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.