BBC Funding

– in the House of Commons at 12:23 pm on 7 December 2023.

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Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport 12:23, 7 December 2023

With permission, Madam Deputy Speaker, I would like to make a statement on the BBC.

The BBC is a great British institution and plays a vital role in our culture and creative economy. It broadcasts our values and identities all over the world, reaching hundreds of millions of people every day. In January 2022, the Government and BBC agreed a six-year funding settlement, which froze the licence fee at £159 for two years. The two-year freeze has already saved every fee payer £17 over 2022 and 2023. That settlement provided vital support for households when inflation was at its highest, while giving the BBC the funding it needed to deliver on its remit.

Under the terms of the settlement, the licence fee must now increase annually in line with the consumer prices index, with the first increase due in April 2024. The Government are committed to supporting families as much as possible during these difficult times. We recognise that bill rises are never welcome and family budgets remain under pressure.

Today, I am announcing that we will use the annual rate of CPI in September to calculate the increase of the BBC licence fee in April 2024. This is the same way the Government calculate inflation-linked increases to state pensions and benefits. The decision means next year’s licence fee increase will be kept as low as possible. In April, the licence fee will rise by 6.7%, to £169.50 annually. That will minimise the rise for households, keeping it to £10.50 over the year, or 88p per month, rather than a rise of £14.50 that would have happened under the previous CPI measure.

While we recognise that household budgets remain under pressure, the decision, alongside the two-year freeze, will save individual licence fee payers over £37 by the end of 2024. These interventions support households, while providing the BBC with £3.8 billion to produce its world-leading content. The Government engaged with both the BBC and S4C to understand the impacts on the finances of both broadcasters. The decision will ensure that S4C, which is also funded from the licence fee, can maintain its unique role in promoting the Welsh language and supporting our public service broadcasting landscape.

Although we have taken steps to ensure that the uplift is kept as low as possible, we recognise that a £10.50 increase will still be felt by licence fee payers. The number of licence fee payers is also declining, with an increasingly competitive media landscape. We need to make sure that the cost of the BBC does not rise exponentially, and that it is not borne by a smaller number of fee payers. We are already seeing an increasing number of households choosing not to hold a TV licence. The number of households holding TV licences fell by 400,000 last year, and has declined by around 1.7 million since 2017-18. That is placing increasing pressure on the BBC’s licence fee income.

We are also seeing a rapidly changing media landscape, with more ways for audiences to watch content. The reach and viewing of broadcast TV fell significantly in 2022, with weekly reach falling from 83% in 2021 to 79% in 2022. As this trend continues, linking the TV licence to watching live TV will become increasingly anachronistic, as audience viewing habits continue to move to digital and on-demand media.

We know that if we want the BBC to succeed, we cannot freeze its income, but at the same time we cannot ask households to pay more to support the BBC indefinitely. We are already supporting the BBC to realise commercial opportunities that will make it more financially sustainable, and will continue to explore them provisionally with the BBC.

The situation clearly shows the need to consider the BBC’s funding arrangements to make sure they are fair for the public and sustainable for the BBC. Therefore, I am also announcing that today the Government are launching a review of the BBC’s funding model. The review will look at how we can ensure the funding model is fair for the public, sustainable for the long term, and supports the BBC’s vital role in growing our creative industries.

The review will be led by the Department for Culture, Media and Sport and supported by an expert panel. It will assess a range of options for funding the BBC. We are clear that we want the BBC to succeed. The review will include looking at how the BBC can increase its commercial revenues to reduce the burden on licence fee payers. Given pressure on household incomes, I can explicitly rule out this review looking at creating any new taxes. The findings of the review will support the Government to make an informed choice on whether to consult the public on moving to alternative funding models. That would take place as part of the charter review process, in which any final decision on reforming the BBC’s funding model would be taken.

The BBC is a great national institution. We want to ensure that it is fit for the present and whatever the future holds, while keeping costs down for the public. That means ensuring that the BBC is supported by a funding model that is fair to audiences, supports the creative industries, and is sustainable in the age of digital and on-demand media. I commend this statement to the House.

Photo of Thangam Debbonaire Thangam Debbonaire Shadow Secretary of State for Digital, Culture, Media and Sport 12:30, 7 December 2023

Working people listening to the Secretary of State’s pitiful comments on support with the cost of living are not fooled. They see exactly what this is. We have had weak, mealy-mouthed platitudes that will make no material difference to their lives.

