BBC Funding (CSR)

Graeme Morrice Excerpts

Wednesday 10th November 2010 Commons Chamber

[Ian Murray]

I think the BBC has a lot to learn on those principles. However, I will talk shortly about what the Government have done by not including licence fee payers in the comprehensive spending review and the future of the BBC.

The BBC is a globally respected brand, which is why the House should be concerned for its future, and it has been described as a national treasure, which is why Labour Members will always stand up for it as a friend, although a critical friend. I must state clearly at the outset that the BBC should not be immune from reform or cuts at a time when we are all supposed to be in this together, but that reform process has to be done through negotiation and with respect for what the BBC delivers and the people—its staff—who deliver the service on behalf of us all.

The outcome for the BBC from the CSR has shown contempt for the corporation, and the opportunity has been lost truly to change the organisation in the context of a new digital age, changing and fast-moving markets and, significantly, shrinking budgets across the sector in programme making.

The BBC also has a responsibility to consolidate its own activities within the continual pursuit of excellence alongside an honest examination of the role of both the BBC and, more importantly, public sector broadcasting. The final settlement for the BBC through the comprehensive spending review is yet another example of the Government’s undue haste. We have seen that with the dangerous too-deep, too-soon, too-quick cuts that will harm jobs, harm growth and threaten the already fragile UK economy.

The CSR deal for the BBC was put together in 72 hours. It was a dubious deal, with Ministers embarking on a strategy to intimidate the BBC into accepting whatever came its way. Why? Because the outrageous proposal that the BBC take responsibility for free TV licences for the over-75s hung over it like a guillotine. What would be next? The licence fee paying for the winter fuel allowance, child benefit or perhaps even the Prime Minister’s new personal photographer?

That threat ensured that the BBC would grab the deal given to it through the CSR quickly and with both hands. Let us look at the settlement it was given. It includes a freeze in the licence fee for the remainder of the charter period and the BBC taking on funding for the BBC World Service, BBC Monitoring and the Welsh language channel S4C. In addition, the BBC will be supporting the Secretary of State’s pet project, the new City TV, through a £25 million ring-fenced partnership fund. It will also be given responsibility for delivering broadband services. All in all, there is a £340 million bill alongside a 16% real-terms reduction in licence fee income over the period.

This “delicious” deal, as the Prime Minister described it, was so hastily contrived that it prevented proper consultation and debate with licence payers, stakeholders and, most importantly, BBC staff themselves to the extent that we are left with no real way of knowing the true impact on the BBC. Will it affect the quality of programming? Will it mean the BBC stopping services? Will it mean significant job cuts? Will it damage the independence of the BBC and the BBC World Service? Will the board of S4C take the Government to court, due to it not being consulted about its funding being transferred to the BBC?

Conversely, this rushed deal has also restricted the opportunity to keep the pressure on the BBC to continue on its programme of reform in terms of bureaucracy and excessive executive pay.

[Graeme Morrice (Livingston) (Lab)]

I am grateful to my hon. Friend for giving way. Has he, like me, received many representations from constituents arguing against any freezing of, or indeed cuts in, the licence fee and supporting its retention so that a quality service can continue to be provided by the BBC?

[Ian Murray]

I welcome the intervention from my hon. Friend, who raises an important point. Many Members, I am sure, will have received dozens, if not hundreds, of e-mails, letters and telephone calls from people who are concerned about the BBC, cuts to it and what it delivers. Constituents have raised that point with me on numerous occasions.

To go back to the missed opportunity, the BBC was entering into a new culture of transparency and accountability—a programme that was, on its own measurement, to save £2 billion by 2014. I want to ask the Minister some questions about the future of the BBC. Is this deal on top of the BBC’s current strategy to save £2 billion by 2014? What criteria will be applied to where the cuts will fall? Will there be job losses and a reduction in quality? What impact will the cuts have on the move to the media city in Salford and the programming being transferred to the regions—50% by 2016, I think? Who is now responsible for the roll-out of broadband—the Department for Culture, Media and Sport, the Department for Business, Innovation and Skills or indeed the BBC? What will the future hold for the BBC World Service? What budget protection will the World Service have? Will that critical service have to compete with other parts of the BBC budget in due course?

--- Later in debate ---

[Mr Vaizey]

My hon. Friend makes an interesting point in his forensic intervention, which secured an immediate U-turn from Opposition Members on a licence fee increase. Perhaps he and I should talk later about what further help can be given to the elderly, but I would say that freezing the licence free is substantial recognition of people’s difficulty in paying it.

The Government have put forward a new partnership model between the BBC Trust and S4C as the best way of securing the latter’s future. Under that model, funding for S4C will come from three sources in future: the licence fee, a continued subvention from the Government and commercial income. The BBC will contribute £76.3 million to S4C in 2013-14 and £76 million in 2014-15. The Government will contribute £6.7 million and £7 million respectively. The service will be operated by a joint management board, with a majority of independent directors appointed by the BBC Trust.

I am aware that I am running out of time, but I wish briefly to mention broadband. The current ring-fenced funding for digital switchover of approximately £133 million per annum will be raised to, and capped at, £150 million per annum to fund broadband. It is important to say that the switchover money was never part of the licence fee funding for the BBC, so in effect the £150 million a year broadband money simply continues an arrangement made under the last Government whereby part of the licence fee is used for what could broadly be called “digital switchover”. When one talks about the BBC taking on £344 million of extra liabilities, one is really talking about only £200 million.

[Graeme Morrice]

The point that I was trying to make earlier was that I and other Members have received numerous representations from constituents expressing concern about the freezing of the licence fee for the next four years, because in effect it will mean a real-terms cut. People are concerned about a reduction in the quality of the service. The hon. Member for Harlow (Robert Halfon) made a point about democratisation. What consultation has there been with the licence fee payer about that real-terms cut?

[Mr Vaizey]

As I have said, we felt that there was a meeting of minds between us and the BBC, and that it was best to get on with it rather than detain the BBC for a year in negotiating the licence fee.

We welcome the BBC’s plans to enhance its national DAB coverage, although we remain in discussions with it about its obligations as regards local DAB. I hope that we can take forward developments on local DAB coverage with the BBC and the commercial radio sector.

Outside the formal licence fee agreement, the BBC has also made assurances to the Government about the scale and scope of its future activities in three areas. First, the BBC Trust has assured us that it considers it desirable to dispose substantially of BBC Worldwide’s magazine business. Secondly, the trust recognises the principle that the BBC should not launch services that are more local than its current offerings on radio, the web and television, to give our local newspapers a chance to survive and thrive. Thirdly, it has assured the Government that it will pursue a 25% reduction in the budget of BBC Online, which will please The Guardian. I hope that those assurances from the BBC will be viewed in a positive light by those who have expressed concerns about its income—sorry, impact—on the market. That was a Freudian slip.

I end by reiterating the Government’s full commitment to the BBC’s independence. We regard it as a fantastic organisation and a beacon of excellence in Britain. I thank the hon. Member for Edinburgh South for securing the debate. In my opening remarks, I forgot to thank him especially for one of the reasons he will now remain my favourite Labour MP—during his speech, he promoted me from Under-Secretary to Secretary of State. For that I will always remain grateful.

Question put and agreed to.