BBC: Future Funding (Communications and Digital Committee Report)
(2 years ago)
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Baroness Stowell of Beeston
That this House takes note of the Report from the Communications and Digital Committee Licence to Change: BBC future funding (1st Report, HL Paper 44).
Baroness Stowell of Beeston (Con)
My Lords, it is both a privilege and a pleasure to chair the Communications and Digital Select Committee, and I am delighted that so many fellow members will contribute to this debate on our report published in July, Licence to Change: BBC Future Funding. My colleagues bring a breadth of knowledge and expertise from across the media, digital and creative sectors and are a joy to work with, as is the outstanding team who advise and support us: Daniel Schlappa, our clerk, Emily Bailey Page our policy analyst, administrator Rita Cohen and, for this particular inquiry, communications officer Lucy Dargahi. However, the committee does not exhaust the House of Lords’ expertise and interest in this area, so it is very welcome to see so many other noble Lords signed up to speak in this debate. I look forward to everyone’s contribution.
The questions of the BBC’s purpose and how it should be funded are becoming more and more urgent. Media consumption is increasingly digital, audience habits are changing and people have unprecedented amounts of choice about where, when and how they consume entertainment and news. Political debates about the BBC’s future and the way it is funded can become a distraction from the real threats to its future, but talking about the licence fee should not be a taboo subject, and neither should we avoid highlighting the BBC’s flaws and that there are certain audience groups who do not feel well served. Safeguarding the BBC’s future and the public value it generates requires us all to have an open conversation about what we want of our national broadcaster and how we should fund it. There are opportunities to be seized, but they will be lost if we make our goal protecting the status quo or defending the institution for its own sake.
We therefore launched this inquiry to provide a cross- party, non-partisan, objective view on these big questions. Unusually, our conclusions and recommendations are aimed at the BBC as well as at the Government, because we were clear in our conclusions that the corporation itself must lead the debate about the way forward. Facing up to the real threats to its future requires the BBC to define a clear purpose for itself that makes it relevant to today’s world, not the world it entered 100 years ago.
Let me say more about the committee’s findings before I say more about our expectations of the BBC. We found that the BBC has an important role to play in our national life in bringing people together in an increasingly atomised society and reflecting the nation in times of celebration and hardship, as we have been proud to see it do well during Covid, in Ukraine and when we celebrated and mourned our late, great Queen. We, the members of the committee, believe in a public service broadcaster to help us avoid the fate of polarisation that we see in the USA. However, to remain relevant and valuable in future, the BBC needs to grapple with major challenges around serving audiences in a fast-changing world.
There is more competition than ever. The traditional broadcasters’ share of UK viewing fell from 97% in 2010 to 70% in 2021. This downward trend is continuing, with sector analysts predicting it will fall to 50% in five years’ time, and it is lower still among younger people. The cost of TV drama production is rising, and international streaming businesses have transformed the market. In 2021, the BBC’s content budget was £2.5 billion, Netflix’s was $14 billion and Disney’s $18.6 billion. By contrast, the licence fee fell by 30% in real terms between 2010 and 2020.
A flat licence fee, which does not take account of people’s ability to pay, cannot rise to meet the costs of production without being unacceptably expensive for the less well off in society. However, cost is not the only thing which leads people to question the licence fee, and straightforward value-for-money arguments do not convince all those who can afford to pay. The BBC also needs to do much better in reflecting all sectors of UK society. Ofcom data shows that audiences with disabilities, those in Scotland and those who are less well off are the least satisfied with the BBC. If people are not properly represented, they will be even less inclined to pay the licence fee when alternatives are available. We were clear that the legitimacy of public funding, and the BBC itself, can be maintained only by doing a better job of representing the full range of perspectives and communities that make up the UK.
Since our report was published, evidence of the urgency of these issues has continued to mount. Ofcom’s most recent report on UK media consumption showed that UK broadcasters continue to lose viewing share to streamers such as Netflix, despite the improved performance of on-demand services such as BBC iPlayer.
In its annual report on the BBC published at the end of November, Ofcom found that the BBC needs to do more to reach and resonate with audiences on lower incomes, although—as was noted in a different debate yesterday—the BBC’s promise in response to provide more lighter drama and other genres, together with factual entertainment competitions, perhaps illustrates a lack of understanding of why some audiences have turned away.
To address all these challenges, the BBC needs a new, bold and ambitious strategic vision that sets out its role and answers the question of why it exists, as well as how it will deliver distinctive value in a rapidly changing world. Pleasingly, the BBC has signalled a desire to be more open and front-footed. The chairman, Richard Sharp, told us that the BBC board is currently overseeing a detailed strategy review of the corporation, and Tim Davie’s substantial speech to the Royal Television Society earlier this month was a welcome step forward in addressing some of the points raised in our report. He acknowledged that the BBC needs to articulate a clear, market-leading role for itself in the digital age, and that tough choices are needed to secure its future.
This is a good start, but it remains unclear what the BBC wants to be, beyond being a significant player in this global media world; it needs to offer greater clarity and avoid attempting to be all things to all people. Mr Davie said that the BBC needs to differentiate itself. That recognition too is welcome, but we need to see more detail on what this means in practice—what the BBC will do more of, what it will continue to do and what it will stop doing. For that to be meaningful and give us confidence, we need clarity on the strategic purpose driving the plan.
Previous attempts to map out distinctive territory have not always been convincing. Talking about high-quality, unique content is confusing because some of what makes the BBC unique is not necessarily high quality, and what it does that is high quality is not always unique. That is a problem because, if the uniqueness is the way the BBC is funded, what is left of its distinctiveness once the licence fee diminishes in importance or disappears altogether?
That is not an argument to keep defending the licence fee as the BBC’s primary source of income, or defining the BBC’s output as a way to justify the licence fee. What it demonstrates is the danger of that approach in a world where more people question the licence fee because they can get what they want elsewhere.
Like it or not, the BBC must be more open to discussion about alternative options than it has been in the past. Our report explored a variety of models, ranging from full commercialisation through to full state dependency. We did not set out to recommend any individual funding model, although our evidence was clear that some would not work. Advertising, for example, is highly unlikely to be viable, leading to a multi-billion pound reduction in the BBC’s income and damaging other public service broadcasters; a pure subscription model would generate insufficient income while facing major technical challenges and creating barriers to access; and funding the BBC by government grant would risk eroding the BBC’s editorial independence.
We were clear, however, that a BBC designed to benefit the nation would require some form of public funding, and there are viable alternatives that deserve serious consideration. For example: a hybrid subscription model—either domestic or international—which you might describe as a “top-up” approach, where some features are available for an additional fee; a hypothecated tax; progressive reform of the licence fee itself; or a progressively applied household levy.
For the BBC to be serious about safeguarding its future, it needs to be a lot more open about ambitious new proposals for its funding model. I was pleased to see that the Government welcomed our analysis, and the new Secretary of State’s recent commitment to launching the independent review of the licence fee is most welcome. We were clear that an independent, evidence-based process to take this work further is what is required.
I am concerned, however, that the review has not yet been launched. It was originally due last summer but, only last week, the Secretary of State seemed no closer to announcing further details on its timing or terms of reference. It would be very good news if my noble friend the Minister were able to say today when this independent review will start.
This matters because any possible changes will take time. Decisions about the BBC’s future funding cannot be left to the last minute in charter discussions. Parliament and the public must be given adequate time to engage and must be provided with information about the implications of change. If delays continue, we risk losing the opportunity for the BBC and the Government to consider a broad range of models.
I acknowledge the Government’s position that there will be public and parliamentary consultation as part of the BBC charter review, but the committee remains concerned that more extensive engagement is required for an issue of such importance. We heard from members of the public during our inquiry that their voices were not being represented in this debate. Decisions on the BBC’s role and future must be taken more transparently than has previously been the case.
Securing the BBC’s future will also involve action on the regulatory front. It is vital in a fast-changing media world that the BBC has the flexibility to adapt, and that is why we called for a more nimble regulatory framework; but, at the same time, this must also be balanced with transparency and engagement with stakeholders from the commercial media sector.
I have written to Ofcom to emphasise the importance of ensuring that more flexibility does not lead to the BBC crowding out domestic competitors from the market. It will also be interesting to see what changes to the BBC’s internal governance are recommended as a result of the current mid-charter review.
The Communications and Digital Committee has been glad to see both the BBC and the Government signal in response to our report that they are committed to a proactive, constructive discussion on future funding. This will only get more important in the years ahead. We want to see in the decades to come a strong BBC that thrives and delivers value for all audiences across the UK and the world, but achieving that vision will involve tough decisions and bold action.
Now is the time for the BBC to step up and lead this debate, rather than wait for others to decide its fate. It is also time for all of us as parliamentarians to encourage the BBC and demand that it be bold in responding to the challenges that we have set out in our report. There is so much to gain if it does so. I beg to move.