Thirty-three pence a month per household is what I understand to be the difference between today’s announcement and the deal the Government had already agreed to. That is not nothing, but does the Secretary of State really think that it will even touch the sides? Are she and the Prime Minister so out of touch that they think that will get people through the Tory cost of living crisis? They crashed the economy, sending mortgages and rents sky-high. They hiked taxes on working people. They have presided over 13 years of stagnant economic growth.

What is the cost of the Government’s announcement? The creative industries are one of the best sources of economic growth and quality jobs in the country, and the BBC is the biggest commissioner of work in the creative industries. Has the Secretary of State worked out the impact that choosing that particular inflationary measure will have on economic growth and jobs? Has she worked out the effect that it will have on the other creative businesses the BBC commissions and their supply chains? Has she worked out what difference it will make to the BBC’s crucial role as our soft-power superpower, promoting brand Britain around the world? Has she worked out what the impact will be on democracy, given the BBC’s role as the most trusted source of news anywhere in the world?

When it comes to the funding model review, I understand that the terms of reference are overtly focused on the commercial side of the BBC. I did not hear a word about the public service element of the BBC. The Secretary of State mentions an expert panel. Can she tell us who will be on it? What timetable will it work to? Where will the public service element feature in the Government’s terms of reference? Have the Government actually given up on the BBC as a public service broadcaster?

I am afraid to say that it all sounds like yet more broken Tory promises. This is no way to treat one of our great institutions, and no way to treat the millions of people who work at the BBC, their partners and the people around the country who value them so much. Let us not forget that this comes on the back of a two- year freeze that has already had a damaging impact.

This is just the latest sign of chaotic decision making by a flailing, failing Government led by a Prime Minister who is too weak to control his own party and by Ministers who make working people pay for their mistakes. It is a sign of the disdain that the Tories have for the role that there have been 12 Secretaries of State for DCMS in 13 years; it tops the reshuffle charts, bringing instability to a Department for economic growth.

Our great institutions, our public services and working people just cannot take any more of this chaos. Labour backs the BBC. We will grow our creative industries and spread the benefits across the country. A general election cannot come a moment too soon.

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I think the shadow Secretary of State needs to live in the real world like the rest of us. People are struggling with the cost of living, and the Government have continued to take steps to protect them. She needs to live in the real world, in which the media landscape is changing. It is totally inappropriate just to sit still and do nothing, because that would destroy the BBC and make it unable to live in this changing world, and it would do nothing to protect licence fee payers. If that is the Labour plan, I do not want see it.

The shadow Secretary of State talked about what we are doing for working families. She knows that this is not the only step that we are taking. We have spent £97 billion supporting families across the country, saving a typical family about £3,300, and cut inflation by half.

The hon. Lady mentions the creative industries. She might have forgotten that since I have been in this role, I have used tax reliefs to support the creative industries. The Labour party voted against that. In fact, the Conservative party has brought in tax reliefs for the creative industries year on year for 10 years, and they were voted down by the Opposition on every single occasion.

Labour does not support the creative industries. The shadow Secretary of State for Education, Bridget Phillipson, said that we should be spending more money in schools not on the creative industries, but on others. Under this Conservative Government, the creative industries are growing at double the rate of the rest of the economy and employing 2 million people.

I will happily update the shadow Secretary of State for Culture, Media and Sport on other details relating to the panel. The timetable is that the report will come into play, to me, by the autumn of 2024.

Photo of Peter Bottomley Peter Bottomley Father of the House of Commons

At the risk of correcting Thangam Debbonaire, I think the Housing Minister has changed more often than the Secretary of State for Culture, Media and Sport.

I say to my right hon. and learned Friend the Secretary of State that I do not think that anyone will go to the stake for the difference between the September CPI and others, although we can note that, were the BBC licence fee to go up by another 10%, it would still be 50p a week per household, which is probably the best value in broadcasting anywhere.

I am worried that the Government have decided, again, to make a decision without consulting Parliament. If we are to have a public broadcaster funded by a licence fee or some equivalent, Parliament should be brought in more often by Governments. This is probably the fourth time that there has been an announcement of what will happen without Parliament having been consulted first. I hope that my right hon. and learned Friend and others will say that Parliament should be brought in. If the choice is between the United States model and public broadcasting, Parliament ought to be able make its views known.

The House will have noticed that the Secretary of State said that the review will look at alternative options for funding the BBC and then said that she

“can…rule out…creating any new taxes.”

I thought that it was Parliament that decides whether we have taxes. The review may want to consider some kind of household payment, whatever we call it—at present it is called the licence fee; if we do not call it a tax, we call it a charge or something else—or something to be taken from existing taxation. If the BBC is a public benefit, why not add to whatever households pay for the licence fee the implied tax on the income that they use to pay it, for example? That would allow the income from existing taxes to go up.

