The Minister for Europe (Mr David Lidington)
I thank my hon. Friend the Member for Croydon South (Richard Ottaway) for introducing the debate, and for doing so in a characteristically courteous and thoughtful fashion; and I pay tribute to all members of the Foreign Affairs Committee for a comprehensive report on what all Members, whether in government or not, agree is a matter of great public significance and of significance to how we advance the interests of the United Kingdom.
My right hon. Friend the Foreign Secretary has said frequently in opposition and in government that he sees the World Service as, to use the words of my hon. Friend, a key element of British soft power. My right hon. Friend has also underlined frequently the central importance of the World Service and the British Council in giving this country an unrivalled platform from which to project our culture and to share our values.
The Government and, in particular, my right hon. Friend will clearly want to reflect carefully on what has been said during this debate, but I make it clear that there cannot be any avoidance of difficult financial decisions and hard choices for the Foreign Office or for the World Service, as for any part of the public sector. I hope that when I have concluded my speech hon. Members will recognise that the Government are committed to finding ways—within the terms of the existing settlement announced in October last year, and in discussions about possible additional sources of World Service revenue—in which the current and potential resources available to the World Service can be used to the greatest possible advantage. My hon. Friend the Member for Stafford (Jeremy Lefroy), in particular, listed a number ways in which that might be possible.
Rehman Chishti
Can the Minister confirm that in 2010 the chief executive of the BBC World Service earned £215,000 and five of his colleagues earned more than £200,000? Does he agree that chief executives and other senior officials should have had their salaries frozen or taken a reduction instead of cutting front-line services?
Mr Lidington
My hon. Friend makes an important point. I am not somebody who usually harps on about high salaries for people who hold important positions of responsibility, but it is fair to acknowledge that the BBC World Service board is responsible for a significantly smaller operation with a smaller budget than the Foreign and Commonwealth Office, and yet the World Service’s board is more numerous and significantly more expensive than the board that runs the FCO. I do not want to make too much of that, but my hon. Friend makes an emblematic point that I will come to later.
I am not trying to deny that hard choices are having to be made, but there is a need to say to the World Service, as to every other part of the public sector, that it needs to look rigorously at how to make finite budgets go further and try to reduce all unnecessary costs.
Mel Stride (Central Devon) (Con)
Does my right hon. Friend believe that the BBC World Service is doing enough to amortise the costs of news gathering and production among other services, including within the BBC family, before looking at a reduction in language services?
Mr Lidington
One of the challenges that the World Service management faces is to draw up what I hope will be very ambitious and detailed plans to deliver a reduction in administrative and other inessential costs that match commitments of the sort that Government Departments throughout Whitehall, including the FCO, are already having to make. The BBC World Service has announced that it is committed to a significant reduction. We have not seen details of that, nor are we entitled to do so. It is an independent organisation, quite properly so, although the National Audit Office and the Public Accounts Committee are of course free to investigate further.
I hope that the World Service will choose to make those plans public and will look to take advantage of the opportunities that will arise from the new arrangements for the relationship between the World Service and the BBC as a whole to merge and share costs where possible. For example, arrangements to combine studios for the World Service and other parts of the BBC would seem to be a sensible way forward. Indeed, the BBC has indicated that it is considering that in the context of the new arrangements.
Mike Gapes
Is the Minister aware that the BBC World Service spends proportionately less on human resources, finance and IT than the FCO? Is he also aware that there has been a reduction of about 32% in the management costs of the World Service since 2009?
Mr Lidington
The hon. Gentleman, perhaps uncharacteristically, is choosing to overlook the fact that the FCO is responsible for well over 100 operations in different countries overseas and that in those circumstances the requirements of currency operations and IT add up to quite a considerable overhead. I welcome the public commitment of the World Service to a significant reduction in its administrative costs, and I am sure that the House looks forward to seeing how it proposes to deliver that.
Mr Lidington
I will give way to the hon. Gentleman, and then I will make progress, because I want to be fair to the many hon. Members who want to take part in the next debate.
Mr David
I hear what the Minister says, and of course we all want to see efficiency savings and economies. However, it is important to bear in mind that the cost of producing a message or sending out a programme is lower in the BBC World Service than in any other international broadcaster.
Mr Lidington
It is certainly important to bear such things in mind, but many parts of the public sector in this country can point to how their best practice matches that in other parts of the world. Nevertheless, the financial state in which this country finds itself as a consequence of the inheritance bequeathed to us by the Government of whom the hon. Gentleman was a member is so grave that we have no alternative but to ask every part of our public services, no matter how well and efficiently they perform, to drive those efficiencies further.
My hon. Friend the Member for Croydon South, and indeed the report, criticised the Government’s decision to reduce the budget of the World Service by 16% and argued that it was disproportionate. To set the matter in context, as the House knows the Government inherited a massive fiscal deficit when they came to power. We made it clear from the start that it would be the Government’s overriding priority to take swift and effective action to reduce that deficit. Every member of the Government has always made it clear that rebalancing the nation’s finances will not be without pain and that every taxpayer-funded organisations will have to play its part, as will the private sector. Frankly, if as a country we fail to deal with the overriding challenge of our deficit, all our hopes, whether for prosperity, improved public services or enhanced international influence for the United Kingdom, will come to naught.
