Digital Economy Bill

Lord Birt Excerpts

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

[Lord Gordon of Strathblane (Lab)]

My Lords, I cannot work up the same sort of enthusiasm for the statutory underpinning of the BBC. Although I deplore interference with the running of the BBC and the licence fee, and welcome the promises of better behaviour in future in the recent licence settlement, it seems to me that statutory underpinning creates a platform for statutory interference as well, which could be a lot more dangerous. Things are run quite well and we now have a royal charter that will last for 11 years. That gives us time to reflect on possible changes at some point in the next 11 years—but certainly not at the moment.

[Lord Birt (CB)]

My Lords, I accept that I have a special interest, but I have yet to be bored by the noble Lord, Lord Lester, on this matter. Indeed, I applaud his tenacity and hard work. The day this House discussed the royal charter was the lowest day in all my time in the House. It was a particularly distinguished debate, and there was a wide consensus on all sides that the charter was inappropriate. I do not plan to rehearse the arguments that I made on that day again, but there was wide agreement that, although we had all long believed that the charter was the right way of governing the BBC—I certainly believed that when I was the director-general—we had learned the hard way that it was not.

The royal prerogative is simply archaic; it flows from our history, with its origins in medieval times. Its shortcomings have just been unfolding in the Supreme Court; it has been found wanting there. That was a low day for me because, despite consensus across the House, the Government did not give an inch. I do not expect them to do so today. However, the good thing about this debate and about what the noble Lord, Lord Lester, and his colleagues are doing is that it puts this issue firmly on the agenda. If it is not won today, I predict that it will be won one day. The BBC simply has to be put on a statutory basis.

[Lord Wood of Anfield (Lab)]

My Lords, I should declare that my wife works at Ofcom, so I have an interest of some relation to the BBC. These amendments are crucial to an issue we all care about: the independence of the BBC and ensuring it is not compromised. The Government may protest that they have no intention of compromising the BBC’s independence—I am sure they do not—but I know from the debate and from many conversations over the past few months that I was not alone in being alarmed by the initial proposal floated last year that the Government would appoint a majority of members of the new BBC unitary board, replacing the BBC Trust. I am pleased to say that the Government seem to have moved away from that proposal in response to concerns expressed in this House and elsewhere.

But concerns remain. For one thing, we discovered last week just how close the Government intend still to remain to Rupert Murdoch’s companies, whose hostility to the BBC is well known. Senior executives from Murdoch-owned companies met the Prime Minister or Chancellor 10 times last year—more than any other media organisation. In the past 18 months, News Corp executives had 20 meetings with senior government representatives, 18 of which were with the Prime Minister, Chancellor or Culture Secretary, seven involving Rupert Murdoch himself, whose views on the BBC are very clear. Quite what was discussed in these meetings we do not know, but I would be astonished if complaints about the BBC were not raised repeatedly.

As the noble Lord, Lord Lester, eloquently set out, threats to the BBC’s independence come in much more subtle forms. The combination of financial constraint plus extra responsibilities has been a long-standing part of the Government’s relationship with the BBC. I worked for Gordon Brown as Prime Minister; we did a bit of that as well. But, as the noble Lord mentioned, in this new charter the Government have raised their sights and shifted more than £500 million-worth of responsibility for licence fees for the over-75s without allocating a single penny to support it. This process of shifting responsibility for government policy on to the BBC while tightening the purse strings even further, and, presumably, reserving the right to complain when the BBC revisits the viability of these commitments, is a serious threat to the autonomy of the BBC. We should be on our guard against it.

When it comes to the new unitary board, I agree with the spirit and content of the amendments. It is important that we have a transparent process to ensure a genuinely independent board. The Government’s current proposal on composition risks lining up a slate of government appointees against a slate of BBC appointees, aiming for some kind of internal balance rather than ensuring real independence for the board as a whole. It is also vital, as the noble Lord, Lord Lester, set out, that we have clarity on the terms of appointment to the new board.