The BBC needs defenders, and I am one of them. As long as I am here, the Government can expect detailed attention, and a great deal of support for doing sensible things.

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I, too, am a defender of the BBC. It provides an outstanding service across the world. I am proud to have seen at first hand the fantastic job that it did for Eurovision, for the coronation and for the last night of the Proms. If we were to create something that spread our values and soft power abroad, we could not do better than creating the BBC. I certainly do not want to see its services diminished, but I want to ensure that it continues to survive in this changing media world. At the moment, it is losing audiences and licence fee payers, and I want to help to support it. That is one thing that we will look at carefully in the review.

The Father of the House rightly mentions the importance of discussion and consultation. My door is open to all those who want to raise points with me. Of course, in due course, we will need to consult, and this is part of the charter review, which will involve a wider consultation exercise.

Photo of John Nicolson John Nicolson Shadow SNP Spokesperson (Digital, Culture, Media and Sport)

The Conservatives agreed to increase the licence fee in line with inflation, but their own economic mismanagement means more misery for UK citizens. The Government are now desperately trying to wriggle on how they calculate inflation for the purposes of this agreement. There is a pattern among those on the Government Benches that they will breach an agreement, convention or protocol whenever it suits them. Let the Conservatives take responsibility for this BBC uplift, as the need for the rise is entirely due to their mismanagement of the economy.

We all have some criticisms of the BBC. Sometimes they are centred on its domestic news coverage, but the BBC goes far beyond that, extending to drama, radio, documentaries, Gaelic broadcasting and sports coverage. To those who would ding doon the public service broadcasters, I say: be very careful what you wish for. Of course, for many Tories the ideal would be GB News 24 hours a day, with Tory MPs talking to Tory MPs about Tory policies. I believe it is known as “GBeebies”, as one Tory MP after another is wheeled in to rant culture war tosh at the camera, in a pale imitation of American shock jocks. It is a breach of Ofcom rules. Democracy needs tough journalism and MPs scrutinised in long-format interviews by objective journalists.

We have seen what the cuts lead to. The BBC agreed, most foolishly, to take responsibility for over-75s’ licences, under the previous director general, Tony Hall. That has led to cuts in news, most recently at “Newsnight”, which I was once proud to serve as a reporter. The BBC opposed the Government’s reneging on their agreement on that at the time, and we have seen the results.

In the years to come, the BBC may need a different funding format, but that time is not now. In closing, may I ask the Secretary of State, on behalf of my colleagues on the Select Committee, to explain why the news of the new BBC chair was leaked to the press, rather than being given directly to Committee members or the Committee Chair?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I am grateful for the hon. Gentleman’s points. He mentioned many important parts of the BBC and other outlets. I am in favour of plurality of the media, so that we get a wide variety of voices. Of course, the preferred candidate as chair been announced and they will be going before his Committee in due course.

Photo of Martin Vickers Martin Vickers Conservative, Cleethorpes

One important aspect of public service broadcasting is regional news. We have already experienced cuts to BBC local radio, but regional news programmes, such as the Lincolnshire and Yorkshire edition of “Look North”, which serves my constituency, are greatly valued by my constituents. Will my right hon. and learned Friend give an assurance that the BBC will continue with the current level of regional news broadcasts?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

The BBC is, of course, operationally independent and it is not for the Government to say what it should provide. However, I remind my hon. Friend and the House that the BBC is there to provide a public service and it has a public purpose: to reflect, represent and serve the diverse communities of all of the UK. The BBC must also support the creative economy across the UK. Of course regional and local news and other output is an important part of that.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

May I ask the Secretary of State to get real? I am secretary of the National Union of Journalists parliamentary group, and it has other members here. She knows that as sure as night follows day there will be the loss of journalistic jobs as a result of this cut, at a key time, when we are going into a general election and they are desperately needed. Why does she not admit that this is a revenge attack for all those times at 10-past 8 on the BBC’s “Today” programme when Ministers, having been asked questions by Nick Robinson, Mishal Husain, Justin Webb, Amol Rajan or Martha Kearney, have floundered to answer a basic, straight question? The review is an overlying threat to the BBC about its behaviour in holding this Government to account.

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I do not accept anything that the right hon. Gentleman has just said. The purpose of the review is to ensure that the BBC can continue to provide its exceptional and outstanding service for decades to come. If we just sit on our hands and do nothing, it will be overtaken by other media outlets that are competing in the world. We need to ensure that the BBC has a sustainable financial platform from which to provide its outstanding service.

