The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Damian Collins)

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I thank my hon. Friend for what he has said, but, for the record, I am not the Secretary of State, although I am a Minister in the Department.

Damian Collins

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Just to confirm for the record that it was, of course, the BBC’s decision to end free television licences for the over-75s. It was ultimately the BBC’s decision.

Damian Collins

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The BBC agreed to a financial settlement with the previous Government that provided transitional funding, after which the BBC would take on responsibility. That was always the case, and it was the deal the BBC signed up to at the time.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Damian Collins)

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In the short time I have, I will address the concessionary licence fee for the over-75s and provide the necessary context for a range of relevant issues, including the BBC’s decision to end free TV licences for the over-75s, the Government’s work on decriminalising TV licence fee evasion and our broader road map for BBC reform, including our intention to review the licence fee funding model.

The House will no doubt be aware that, in the 2015 funding settlement, the Government agreed with the BBC that the responsibility for the over-75s concession should transfer to the BBC. The Government and the BBC agreed to make that change. Alongside that, the Government also closed the iPlayer loophole, committed to increase the licence fee in line with inflation and reduced a number of other spending commitments. To help with the financial planning, the Government agreed to provide phased transitional funding over two years to gradually—

The Minister for Media, Tourism and Creative Industries (Sir John Whittingdale)

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I come to this debate slightly late, as I am actually responding to a debate that took place almost a year ago to the day. In that debate, my hon. Friend the Member for Christchurch (Sir Christopher Chope) made his points powerfully but succinctly: he had just 16 minutes to speak. The Minister at the time, my hon. Friend the Member for Folkestone and Hythe (Damian Collins), had one minute to respond. I will therefore set the context of the debate and answer a number of the points I suspect my hon. Friend the Member for Christchurch would have made if he had had longer when he moved the Second Reading of his Bill.

Just over 100 years ago, on 18 October 1922, the BBC came into being as the British Broadcasting Company. It was an arrangement between the Post Office and a group of radio set manufacturers to provide radio content and promote the sale of wireless sets. It was funded through a 10 shilling licence fee. In 1927, the BBC received its first royal charter, becoming the British Broadcasting Corporation, with a mission to inform, educate and entertain. Since then, the BBC has continued to evolve and to play a hugely important role in British life, as it has touched the lives of almost everyone in the UK and made a unique contribution to our cultural heritage.

In December 1932, the BBC launched its Empire Service. Days later, the service broadcast the first Christmas day message by a British monarch when King George V addressed the empire live from Sandringham. In 1940, Winston Churchill delivered his first radio broadcast as Prime Minister. In 1946, the first combined radio and TV licence fee was introduced, at a cost of £2, which then became the TV licence in 1971.

In 1985, Live Aid was broadcast to an estimated 400 million viewers, and in 2007, iPlayer pioneered a whole new way to watch BBC content on demand via the internet. A year later, that was followed by BBC Sounds, which is a streaming media and audio download service hosting a range of content including live radio broadcasts, audio on demand and podcasts. As was noted in the brief debate we had a year ago by the right hon. Member for Warley (John Spellar), last year the BBC’s coverage of the funeral of Her late Majesty the Queen was watched by 22.4 million people across BBC channels at peak viewing time.

The BBC, now just over 100 years old, continues to be a great national institution. It is an invaluable source of education, information and entertainment, particularly for the most vulnerable and isolated people in our society, including older people. It is respected globally and reaches hundreds of millions of people across the world every week. No other country in the world has anything quite like it.

Sir John Whittingdale

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If my hon. Friend will forgive me, that is a point I intend to address in some substance a little later on. He makes an argument that many have made, and I understand it. The quality of the content of the BBC is considerable, although I—like everybody in this House, I suspect—occasionally have reason to question it. It is, in my view, still the finest broadcaster in the world, but that is a separate issue from the question of how we pay for it, which is the issue at stake in the Bill.

Sir John Whittingdale

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I recall it very well because I was the Secretary of State at the time, so I was quite involved in that particular negotiation.

To return to the point of the licence fee, the licence fee pays for, overwhelmingly, the BBC’s non-commercial activities. It raises something like £3.74 billion in public funding every year, with which the BBC has to deliver its mission and public purposes. A television licence is required to watch, record or receive television as it is broadcast live on any channel or online service.

In a subsequent licence fee settlement, which was in my second incarnation, it was set to be frozen for two years and then to be uprated in line with inflation. The original charter agreement reached a settlement with the BBC where it was agreed that a licence should be required to watch not just live transmission of linear television services but live or on-demand content on BBC iPlayer, meaning that the so-called iPlayer loophole was closed.