We need only look at other countries in the European Union to see the dangers that can quickly arise when the independence of public broadcasters is compromised. For example, last year the Polish Government assumed the right to appoint the heads of state broadcasting authorities and removed the guarantees for independence of public service TV and radio, in breach of Council of Europe norms and the Polish constitution. We are a long way from being Poland in this respect, thank goodness, but the combination of governance change, political pressure from rival organisations, financial pressure and the temptation to offload policy commitments on to the shoulders of the BBC provide a real threat to autonomy and independence. It is right to err on the side of vigilance and caution in the spirit of this group of amendments.

I look forward to hearing the Minister’s response. We on these Benches will then take a view about how to work with others across the House on the issues raised, including this debate, which, as the noble Lord, Lord Birt, just said, will become more and more live, about whether it is time to put the BBC’s independence on a statutory basis.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, I am grateful to all noble Lords who have taken part in this debate and in particular to the noble Lord, Lord Lester. He mentioned that he remained optimistic. When he spoke to me outside the Chamber, he said that he was “pathetically optimistic”. I would prefer to say that he is “characteristically determined”. He has produced argument after argument, not only in the BBC charter renewal debates, but also at Second Reading. I fear I may disappoint him yet again. I am sad that some of his supporters are not here.

We return to an issue which we have debated at length as part of the recent discussions on the BBC’s royal charter which were completed last year. The new royal charter was sealed on 8 December. Amendments 217, 218, 219, 229A and 234, in the name of the noble Lord, Lord Lester, seek to constrain future BBC royal charters through statute. I note and acknowledge that the noble Lord has made a number of changes to his amendments in the areas of parliamentary votes over future charters and governance. I appreciate the thought he has put into this and the dialogue we have had so far. In a skilled way, he has set a number of questions, some of which I will try to answer. He is right to say that whether we should have statutory underpinning for the royal charter is an issue of principle. He asked whether statutory underpinning was possible and legitimate. As he knows full well, because he almost answered my question for me, I agree that it is possible, and sometimes legitimate—but not always.

There remain some very serious, potential dangers associated with the noble Lord’s amendments and we cannot, therefore, support them. These amendments restrain future royal charters and funding settlements. Let me talk about two specific examples where this is problematic. On the subject of appointments, these amendments hardwire a unitary board into legislation. While we may now believe that we have found the best solution to the BBC’s governance, it is not guaranteed that we will still believe this in 10 years. As the last 10 years have shown, while governance arrangements can be drawn up with the best of intentions, these can prove unsatisfactory in practice. The new charter replaces the BBC Trust, which has been widely regarded as a failed model, and it is right that we should be able to address this in future.

The noble Lord, Lord Wood, and other noble Lords, talked about the independence of the board. I cannot see that the structure that we have reached in the royal charter can be criticised in this respect. At the moment, there are 14 members of the board, including five non-execs appointed by the BBC, four executives appointed by the BBC and four members, one for each nation, who need to be approved by the devolved assemblies. The Government have hardly got undue influence there. They are all appointed following a fair and open competition. Candidates for the chair must have a pre-appointment hearing by the Culture, Media and Sport Committee. If a change in this composition were required, an Act of Parliament would have to be amended, with the party-political debate, tactical pressure and uncertain legislative timetable that this would entail. This is not the right vehicle to make sure that the BBC can be governed effectively. Charter review remains the right vehicle—one that affords ample opportunity for debate and consultation, but also one that allows for effective decision-making and, crucially, a negotiated agreement with the BBC.

The second serious problem concerns the part of the noble Lord’s amendment which specifies that the licence fee needs to rise in line with inflation, or at a rate greater than inflation if the board recommends this, in perpetuity. This provision is not in the licence fee payer’s best interest: it sets the wrong incentives for the BBC to continue to strive to be efficient and to provide the high-quality programming that audiences expect and deserve. The BBC should continue to make efforts to increase efficiency and value for money for its audiences. This is something that the licence fee payer should be able to expect. A guaranteed income which keeps on rising is not the way to ensure this.

Furthermore, we must remember that the licence fee is a tax. It should therefore be possible for the Government of the day to ask the BBC, as is the case for every other public body, to contribute to lightening the pressures on public spending or the taxpayer’s purse, if the circumstances require it or when public spending priorities change. The noble Viscount, Lord Colville, and the noble Lord, Lord Wood, referred to the so-called raid and the cut in the licence fee income. The licence fee has been frozen at £145.50 since 2010. We will end this freeze and increase the licence fee in line with inflation to 2021-22.

