Digital Economy Bill

Lord Best Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 8th February 2017 Lords Chamber

Moved by

[Lord Best]

220: After Clause 76, insert the following new Clause—
“Duty of OFCOM to make a recommendation on BBC funding
It shall be the duty of OFCOM to make a recommendation to the Secretary of State regarding appropriate levels of BBC funding in respect of the settlement from 1 April 2022.”

[Lord Best (CB)]

I shall also speak to Amendments 221 and 222 in the names of the noble Lord, Lord Inglewood, the noble Baroness, Lady Bonham-Carter of Yarnbury, and myself. I declare my interest as chairing your Lordships’ Select Committee on Communications, and this amendment encapsulates one of the principal recommendations from that committee’s report on the renewal of the BBC’s charter, Reith not Revolution.

Most of the recommendations in our report, which did not cover matters of governance and management, have been taken forward by the Government in the BBC’s new charter, which the Select Committee appreciated. In particular, the Government accepted our recommendation for an 11-year period for the new charter: this provides stability and security for the BBC, enabling proper forward planning. We were also very pleased with the line taken by the Government, following our subsequent representations, that the mid-term review of the charter would not reopen the debate on the purposes, scale and scope of the BBC, but would concentrate exclusively on reviewing the new governance arrangements for a unitary board and an extended role for Ofcom.

However, one crucial ingredient has remained unresolved, since it was not a matter that had to be settled within the charter itself. This was the issue of how the BBC’s licence fee should be set—ie, what process should be followed when establishing the charge made to all the users of the BBC’s services, now including those delivered online through the internet. Of course, the licence fee represents the vast bulk of the BBC’s income and therefore determines its scale and scope. How that fee is set is obviously of the utmost importance to the future of the BBC. This is a much narrower point than the question of statutory underpinning for the BBC, but it relates to the independence of the BBC. Although the charter will cover a full 11-year period, the next setting of the licence fee, upon which so much depends, is only five years away.

--- Later in debate ---

[Lord Ashton of Hyde]

I understand the point the noble Lord is making; he illustrated it right at the beginning of his speech in the previous debate. This is a matter of principle: whether we think statutory underpinning is the right mechanism for the royal charter for the BBC. I acknowledged to him that in some cases it might be, but I did not agree that it was appropriate for the BBC. I take his point and his due warning about Report. I agree it is relevant to this, but we have established that we have a disagreement on that point of principle. As for binding future Governments, of course we do not want to do that, and, in fact, we cannot.

The next question is that of public consultation on the settlement or the level of the licence fee. As noble Lords will appreciate, funding a public service is not a straightforward topic for public consultation. For example, the recent charter review found that almost 75% of the public consider the BBC’s programming to be of a high quality, but just 20% said that they would like to see the licence fee rise in line with inflation, thus helping the BBC maintain these high standards. Public consultation, therefore, needs to be approached with due sensitivity.

The BBC’s funding needs are a very complicated and technical issue, as we have seen at every licence fee settlement. The judgment about the overall package is a fine one. It should therefore remain for the elected Government to decide how to approach reaching an appropriate level of BBC funding in a detailed and extensive negotiation with the BBC. As I have said, this resulted in a position that the director-general has said is a strong deal for the BBC that gives it financial stability.

Finally, Amendment 223 seeks to remove the ability of the BBC to set age-related licence fee concessions in the future. I have already explained that the licence fee is a tax and it is right that the Government should retain the ability to determine the outline priorities of what it should be spent on. The BBC explicitly sought responsibility for the age-related licence fee concession. Removing the BBC’s ability to determine this policy—for which it will pay—simply prevents the BBC being the master of its own destiny. I believe it is particularly arbitrary to withdraw the BBC’s ability to set this concession without knowledge of what the overall funding package for the BBC will be at that future point. I do not believe that that is in the BBC’s interest, now or in the future. With those explanations I hope that, for the time being, the noble Lord will feel able to withdraw his amendment.

[Lord Best]

My Lords, I am extremely grateful to all noble Lords who have spoken, all of whom spoke in support of a change. I get the very strong impression that the Ofcom route, which is the one proposed in my amendment, would not find so much favour with your Lordships as the creation of a separate new licence fee commission. The independence of that body would be assured. I can see that some regulators do take an interest in the fees and charges made by the bodies that they regulate—it would not be entirely unheard of for Ofcom to have a view. However, I take the point that Ofcom is fully stretched with the duties that it already has. On balance, although everyone who spoke accepts that the current arrangements have been entirely unsatisfactory and that change is needed, the idea of a new body—which does not always find favour—might be the preferable route.

