BBC: Future Funding (Communications and Digital Committee Report)

Baroness Rebuck Excerpts

Friday 16th December 2022 Lords Chamber

[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.