[Lord Birt]

Does the Minister agree that in future, in the event that the Government interfere, as they have done twice in recent years, and require the BBC to spend its licence funding in some other way, it would be appropriate for Parliament to discuss that before the measure goes forward?

[Lord Ashton of Hyde]

I will come to that. Of course, future Governments will have to make their own arrangements in negotiations with the BBC. The BBC licence fee is a tax. Of course, the Chancellor of the Exchequer and the elected Government have a say in how taxes are raised and spent.

--- Later in debate ---

[Lord Lester of Herne Hill]

What I am hoping will happen is that Lord Hall of Liverpool—the director-general—will meet Ministers himself. He has been quoted in particular ways now and I will not attribute any views to him, because that would jeopardise the independence of the BBC, but I very much hope that he will meet the Secretary of State and explain privately what he thinks about these issues. From my point of view, as a would-be midwife, all I am trying to do is create a framework of principles which do not have any of the detrimental effects that the Minister has pointed to. I will seek to do that, and I hope that it will not be necessary on Report to divide the House. I am optimistic enough to believe that a thinking, open-minded Government in discussion with the BBC could come up with some statutory underpinning that would give a framework of principles without these detrimental effects. On that basis, I shall withdraw this amendment and will not pursue others in the group.

[Lord Birt]

Before the noble Lord sits down, I wonder if I might remind him that it is “Lord Wood of Anfield” and “Lord Birt, of Liverpool”, but “Lord Hall of Birkenhead”. It is very much on the other side of the Mersey.

--- Later in debate ---

[Lord Lester of Herne Hill]

My Lords, I am very grateful to the noble Lord, Lord Best, for his amendment. I agree with the object, but not the means. In fact there are not three but four options open to the Minister. The first, and most pathetically moderate, is of course my original one in Amendment 219, where I borrowed from the way that we deal with judicial salaries and revenue by proposing in new subsections (9) and (10) that “the board”—that is to say, the BBC board—

“must publish a recommendation to the Secretary of State on the amount of funding that the Secretary of State should make available”.

This is on the basis that the BBC should know best what it needs. Then the Secretary of State publishes,

“a response to each recommendation made under subsection (9)”.

If this is rejected, we are in a completely hopeless position so far as this subject is concerned.

My problem with the amendment of the noble Lord, Lord Best, is that it is a bit odd to give the regulator the function of recommending an increase in the licence fee. That is why I have produced Amendment 222A to create an independent body—the licence fee commission. The disadvantage of this is that we do not like creating a whole lot of new bodies unless there is some very important reason. Then the noble Lords, Lord Stevenson of Balmacara and Lord Wood of Anfield, have a more modest way of achieving the same thing: they would have a BBC licence fee commission to do it. Those are, I think, the four options. My own view is that the Government should now accept one of them or come up with a formula of their own that we can agree on Report. I am optimistic that this will happen, so I am now watching this space with great enthusiasm—and suspense.

[Lord Birt]

My Lords, I support the drift of the amendment of the noble Lord, Lord Best; I think that we need a proper, open, rigorous and transparent means of setting the level of the licence fee.

A little bit of history is that we did have a commission in the late 1990s, when the then Government appointed Gavyn Davies, a very distinguished economist and later chairman of the BBC, to do just that. As you would expect, he produced a searching, rigorous report. A further little bit of history is that he made a recommendation, and the Secretary of State, as you expect in politics, lowered the recommendation; as you do not expect, it went to No. 10, and the then Prime Minister not only upped his Secretary of State but recommended a level for the licence fee which was higher than that which Gavyn Davies recommended. It was the famous RPI plus 1.5% for seven years settlement, which allowed the BBC fully to enter the digital age. It was the process that Gavyn Davies led that enabled the Prime Minister to make a considered judgment.