In response to the Minister, there is absolute agreement that the Secretary of State must take the final decision—that is not under dispute. It also should be clear that this should not be confused with the statutory underpinning of the royal charter, which we debated earlier. This is a one-off, separate issue relating to the licence fee. I am glad the Minister accepts that independent advice might be required. However, I think it is possible to bind future Governments, in the sense that putting a process in the Bill would ensure that the transparency that everyone seeks comes to pass and that proper public consultation and parliamentary scrutiny whenever the licence fee is reviewed, which will be five years from now, happens. It might be useful to come back to this later. For the moment, I beg leave to withdraw the amendment.

Amendment 220 withdrawn.

Digital Economy Bill

Lord Best Excerpts

Report: 3rd sitting (Hansard): House of Lords
Wednesday 29th March 2017 Lords Chamber

Moved by

[Lord Best]

32A: After Clause 81, insert the following new Clause—
“BBC Licence Fee Commission
(1) The Secretary of State must, by regulations made by statutory instrument, set up an independent body (“the BBC Licence Fee Commission”).(2) It is to be the duty of the BBC Licence Fee Commission to make a recommendation to the Secretary of State regarding the level of licence fee required to fund the BBC for the purposes set out in the Royal Charter and Agreement in respect of the settlement from 1 April 2022, and for each successive settlement thereafter.”

--- Later in debate ---

[Lord Best (CB)]

My Lords, I shall speak also to Amendments 32B and 32C, which are also in the names of the noble Lords, Lord Inglewood and Lord Stevenson of Balmacara, and the noble Baroness, Lady Bonham-Carter of Yarnbury.

In Committee we discussed several amendments from different parts of the House which all aimed to secure an improved process for setting the BBC licence fee. Those amendments were a response to the universal condemnation of the way the licence fee was settled in 2010 and 2015. The problem has not been simply about the so-called “raids” on the BBC’s revenue to pay for other government priorities such as broadband rollout or free licences for the over-75s. Nor has the problem even been about the decisions reached, such as the seven-year freeze on the licence fee, which is now, thankfully, coming to an end. The problem is more fundamental. It is about the process itself.

This process has been variously described as “clandestine”, “behind locked doors”, “frantic”, “purely political” and “fixed over a weekend”. It gives the Secretary of State the power to impose a funding settlement on the BBC following secret talks and without any external checks and balances. No one believes that this is the best way to come to a considered, evidence-based, sensible decision on the vital question of a licence fee that millions of citizens will pay.

As the Culture, Media and Sport Committee in the other place, then chaired by John Whittingdale, MP, said:

“The 2010 settlement demonstrated that the BBC’s independence can be compromised by negotiations with the government of the day that lack transparency and public consultation”.


Your Lordships’ Select Committee on Communications, which I have the honour to chair, condemned the process in its well-received report for the BBC’s charter review, Reith not Revolution. Our report drew on the earlier work of the CMS Committee in the other place, which had concluded:

“No future licence fee negotiation must be conducted in the way of the 2010 settlement”.


However, the process remained unchanged and we noted, in respect of the 2015 settlement, that Rona Fairhead, the well-regarded chair of the BBC Trust, found it equally unsatisfactory. Indeed, I note that Ms Fairhead spoke in support of the amendments before us today in her speech at the Oxford Media Convention earlier this month.

So what form should a more transparent and informed process take? Amendments 32A, 32B and 32C bring together the earlier versions and provide the package of measures to achieve this. On a technical note, when the Minister responds, will he kindly indicate that he accepts that the amendments are in a linked group? That is, if the first goes to a vote, then, irrespective of the outcome of the vote, the next two amendments will be treated as consequential and will not be subject to further Divisions but will be accepted “in the voices”, as we say.

Amendment 32B proposes proper public consultation and debate by both Houses of Parliament. This sounds pretty uncontentious. However, we are told that, because the licence fee is regarded as a hypothecated tax, it cannot be subject to consultation: levels of tax, it is said, must be left to the Chancellor, who in this case delegates to the Secretary of State for Culture, Media and Sport. I note in passing that Chancellors can run into problems in setting taxes without prior consultation with interested parties—but, recent events aside, it is surely the case that when the licence fee is reset in 2020, the Secretary of State would be much helped by getting feedback from the wider public, as was the case with the helpful White Paper consultation on the charter itself. Certainly the organisation, Voice of the Listener and Viewer, which works in the interest of the public at large, favours this amendment. Whether a licence fee is a hypothecated tax or not, it seems sensible, when deciding on the tricky question of the licence fee, to know what those who will actually pay the fee think about it.