Baroness Rebuck (Lab)
My Lords, I am delighted to contribute to this debate as a member of the Communications and Digital Committee and humbled to speak after our esteemed chair, the noble Baroness, Lady Stowell of Beeston. Please note my interests in the creative industries as detailed in the register. During this inquiry, each member brought a strong set of opinions to the table against which to assess the evidence, and it took expert navigation by our excellent chair to reach the agreed conclusions.
The British public know what the licence fee is. They understand its purpose and, mostly, they pay it. The evasion rate compares well with other European countries. Netflix CEO Reed Hastings has talked of the BBC’s role in shaping global broadcasting and said that the iPlayer blazed the trail long before Netflix and on-demand viewing.
In Salford, our committee heard how BBC engineers assess and develop technological advances, from the use of blockchain to immersive TV and AI-controlled cameras. Professor Mariana Mazzucato argued to us that by being at the forefront of technology, with stability as a national and values-driven broadcaster, the BBC has market-shaping power that de-risks and opens up the media innovation chain.
The BBC shapes the demand for content too—for example, in its championing of women’s football, culminating in 17 million viewers of the Women’s Euro final. The BBC is also, impressively, the largest single investor in UK content, while our vibrant publishing industry, which is where I spent my professional career, owes much to its existence. The BBC has many wide-ranging economic impacts. A PwC study showed that, if the BBC increased its footprint by 15% in a region, it doubled that area’s creative growth.
Our committee heard criticism of the BBC too—for instance, that its news coverage can reflect a metropolitan perspective, not the views of the whole country. However, historically all Governments have criticised BBC news coverage if it did not conform to their agendas, and that should never threaten the BBC’s very existence.
We also heard that pay TV and streamers were better at reflecting our ethnically diverse society. The BBC takes that issue seriously, but there is still much to do. Many teenagers are switching off the BBC; we spoke to many of them in Salford, and they said they watched the BBC as children and for school revision but now turned to TikTok and YouTube. Ofcom research backs that up, and few longitudinal studies exist to predict whether this generation will eventually return.
Grappling with the loss of income from the licence fee freeze, the BBC has increased its commercial target by 30% for the next five years to £1.5 billion, and is investing its new £750 million borrowing capacity for greater returns. However, according to the National Audit Office, the BBC’s commercial activities do not yet contribute significantly to overall income.
We heard evidence for an online-only BBC, a second digital revolution, but there was doubt from some of our witnesses that the UK would achieve full-fibre rollout by 2030—the Minister may want to comment on that— while Enders Analysis highlighted the 8 million adults in the UK who prefer to stick to linear free-to-air TV.
As we have heard, Tim Davie said in a recent speech that the BBC wanted to shape a digital-only future, but there is no detail yet for that vision. As this week’s NAO report suggests, the legislative environment needs to become more agile to keep pace with technological change. For example, the decision to allow programmes to be available for longer on the iPlayer took over a year to agree, while the question of how PSB content is displayed on other platforms is yet to be resolved. When we were in Salford, we saw a range of television sets and, frankly, you would have to be an archaeologist to find the BBC. The BBC’s metadata gathering and usage could also be improved, which could be an opportunity for the BBC to lead on the ethical but effective use of data.
That takes me to the core of our report: funding models. The European Broadcasting Union, impressed by the BBC’s audience, quality, impact and brand, argued that if a country has a reasonable licence fee and avoidance is low then that is the easiest and most transparent way of funding a national broadcaster—yet it is not a progressive model. The question is, as the chair has said: how urgent is change in the context of falling linear viewing, increased digital competition and higher costs?
In our report, we focused on exploring a council tax or progressive household levy that took account of people’s ability to pay. We noted that a ring-fenced income-tax solution would adversely affect low-earning shared households and that a telecommunications levy might make internet connectivity more expensive for many. Pure advertising or full subscription alone, as we have heard, would not fund the current BBC, but we heard evidence supporting a hybrid subscription model. To my mind, though, the pure public service part of the two-tier system seems to come too close to the market-failure model that we unanimously rejected, so more work needs to be done.
We must encourage the BBC to work imaginatively on a more detailed vision for the digital age with preferred costed funding options while it turbocharges commercial revenues, mindful of its other role: to provide underserved services. That work is critical, because my time on this committee reaffirmed to me the crucial role of that the BBC plays in supporting our shared national identity, creativity and economic growth.
From the Government, we must ask the Minister to reassure us that any decision on future funding models will be decided with the BBC and that independent market studies will be commissioned, made available and consulted upon thoroughly with Parliament and, eventually, with the public.
Lord Hall of Birkenhead (CB)
My Lords, in my view, the most important thing about the report that we are discussing today is that it casts light forensically to inform the debate about the big question of how to fund the BBC. The committee took a large amount of evidence from a broad range of opinion, both in this country and, as has been mentioned, importantly, from across Europe. The result is a careful analysis of the options laid out in a way that I have never seen before—the pluses and minuses of every conceivable way of funding the BBC.
Rightly, advertising looks difficult, and so too does a model based wholly on subscription. That is because it would not deliver on the important principle of universality—in other words, that broadcasting should deliver good things that everyone should have access to equally. That principle is as important now as it ever was, in my view, and defining what it means now and for the future is going to be important. What I drew from this work is that the key objective from now until 2027 should be to find a way to pay that is fairer. Poorer people should pay less and the better-off more, which to my mind points to a reformed licence fee of some sort or some form of household levy.
The point that I really want to make is this: the report laid out options clearly for how to fund the BBC but, in my view, the question of how to fund it and at what level should follow a debate at scale about what we want from the BBC in its second century. The last time the charter was renewed, when I was director-general, the BBC had the financial settlement imposed before discussions took place about its role. Today there is time to get that right and engage the people who pay for the BBC, the licence fee payers, and important stakeholders in a way that makes sense to them. What do they want from the BBC?
Where should that debate begin? There are three big areas to look at. It has to begin with the BBC’s role in news and journalism, which is central to what it does. We all know that news is the bedrock of any democracy. The threats to that are clear now that people can get news from anyone, anywhere and any place; bad news and fake news travel faster than the truth. Every person, rich or poor, wherever they live and whatever age they are, should have somewhere in the noise and mayhem of the world where they go to find out what is actually happening. That is what the BBC is there to do, in my view, and the pandemic underscored those arguments.
The public debate needs to examine the BBC as both local and global. No other organisation in the UK or around the world can offer this. In my time, I saw how important local radio was as part of what the BBC offers, both in representing and celebrating communities. This is increasingly an area where the market fails us. That is why, for example, the local democracy reporting service established a few years ago is so important. As noble Lords probably know, the BBC pays for 165 journalists who cover local news for any outlet. About 1,000 individual news outlets have signed up. They have so far syndicated nearly 250,000 stories. That sort of scheme needs to go forward.
Then there is the global: do we want, as a society and country, to build on this? In the past months we have seen brilliant reporting from the Persian service, for example, and from Ukraine. The ability of the BBC to bring this all together to us depends upon its reach worldwide. The global numbers are big: 492 million people each week, of which the largest share is to the World Service. This increased by 42% between 2016 and 2020, which was in no small measure due to the increased funding won from George Osborne when he was Chancellor of the Exchequer. The evidence is there, and the BBC could do so much more for our soft power around the world.
Away from the journalism, there is another question about the important role the BBC plays for us all— that is, culture. By funding and making programmes by us, about us and for us, it helps define who we are and what we stand for. In the last 12 months, public service broadcasters as a whole provided approximately 35,000 hours of original content, whereas Netflix and Amazon Prime combined provided only 831 hours. That is why the role of the BBC matters. This applies to drama, comedy, music, sport and, if we think back, to the many days of national mourning and commemoration for Queen Elizabeth. Programmes and services that reflect who we are, give expression to our lives and bring us together in joy or in sorrow are an essential and necessary part of our culture going forward—and should be available equally to all.
Of course, the BBC’s cultural role in all of this extends to education. This can often be in the mainstream schedules. “Blue Planet II”, for example, showed how powerful scenes of plastics in the oceans led to a change in people’s behaviours by reducing the use of single-use plastics. This educative role could also be more specifically targeted. In the first weeks of Covid, for example, the BBC stepped up to the plate. Two-thirds of primary school pupils and 77% of secondary school pupils used the resources of Bitesize during the Covid crisis. The fact that this all could be turned on at such speed again shows the value of a media organisation of scale that has education as one of its primary purposes. This should be debated.
The third area we need to look at is the BBC’s role in the future growth of the UK. As we know, the screen industries represent an area of real global competitive strength. At the heart of that is the BBC, and its impact has been real. A brilliant example of that is Cardiff. Since the BBC opened its studios in Roath Lock, the creative sector has grown by over 50%. It is good that the BBC is building on this to ensure that it does more in the nations and regions, and it is aiming to deliver even more than it does now.