However it is done, that body needs to look at the total environment. The most important issue in British broadcasting today, barely discussed at all, is the long-term decline of UK production. It is not going up; it is going down. It is going down because of the economic position of ITV and Channel 4. Any discussion of the level of the licence fee should look not only at the BBC but at the totality of the broadcasting production environment in the UK.

Some suggest that the licence fee should be linked to the RPI. There can, from time to time, be good reasons for that. I think that, strategically, it should be linked to GDP. The BBC performs a fundamental role in society, like the Armed Forces. We have a view of GDP and the investment we should make in the rest of the world; we should have a view in relation to GDP of how much we invest in our most important public service broadcaster. When GDP is stretched, as it has been over the past 10 years—though, thankfully, it is going up again—and if the country’s economy is suffering a reverse, then the BBC’s revenues should go down. If the country is prospering, so should the BBC—so should society’s investment in its most important public service broadcaster.

[Baroness Bonham-Carter of Yarnbury (LD)]

I add my support to these amendments and also pay my respect to the noble Lord, Lord Best, who so ably chaired the Communications Committee, of which I was a member, and produced this report. As everyone in this debate has said, a greater level of transparency must be introduced into the setting of the licence fee. Never again can there be backroom deals.

What these amendments seek to achieve is that in future there will be clarity and public scrutiny. The public, after all, pay the licence fees. These are moderate proposals which will rightly leave an elected Government with the final say in determining the BBC’s revenue, but introduce an important element of accountability into the process, which is surely appropriate for such a vital national institution. There is obviously room for debate as to which body oversees this process, but I hope that the noble Lord agrees that there should be a more open and transparent process.

Digital Economy Bill

Lord Birt Excerpts

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

[Lord Maxton (Lab)]

Can I just be marginally controversial? I accept the first amendment, which would establish a BBC licence fee commission, but the time has come when we have to look at the licence fee itself. We should remember that the licence fee was established way back in the days of Lord Reith—an awful man, but that is beside the point—based on the fact that you had one broadcasting unit in your house. The licence fee is for the house, not the individual, yet I stand here today with at least three devices in my pockets which allow me to view or listen to broadcasts by the BBC or, in fact, by any other organisation that cares to broadcast.

The time has really come when we must look at whether or not we have one licence fee for one household, which could include the very poorest single woman or man living alone in their house with one television or one radio to listen to. They pay exactly the same sum of money as another household with five people in it, all of whom have different devices. There are now four of us living in my household and each room has a television in it and a radio, we have radio in the cars, television on iPads and phones, radio on this, television on that—we have too many, maybe. But the same licence fee covers everything. It is the same licence fee for everybody, whatever—and I am not even talking about hotels or boarding houses or whatever else we can include with them. It is interesting to note that the Government themselves, when they looked at the licence fee, changed it to a live or nearly live licence fee. It is nearly live of course because if you watch television on your iPad, it is about 30 seconds behind, so it is not directly live. So this is the first thing that has to be said: it is time that this commission looked at the whole of the licence fee, not just the level of it.

Secondly, and lastly, this is a tax imposed upon everybody and we are entitled to know exactly how that money is spent by the BBC. I notice that an ex-director of the BBC is hoping to get into this debate —we know what his salary is and we know the salaries of every member of staff on the managerial side, but we do not know how much is paid to Mr John Humphrys, for instance, or to anybody else on the news side of it. I think that the BBC ought to be completely covered by the Freedom of Information Act, which is something that the commission could look at.

[Lord Birt (CB)]

My Lords, it is hard to improve on the excellent summary by the noble Lord, Lord Best, of the glaring inadequacies of the last two licence fee settlements—the infamous midnight raids. I would add only one thing: it is important to recognise that in neither instance was the motive of the Government to do down the BBC, rather it was simply unscrupulous pragmatism, switching responsibility to the BBC for paying for services that had previously been funded by government. In both instances, the Government did this because they did not want to take the political hit of taking something away—the ill-considered gift of a previous Government of free licences for the over-75s, might I say—nor did they want to take the financial hit of continuing to fund the services for which they were switching responsibility.

In both instances, the Government were completely oblivious to the consequences for the funding of the BBC and the knock-on consequences for every kind of service. This is government at its worst, frankly. We all understand how it happened, but it was ill considered and Britain deserves better. There needs to be a proper, considered process to set the licence fee which takes, as others have said, every kind of circumstance into account before the licence fee is set. I strongly support this amendment.