Sir John Whittingdale

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It has always been the case that the licence fee is required to watch live TV. It does not extend to the other things, however much some people might suggest it should. That has led to an issue that I will go on to talk about: the challenge to the existing model as people change the way they consume television.

It is worth noting that the licence fee is not just used to fund the BBC. It is also used for other strategic public service objectives, including the funding of the Welsh language broadcaster S4C. I spent yesterday in Cardiff, where I was able to visit S4C; I visited the set of “Pobol y Cwm”, for any Welsh speakers in the Chamber today. I can vouch that S4C does an important job in sustaining the Welsh language and is thoroughly deserving of public funding through the licence fee, which is why the Government agreed in the last licence fee settlement to a significant increase in that funding.

The licence fee represents a significant intervention in the broadcasting market, providing a predictable and steady source of revenue for the BBC. The Government are currently committed to maintaining the licence fee funding model for the duration of this 11-year charter period, which runs until 2027. But as I have already suggested—I will come on to this point at greater length—the BBC funding model is facing major challenges, and it is necessary to look at ways to ensure that it remains sustainable in the longer term.

The licence fee does not represent the only intervention by the Government in the broadcasting sector. There are a number of other ways in which we support a dynamic and successful broadcasting sector and, in particular, public service broadcasting. We have six public service broadcasters: the BBC, ITV, STV, Channel 4, S4C and Channel Five. Only two of those—the BBC and S4C—receive direct public funding from the licence fee. All six broadcasters benefit from regulatory advantages such as prominence and guaranteed access to spectrum. With these benefits come obligations with respect to the content that they show and how it is made.

The UK’s public broadcasting system was originally born of necessity when there was limited analogue capacity of spectrum, but more recently—over the past 50 years—the role has become clearer. The six broadcasters complement the free market, producing the type of content that would otherwise be under-served, such as local news that addresses communities across the country, current affairs programmes and original, distinctively British programming that shapes our culture and reflects our values. It is not limited to traditional broadcast television; BBC Bitesize, for example, provides an important resource for young people and schools across the UK. The UK’s public service broadcasters complement their commercial competitors by raising standards across the industry, investing in skills, boosting growth and taking creative risks.

Broadcasters, including the public service broadcasters, are facing a number of challenges due to changing technology. Just as the advent of cable and satellite revolutionised public service broadcasting, internet-delivered services are revolutionising broadcasting now, creating new distribution models with their own gatekeepers. It is telling, for example, that 74% of households with a TV set now choose to connect it to the internet. That has provided viewers with an enormous amount of choice in what they watch and how they watch it.

In particular, the trend away from linear viewing and towards on-demand viewing is continuing. According to Ofcom, in the first quarter of 2023, approximately two thirds of UK households were subscribing to a subscription-video-on-demand service. The weekly reach of broadcast TV fell from 83% in 2021 to 79% in 2022, which is the biggest ever annual drop. This ongoing shift away from traditional, linear, scheduled TV viewing to on-demand via the internet offers viewers an enormous extra range of choice, but it is also putting pressure on the traditional funding models and on public service broadcasters. One way in which the Government intend to address that is through the introduction of the media Bill, which I hope we will hear more about in the King’s Speech. The purpose of that Bill will be to ensure that the public service broadcasters remain visible at the top of the programme guides, whatever form of TV distribution viewers choose to use, because we believe it is important that the public service broadcasters are sustained.

I come to the specific issue my hon. Friend the Member for Christchurch raises in his Bill: TV licences for the over-75s. Both decriminalisation of the licence fee and the exemption for the over 75s have been debated at length many times in this Chamber. I understand that they remain controversial and that many people remain critical of the fact that the BBC now enforces the payment of the licence fee for over-75s who do not qualify as a result of receiving a means-tested benefit.

Sir John Whittingdale

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The hon. Gentleman is right on both points. He is right that enforcement action has largely not been taken by the BBC against over-75s who have not acquired a television licence—certainly no prosecutions have yet followed. He is also right to cite our stricture to the BBC that it should approach this matter with sensitivity. Like him, “sensitivity” is not the first word I would choose to describe the general tone of communications about TV licence fee collection.

Sir John Whittingdale

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I would slightly disagree with my right hon. Friend—[Interruption.] The law does not say that someone can be sent to prison for not paying their licence fee. If they are convicted of failing to have a TV licence, they can be fined. Where they then refuse to pay the fine, custodial sentences can, as has happened in some cases, be imposed. Criminalisation is a matter we have debated before, but it is still one of great controversy. We have looked at it on a number of occasions and I am happy to keep it under review.

