BBC: Future Funding (Communications and Digital Committee Report)

Lord Lipsey Excerpts

Friday 16th December 2022 Lords Chamber

[Lord Lipsey (Lab)]

My Lords, may I have the unused time of my noble friend?

Like this House, the BBC licence fee is always going to be abolished in five years’ time. The current Culture Secretary—I congratulate her on her coming baby—was at it again recently, saying that the Government remain committed to changing the completely “outdated” BBC funding model by 2027; five years, yet again. Noble Lords will forgive me if I do not hold my breath waiting. What are the chances of the current Culture Secretary still being Culture Secretary in five years? Look at the history book: there have been four Culture Secretaries since the last general election, with an average term of nine months. This time, of course, there is another likely change coming along: Keir Starmer, according to a bookmaker I consulted this morning, is 5:2 to be Prime Minister in five years—and I do not expect him to reappoint Ms Donelan, even if she survives that long.

Why is the licence fee always up for abolition? As our report points out, it has two defects. First, the same amount is paid by everyone, rich or poor. If we ignore tax, a 23 year-old on the minimum wage would have to work for two full days to pay the licence fee; it would take someone on £1 million a year two minutes. For a legally compulsory levy, that seems unfair. I personally give even greater weight to the second defect, which is that it gives far too much power over the BBC’s income to the Government of the day. In the case of this Conservative Government, they have used this power ruthlessly—because they do not like the BBC much—in the interests of their private sector chums to keep the BBC in check. As Gavyn Davies, a past chair of the BBC and who chaired the Davies committee on which I sat, always says, the Government have kept the BBC on a diet.

The unfortunate thing, as I think our report explores in considerable detail, is that all of the tempting-sounding alternatives to a flat-rate licence fee have their defects. In most cases, these are arguably even more serious than the defects of the licence fee. Advertising is a non-starter: realistic estimates suggest that it would provide only a small proportion of what the BBC needs but, at the same time, would take away a large proportion of what other public service broadcasters need. What about pay-per-view? Many people would then be excluded from programmes they would like. It must be remembered that the marginal cost of supplying a programme once it has been made is zero. The same argument applies to a sort of supercharged BBC extra channel, channels or programmes which you have to pay to see. That would straightforwardly exclude the poor and bring about an end to universality, which is commonly accepted as the key virtue of the BBC. What about linking payments to council tax? The trouble is that successive Governments have failed to update valuations for council tax, so they are in large measure as arbitrary as the licence fee itself. What about hypothecated tax? What chance would the BBC have in the annual spending round against the NHS, education or pensions?

We could, I think, more easily tackle the dictatorship of the Government over BBC funding. Only this week, we learned from the National Audit Office that the BBC’s attempts to go digital are being strangled by a lack of cash. Our report suggests that the Government set up an independent body to advise them on the licence fee. That would at least make the present system of setting the licence fee more rational and less opaque. In an ideal world, I would go further: in my broadcasting utopia the licence fee would be set by an independent, non-partisan body—perhaps one established by royal charter—which would balance the virtues of the BBC with the cost to the licence fee-payer of providing it. Unfortunately, I can have my views and advisers can have their views but, in the end, Ministers are going to decide this. In truth, I do not suppose that Ministers of any colour would give away their power to decide on the BBC’s income. In that case, I think the advisory body proposed by our committee is probably the best we can do, inadequate though it is.

At the end of all our evidence-taking, thinking and drafting, I am afraid it was hard to duck the unpalatable conclusion that the licence fee is both the worst and the best way of funding the BBC, and I am not sure how you square that circle. I finish with one conclusion, which the great majority of our witnesses, and certainly everybody who has spoken today and our committee, would agree with. Yes, the BBC has faults, and it should be open to radical change. For that reason, we recommended that it should publish

“a comprehensive long-term vision that sets out its role, and how it will deliver value and distinctiveness in a rapidly changing world.”

But the BBC, flaws and all, is a great national treasure—one with which our country leads the world. We dabble with the BBC and the licence fee which funds it at our peril.