The Secretary of State for Digital, Culture, Media and Sport (Ms Nadine Dorries)
Thank you, Mr Speaker, and I offer you my personal apology. I actually refused every media invitation both yesterday and today.
Under article 43 of the BBC’s royal charter, I am required to determine a funding settlement for the level of the licence fee for a period of at least five years from 1 April 2022. I am legally required to make my determination as far in advance as possible.
I also highlight that, this year, the licence fee settlement has featured S4C prominently for the first time. In line with the recommendation from the independent review of S4C completed in 2018, the licence fee will be the sole source of public funding for S4C.
Negotiations began back in November 2020, and both I and my predecessor met the BBC on several occasions during this period to discuss this settlement. As part of those negotiations, the charter requires that I assess both the BBC’s commercial income and activities and the level of funding required so that the BBC can effectively fulfil its mission and public purposes. In addition, this Government set out our own relevant factors to consider during the charter review in 2015-16: evasion, commercial income, household growth and industry costs.
As the Prime Minister has said, the BBC is a great institution. It has a unique place in our cultural heritage. Beyond our shores, the BBC broadcasts our values and identities all over the world, reaching hundreds of millions every day. Likewise, the Welsh broadcaster S4C plays a unique and critical role in promoting the Welsh language, and in supporting our wider public service broadcasting landscape.
However, in reaching this settlement, I had to be realistic about the economic situation facing households up and down the country. The global cost of living is rising, and this Government are committed to supporting families as much as possible during these difficult times. Given that climate, we had to think very carefully about imposing any potential increase in the TV licence fee, particularly when any increase would expose families to the threat of bailiffs knocking on their door or criminal prosecution. When it comes to monthly bills, this is one of the few direct levers we have in our control as a Government. In the end, we simply could not justify putting extra pressure on the wallets of hard-working households.
Every organisation around the world is facing the challenge of inflation. I simply do not believe that those responsible for setting household bills should instinctively reach into the pockets of families across the country for just a little more every year to cover those costs. Today, I am announcing that the licence fee will be frozen for the next two years, and will rise in line with inflation for the following four years.
The BBC wanted the fee to rise to over £180 by the end of the settlement. Instead, it will remain fixed at £159 until April 2024. That is more money in the pockets of pensioners and of families who are struggling to make ends meet. We are supporting households when they need that support the most. This settlement sends an important message about keeping costs down while also giving the BBC what it needs to deliver on its remit. The approach to funding will be the same for the BBC and for S4C. However, I can announce that S4C will receive an additional £7.5 million funding per annum from 2022, to support the development of its digital offering. That is a 9% increase, following five years of frozen funding.
We believe this is a fair settlement for the BBC; it is a fair settlement for S4C and, most importantly, it is a fair settlement for licence fee payers all across the United Kingdom. Let us not forget that the BBC will continue to receive billions in annual public funding, allowing it to deliver its mission and public purposes and to continue doing what it does best.
To support the BBC even further in what is a fast-changing broadcasting landscape, the Government will more than double the borrowing limit of the BBC’s commercial arm to £750 million. That will enable the BBC to access private finance as it pursues an ambitious commercial growth strategy, boosting investment in the creative economy across the UK. But as Tim Davie said in his first speech as director-general of the corporation, the BBC must be a “simpler, leaner organisation” that offers “better value” to licence fee payers. We agree with that. Ultimately, this settlement strikes the right balance between protecting households and allowing broadcasters to deliver their vital public responsibilities, while encouraging them to make further savings and efficiencies.
The licence fee settlement is only one step in our road map for reform of the BBC. In the last few months, I have made it clear that the BBC needs to address issues around impartiality and groupthink. Those problems were highlighted definitively by the recent Serota review. The BBC’s own leadership rightly recognised those findings in full and committed to deliver all the review’s recommendations in its 10 point action plan on impartiality and editorial standards. I have had constructive discussions with the BBC about those issues in recent months. The BBC now needs to put those words into action. It needs to convince the British public that those changes are being made, and to provide regular and transparent accounts of its progress.
We will shortly begin the mid-term review of the BBC’s charter, which will consider the overall governance and regulation of the BBC. A key part of that review will look at whether the BBC’s action plan on impartiality has, in fact, materially contributed to improving the organisation’s internal governance.
It is also time to look further into the future. As any serious commentator will tell you, Mr Speaker, the broadcasting landscape has changed beyond all recognition over the past decade. We are living in a world of streaming giants, on demand, pay per view and smart TVs. Technology is changing everything. Some 97% of homes already have superfast broadband. A family in Cumbria can stream five different movies in five different rooms in their house at any one time, and our gigabit roll-out is transforming those networks even further. More than 65% of UK households now have access to the fastest connection on the planet.
As the tech has changed, so have audience habits, particularly among younger viewers, so it is time to begin asking those really serious questions about the long-term funding model of the BBC and whether a mandatory licence fee with criminal penalties for individual households is still appropriate. As we have said before, we will therefore undertake a review of the overall licence fee model. Those discussions will begin shortly.
The BBC has been entertaining and informing us for 100 years. I want it to continue to thrive and be a global beacon in the UK and in the decades to come, but this is 2022, not 1922. We need a BBC that is forward-looking and ready to meet the challenges of modern broadcasting; a BBC that can continue to engage the British public and that commands support from across the breadth of the UK, not just the London bubble; a BBC that can thrive alongside Netflix, Amazon Prime and all its other challengers that attract younger viewers. The licence fee settlement represents a significant step in that journey and in our wider reform of the BBC.
I look forward to continuing to work with the BBC and others across the industry over the coming years to secure the future of these vital British services. I commend this statement to the House.