Equally, it should be backing people with ideas, continually looking for the talent of the future and developing its role as a trainer for the sector in technical skills through apprenticeships and so on. So many people who have gone on to successful careers point to the BBC as the place it all began—think of Phoebe Waller-Bridge or even Ed Sheeran. For the success of the creative industries, and therefore of us all, the BBC’s role in the future is vital and that should be amplified and debated. We are going to want a BBC for information, for our culture and for our creative industries. The BBC is a part of our national infrastructure, but we need a debate—starting now. We need to discuss and define what we want from the BBC, discuss how it is best delivered and then work out how we fund it in a way that allows it to carry out our needs properly.
Finally, I have a word of caution. The BBC is right to plan for a future where everything is delivered online, quite possibly through a single app. I am sure this is going to happen, and it is exciting. However, we have also got to remember that there are still 8 million people—mostly people who are poorer, live alone, have a disability or are old—who rely on television as it comes now through Freeview. In this debate, their voice matters too.
Lord Vaizey of Didcot (Con)
My Lords, it is a privilege to take part in this debate and to be a member of the Communications and Digital Committee, which is so brilliantly chaired by my noble friend Lady Stowell. I sometimes have to pinch myself as I look around the room and see a committee made up of a top publisher, a top BBC executive, a top telecoms executive, a top Lib Dem, a top artist and a rock and roll Methodist minister. I declare my interest as a presenter on Times Radio, a superb competitor of the BBC which is eating the BBC’s lunch—at least as far as talk radio is concerned.
I have come not to denigrate the BBC but to praise it with heartfelt love. We are so lucky to have the BBC in this country. Yesterday I talked about our arts ecosystem and how lucky and privileged we are to have that. We are lucky as a country to have such a high-quality state-funded broadcaster that is completely independent of government and continues to raise the bar. We should never forget that.
I am delighted that my speech is almost identical to that of the noble Lord, Lord Hall, because that must mean I am on the right track. There are three reasons why we need to continue to support the BBC. The first, as the noble Lord has already articulated, is trust. In an internet-fragmented world of disinformation, we need more than ever a trusted brand that means that, when we turn on the news, we know we are getting as close to the truth as possible. Secondly, we need the BBC for quality. Reed Hastings, as the noble Baroness, Lady Rebuck, noted, has pointed out how the BBC continues to innovate and raise the bar for all commercial broadcasters in this country. Thirdly, and most importantly, the media is so important to our society that it is vital we hold on to home-grown media. While we have a plethora of media choices as consumers, the vast majority are owned in the United States. It is really important that we have, as an anchor tenant, a British media company.
It is true that we have a rich ecosystem and maybe, as an intellectual exercise, you would struggle to suggest that we should create a state-funded broadcaster today. The fact is that the BBC exists, and it is a vital part of that ecosystem. If it was removed, we would be so much poorer. It is very depressing to me that, in the 100th anniversary year of the BBC, there was barely any celebration. Even the BBC’s own celebrations were muted, but as one might perhaps expect in the political climate of today, politicians were few and far between in coming forward to celebrate this extraordinary institution.
The BBC is not above criticism. I also play the parlour game we all play in thinking about the BBC’s reach. I have already pointed out that I am a Times Radio presenter, but even before then I questioned—and I continue to question—whether Radio 1, Radio 2 and 6 Music is perhaps overegging the pudding in terms of popular music and what commercial radio can provide. I remember for many years having the Guardian complain to me about the reach of the BBC online. There are lots of British newspapers that have the opportunity of a global reach, but which find when they open in new markets that they have to compete against the BBC.
I raised in our committee whether the BBC was right to go so heavily into podcasts, which is an emerging market that could perhaps be catered for better by the private sector. These debates are very nuanced, and it is quite right that the BBC does not want to leave itself out of emerging markets where audiences are going. This speaks to a fundamental point: it really is not for politicians to start telling the BBC what it can and cannot do. Those are commercial and broadcasting judgments for the BBC. It is important for us all to avoid what I call the “Strictly” debate, whereby we quickly descend into deciding which programmes we like or do not like and extrapolate from that BBC policy.
However—again I am echoing what the noble Lord, Lord Hall, was saying much more subtly—the decision to cut back on local radio seems utterly nonsensical. It commands huge political support, but it is a vital community service. When I was an MP during the floods in 2008, I described BBC Radio Oxford as the fourth emergency service; it was a vital source of information for local people.
Huge challenges are facing the BBC, including the move to digital—as the noble Baroness, Lady Stowell, pointed out, Tim Davie made an important speech about how the BBC is going to face that challenge—and addressing the ongoing debate about how impartial it is. I have great confidence in the leadership of Richard Sharp as chair and Tim Davie as director-general. It is right and proper that they address those issues. Some people feel that they are selling the past by daring to talk about the BBC’s impartiality, but it is a live political debate, and silence from the BBC’s leadership would be a denigration of their duty. Having said that, I have some concerns about how Ofcom is leaning into the BBC. When Ofcom took over regulation of the BBC, I hoped that there would be cool, objective analysis of the services that it provides, but I sometimes worry that it has too much of a political slant.
Our in-depth inquiry into how the BBC is funded came up with a lot of arguments with which we are all familiar, and it came to conclusions which I think most of us can support: first, that we need a state-funded, taxpayer-funded broadcaster; secondly, that, rather like democracy, the licence fee appears often to be the least worst option but has its flaws; and, thirdly, that finding an alternative will be incredibly difficult. If we are to search for an alternative, something like a household levy which introduces an element of progressive taxation into the licence fee may be the way forward. The underlying conclusion of the report chimes with what I have thought for many years, which is that we need constantly to question whether the licence fee is the right solution to fund the BBC, but that to pretend that there is an easy answer and an easy alternative is a fool’s errand.
Lord Liddle (Lab)
My Lords, after the speeches of great quality that we have heard, I feel somewhat humbled in speaking in this debate. My connection with the BBC is that I was married to it for quite a lot of my life. Therefore, my knowledge is based on outbursts at the breakfast table and some discussions of the huge amount of paperwork that my wife, Caroline, had to get through every evening and at weekends.
I congratulate the noble Baroness, Lady Stowell, on the fair, balanced and well-argued way in which she introduced the debate; it is typical of her, and the report has made an excellent contribution. I want to throw in one idea about the future funding of the BBC and then to talk about the arguments around what we neglect when we concentrate on the core, and how we protect the important bits that we may be losing.
First, on funding, one idea that the report does not mention is the kind of arrangement that we have for overseas aid, whereby a percentage of GDP is automatically devoted to that purpose. I realise that, in the case of overseas aid, the percentage was cut from 0.7% to 0.5%, and we cannot always rule out government intervening in extreme circumstances. But paying a fixed percentage of GDP out of progressive taxation to fund the BBC would be worth thinking about. The worry about the licence fee, which may be the least worst option in some respects, is if politicians like us do not have the guts to argue for putting it up, then the BBC would just be eroded over time. All the arguments about it being a poll tax come up. We have to find an alternative because, if we simply stick with the licence fee, I fear that the BBC will decline over a long period.
Secondly, the financial pressures on the BBC in the past 10 years have been severe and led to the resources available to it being cut back in real terms. Not many organisations have faced similar pressures—I suppose that local government, which I am involved in, would be one. There is a worry that we are losing things that are very important. I worry about what is happening in the World Service; we had a debate about it—I cannot remember whether it was last week or the week before. Some 350 journalists are going; that is a serious cutback in the global capacity of the BBC. By trying to focus resources on the core, are we losing the World Service?
I have even bigger worries about local radio. I was glad that the noble Lord, Lord Hall, made a strong defence of it—I have an interest in it, in that I go on Radio Cumbria an awful lot to talk about politics. Local radio plays a vital role in the community. The noble Lord, Lord Vaizey, mentioned its role during the floods in Oxfordshire. Certainly, in relation to the floods in Carlisle, 15 or more years ago, local radio was fundamental. I recently received an email from the people at Radio Cumbria, who say that the number of journalists’ jobs has been cut back from, I think, six to two. The amount of strictly local coverage is being drastically cut. That is a serious loss. On my side of the House, we are supposed to be committed, as a future Government, to radical devolution in England. If we are serious about shifting political power outside Westminster, we have to have a vital democratic debate to go along with it. Scotland has its own arrangements, which are well protected, but I fear for the future of local radio in England and the vital contribution it makes to local democratic debate. It is particularly important given the decline of local newspapers.
We need to think radically about a new funding model—so I am all in favour of that aspect of the report. But with all this emphasis on the core, we have to be careful that we do not lose both the global reach of the BBC and its local impact.
Lord Berkeley of Knighton (CB)
My Lords, I must declare an interest, having suddenly realised on the way here that I have been broadcasting on the BBC since the early 1970s. I say this with some embarrassment, as well as pride. I am not approaching Sir David Attenborough yet, but the word veteran seems to focus.
Mentioning Sir David Attenborough leads me to say that he is a great advocate of the innovative, the educational and the entertaining. When he was controller of BBC2, he was insistent on those qualities and on the commissioning of new work. We should listen to people like him. How fortunate we are that we still look at and listen to Sir David Attenborough, because he presents us with the kinds of things that the BBC initiated, such as programmes on nature, which have had such an extraordinary effect.
