BBC: Future Funding (Communications and Digital Committee Report)

Viscount Chandos Excerpts

Friday 16th December 2022 Lords Chamber

[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.