BBC: Finance and Independence

Lord Lipsey Excerpts

Thursday 10th September 2015 Lords Chamber

[Lord Lipsey (Lab)]

My Lords, the current roaring debate about the BBC is not entirely edifying. However, thanks to my noble friend Lady Bakewell, we have done a great deal better this afternoon in your Lordships’ House. I will focus on funding.

There is no right sum to give the BBC. How much cash it should get depends on two factors: what you want the BBC to do and whether it is using the resources you give it efficiently and well. With this year’s settlement, we move into a new era: what the Davies committee, on which I sat nearly 20 years ago, described as:

“The BBC on a diet”.

We will still have a BBC at the end of the process; it will probably still be a full-service BBC; but its scope will be limited and its market share will decline. That is sad.

For an economist, and I sort of am one, there is much to be said for a broadcasting service that is free at the point of use. This is because of the nature of broadcasting output. Essentially, once you have made your programme, the cost does not increase no matter how many people watch it. In economists’ jargon, the marginal cost is zero. If the good is free, more people watch it, they all get something out of it, and the total value created is greater. Anything that cuts the number of viewers—such as pay-per-view or subscription—cuts the net value to consumers. From that point of view, the licence fee has strengths.

You tamper with the licence fee at your peril. I have read the latest proposal for a household levy rather than the licence fee. I can see that it has obvious advantages, particularly for the BBC, so I am instinctively sympathetic towards it. However, there is a real, if political, difference between an existing fee and a new one. Remember the poll tax. Whatever the logic for it, it was a completely new tax that came out of nowhere and was therefore unacceptable to everyone. The licence fee has an estimable, though low-profile, advantage: it has been around for a long time. People pay it mostly without cavil, from habit. One does not even need to send in the bailiffs, knock down doors or do much generally to collect it. That is something that you put at risk greatly to your peril.

My final point is perhaps utopian beyond feasibility but it is simply this: the politicisation of arguments about the funding of the BBC is unfortunate. More objectivity would help. There should have been an objective assessment before any announcement was made this year. The bully-boy handling of this year’s negotiations by Messrs Osborne and Whittingdale was, frankly, a scandal. I wonder if there is not scope for an independent body, perhaps a standing body, to be charged with advising on how much revenue the BBC should be given. Might there even be an agreement among politicians that they would, save in conditions of national emergency, adhere to the body’s recommendations? I dare say that if your Lordships’ House ruled the country, some such arrangement would be readily agreed, though in the real world in which we live, I am not so naive as to hold my breath waiting.