I am really thrilled that the report has come out. I congratulate the noble Baroness, Lady Stowell, and her Select Committee. As my noble friend Lord Hall mentioned, it offers precisely the kind of scrutiny we must give that vital subject—the kind of scrutiny we completely failed to give the Arts Council cuts we debated yesterday—because so much is at stake. There is an analogy here. The things at stake for the BBC are exactly the same as those we might have discussed, given the opportunity, about the Arts Council cuts; namely, the preservation of the commissioning of new work and of certain qualities and people who are doing work which is perhaps not universally popular initially but still terribly important.
I speak as a composer who has been commissioned by the BBC, for which I am very grateful, but my comments apply to an enormous number of other people, given the amount of music being commissioned. Just recently, the BBC has done quite a sterling job—perhaps travelling a mile to achieve an inch—in patronising women artists, women composers and people from different ethnic backgrounds; it is all there to be seen in the wonderful festival that is the Proms. When I ran the Cheltenham Music Festival, I was always able to ring up a producer at Radio 3 and say, “We want to put on a concert with works by Elliott Carter and Sir Harrison Birtwistle. To get the artists who can do that work from abroad, it would help enormously if I were able to say that Radio 3 would be interested in broadcasting it.” They would often reply, “That sounds like a fabulous programme; yes, we would like to take it.” That is the way in which the BBC and the creative industries can hold hands to make things happen.
Technology has been mentioned. In many ways, noble Lords would be surprised to hear that the BBC is still using some technology which is about 50 years old. When we do outside broadcasts, we use a handheld mic that football commentators have been using for years. That led me to a very awkward situation. When I was introducing a new piece by John Tavener at the Roundhouse in Chalk Farm—another progressive series that the BBC put on—and telling the audience that it was all about the immaculate conception and the blessed Virgin Mary, I suddenly heard dialogue in my headphones: “Is that you, Bert?” “Yeah, how are you, Fred?” “Well, the wife’s up the spout again.” I suddenly thought: is my discussion about the immaculate conception being broadcast with a conversation between two taxi drivers going on in the background? Of course, the technology was such that I could not stop to ask the outside broadcast van whether they were picking up that conversation like I was. I had to soldier on about the blessed Virgin Mary and the immaculate conception while those two taxi drivers discussed a definitely maculate conception.
I will now discuss the World Service, as, in the past, I travelled in Czechoslovakia while the Russians occupied it and in Russia itself. The Ukraine situation focuses our minds on that subject. I do not think that the man in the street here realises how colossal the soft power of the World Service is or how vital it is to people who are living in a world of oppression and extreme violence to hear what else is going on in the world. As my noble friend Lord Hall said, the bedrock of democracy is news. To be able to share news with the rest of the world is so important. I know that the Government appreciate that soft power and realise that the World Service is important, but we could do more to make our own population realise what they are paying for, because it is such a valuable thing for those who are living under persecution. That is another element that I would very much like to see preserved.
One of the important things about the report is that it does not pull its punches; it is right about many things. When I was on the BBC General Advisory Council—a rather thankless task, in some ways, because the BBC was simply not interested in criticism—I always felt that people were giving lip service by saying, “Oh yes, thank you. Well, we can tick that box; you’ve been here with three bishops, four ex-cons and whoever else, so we have done our job of consultation.” I felt that it did not mean anything. So the BBC must open up in that way and become more open to criticism.
Overall, the report is a launching pad for looking at how to fund the BBC in future. There is no easy way to do that—there is no obvious solution—but we have heard some suggestions which make eminent sense, so I commend the report and congratulate the people who put it together.
Baroness Harding of Winscombe (Con)
My Lords, it is a privilege to take part in the debate, although I fear that I will have no anecdotes to come close to those of the noble Lord, Lord Berkeley. I also congratulate my noble friend Lady Stowell on her excellent introduction and comprehensive summary of the report, and on her outstanding chairing of the Select Committee, on which it has been a privilege to serve.
As my noble friend said, there is a real danger that the subject—the funding of a treasured national institution—will very quickly become polarised and political, and that any challenge to the status quo is seen as an existential threat to the institution itself. We have exactly the same problem in our debates on another beloved institution, the NHS: that suggesting reform can risk being accused of not believing in the principle of the institution. What has been hugely encouraging about the way the Communications and Digital Committee has developed the report, under my noble friend’s excellent leadership, is that we have been able to move away from those kinds of debates and false polarisation.
As the report and today’s debate have so clearly set out, we all fundamentally and passionately believe in the BBC. As many of us said in the recent debate to mark 100 years of the BBC, we all want to see it thrive for another 100 years and beyond; and—not “but”—we are also clear, as the title of the report suggests, that, for the BBC to continue to command the broad support of the population, change is needed. In fact, as the title says, we want to give the BBC licence to change.
The most important reason why the status quo is not an option is precisely because the BBC is so important to our society, democracy and country. As a number of noble Lords have said, technology is driving huge change in society in general, and in our media in particular—some good, and some not so good. Technology connects us directly with people all over the world who share our interests and enables us to access an extraordinary array of content on multiple platforms and devices. However, at the same time, our children and grandchildren face online threats that were inconceivable when we were growing up; the echo chambers of social media are making it harder for people to have civilised debate on our political differences; and the fragmentation of audiences is making it ever harder for a mid-sized media organisation such as the BBC to thrive.
The pandemic and the Ukraine war have brought soaring inflation, and, with that, hardship, uncertainty and fear. That all means that institutions and ways of living that bind our society together are even more important than they were before, so a healthy BBC really matters. It is a public service media organisation that has a mandate of universality to inform, educate and entertain all of us in some way or other, and it brings us all together when it really matters. It helps us to articulate the values we hold dear in our country, acting as national glue in an increasingly fragmented and social media-driven world. However, to do that, the BBC needs to remain genuinely relevant and valued, which means that it needs to change with the times. Change is hard for everyone; the older you get, the harder the change gets. If you are a 100 year-old and much-loved national institution, there is no doubt that change can be quite hard to face into.
I would like to use my speech to highlight three areas that the report draws attention to where the BBC needs to change. The first and most obvious, given the title of the report and its subject matter, is the way in which the BBC is funded. The current funding mechanism is not sustainable. My children’s generation find it baffling that they need a TV licence when they leave home to go to university without a television. If they want to watch anything, they are not watching on a television, as they do not own one, but we expect them to pay something linked to a TV set. It is not surprising that that generation is the least engaged group of BBC viewers. Linking funding to the ownership of a television set will be ever less justifiable—and this matters, because for a BBC to remain relevant to all, the way we pay for it must be relevant and justifiable to all of us. Changing the funding mechanism, as many others have said this morning, is not going to be easy, but not changing sends the BBC down a certain path where gradually it becomes less and less relevant to society.
The report sets out the pros and cons of the various options. It is clear that an advertising model or full-subscription model would not be financially sustainable or consistent with a mandate of universality. Some form of levy will likely be necessary. We are not the first country to face this transition of funding our public service broadcaster based on the TV set and moving towards some form of levy, and there is much to learn from Germany, Switzerland and Scandinavian countries. One of the biggest learnings, as the noble Lord, Lord Hall, highlighted, is that this takes time. If we are going to do this, we need to get started. Even to be in a position to make a decision for the next charter renewal period, we do not have much time left. Can my noble friend the Minister confirm what the timetable is that gets us to a decision point with ample opportunity for full public consultation and debate in time for the next charter renewal?
Secondly, I would like to address how the BBC delivers on its commitment to universality. I know that the BBC reaches 75% of 16 to 34 year-olds each week, but TikTok is ahead of it with 16 to 24 year-olds. We heard directly from young people in Salford and from people of all ages from other communities outside the elite metropolitan bubble we live in here that they do not feel that the BBC fully reflects them and their interests. Just as how we pay for the BBC must reflect modern society, of course the content really needs to too. I appreciate that this is not easy, and cannot mean that the BBC tries to literally be all things to all people. Choices need to be made, and made wisely. But I worry that the BBC leadership finds it hard to admit the scale of this challenge for fear of the debate really being existential. I think the opposite is true: the only thing that could present an existential threat to the BBC is a failure to acknowledge the need to improve and therefore not to listen hard enough to those communities’ needs. The BBC should be more open about the challenges it faces in delivering for all communities and work ever harder to address them.
Thirdly, we need the BBC to lead us in this overall work. It was encouraging, as my noble friend said, to see the recent speech made by the BBC director-general at the television conference and hear that he is aiming to make the BBC a digitally-led public service media company. But one speech does not deliver it, nor does one speech give us sufficient clarity on the BBC’s long term vision and plan to inform, educate and entertain us in the digital era. I know that the director-general is right that no organisation on the planet has delivered a successful digital transformation without investment, but no investment proposal should be approved without a compelling long-term vision and plan. We need the BBC to be brave and to set that out for us. That is hard to do if you think the real debate is about your existence—but it is not, and should not be. It is about how the BBC thrives and continues to play a central role in our society for the next 100 years.