The World Service was asked to reduce its budget by 16%. The Foreign Affairs Committee has argued that that is disproportionate. I say candidly, but politely, to my hon. Friend that I disagree with that verdict. At the beginning of the previous comprehensive spending round in 2007-08, the World Service budget was 13% of the Foreign and Commonwealth Office budget. By the end of 2014-15, its budget will be 14.4% of the FCO budget. The proportion of its budget at the end of this Government’s tenure will therefore be slightly higher than it was before. To respond to the particular case put to me by my hon. Friend, in 2007-08 the World Service received £222 million, and in 2013-14 it will again receive £222 million. However, the FCO budget will fall from £1.7 billion in 2007-08 to £1.55 billion in 2013-14. It is those figures that lie behind the percentages that I quoted.
Richard Ottaway
Is the Minister including the costs of conflict prevention in his figures?
Mr Lidington
I will take advice on that point and come back to my hon. Friend either later in the debate or in writing.
It is also fair to point out that the FCO has been more severely affected by the impact of foreign exchange losses than has the World Service. From 2007 to 2011, the loss of the mechanism that protected the FCO against foreign exchange risk accounted for a 17% loss to the FCO core budget, but only a 2% loss to the BBC World Service core budget. That discrepancy is explained by the fact that a much greater proportion of the FCO’s diplomatic effort is located overseas than is the case with the BBC World Service.
The Foreign Affairs Committee has made its case, and I hope that I have provided figures that back up the evidence my right hon. Friend the Secretary of State gave and that support our contention that although the settlement is indeed tough, it is fair when set alongside what has happened to the core FCO budget over the past few years.
The World Service undoubtedly provides a valuable service, but that is true of many other public bodies. The police, the military and the education system have all had to make savings, and so have the British Council and UK Trade & Investment. Some of those organisations have suffered cuts considerably larger than 16%. I am happy to stand at the Dispatch Box and say that all those institutions are vital assets of the UK. We do not take pleasure in what we have had to do, but the measures that we have taken are essential for the future well-being of our country. Much as I dislike having to support cuts to the budget of the BBC World Service, we cannot in good conscience say that we support cuts in general but resist all of them in particular.
Members will have heard the announcement by my right hon. Friend the Foreign Secretary on 11 May, in which he set out plans for the future of the Foreign Office’s diplomatic network. We will find £100 million a year in savings from our administration budgets, yet at the same time we are both widening and deepening our diplomatic network. We are opening more posts and strengthening existing ones in emerging economies of key importance to this country. The savings that we are having to find to finance that expansion are not easy, but they are essential if we are to develop within tough financial constraints.
When I go to British embassies overseas, I am left in no doubt about the seriousness of the choices that Ministers have to make. I regularly have meetings with our staff at our posts throughout Europe and the former Soviet Union, and at practically every meeting I meet staff who are worried about their jobs, some of whom have worked loyally for the FCO for a large number of years. The FCO is not immune from difficult decisions, and there is no pain-free way to make the choices necessary to provide a strong voice for Britain in the world. I do not think the World Service can be exempt from the need to make difficult choices.
The World Service originally approached the Foreign Secretary for authority to close 13 of its 31 language services—even more closures than were authorised by the Government of whom the hon. Member for Caerphilly (Mr David) was a member. When I heard him denounce the policies of the current Government, I worried about the selective amnesia that had come over him about his Government’s record on the World Service.
My right hon. Friend the Foreign Secretary was not prepared to support those suggested closures, and after frank discussion with the World Service and the BBC Trust he reluctantly agreed to the closure of five services. That was after he had received clear assurances that the closures would not cause major damage to the World Service’s overall services and audience share. The World Service also assured us that it would make strenuous efforts to find efficiency savings and drive down non-editorial costs to protect its front line. It has said that it will find savings of up to a third in finance, human resources, business development, strategy, marketing and other administrative operations.
I hope that the World Service will match that commitment with detailed plans, and that it will match the greater transparency of financial arrangements that the Government have undertaken to provide. The BBC is not obliged to do that under the current arrangements, but it would add to public confidence in the organisation, including the World Service, if it endorsed greater transparency so that taxpayers and licence fee payers could see where their money was being spent.
There are other changes in how World Service output is delivered, such as the closure of radio transmissions in Mandarin or the cessation of the Hindi shortwave service. Ministers have no power to veto such decisions. Some access to the World Service in those languages will remain, whether online or through FM or television, but those choices fall squarely within the responsibility of the World Service—the Government were not consulted in detail on those changes and we had no locus to intervene. The BBC believes that those decisions were soundly based, and we have seen its justification for those changes.