--- Later in debate ---

[Lord Ashton of Hyde]

With respect, I did not say that. I said that the Government would not consult on taxes. Of course the Government can take advice. The Government take advice on taxes every day, whether they have asked for it or not.

[Lord Birt]

The Minister said a moment ago that the Minister—in this case, the Secretary of State—must do as the charter says. I remind him that the charter before last said explicitly that the licence fee may not be used to fund the World Service. After the famous “night raid”, where the BBC was required to fund the World Service from the licence fee, the Secretary of State simply went to the Privy Council and changed the charter. He manifestly did not do what the charter required.

[Lord Ashton of Hyde]

I do not completely follow the noble Lord. If the charter was changed, presumably the Secretary of State did follow the charter.

[Lord Birt]

I am sorry if was not clear. The charter clearly said that the licence fee may not be used to fund the World Service. The Government then required that it should—and retrospectively changed the charter in the Privy Council.

[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.

--- Later in debate ---

[Baroness Young of Old Scone (Lab)]

My Lords, I declare an interest as a past deputy chairman of the BBC. Public service broadcasting has been vital to our national broadcasting ecosystem in terms of raising quality and sustaining the mixed economy that has made our public service broadcasting admired across the world and indeed a player across the world. The amendment is important in particular for children’s programmes, which sometimes lurk in the weeds, as I think my noble friend said. I do not think that some of these programmes lurk in the weeds at all; you have to scroll through vast quantities of channels that want to flog you jewellery or soft porn before you can get to some of them, on some of the platforms. It is interesting to see that both the BBC and the commercial public service broadcasters are of the same mind, as is Ofcom, and we owe it to them and to the public investment that the licence fee represents that they are given prominence on all platforms. I hope that the Government will seriously consider the amendment.

[Lord Birt]

My Lords, some time in the mid-1990s, I drove to west London to Sky’s warehouse-style offices to be given the first privileged sighting to an outsider of the then embryonic Sky guide and set-top box. I was enormously impressed. In simpler times, it was very innovative and very helpful to the television viewer. Some decades later, not only Sky’s but other guides appear frankly antiquated, and the whole EPG needs modernising very fundamentally. It is not of the digital age; it is hard to navigate and is miserably slow to search. You cannot personalise it, and the Channel 4 and ITV channels are not bundled together conveniently. I have tried very hard to remember where BBC1 HD is, but I have completely failed; I search for it endlessly and spend many wasteful minutes before I find it.

In an ideal world, we would have competing EPGs, and we would have contemporary innovation if we did. We need a much faster user interface than the clunky one that we have now. Plainly, it is no longer right to have EPG providers also being the main channel and service providers themselves. There is a conflict of interest; others have spoken of this. It is not right and at some point it should be ended. I favour a much more fundamental review of EPGs than is being discussed now—but, in this less than ideal world, we simply must protect the PSBs, and I support the amendment.

[Lord Wigley (PC)]

I shall not repeat the comments that I made in Committee on this matter. I thank the noble Lord, Lord Wood, for introducing the amendment, which I certainly support. Two areas have been touched on already. The first is very close to my heart—the position of S4C in Wales and the Gaelic channel in Scotland. It is enough of a fight to try to ensure that there is language promotion and continuation without the struggles of going through reams of channels before reaching them. I accept entirely that some channels, such as Virgin, give the viewer an option to create their own priorities, but many viewers will either not have the drive or sometimes even the ability to use that facility in the way that it should be used. It may interest noble Lords to know that more people watch the Welsh language news on S4C than watch “Newsnight” in Wales. The language is thriving, but it needs to be equally accessible to the prime channels that are available on a UK basis.

My second point is on children. As a grandfather with five young grandchildren, I was amazed at the speed with which they could navigate their way to where the channels they wanted were located. But in doing so, they went through a whole plethora of other channels, which I was very glad that they skipped over quickly. We need to be able to help parents who need to safeguard their children from matters that they are too young to watch. For both those reasons, I very much support the amendment.