Viscount Chandos (Lab)
My Lords, what do we want from the BBC and how do we pay for it? Your Lordships’ House should be very grateful to the committee for producing this comprehensive review of the BBC’s future funding options, and to its chair, the noble Baroness, Lady Stowell of Beeston, for her powerful introduction to this morning’s debate.
I declare my interests as set out in the register—and, in particular, as I am a director of and shareholder in the Theseus Agency, which has licensed BBC Studios properties, a director of RSMB, which helps to compile the BARB television and RAJAR radio ratings, and a trustee of the Thomson Foundation, which trains journalists and promotes sustainable media development in low-income countries. My oldest son is a screenwriter who has made and is developing television series for the BBC. As the noble Lord, Lord Vaizey, has already broken the advertising-free principle of this House, I recommend “Cheaters” on the BBC iPlayer for noble Lords’ Christmas viewing—though possibly not in front of granny.
What we can reasonably ask the BBC to provide is, of course, inextricably linked to what we are prepared to pay for it. The report approaches this conundrum with a mixture of references to Reithian principles and the more pragmatic starting point of the BBC’s current scale and range of activities. It does not attempt to make the case for a radically reduced BBC nor for that matter for a substantially increased one, and I agree with that approach.
I believe that the right questions are: is the deep institutional value of the BBC being focused in the right areas? What can be expected from spending a budget of around £5 billion per annum? How much more than the existing 25% of that budget can be generated by commercial activities? Is there a better and fairer way in which to raise the 75% that comes currently from the licence fee?
I strongly support the committee’s advocacy and that by other noble Lords this morning that the principle of universality should not be sacrificed for a more limited market failure-based remit. The rich mix of services and content that flow from the universality principle is at the heart of the BBC’s strength and appeal. Popular and specialised and more minority programming feed each other and the audience’s tastes.
The BBC is important not just to the audience but to the whole ecology of the creative industries, as other noble Lords have argued. Just as many of your Lordships argued last week, in our debate on the arts and creative industries, that the subsidised arts were a source of innovation and stimulus for the wider creative industries, so the BBC plays a similarly vital role.
On how to pay for this, I wholeheartedly support most of the report’s conclusions. Advertising funding would change the nature of the BBC’s services and have a potentially huge impact on other public service broadcasters. A move to a pure subscriber model would be likely to decimate the BBC’s revenues for the foreseeable future, as well as undermining the central universality on which the committee and your Lordships’ House as a whole—in the debate so far—are agreed.
Is the licence fee still, as the Peacock committee concluded nearly 40 years ago, the least-worst option? That phrase implies flaws and compromises and, in the 37 years that have elapsed since that report, these have only increased. The huge increase in the effective capacity of the spectrum through digitalisation and the growth of the different uses of television sets—as many young people may use their sets almost exclusively for playing video games—make it ever harder to defend the licence fee status quo. It is hardly surprising that there are arguments for contestable funding, although I welcome the committee’s scepticism about going down that path even in part, let alone centrally.
The regressive nature of the licence fee also drives the need to consider change, and the committee has clearly set out the possible changes, such as a household-based tax or a hypothecated tax on income, which should be considered both by the Government and by the BBC. Any form of public funding, whether the licence fee or a hypothecated tax, or even grant funding from general taxation, which I differ from the committee in not ruling out, can all be seen as a threat to editorial independence, but it is up to every Government to exercise their powers in that respect, properly.
A number of noble Lords have mentioned the World Service, the importance of which I fully support. I very much regret the settlement nearly 10 years ago that removed the Foreign Office funding for the World Service. Although I know how difficult it would be, I believe that this should be reversed.
The final topic I want to cover in my remaining time is the question of a hybrid subscription model, which I think there is more openness to consider than a pure subscription model. This hybrid model could be for both domestic and international viewers. I am sceptical about it for two or three reasons. One is the dividing line in domestic, in terms of what is a premium product or content and what is not. More fundamentally, I think the opportunity was missed, again 10 years ago, when Kangaroo—a project between the BBC and the other public service broadcasters for a single, powerful streaming service—was ruled out by the competition authorities. I do not believe that Reed Hastings of Netflix spends much of his time worrying about the threat from BritBox or ITVX. I believe that the BBC may well find that increasing commercial revenues through the exploitation of individual programming, whether through sales or co-productions, such as the deal struck with Disney+ on “Doctor Who”, is a more productive path to go down.
Baroness Bull (CB)
My Lords, it’s a great privilege to serve on the Communications and Digital Committee and, like many committee members, I start by declaring interests both past and present: I was a BBC governor and I have made and presented programmes on television and radio, where I still pop up from time to time as a contributor. I also join fellow committee members in congratulating the noble Lady, Baroness Stowell, on her skilled chairing and her excellent introduction; and I too note the work of our excellent clerking team.
Being this far down the list means that the debate has already ranged widely across the pages of our report, and I echo many of the points raised, particularly the need for the BBC to better represent and include the full diversity of the UK today. I will use my late billing as licence to focus my remarks more narrowly on the fundamental principle underpinning all our recommendations: that the shape of the future funding model must depend on what the BBC is for and what it provides.
While the Reithian mission to inform, educate and entertain continues to stand the test of time, the 2022 White Paper sets out the Government’s intention to review the PSB purposes and objectives, so that PSBs focus on areas where they are uniquely positioned to deliver and which would make us poorer as a nation—culturally, economically and democratically—if they were not provided. This seems to hint towards a market failure role, often regarded as a purpose of public service broadcasting. While some witnesses to our inquiry argued that this should be the exclusive focus of the BBC, many did not, with one suggesting that this kind of “eat your greens” mandate would see the BBC fail to reach large sections of the public.
I was particularly interested in a contribution on this subject from Professor Mariana Mazzucato, from UCL’s Institute for Innovation and Public Purpose, who has already been mentioned by the noble Baroness, Lady Rebuck. Mazzucato makes a persuasive case for seeing the BBC in terms not of market failure but of market shaping: a more accurate description in her view of the role it plays in leading innovation, setting new standards and taking the risks necessary for new markets, creative ecosystems and supply chains to emerge.
This was beautifully illustrated in a recent article by Bill Thompson, in which he looks back at market-shaping innovations pioneered by the corporation over its first 100 years: the BBC Marconi Type A ribbon microphone, as well as the lip mic mentioned by my noble friend; NICAM stereo recording and transmission; and DVB-T2, the second-generation system that ultimately made Freeview HD possible and, in doing so, freed up broadcast spectrum for mobile phones, giving us the always-connected world that we live in today.
Then there is outside broadcasting, pioneered in 1936 to relay the Coronation of King George VI, or the BBC’s work on broadcasting standards conversion, which allows signals from one type of system to be seen on another. It was this invisible innovation that enabled UK viewers to watch the 1968 Mexico Olympics in colour and to see the 1969 lunar landings as they happened—not just one small step for a man, but a giant leap for international live broadcasting. And who can forget Ceefax; the BBC networking club, a sort of internet forerunner; BBC computers; and the iPlayer?
I mention these innovations not just to enjoy a trip down memory lane, but as a clear example of how BBC innovations have impacted on and beyond the media and broadcasting sectors. They demonstrate not only the BBC’s role in shaping and supporting the creative industries, but the importance of the creative industries to an innovation economy. This impact can be seen in two ways: in the way new technologies generated by creative businesses such as the BBC are adopted by other industrial sectors; and in how creative businesses push producers in other sectors to meet their creative needs by developing new products and services. One immediately accessible example of this is the new underwater filming technologies developed for “Blue Planet II”, which have created ongoing legacy benefits for scientific research.
Alongside these examples of the BBC as inventor, investor, innovator and “de-risker” of new technologies, its market shaping role is also played out through its content creation and its contribution to talent and skills development, both on and off screen, as already mentioned by my noble friend Lord Hall. This is value distributed across multiple domains and, looked at in these terms, “market shaping” seems a far better lens than “market failure” through which it should be considered. However, fully understanding this kind of value, and then translating it into a source of stable and adequate funding, will require new ways of thinking and new approaches to analysis and assessment.
This is what our report calls for: from the BBC, a bold new vision with its market-shaping role featured prominently; and, from government, a commitment that any future funding model and remit incentivises the corporation to strike the right balance between addressing market failure and shaping markets for the benefit of the UK creative industries and the wider economy.
When we think about the BBC, we tend primarily, as the noble Lord, Lord Vaizey, said, to think about content—the programmes we love and hate—and about whether we like the platforms on which that content is currently made available. Reimagining the BBC as a shaper and creator of markets, rather than as a public service broadcaster whose role is to fill in where the market fails, offers an alternative way to view the BBC’s public value and to consider what the BBC is for, what it provides and how it should therefore be funded.
Lord Griffiths of Burry Port (Lab)
My Lords, I add my voice to those who have already articulated a response to this committee report, and I add my voice also in expressing appreciation for the chairing of our committee—some wild and disparate spirits were brought into focus together to achieve some reasonable outcomes, to which many people have now referred.