As a number of hon. Members mentioned, given recent events in the middle east and north Africa, the FCO chose to reprioritise in order to bolster our effort there. It is entirely sensible for the World Service to do likewise. However, even before the Arab spring, the decision to curtail Arabic broadcasting was somewhat surprising.
On potential sources of additional money for the World Service, first, there is the prospect of commercial income. We agreed with the World Service that it would increase its sources of commercial income, with an initial target of £3 million. It is important for it to adopt an entrepreneurial approach to developing that source of income.
Secondly, on funding from the Department for International Development, my hon. Friend the Member for Croydon South quite fairly pointed out that there are two genuine hurdles to be surmounted, the first of which is meeting the OECD kitemark for measures that count as official development assistance. The OECD requires that any activity that qualifies as ODA must have the
“promotion of the economic development and welfare of developing countries as its main objective”.
However, even if activity qualifies under OECD rules as ODA, it does not necessarily meet the second, stricter test, which is embodied in the International Development Act 2002. The Act gives the Secretary of State statutory authority to spend money when that allows for the relief of poverty—that is the prime measure. As my hon. Friend mentioned, my right hon. Friend the Secretary of State for International Development is looking at a new relationship with the World Service trust. In addition, the Government are approaching the OECD with a view to getting its agreement to classify a proportion of World Service spending as subject to ODA rules.
It is worth noting that the settlement included money to be used as the contribution of the World Service to the overall BBC pension deficit. The BBC says that its original estimate of that deficit has been revised down by about one third. We do not yet know the detailed figures for the World Service, but if, pro rata, it no longer needs a third of the money it has allocated for pensions—that would amount to about £4 million a year—it could choose to restore the five cut services and the Hindi service, or to restore the cuts to the Arabic, Hindi and Mandarin services that it previously announced.
Those choices are for the BBC. In a recent article in Ariel, the World Service controller of languages said that even if funding were reinstated, it would not necessarily restart services that it had stopped, but would instead look at new investment. Global shortwave audiences are falling dramatically—20 million listeners were lost from 2009-10 alone.
My right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) and my hon. Friend the Member for Cheltenham (Martin Horwood) asked about the place of the World Service in the proposed new arrangements with the BBC, which will take effect from 2014-15. As I have already said, these provide opportunities for things such as the combination of news rooms and studios, and for different arms of the BBC to share costs, which might help World Service funds to go further. But it is also true that the BBC, through its new chairman and director-general, has made it clear that it places a high value on the World Service and sees it continuing as a key element of BBC output. The new governance arrangements will be guaranteed by an amendment to the BBC agreement between the Secretary of State for Culture, Olympics, Media and Sport and the BBC. We are discussing with the BBC Trust a formal exchange of letters to confirm this. The BBC Trust is also considering an international trustee to represent the interests of the World Service.
Even after the cuts, the World Service will still receive funding from the British taxpayer of £733 million over the next three years. The settlement that we came to with the World Service was challenging, and we take seriously the points that have been made by the Select Committee and in the Chamber today and will reflect further on them. We will work with the World Service to find ways in which it can continue to fulfil its mission as an independent broadcasting voice that is at the same time a key element in the promotion of British culture and values.
Richard Ottaway
Time does not permit me to acknowledge in detail the speeches that have been made today. It has been a great debate, but the Minister must have felt a bit lonely. We have heard seven speeches today, six of which supported the thrust of the motion and the desperate need for a review of the service, and his own which was more defensive of the Government’s position. The Minister is a good friend of mine, in both the personal and political senses, but he has not quite got the point that everyone has made today.
We all recognise the economic pressures on the Government—indeed, everyone who spoke is a member of a party that supports the need to address the desperate financial situation the country is in. However, it is a question of priorities. When the facts change, so must the policies. The circumstances in Libya have meant that more resources have been diverted to that country. The international tensions of worldwide terrorism have meant that more money has been put into the security services. The extra need for diplomacy around the world was behind the statement last week about extra funding for diplomacy. What colleagues are saying today is that, with the changing world we live in and the desperate need for more soft power—
Richard Ottaway
I am afraid you would never forgive me if I gave way, Mr Deputy Speaker.
There is a desperate need to address the changing world and to take soft power more seriously. I appreciate the fact that my right hon. Friend has agreed to a review. I hope that it will be a constructive review and that this is not brushed under the table saying, “That’s the House of Commons dealt with.” The House is serious about this and I hope the Foreign Office will be as well.
Question put and agreed to.
Resolved,
That this House notes the Sixth Report from the Foreign Affairs Committee, The Implications of Cuts to the BBC World Service, HC 849; endorses the Committee’s support for the World Service’s invaluable work in providing a widely respected and trusted news service in combination with high-quality journalism to many countries; considers that the unfolding events in North Africa and the Middle East demonstrate the continuing importance of the soft power wielded through the World Service; believes that the value of the World Service far outweighs its relatively small cost; and invites the Government to review its decision to cut spending on the World Service by 16 per cent.