Let me go back to the issue of the licence fee for the over-75s. As the hon. Member for North West Leicestershire (Andrew Bridgen) suggested, in the 2015 funding settlement the Government agreed that responsibility for the over-75s concession should transfer to the BBC. The Government and the BBC agreed to make that change alongside a number of other elements of the licence fee settlement, such as the closure of the iPlayer loophole, to which I have already referred, and an agreement to increase the licence fee in line with inflation from there on. It was also agreed that the transfer would be phased in over two years so that the BBC had time to adjust to meet the additional cost of maintaining that. It was debated extensively at the time of the passage through Parliament of the Digital Economy Act 2017.

The result is that responsibility for the over-75s concession now rests with the BBC. The Government made it plain that we hoped and expected that the BBC would maintain the concession, but the BBC chose to restrict it to those in receipt of pension credit. The Government remain disappointed about that decision. I recognise, however, that even that concession represents quite a considerable cost to the BBC, and how the BBC budgets, and the extent to which it feels able to maintain the concession, is a matter for the BBC.

Sir John Whittingdale

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In the licence fee settlement, which is written into the charter, I froze the licence fee for two years and then said that it should return to increasing in line with inflation, but by precisely how much it will increase and when are matters on which the Government will be able to provide my hon. Friend with further information relatively soon—that is not yet determined. The requirement is written into the charter, as I said.

The Government recognise the importance of television to people of all ages, particularly older people who value television as a source of entertainment and companionship and as a way to stay connected. We remain committed to ensuring economic security for people at every stage of their life. We believe that the BBC has a duty to ensure that it uses its substantial licence fee income to support older people. As the hon. Member for Ellesmere Port and Neston (Justin Madders) suggested, the BBC has informed the Government that no enforcement action has been taken against over-75s at this stage.

Sir John Whittingdale

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I can assure my hon. Friend that those will be taken into account. He is right that that is a factor that increases the income of the BBC. However, it has to be balanced against other factors, about which I will say a little more, that result from a change in the way in which people access television, which is leading to a reduction in the number of people paying the licence fee.

The proposal of my hon. Friend the Member for Christchurch in his Bill would be to decriminalise TV licence evasion for the over-75s. It would be very difficult to make it a criminal offence not to pay the licence fee up to a certain age, after which it would no longer be a criminal offence. Our view is that the law needs to apply equally to offenders, regardless of their age. It is right that our justice system is fair and just to all people, regardless of their characteristics.

The more general issue of decriminalisation is one that we have considered on a number of occasions. In fact, when I was Secretary of State in 2015, I came into the job supporting decriminalisation, because I shared the views expressed by a number of my hon. Friends. We commissioned a review of the matter, conducted by Mr Perry, which came out firmly against decriminalisation. Subsequently, in February 2020, when I was a Minister in the Department for a second time, a further consultation received a large number of responses—over 150,000—the majority of which were against decriminalisation.

The reasons for that were several. The BBC argued strongly that it would lead to an increase in evasion, which it estimated would cost it in the order of £300 million. It was also pointed out that if it became a civil offence, and people were taken to court for failure to pay as a civil matter, that could lead to significantly higher fines and costs, if they were found guilty. It highlighted significant impacts in terms of the cost and implementation. The current system works relatively efficiently in the magistrates courts, but moving it over to be a civil matter would result in a considerable increase in costs.

For those reasons, the Government decided that we would keep decriminalisation under review, but we would not proceed to decriminalise at that time. It is more important that we address the whole issue around the future of the licence fee, which is becoming harder and harder to sustain.

Sir John Whittingdale

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If people fail to pay their licence fee, it is a matter for criminal prosecution, but as the BBC is responsible for the collection of the licence fee, it is a matter of choice as to whether or not it wishes to prosecute. In response to our request that it addresses the matter with sensitivity, the BBC has assured us that it has not, to date, sought to prosecute anyone over 75.

I want to say a little more about the challenge to the licence fee going forward. When it was reviewed in 2015, it was recognised that there were a number of drawbacks. In some ways, it is a flat-rate charge for which there is no means-tested assistance, and therefore it is highly regressive. At that time, it was concluded that there was no better system of funding the BBC and that it was the most appropriate. For that reason, it was agreed that the licence fee would continue for the remaining period of the current charter.

As the media landscape has changed in the way that I have described, that has had a consequence. Despite the point made by my hon. Friend the Member for Shipley (Philip Davies) about housebuilding, the number of TV licences held has declined by 1.9 million since 2017-18. That is because, probably for the first time, a large number of people are genuinely saying that they do not watch live television and that they are perfectly adequately entertained by watching streaming services, on demand and catch-up TV. Under the current rules for the licence fee, they are not required to have a licence.