Photo of James Sunderland James Sunderland Chair, Select Committee on the Armed Forces Bill, Chair, Select Committee on the Armed Forces Bill

I have always loved the BBC. As a kid growing up and since, I have been blown away by the quality of its broadcasting; by its sport, music, culture, radio, nature, news and, of course, humour—even though I feel we have lost something with this endless thirst for political correctness. However, I have been increasingly concerned in recent months by the political bias creeping in, notably with individual commentary from presenters, through tweets and with inaccuracies in reporting. The BBC is a public service broadcaster; it is not a political organisation. So does the Secretary of State agree that the BBC has much more to do here to fully justify its publicly funded licence fee?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

The heart of my hon. Friend’s question is about the BBC’s impartiality. I know that the BBC strives hard to maintain impartiality, with its 10-point plan, but at its heart the BBC needs to provide an impartial service, because if it does not do so, it should not be getting licence fee payers’ money and it is just the same as every other organisation. That is why it needs to continue to strive, as I know it does, to ensure that it provides impartial output.

Photo of Layla Moran Layla Moran Liberal Democrat Spokesperson (International Development), Liberal Democrat Spokesperson (Foreign and Commonwealth Affairs)

We should put on the record how lucky we are to have this public service broadcaster. We have just had a statement from the Foreign, Commonwealth and Development Office about Russian interference in our democracy, where this House raised its concerns ahead of the possible election, which will perhaps come sooner rather than later. How does the Secretary of State think that doing this and cutting the BBC’s budget by £90 million is going to help resilience in the whole of society in an election year, when we know that misinformation and disinformation by malign states has never been more of a threat?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I wish to correct the hon. Lady: we are not cutting the BBC’s budget but increasing it, by 6.7%. What we are not doing is increasing it by 9%. She will know from speaking to companies or households in her constituency whether those companies have had a 9% increase in their funding. Have the Government had a 9% increase in their funding? We are creating a careful balance to ensure that we support the BBC with this rise of 6.7% to provide those services, while thinking carefully about the cost of living and bills for households up and down the country.

Photo of Alun Cairns Alun Cairns Conservative, Vale of Glamorgan

I thank my right hon. and learned Friend for her statement on restricting the increase in the BBC licence fee. I also recognise the reassurance she has given S4C, which is facing a particularly challenging time and needs stability. As she said, the licence fee still raises £3.8 billion. Departments, local authorities and most public organisations have to publish details and invoices in respect of sums in excess of £500. I have tried on two occasions in the House to introduce legislation to force the BBC to do the same. Within the review, will she consider how we can increase transparency and scrutiny of the £3.8 billion that is spent, so that we can introduce better efficiency gains and scrutinise closely where money might be wasted?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

My right hon. Friend makes an interesting point. I do not think it will form part of this review, but it is an interesting point that I will reflect on and consider further.

Photo of Grahame Morris Grahame Morris Labour, Easington

I wish to declare that I, too, am an officer of the NUJ parliamentary group—in fact, I am its co-chair. May I point out to the Minister the damaging impact of dramatic cuts already being implemented by the BBC management, including to the valued BBC local radio services, which we have discussed in this House on several occasions, to highly regarded investigative journalist jobs, most notably and recently on “Newsnight”, and to local news output? Given that inflation has been substantially higher than expected during the two-year licence fee freeze and given, as my hon. Friend Thangam Debbonaire said from the Front Bench, that the BBC is the biggest commissioner of the creative industries in the UK, will the Minister, in her review of the funding model, please ensure that the BBC has enough funding to maintain the highest quality in commissioning, production and broadcasting?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I am absolutely committed to ensuring that our creative industries continue to thrive and have set a very high ambition in that space. As I have said, I want to see the creative industries grow by £50 billion and have a million extra jobs by 2030. We are already seeing that growth, with the creative industries growing at twice the rate of the rest of the economy. I have helped ensure that the creative industries get tax relief. In June they had further funding of £70 million, which will leverage further private investment. There was an announcement in the recent autumn statement about further support for visual effects through the tax system. I am absolutely backing the creative industries. I want them to thrive and we are putting in place mechanisms to ensure that they survive. The BBC is part of that and is one of the things that I will take into account.