I am so glad that I have not even caught an echo in any contributor’s speech suggesting anything that would threaten the BBC’s future. It is integral to our national life and it would be like selling the family silver if we were too light-hearted about sacrificing it in some silly way. We need a commitment to the BBC, just as the BBC seeks to find a way of committing itself to enhancing its role as a part of our national ethos.
I have noted from the various contributions some pressure points. First, from the noble Baroness herself, the pressure on the BBC to get some strategic thinking done and get something coherent out for us all to consider, recognising that some progress has been made but that more needs to be made. The noble Lord, Lord Hall, added to that by suggesting that pressure needs to be put on all who might have views about what the BBC might need, so as to channel towards the BBC some expressions of hope and suggestions about content and other ways forward. It is not just the BBC in isolation producing its plan; rather, it is some kind of dialectic with the public at large, and the institutions that are part of the public at large, which can be helpful and symbiotic and can create something that is far richer.
The pressure on the Government has also been expressed. A much-promised review needs to take place. I add my voice to those who have expressed hope that the Minister, when he pops up, is going to have something helpful and hopeful to say that we can feel the debate has led towards. The review needs to happen, and the Government need to do their thinking. They have responded to our report but, on the other hand, more thinking needs to be done and targets need to be set.
While I am on my feet, I pay tribute to the noble Lord, Lord Hall. Paragraph 83, on page 31 of our report, talks about the challenges that face the BBC in the next decade. All the challenges that are listed there, and others, were pretty much on the shoulders of the noble Lord, Lord Hall, while he was running the BBC. Therefore, the changes are not going to happen once the other pressures are resolved and a way forward is traced. In the case of the noble Lord, Lord Hall, he had to respond to them as they were happening, including modifying the way the licence fee would be applied to 75 year-olds, with inflationary levels set for the next however many years until the renewal of the charter. I pay a simple tribute to the noble Lord for actually doing it as best he could, without the advantage of the process we are now involved in. We should bear that in mind.
A final pressure is that on Ofcom to be more nimble—I think that was the word—in looking at regulatory changes that may occur from time to time.
If all those pressures are responded to and produce progress that will equip those renewing the charter in 2027 with the background material and thought-through ideas that would be very useful for that process, then all the better. As the noble Lord, Lord Berkley, said, if the report and other materials can serve their purpose and act as a launching pad, then so much the better.
I am not going to take up my seven minutes; it will be a historic moment for a Welsh Methodist preacher to show that he can curtail. On the other hand, perhaps it would be indicative of a wise man who, knowing that things have already been said, does not give himself the luxury of saying them again. I end with just one word. This morning, I contributed to BBC Radio Wales’s “Breakfast” show; it is a kind of equivalent of “Thought for the Day”, which I did for 17 years for the BBC nationally, until I accepted the Labour Whip and was eliminated from its framework of reference and no longer allowed to do it because, as everybody knows, I would be desperately unbalanced—yet here I am, standing on two feet and perfectly balanced. I say to the noble Lord, Lord Vaizey, that, this morning on the BBC, as I gave a little Christmas meditation. I was no longer the rock Methodist minister; I had changed my genre—it was more soul and gospel.
Lord Lipsey (Lab)
My Lords, may I have the unused time of my noble friend?
Like this House, the BBC licence fee is always going to be abolished in five years’ time. The current Culture Secretary—I congratulate her on her coming baby—was at it again recently, saying that the Government remain committed to changing the completely “outdated” BBC funding model by 2027; five years, yet again. Noble Lords will forgive me if I do not hold my breath waiting. What are the chances of the current Culture Secretary still being Culture Secretary in five years? Look at the history book: there have been four Culture Secretaries since the last general election, with an average term of nine months. This time, of course, there is another likely change coming along: Keir Starmer, according to a bookmaker I consulted this morning, is 5:2 to be Prime Minister in five years—and I do not expect him to reappoint Ms Donelan, even if she survives that long.
Why is the licence fee always up for abolition? As our report points out, it has two defects. First, the same amount is paid by everyone, rich or poor. If we ignore tax, a 23 year-old on the minimum wage would have to work for two full days to pay the licence fee; it would take someone on £1 million a year two minutes. For a legally compulsory levy, that seems unfair. I personally give even greater weight to the second defect, which is that it gives far too much power over the BBC’s income to the Government of the day. In the case of this Conservative Government, they have used this power ruthlessly—because they do not like the BBC much—in the interests of their private sector chums to keep the BBC in check. As Gavyn Davies, a past chair of the BBC and who chaired the Davies committee on which I sat, always says, the Government have kept the BBC on a diet.
The unfortunate thing, as I think our report explores in considerable detail, is that all of the tempting-sounding alternatives to a flat-rate licence fee have their defects. In most cases, these are arguably even more serious than the defects of the licence fee. Advertising is a non-starter: realistic estimates suggest that it would provide only a small proportion of what the BBC needs but, at the same time, would take away a large proportion of what other public service broadcasters need. What about pay-per-view? Many people would then be excluded from programmes they would like. It must be remembered that the marginal cost of supplying a programme once it has been made is zero. The same argument applies to a sort of supercharged BBC extra channel, channels or programmes which you have to pay to see. That would straightforwardly exclude the poor and bring about an end to universality, which is commonly accepted as the key virtue of the BBC. What about linking payments to council tax? The trouble is that successive Governments have failed to update valuations for council tax, so they are in large measure as arbitrary as the licence fee itself. What about hypothecated tax? What chance would the BBC have in the annual spending round against the NHS, education or pensions?
We could, I think, more easily tackle the dictatorship of the Government over BBC funding. Only this week, we learned from the National Audit Office that the BBC’s attempts to go digital are being strangled by a lack of cash. Our report suggests that the Government set up an independent body to advise them on the licence fee. That would at least make the present system of setting the licence fee more rational and less opaque. In an ideal world, I would go further: in my broadcasting utopia the licence fee would be set by an independent, non-partisan body—perhaps one established by royal charter—which would balance the virtues of the BBC with the cost to the licence fee-payer of providing it. Unfortunately, I can have my views and advisers can have their views but, in the end, Ministers are going to decide this. In truth, I do not suppose that Ministers of any colour would give away their power to decide on the BBC’s income. In that case, I think the advisory body proposed by our committee is probably the best we can do, inadequate though it is.
At the end of all our evidence-taking, thinking and drafting, I am afraid it was hard to duck the unpalatable conclusion that the licence fee is both the worst and the best way of funding the BBC, and I am not sure how you square that circle. I finish with one conclusion, which the great majority of our witnesses, and certainly everybody who has spoken today and our committee, would agree with. Yes, the BBC has faults, and it should be open to radical change. For that reason, we recommended that it should publish
“a comprehensive long-term vision that sets out its role, and how it will deliver value and distinctiveness in a rapidly changing world.”
But the BBC, flaws and all, is a great national treasure—one with which our country leads the world. We dabble with the BBC and the licence fee which funds it at our peril.
Lord Addington (LD)
My Lords, when it comes to the end of a debate—especially one like this, where I have not served on the committee—a certain degree of nerves creeps in. One thing has come out in this debate: there seems to be a great deal of good feeling for the BBC, but not for all the BBC, and the bit we do not feel good about changes with every person who speaks. If we take that on board, we discover that there is not one answer to this, unless we are imposing some form of dictatorship. But what do we regard as good about the BBC? Its universality—the fact that there is something for everybody.
Certain bits will annoy certain people. For example, I am sure that every Government wish they could, at the snap of their fingers, get rid of the “Today” programme. Time after time, the Government sit down, do stuff, and stuff goes wrong. Whether it goes wrong by little portions or by great tidal waves, the “Today” programme tells us, the political class listen to it, and then, along with the broadsheets, they set an agenda. If things are going reasonably well, the Government do not care, but when they are going badly or they are being criticised, they care deeply. Just about everybody who has spoken in this debate has been in a party that has been in government. It was a bit of a shock to the Liberal Democrats when they discovered that they were getting their fair share of this. As for political bias, I am afraid that the Conservative Party in some form or another has normally been in power over the last 100 years, so if the BBC is out to get it, it is not very good at it—end of.
Lord Addington (LD)
Let us settle down. How the BBC is funded is the big question. There seems to be a reluctant agreement about the licence fee, but, as I think the noble Baroness, Lady Harding, put it, a bit of rebranding is required. It is known as the TV licence fee, but my daughter does not watch television programmes on a television but on a laptop. It is surprising to discover the different ways to consume things that the licence fee covers—for example, using a mobile phone—so a bit of rebranding is required.
On the idea that we should consider people’s ability to pay the licence fee, it seems quite appealing initially when you look at local taxation levels and banding levels, until you realise what a gin trap they are for anybody who goes anywhere near them, and how they are totally out of date, et cetera—and on and on into the night. The most dominant Prime Minister of my lifetime was brought down—or at least, the process was started—by playing with that. So, we have to get a degree of consensus, at least about what we do not want.