The other two amendments here, Amendments 32A and 32C, address the question of providing the Secretary of State with some clear, impartial and expert guidance. My committee proposed earlier that Ofcom should be given the responsibility to draw up a clear recommendation on the licence fee. The Secretary of State could reject it, but, if so, would be required to publish the reasons. In our Reith not Revolution report, the Communications Committee suggested that Ofcom should then reconsider the position and, if necessary, offer a second recommendation. After that, the Secretary of State’s decision would be final.

Several Members of your Lordships’ House, including the Minister, pointed to the weakness of asking Ofcom to take on this role. This excellent organisation already has a huge workload and will now be extending its regulatory duties in relation to the BBC. Moreover, the Minister pointed out that it is unusual—although, I would say, not unknown—for a regulator to express an opinion on the price to be paid by the consumer for the service being regulated. In response to these comments, the amendments before us do not impose another duty on Ofcom, but instead adopt the approach first mooted by the Opposition Benches for a new, independent body: a BBC licence fee commission.

This body would not decide on the licence fee—that task would remain squarely with the Secretary of State—but the Secretary of State would have to look carefully at a recommendation from the new commission and give clear reasons for rejecting it, if that was what the Secretary of State decided to do. The licence fee commission would be able to draw upon a comprehensive range of financial and professional expertise to provide the basis for sound judgment. It would consider carefully the costs involved for public service broadcasters in fulfilling their obligations—and, most particularly, for the BBC in fulfilling its own very special public service role. Drawing on this input would surely help the Government avoid accusations either of undermining the BBC by setting the licence fee too low or of failing to control wasteful spending by setting it too high.

Importantly, bringing these matters into the open, creating a proper, transparent process, would moderate the unfettered life-or-death authority of the Secretary of State over the BBC’s funding and therefore over its future. In doing so, the new process would reduce the chilling effect on the freedom of the BBC to act independently of government, which otherwise remains while the Secretary of State holds this sword of Damocles over the BBC’s board and management. The only argument I can see against the establishment of an independent new body with this single task is that it will cost more than if the Secretary of State simply relied on the Government’s own judgment. But the cost of a commission is surely insignificant when it is set against the several billions of pounds that the licence fee will raise over the years that follow this decision.

Indeed, I was heartened in our Committee debate by the Minister drawing attention to the commitment in the Government’s BBC White Paper last year to,

“consider taking independent advice at the next settlement”.—[Official Report, 8/2/17; col. 1757.]

The aim of these amendments is to put some flesh on the bones of that commitment. I hope therefore that the Minister will respond positively to the constructive proposals in these amendments, which are supported by a range of organisations, from the Voice of the Listener and Viewer to the National Union of Journalists, and clearly commend themselves to all sides of the House. I beg to move.

--- Later in debate ---

[Lord Ashton of Hyde]

I agree that a retrospective change in legislation of the charter is never a happy process—but, in a purely technical sense, if the charter was changed then it was being followed. But I take the noble Lord’s point about that—and we will move on.

I have summarised the way that the funding deal has been changed to increase stability for the BBC. In light of all my remarks, I hope that noble Lords will allow the BBC to get on with its job under the agreed royal charter and therefore that the noble Lord will withdraw his amendment.

[Lord Best]

My Lords, I am grateful to the 10 noble Lords who spoke in support of my amendment. The only moderating voice was from the noble Lord, Lord Maxton—but even that, I think, was with approval as well. I will not reiterate the arguments that everybody brought forward. I thank the Minister for his response and accept that most of the recommendations from your Lordships’ Select Committee on Communications were adopted by the Government, which we were pleased about, including the 11-year period for the charter. But there is only a five-year period for the funding of the BBC, and, although there is certainty for five years, this is not entirely new. We had certainty over the freeze in the BBC licence fee for seven years prior to that.

The Minister stressed that the Government will “consider taking advice” and “may consult experts” on the various aspects of this. I had hoped that the Minister might pull the rabbit out of the hat and that we might have something more to show for the debate tonight than we have. I understand that the Government do not consult on taxes—although, as the noble Lord, Lord Inglewood, said, this is a particularly obscure kind of tax. It is 100% hypothecated and we do not have many of those. The Minister mentioned that it was a complicated issue. That is why an expert commission could be so useful. Public consultation might well produce an answer that there would be reluctance to increase the licence fee, but there would be better understanding if these matters were all out in the open and transparent before the public came to that view.