Photo of Peter Gibson Peter Gibson Conservative, Darlington

I welcome the statement from my right hon. and learned Friend. What further steps is she taking to encourage the BBC to maximise its commercial revenue in order to minimise the burden on licence fee payers?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

My hon. Friend makes an important point. I want to see a thriving BBC that can compete internationally and is getting further income. There are lots of opportunities for the BBC to explore, and I want to work with it very closely on those and understand them in greater deal. Whether that means international work and international charging or partnerships and joint venues, I want to make sure that the BBC has every opportunity to maximise its commercial income.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

I have always been a staunch defender of the BBC, not least because my late parents met when they both worked for the corporation, so I would not be here otherwise. However, the increasing challenges for news coverage and the bias that has crept in have been of concern to my constituents. I wrote to the director-general following the broadcasting of Hamas propaganda on the attacks on the Gaza hospital. That was left up on the BBC website literally all day, creating community tensions in my constituency. There was not a word of apology, not a retraction and not even a reply from the director-general. As we approach this review, can we make sure that built into it is the requirement for absolute impartiality and fact-checking of news before it is posted?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

My hon. Friend makes a really important point: because the BBC is so respected throughout the world, and because it has a reputation for providing impartial and accurate news, when it gets it wrong—in this case, it did get it wrong and it has admitted, now, that it did—the impact of that is more significant than when any other news outlet gets it wrong. Particularly on issues such as the one that my hon. Friend mentions, where there are consequences of inaccurate reporting both in the region and here, including for the Jewish community at home and the antisemitism that results from that, it is so important that the BBC takes time to reflect and makes sure that when it puts its news out, it is accurate.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I thank the Secretary of State for her statement and for providing clarity. I am sure that she is well aware of my feelings about BBC reporting, which seems to be driven to a certain leaning and by an agenda that I have issues with—others have mentioned that as well. However, some of the programming is targeted at small and specific audiences, such as the Ulster Scots—I am very proud to be an Ulster Scot and I seek more Ulster Scots programmes on the BBC regionally—or the heritage programmes, which are always beautifully done. How will the Secretary of State ensure that the tightening that is done relates to paying presenters exorbitant wages, as opposed to cutting the niche programming that is necessary for the preservation of culture and heritage, which I love?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I thank the hon. Member for his important question. I must emphasise that the BBC is operationally independent. It has a duty to provide diverse news and cultural programmes that are particular and relevant to the regions, and it must fulfil that duty under the terms of the charter and its public service mission. The decisions about who the BBC employs and what it pays is a matter for it, but it has obligations relating to transparency.

Photo of Anna Firth Anna Firth Conservative, Southend West

I welcome the Secretary of State’s statement, and particularly the review of whether the BBC is being fair to taxpayers. I have to say, constituents in Southend and Leigh-on-Sea do not consider that they get value for money from the licence fee, and nor do they think that £3.8 billion is a good amount for the licence fee. Many have written to me to express profound concerns about the BBC’s coverage of the horrendous conflict between Israel and Hamas. This was about not just the BBC’s failure to talk about Hamas as an internationally proscribed terrorist organisation, but their genuine belief that BBC bias is stoking anti-Israel sentiment in our country, which, as I am sure the Secretary of State will agree, is very concerning. So will the review cover three points, as well as all the others: first, the impartiality of content; secondly, whether the licence fee should be mandatory any longer; and thirdly, the need to decriminalise non-payment of the licence fee?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

I understand my hon. Friend’s concerns about the language that the BBC has chosen to use in relation to Hamas. I have made clear my views—they are public on this issue—and I have stated on the record and raised with the BBC privately that Hamas is a terrorist organisation both legally and factually, and that it is important to call them what they are. As for her constituents’ concerns, all of us, of course, get comments from our constituents, and that is an excellent avenue for people to pursue. However, I remind her constituents and others that there are also formal channels through which they can make their views known, if they feel strongly that they should pursue those matters. We are looking at impartiality in the mid-term review, which we will publish shortly. Like her, I am also concerned about the prosecution of people and I have said that I will look at that in the charter review.

Photo of Greg Smith Greg Smith Conservative, Buckingham

I welcome the announcement of the funding model review. It is the responsible thing to do given the changing media landscape that my right hon. and learned Friend mentioned. However, my constituents will raise an eyebrow at the BBC’s prices going up this year to deliver less, with the BBC having closed the Oxford newsroom and made severe cuts to Three Counties Radio. Will she lock into the review a mechanism so that if the licence fee is to remain compulsory for those wishing to have a television, there has to be a consumer test to properly monitor what viewers actually want to watch and listen to?

Photo of Lucy Frazer Lucy Frazer The Secretary of State for Culture, Media and Sport

As always, my hon. Friend makes some interesting points. As we look at the licence fee review and the funding review, it is really important that we consider all aspects very carefully. The BBC is there to provide a great service to the public, and that is what the public expect.