On top of that decline of 1.9 million, estimated TV licence evasion has now risen to its highest level since 1995, standing at about 10.3%. If the trends taking place continue, that represents a significant challenge to the sustainability of the licence fee, and that comes on top of the concerns about the fairness of the model and, indeed, about whether it is right to continue to enforce it through a criminal sanction.

Already we have seen the House of Lords Communications and Digital Committee suggest that the drawbacks to the current licence fee model are becoming more salient. It called for a comprehensive review of the licence fee system. In response, the Government have established the BBC future funding review, with the purpose of examining the options for alternative means of funding the BBC after the end of the current settlement.

Sir John Whittingdale

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It has always been said that if the BBC were funded directly from the Treasury out of general taxation, that would make it susceptible to political pressure, and it would reduce the distance of the arm’s length relationship between the BBC and the Government. There may be some truth in that. I have never entirely bought the argument that the licence fee protects it from political interference. It just means that the opportunity is slightly less regular in that it must wait until the next licence fee settlement.

However, the relationship between the Government and the BBC, particularly over the funding settlement, is one of negotiation, and it is right that the Government should ultimately decide the level of licence fee. There have been suggestions by some—I do not believe my hon. Friend the Member for Shipley would be among them—that the licence fee should be set by some independent committee or by Ofcom, and that the Government should not have a say. That is not something that I believe would be right. I think the Government have a duty to take account of the pressures on household budgets more widely, and the Government are also accountable for that decision. Therefore, I see no chance of that aspect changing, but there are options that will become available over time for alternative means of funding.

Sir John Whittingdale

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I will give way, perhaps for the last time.

Sir John Whittingdale

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I will take advantage of the hon. Gentleman’s intervention to make two points. First, he will be aware—and it is a cast-iron principle—that the Government do not interfere in the editorial decisions of the BBC. It is not for Government to tell the BBC what they can and cannot broadcast, but that does not mean that the Government do not have views.

Secondly, I will take this opportunity to say from the Dispatch Box that the Government are very disappointed at the attitude taken by the BBC to the coverage of events in Israel and Gaza. The BBC’s refusal to describe this as a terrorist act is something the Government profoundly disagree with. My right hon. Friend the Secretary of State, while reiterating that we do not tell the BBC what to do, has made it clear that the Government’s view is that the BBC should describe it as what it is: terrorism. The suggestion that, in doing so, the BBC would somehow be in breach of the Ofcom broadcasting code is clearly not the case. Ofcom has made it clear that it is an editorial matter for the BBC. There are plenty of previous examples where the BBC has called terrorism “terrorism”, and our view remains that it should do so in this case.

Sir John Whittingdale

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I will give way to my hon. Friend the Member for Bracknell (James Sunderland), who has not yet had a chance to speak.

Sir John Whittingdale

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I agree with my hon. Friend. The issue of impartiality is central to the BBC’s reputation, and it is in the top line of the public purposes of the BBC contained in the charter. It is a matter that the Government have kept under review. When the charter was set back in 2017, it was agreed that there should be a mid-term review of its delivery by the BBC and, in particular, the governance arrangements, which include impartiality. We have since had a number of internal BBC reviews. In particular, there was the review conducted by the senior independent board member, Nick Serota, which agreed to strengthening the impartiality requirements.

However, the Government have considered what more could and needs to be done. In the next few weeks we will also publish the outcome of the mid-term review, which will look at this point. My hon. Friend the Member for Bracknell is completely right that the BBC’s reputation for impartiality is paramount, in justifying the need to pay the licence fee and in protecting its reputation, and not just in this country but around the world. We will say more about that in due course.

For the reasons I have described, I do think that in future the licence fee will become harder to maintain and that we now need to start thinking about the alternatives. That is linked to the way in which people receive television. There will probably come a time when television is delivered exclusively via the internet. That will first require everybody to have access to ultrafast broadband in order to receive it—that is another of my present responsibilities—and the technology will need to develop a little more, but we already have internet protocol television becoming more widely spread. Of course, once we get to that moment, subscription becomes viable. We cannot currently have subscription services on Freeview, but we can on the internet, which is why an awful lot of people who have access to that choose to subscribe to Netflix, Disney, Amazon and the rest.

These issues will therefore become more important and more possible as we move towards that future, but we have not got there yet. However, the Government have started to think about those options through the future funding review. Therefore, while I am afraid that we are not in a position to support the Bill, my hon. Friend the Member for Christchurch does touch on extremely relevant points where we think more thought will need to be given in time. I thank him for giving us the opportunity to debate the matter today.