In terms of advertising, the cake is not big enough, and there is also the universality of streaming and subscriptions; these factors are pulling at each other. Some form of paying for the BBC through a licence fee seems to be the only option for the moment, although it probably cannot carry on as it is unless everybody decides that the other things are far too scary and we do not want to do them.
The idea of having a basic, worldwide news provider more tightly controlled by the Government it is primarily criticising is totally unacceptable. If that were to happen, the entire future of the BBC would be called into question. It would become the party in power’s body, not the nation’s. If we lost that, nothing could do the work that the BBC did, and led the other public service broadcasters to do, during lockdown. There is nothing else that gets close to or has the capacity of the BBC. We would have to invent something—a very weird creature—that would take it on. I hope that when we hear from the Minister, he says that the Government are behind the idea of having something that is independent and looks fully at the public service duty.
As for the TV licence, let us just call it a licence and grade it. How would we do that? Well, your Lordships’ answer is going to be as good as mine at the moment. However, making sure that the BBC is not under the control of the political group of the moment is absolutely essential. We must have something with a degree of public reaction—we are probably doing that now, but we can always do it better—and a degree of independence. Without that, you are throwing the baby out with the bathwater. Political advantage should not be a factor here. I think somebody said it is dreadful that the BBC is competing with online news—well, yes, but it could be better and more distinctive. You can go to your particular lobby group, but that is not what the BBC should be. Can we have an idea from the Minister when he responds—and indeed from the noble Baroness, Lady Merron—about what the Government think this institution is going to be? If it is going to be very different, the Government need to justify that.
I have one final point, which was mentioned earlier on. I have championed women’s team games at the BBC, which then led the other public service broadcasters on this, and we now expect to see those games. More than half the population enjoy their triumphs and disasters and buy in to that. The job is not finished yet, but that could not have happened without the lead of the BBC quietly breaking the idea, pushing it forward, and pushing forward the raising of standards of professionalism within those sports. That is something the BBC has done that has affected the lives of just about everybody. We all think that there is too much music we do not listen to, and people who do not like sport will think the same, but if we do not allow the BBC to take that initiative and push something forward, we have lost something very important. I hope the Minister will give me his thinking on how this can be achieved when he comes to reply. I say this to the Government: please, do not get rid of something that is basically good. Allow it to change.
Baroness Merron (Lab)
My Lords, I start by thanking the noble Baroness, Lady Stowell, for her comprehensive introduction to this excellent report, and I congratulate the Communications and Digital Committee on its work. It was a real pleasure and most insightful to hear from so many members of the committee as well as its chair. I say to the Minister, for once, that I welcome the speed with which the Government have responded to the report and scheduled this debate. As he knows, committee reports are not always dealt with so swiftly, so I want to acknowledge the smooth way the process has run on this occasion, and I look forward to many more such occasions.
Like other noble Lords, I start by reiterating our congratulations to the BBC on 100 years of innovation and public service. As my noble friend Lord Griffiths said, the BBC is integral to our national life. This debate, rightly and unsurprisingly, has been marked by much praise and affection for a trusted institution that is particularly important, given the crying need to raise levels of media literacy—something we often discuss in this Chamber—so that people can distinguish between what is true and what is false in order to make up their own minds, with the proper information before them.
The role of the BBC has changed much in recent years. As noble Lords reminded your Lordships’ House today, its professionalism following the passing of Her late Majesty Queen Elizabeth, and the importance of its news output, whether during the Covid pandemic or throughout the war in Ukraine, have made the BBC an absolutely essential pillar of our daily lives. Yet these are uncertain times for the BBC; as the report notes, we are
“in the midst of a rapidly transforming media landscape.”
Furthermore, as my noble friend Lady Rebuck said, there is a great need to keep pace with technological change. Not only are more broadcasters operating but the content that people want and how they access it is changing: Sky TV, for example, is transitioning away from satellite dishes towards smart TVs and streaming boxes, which would have been almost unimaginable just a few short years ago.
The director-general recently announced the BBC’s own plans to go “online-only” over the next decade, and while this will need to be fully worked through in the coming years, those plans suggest that the BBC is far from the dinosaur that some perhaps claim it is. Of course, the organisation is also faced with Ministers who wish to tear up the licence fee system without there being a suitable replacement for it. That is where the report is so helpful.
While successive DCMS Secretaries of State have been unable to identify a workable alternative, this report makes helpful suggestions to be considered, including a universal levy linked to council tax bills, a ring-fenced income tax, or a reformed licence fee with new concessions for low-income households. We are pleased that both the BBC and the Government have responded positively to this report, even if neither is yet in a position to commit to a particular funding system because there is more work to do on that.
As Tim Davie notes in his response to the committee, the priority must be to agree a broad vision for the BBC’s future with the funding question to be answered thereafter, and we agree with him that
“the public must be at the heart of the debate.”
On the matter of vision, I share the views of the noble Baroness, Lady Bull, who talked about the need to shape the BBC in a positive way, not in a way that simply mops up where the market leaves a gap. As my noble friends Lord Chandos and Lord Lipsey said, we need to hold on to the principle of universality, not just for the benefit of the public but because it means that a rich mix is being offered to support the wider economy and the creative industries in particular.
In her letter to the committee, Minister Julia Lopez committed to public consultation on the charter review and new funding models, as well as to publishing an assessment of the market impact of any decision given the knock-on effects that will inevitably arise. From these Benches we welcome those commitments but, as ever, there are several key questions which I know the Minister will want to answer. When will these processes begin, how long will the consultation last, and how will both the BBC and the DCMS encourage people to engage in the process so that we can get to the right place?
Another area that is perhaps not adequately addressed in the Government’s response relates to the future of the world-leading World Service. Paragraph 11 of the Government’s response states that the upcoming review
“will be expected to work closely with the FCDO and ensure that the World Service is given proper consideration.”
However, consideration is not the same as safeguarding and, given recent changes to the World Service, I hope that the Minister can address that in detail.
The noble Lord, Lord Hall, my noble friend Lord Liddle and other noble Lords referred to the importance of local radio, and I absolutely share that view. The noble Lord, Lord Hall, spoke about the fact that local radio celebrates as well as represents communities, and about how it defines who we are and what we stand for and gives expression to our lives. Anybody who has been a constituency Member of Parliament, as I have, will know the importance of local radio in the way that was described. For me, local radio took on a whole different level of importance when it questioned the then Prime Minister Liz Truss. Who could forget that moment when local radio came together to take on such a role and function of national importance?
This report has made an important contribution to ongoing debates around the BBC’s future. We all have a stake in the future of the BBC and, if it is to have the chance of another successful 100 years, we must get decisions right.
The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)
My Lords, this has been a thoughtful and well-informed debate this morning, and I thank all noble Lords who have taken part in it.
The BBC is a great national institution. Over the past 100 years it has touched the lives of practically everyone in the United Kingdom and many people the world over. It makes an important contribution to our culture, our creative economy and to the strength of our democracy. I am therefore grateful to the members of your Lordships’ Communications and Digital Committee for their report on the future funding of the BBC, and in particular to its chairman, my noble friend Lady Stowell of Beeston, for securing today’s debate and for the way she set out the committee’s conclusions. I have an advantage over the noble Lord, Lord Addington, in that I did serve on the committee, albeit very briefly, so I can see from my 10 days with her and with noble Lords who have spoken today how richly she deserves the plaudits they have given her for the way she chairs it.
The committee’s inquiry took evidence from a wide range of prominent figures in the industry, experts and academics, and its thorough report has been helpful in informing the Government’s thinking on the future of the licence fee. Today’s debate has built on many of the findings in its report and highlighted the range of complex issues that will need to be considered as part of the review and as part of the Government’s decision-making on the future of the licence fee.
This debate has also explored many of the benefits and drawbacks of a number of alternative models for funding the corporation. I recognise that many noble Lords may wish to understand the Government’s position on the various alternatives which have been set out, but I should be clear at this stage that I must refrain from putting forward a detailed view on the potential alternatives. The Government are preparing to launch a review of the future funding of the BBC, as noble Lords mentioned, and we should rightly consider the findings of that review and fully assess the evidence before setting out any conclusions. However, today’s debate and the report of your Lordships’ committee are valuable contributions to that ongoing review and to informing the Government’s thinking.
I am afraid that I cannot give noble Lords an early Christmas present by setting out the precise date for the launch of the review but perhaps I can set out a few more details about our approach to it. The Government recognise that decisions over the BBC’s funding model will and should be tied up with the question of what the BBC is for in its second century, as the noble Lord, Lord Hall of Birkenhead, said. We welcome the committee’s recommendations that the BBC should set out its own thinking on the role of the corporation in the future and how the BBC can best adapt to the changing media environment. The review will focus on the BBC’s funding model and will not look at the BBC’s mission and public purposes—that is, its role and remit. Final decisions will be made as part of the charter review, which is where the future role of the BBC will also be decided, and we will certainly want the public and Parliament to be engaged in that process.
