by my hon. Friend Mr Hollobone about a diversity of views, does my hon. Friend the Chair of the Committee agree that too much of our news coverage has an entirely metropolitan focus? Will he elaborate further on what the report said about how we can encourage more resourcing for, and better coverage of, views from rural parts of Britain?

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

We did look at the slightly London-centric nature of the BBC, and we welcomed the move to MediaCityUK in Salford and the provision of resources. We also expressed the hope that more would be done particularly in relation to the other nations. Northern Ireland made a quite strong case to us that it was poorly treated by the BBC. The question of covering rural issues—like my hon. Friend, I represent a rural constituency—is more challenging. I shall certainly continue to put it to the BBC, because sometimes—my hon. Friend is absolutely correct—these areas do not get the prominence they deserve.

Photo of Chris Bryant Chris Bryant Shadow Minister (Culture, Media and Sport)

At the risk of ruining the hon. Gentleman’s reputation as Thatcher’s gimp—I mean toy boy—may I enormously commend him for the work he has done as Committee Chair for the past 10 years? Everyone in the House, whether they have disagreed with him or agreed with him, is grateful to him for that work. He has been an exemplary Chair of the Committee. I put that on record on behalf of my hon. Friends.

The hon. Gentleman is absolutely right to say that changes in technology mean that there are significant new challenges for the BBC, which does of course remain one of the most loved and respected organisations in this country and around the world. That is why we believe that the licence fee will, at least for the short term, remain the best means of funding the BBC for the foreseeable future, and that it would be a mistake to undermine it without putting in place a viable alternative.

May I take the hon. Gentleman up on one point? The report says:

“We challenge the claim that the BBC needs to provide ‘something for everyone’.”

I do not want the BBC to be subject to a market failure argument only, because surely if everyone is paying for it, including my constituents, everyone should get something from it.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee, Vice-Chair, Conservative 1922 Committee

I thank the hon. Gentleman for his extremely kind remarks. I have to say that I am blushing throughout most of this session.

The hon. Gentleman’s point goes to the heart of the debate. I think the argument about providing something for everyone becomes weaker, given the huge increase in choice available elsewhere through the market. When we now have such a large number of channels for specific genres, the BBC should at least say to itself, “Is there really any need for us still to be in this area when there is already so much provision?” That does not necessarily mean that it should retreat into a ghetto—some have expressed that fear—but that it should take account of the huge proliferation of choice and concentrate its resources on the areas that have been poorly served by the market.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

It is perhaps inevitable, on a subject such as this, that my initial exhortation to brevity has been completely and utterly ignored. I have allowed the statement to run over time because I recognised that the feeling of the House was that there were many subjects to be dealt with—and the Chairman of the Committee has dealt with them more than adequately.