BBC: Funding

Debate between John Whittingdale and Julia Lopez

Wednesday 18th December 2024 Westminster Hall

[Sir John Whittingdale (Maldon) (Con)]

I beg to move,

That this House has considered the future funding of the BBC

It is a real pleasure to serve under your chairmanship, Mr Mundell, and to debate a subject that I seem to have spent a large part of my parliamentary career discussing, but which has become extremely appropriate to examine once again today. The Minister, who I have spent a lot of time debating over the last few years, last night replied to an Adjournment debate touching on the overall process under which the BBC charter will be renewed, but as she said last night—and she is completely right—the funding of the BBC is a central part of the charter renewal process, and what the BBC does will to some extent be affected by the money available to it and vice versa. I do think it is right that we look at the matter.

I had responsibility less than 10 years ago for drawing up the charter under which the BBC currently operates. That was in 2015-16—only seven or eight years ago—but the changes that have taken place in the broadcasting landscape since are huge and continue to accelerate. At the time of the last charter, streaming did exist, but it was only a couple of years after Netflix had launched in this country, and there were still only one or two other streamers available. Since then, we have seen an explosion, with an enormous number of different streaming platforms that are investing heavily in extremely good content. Most people now enjoy streamed services as well as traditional broadcast, and subscribe, quite often, to several streamers.

Despite the huge range of content that is now available, in my view—and I think the Government take the same view—public service broadcasting is still absolutely necessary, particularly in the core public service content areas of news and current affairs, which are not really provided by the streaming services. I continue to believe that there is a very important role for the BBC in this country’s broadcasting landscape, but my concern is that the traditional method by which the BBC is funded—through the licence fee—is going to become steadily harder to sustain.

Even seven or eight years ago, we saw the beginning of the challenges. At that time, at the request of the BBC, we closed the iPlayer loophole, by which people were viewing BBC content on the iPlayer but not paying the licence fee. We said then, and it remains the case now, that if people watch live television in any form and if they use the iPlayer, they are required to have a TV licence. Other drivers have increased revenue for the BBC over the years, like the growth of single-parent households and immigration levels, meaning that more licences have been issued—but that trend has now reversed, despite the closing of the loophole; each year, fewer people are buying a television licence. In the course of the last year, the number of licences held has fallen by 500,000, and that movement is likely to continue.

If we look at the public’s viewing behaviour, we find that less and less traditional broadcast television is being watched, particularly by young people. Most 16 to 24-year-olds now do not watch any live broadcasts each week—10 years ago, 80% did—and broadcast channels take up only 57% of all viewing, against TikTok, YouTube and all the other streaming services. People are genuinely saying, “We choose to subscribe and pay for Netflix, Amazon, Discovery, Apple and all the other streamers. We don’t see why, on top of that, we should have to pay for a TV licence when we don’t watch the BBC.”

The TV licence does not just cover the BBC; it covers all live television viewing. Nevertheless, a lot of people can watch on catch-up the programmes that are available on the other public service channels. Genuinely, people are not required under the law to have a TV licence, and more and more are choosing not to have one. That will pose an increasing problem for the BBC.

We have seen complaints from the BBC about the fact that the revenue available to it has been cut in recent years—like every other public service, it has been required to find efficiencies—but the director general has talked about the crisis that has been created by the lack of money and his inability to invest to compete. That situation is not likely to get any better if we continue with the licence fee; if anything, it will become steadily worse.

I remember chairing a Select Committee—I think it was about 15 years ago—that looked at the funding of the BBC and the licence fee. At the time, we concluded that although the licence fee had many drawbacks, it was still probably the best available option. It is a regressive tax, it is criminally enforced and it is the case that among the people convicted of failing to pay, a large proportion are women. Those are all drawbacks of the licence fee, but at that time the alternatives did not seem possible. Certainly, advertising is not likely to be beneficial to the BBC or to the whole commercial television sector; there is not that much advertising revenue to go round, and if there were advertising on the BBC, it would result in a reduction for everybody else.

There is an alternative option. A lot of people have said, “Why can’t the BBC charge a subscription, so people can choose whether or not to pay it?” The reason is simple. At the moment, most people still access the BBC and other traditional broadcasters through digital terrestrial television, or Freeview, and there is no mechanism for conditional access—in other words, the choice to receive a particular channel—with Freeview. At the launch of Freeview, the BBC was very keen that that should be the case, because it was worried about subscription, but it means that while a significant proportion of the population continue to rely on Freeview, we cannot move to subscription. But that will change.

Both the last Government and this Government have said that Freeview will be maintained until 2034; it may well be that we need to maintain it for a bit longer. However, the transition to IPTV or internet protocol television—the provision of television over the internet—will steadily increase, and if people have smart TVs, which allow them to choose whether to subscribe to the streamers, it means they could also have the choice of whether to subscribe to the BBC. I think that that option is likely to become more attractive, although it will only really become viable when we reach the point where almost the entire population have IPTV, but for the reasons I have set out, it is important that we start to talk about it now.

The last Government had future funding of the BBC panel, which this Government have not continued. On the other hand, I know that the Minister has set up a future of TV distribution panel, which does not look vastly different. Anyway, I am glad that the Government continue to look at the issue, which is why I think this is the right time to have this debate.

There are certain things that will never be possible to have on a subscription basis, including BBC Radio—I do not think there is any way in which there can be conditional access on radio—and the World Service. I sit on the Foreign Affairs Committee and we are currently examining the World Service, which is of huge benefit to this country. It could not be provided on a subscription basis, as the people it is aimed at are certainly not in a position to pay. The World Service also makes a very valuable contribution to the reputation of the UK and to our soft power, and the BBC has said that it should be funded by the Foreign Office and not by the licence fee. That argument is quite attractive, although I recognise that it would be a big challenge for the Government to take on. The Minister gave evidence on the subject yesterday and it remains an issue that we will want to debate.

With radio, it would be possible to extend advertising, but, as with any advertising on BBC TV, doing so would damage commercial radio. I am also slightly worried about the extent to which advertising is creeping in at the margin, with the BBC allowing advertising through podcast, which is increasingly the way in which people are accessing audio content.

[Julia Lopez (Hornchurch and Upminster) (Con)]

My right hon. Friend will recognise, as I do, that one big challenge in relation to the BBC is that many of those who are most opposed to its further commercialisation are the other public service broadcasters, who worry about disruption to their own revenue streams, particularly in relation to advertising. That is why it is tricky to come up with an alternative to the licence fee.

[Sir John Whittingdale]

My hon. Friend is completely right. She and I both had the pleasure of serving as Minister; I was delighted to stand in for her while she was on maternity leave, so we have both looked at the issue for some time. We have to look at the overall television landscape. If we allow advertising, or encourage the BBC to compete, it is likely to have an impact on the commercial sector, which completely depends on advertising revenue. Our traditional advertising-funded PSBs—ITV, Channel 4, Channel 5—are already finding it difficult competing in a world with well-resourced streamers, and this would make it worse.