As your Lordships’ committee’s report found, there are benefits to the licence fee but its drawbacks are becoming more salient. There are a number of issues at the heart of the debate about the future of the licence fee, and the first point I will address is sustainability. As we set out in our broadcasting White Paper, there are clear challenges on the horizon, posed by rapid changes to the sector, not just for the BBC but for our public service broadcasting system as a whole.
As I outlined in the recent debate we had to mark the centenary of the BBC and explore the future of public service broadcasting, technological advances are moving in tandem with changes to how people watch television. Internet-delivered services are revolutionising how content is distributed and consumed. Some 79% of households with a television set now choose to connect it to the internet. Alongside this, viewers have continued to move away from linear television to on-demand viewing. Two-thirds of households subscribe to video-on-demand services, such as Netflix and Disney+, and YouTube reaches 92% of online adults in the UK.
As noble Lords noted, US-based streamers are increasingly using their significant financial resources to compete very effectively with both our public service and commercial broadcasters. In 2019, the UK’s public service broadcasters were collectively able to spend just under £2.8 billion on new content. At the same time, as my noble friend Lady Stowell said in opening, Netflix alone spent an estimated £11.5 billion on production globally.
The Government have set out a range of proposals to support our public service broadcasters in response to challenges such as these. This includes a new online prominence regime, updates to the listed events regime and expanded powers for Ofcom to regulate larger, TV-like, on-demand providers. We will legislate to introduce these changes when time allows.
On top of these broad reforms, it is vital that we address the specific challenges facing the BBC’s funding model. In this environment, a licence fee linked to watching live television seems increasingly anachronistic. Licence fee uptake is also in decline, with the number of households choosing to hold a television licence falling by around 1.2 million people from a peak of 26 million in 2017-18. If this trend continues, the BBC’s licence fee income will come under increasingly significant pressure unless the licence fee is raised commensurately. The director-general and chairman of the BBC have acknowledged this, with the director-general recently saying that the BBC is open-minded about new funding mechanisms.
The Government agree with the view that has been raised today that the licence fee funding model is unfair. As noble Lords have noted, it is a regressive tax. The current licence fee model also involves enforcement by criminal sanction, which we see as disproportionate in a modern public service broadcasting system, particularly because of the strain, stress and anxiety that this can cause people. These concerns about fairness are highlighted by data that show that around three-quarters of people who are convicted for television licence evasion are women—an issue that has persisted for many years. In addition, we remain concerned about the risk of prosecution for vulnerable older people, although the BBC has confirmed that no enforcement action has been taken against people over the age 75, at this stage.
The future of the BBC is a vital issue for our nation and we remain committed to reviewing its funding model. The Secretary of State was clear in her recent appearance before the Digital, Culture, Media and Sport Select Committee in another place that the BBC is a great national institution, and that the Government need to make sure that its funding is sustainable over the long term. She also set out that she holds fairness and choice to be important issues, and that they will need to be reflected properly as we consider the future of the BBC’s funding. The media landscape has changed, and the appetite for choice—an important factor—has been enhanced.
The Government want to work constructively with the BBC on the review. We see it as a positive opportunity for the corporation to bring about change, without which the BBC will be increasingly constrained in its ability to fulfil its purpose. We will need to work with the BBC to understand how different funding models could affect and support it.
It might be helpful for me to outline how the review fits into the Government’s wider road map for reform of the BBC. The funding model review will be one part of the preparations for the charter review, which is the process whereby any decision on a new funding model, and on the role and remit of the BBC, will be determined. The funding model review will aim to provide the Government with the evidence to approach the charter review with a strong understanding of the options and their potential impacts.
With the support of these findings, the Government will carry out a formal consultation on any changes to the BBC’s funding model as part of the next charter review. This will enable a public debate on the options, ahead of any decision being made. Any final decision on the BBC’s funding model over the next charter period would be made only following this public and parliamentary engagement, as part of the charter review.
A number of noble Lords rightly paid tribute to the work of the BBC World Service. The Government strongly value its work in promoting our values globally through its independent and impartial broadcasting. We recognise the challenging fiscal environment in which the BBC is operating, and that it is having to make tough financial decisions, but the Foreign, Commonwealth and Development Office will continue to provide the BBC World Service with over £94 million annually for the next three years, supporting services in 12 languages and improving key services in Arabic, Russian and English. That is in addition to nearly £470 million that the Foreign, Commonwealth and Development Office has already provided, through the World2020 programme, since 2016. In the current financial year, the Government are also providing the BBC with an additional £4.1 million of emergency funding to support the World Service to continue to deliver services in Ukraine and Russia, which are vital in the current circumstances.
I will touch on the future of the BBC more broadly. Everyone who has spoken today agrees that the BBC has been informing, educating and entertaining us for 100 years, with remarkable effect. We want that to continue for many years to come. As the debate today has highlighted, the future success of the corporation is about much more than just funding. Your Lordships’ committee’s report contained a number of recommendations for the BBC on this theme too, including the need for it to develop a long-term vision for its role and how it will deliver value and distinctiveness in a continually changing world.
We agree with the BBC on the need for the corporation to reform over the coming years and recognise that there will be challenges as it makes this transition. These reforms will involve difficult decisions, as was demonstrated by the concerns raised again today about the BBC’s plans to reduce its local radio output. The Government want to work with the BBC to support it in making this shift, but it must take audiences with it on this journey. We believe that the BBC needs to clarify how it will manage long-term decisions while modernising and becoming more sustainable, while also maintaining its core public service function and output.
The noble Baroness, Lady Rebuck, invited me to say a little about our progress on delivering nationwide gigabit connectivity, which is important to the way that people increasingly consume television. We are investing £5 billion, as part of Project Gigabit, to ensure that hard-to-reach areas of the UK get fast, reliable broadband as swiftly as possible. Gigabit coverage is currently at 72% across the United Kingdom, up from 6% in January 2019—a huge shift in a short period. We have a target for a minimum of 85% gigabit-capable coverage by 2025 and we will seek to accelerate that to as close to 100% as quickly as possible. We have now awarded four Project Gigabit contracts, having recently announced a £108 million contract in Cumbria—the home of the noble Lord, Lord Liddle—and there are a further 11 live procurements running, with more in the pipeline.
Like everyone who has spoken today, the Government want the BBC to succeed. It provides high-quality services to the entire nation and globally. It acts as a key driver to the success of our creative economy and represents the United Kingdom very proudly abroad. As the debate has highlighted, there are challenges with the licence fee funding model, but alternative models also come with their own challenges and trade-offs. I am very grateful to noble Lords, particularly the members of your Lordships’ committee, for their detailed thoughts and contributions to this vital debate. I look forward to that continuing.
Baroness Stowell of Beeston (Con)
My Lords, I am very grateful to everybody who has spoken in the debate. I am also grateful for the constructive welcome that our committee’s report has received. I echo the noble Baroness, Lady Merron, and thank my noble friend the Minister and his department for the swift response to our report. Perhaps through my colleague the Government Whip on the Front Bench I can also offer my thanks to the Government Chief Whip, who is not in her place, for scheduling this debate so swiftly. It is unusual for us to be able to have this time so soon after publication, and I am very grateful.
As I said at the start, examining how the BBC is funded is not, and should not be seen or received as, an attack on the BBC. I was pleased that most, if not all, recognised that some change is needed to the way the BBC is funded, even if that extends only to modification of the licence fee. As the noble Lord, Lord Hall, and my noble friend Lady Harding made clear in their powerful speeches, the issue is not whether the BBC should exist but what its role needs to be in the decades to come. We need clarity on that to inform decisions on how best to fund it.
I will make just a couple of other points. I was pleased that the noble Baronesses, Lady Bull and Lady Rebuck, emphasised the report’s finding that the BBC should be a market shaper, not a market failure model. As our report said, and some of my colleagues have reinforced,
“the status quo is not an option.”
We need to see change from the BBC, but this presents challenges for the BBC.
The noble Baroness, Lady Merron, my noble friend Lord Vaizey, the noble Lords, Lord Hall and Lord Liddle, and some others raised concerns, which I certainly share, at recent announcements from the BBC about local radio. To me, the announcements reinforce the need for that clear, strategic purpose, and how that is driving some of these big decisions, to be known and understood. Until or unless we get that, it is very hard for anybody to evaluate the decisions the BBC makes on its operations without being confident that it is doing so for the right reasons and towards a goal we all recognise and share. Overall, we recognise the value of the BBC today and in the past, but it will have to change to remain relevant in the future.
It was disappointing not to hear from my noble friend the Minister a date for the independent review of the licence fee. I am grateful to him for outlining the process that the Government intend to follow, but we really need to get on with this. As many noble Lords have said today, leaving final decisions until the charter review is leaving things quite late. There needs to be some real progress on this much sooner than that, and I get nervous if that is the time at which these things will happen.
This was a group of cross-party and non-party Peers working together to examine an issue that previously has always been considered to be something political, or anathema to raise without provoking some kind of perception of attack. I am pleased that we have been able to demonstrate the importance of doing so and that our report has received a constructive welcome in your Lordships’ House today.