Although I am grateful to the Minister for explaining the position as is, it is not the position that these amendments would establish in the Bill and I would like to test the opinion of the House.

Digital Economy Bill

Lord Best Excerpts

Ping Pong (Hansard): House of Lords
Thursday 27th April 2017 Lords Chamber

[Lord Ashton of Hyde]

My Lords, we return yet again to the issue of BBC funding, having debated it at length in Committee and on Report. Honourable Members in the other place have disagreed with the amendments that noble Lords inserted into the Bill at Report stage which sought to establish a BBC licence fee commission. The Government remain clear that they must have a free hand in determining the BBC’s overall funding deals and the level of the licence fee following negotiation with the BBC itself.

Noble Lords will appreciate that decisions on the level of the licence fee are a matter for the elected Government. Similarly, we are not convinced that consulting the public on the level of BBC funding is the right approach to determining its funding settlements. The BBC’s funding needs are a complicated and technical issue, and not one that lends itself easily to public consultation. Although the Government have persuaded honourable Members in the other place, we have listened to the concerns expressed by noble Lords about the process for setting the BBC’s funding settlement and about ensuring that the BBC has an appropriate level of funding. The new charter endorses the BBC’s mission and reaffirms the role and independence of the BBC in a much-changed and fast-changing media landscape.

The specific provisions in the BBC charter for setting the next funding settlement should also give some comfort to noble Lords who have concerns. We know exactly when the next funding period will commence. The Government will allow the BBC to make its case and will consider taking independent advice before reaching a final decision. Therefore in moving this Motion, I hope that those noble Lords who supported the noble Lord, Lord Best, at earlier stages will recognise that their efforts and their arguments on this matter have not been wasted. The Government are under no illusion that the next BBC funding settlement must be one that is carefully considered. There is no question of any so-called midnight raids when a five-year settlement which is inflation-protected has been agreed and everyone knows when the next settlement will begin.

I turn now to Motion E, relating to public service broadcasting prominence on the electronic programme guide, an issue which was much debated both in this House and in the other place. The Government have heard the strength of feeling on this issue. Although we have concluded that we can see no compelling evidence of harm to the PSBs, we recognise that this is a fast-moving technological landscape which needs to be kept under review, a point made clearly by the noble Lord, Lord Wood of Anfield, at Report stage. Amendment 242A will therefore place a new requirement on Ofcom to publish a report which looks at the ease of finding and accessing PSB content across all television platforms on both the linear and on-demand basis. The report will focus consumer pressure on the platform providers and TV manufacturers to improve the prominence of PSB on-demand services where this has been identified as an issue. We know that platform providers and TV manufacturers respond most strongly to consumer needs in developing their products and therefore developments in the EPG should be customer-driven.

The new duty will also impose an ongoing obligation on Ofcom to report and require it to review its EPG code by 1 December 2020, and to publish its first report on the ease of accessing and finding PSB content before then. As my right honourable friend the Minister of State for Digital and Culture made clear yesterday, if Ofcom’s report makes it clear that there is a problem in this area, one that can be fixed only by legislation, and assuming that the Government are returned in June, we will bring forward that legislation as soon as possible. That, I think, is why the Labour Front-Bench spokesman said that she was happy to support the government amendment. I beg to move.

[Lord Best (CB)]

My Lords, the three amendments which are the subject of Motion D came before your Lordships in the names of myself, the noble Baroness, Lady Bonham-Carter, and the noble Lords, Lord Inglewood and Lord Stevenson. They were passed by noble Lords with a thumping majority but they are now to be rejected with no alternative amendments in lieu.

The issue here concerns the process by which the BBC licence fee is determined. There has been extensive condemnation of the current process from the right honourable John Whittingdale when chairing the CMS Select Committee in the other place and Rona Fairhead, the chair of the BBC Trust, as well as from a range of organisations including the Voice of the Listener and Viewer, the NUJ, and of course our own Select Committee on Communications, which I have the honour of chairing, at least until the Dissolution of Parliament.

What everyone agrees is that the current process has meant the Secretary of State deciding on this vital matter in a most unsatisfactory way, behind locked doors and in secret, on a basis that has on the last two occasions involved freezing the fee for many years and the allocation of portions of it to a range of other purposes—so-called midnight raids—from broadband rollout to free licences for the over-75s. The amendments now to be rejected would not tie the hands of the Secretary of State, who would still make the determination, but the revised process would involve public and parliamentary consultation and expert advice from a specialist BBC licence fee commission.