BBC Funding

Baroness Winterton of Doncaster Excerpts

Thursday 7th December 2023 Commons Chamber

[The Secretary of State for Culture, Media and Sport (Lucy Frazer)]

With permission, Madam Deputy Speaker, I would like to make a statement on the BBC.

The BBC is a great British institution and plays a vital role in our culture and creative economy. It broadcasts our values and identities all over the world, reaching hundreds of millions of people every day. In January 2022, the Government and BBC agreed a six-year funding settlement, which froze the licence fee at £159 for two years. The two-year freeze has already saved every fee payer £17 over 2022 and 2023. That settlement provided vital support for households when inflation was at its highest, while giving the BBC the funding it needed to deliver on its remit.

Under the terms of the settlement, the licence fee must now increase annually in line with the consumer prices index, with the first increase due in April 2024. The Government are committed to supporting families as much as possible during these difficult times. We recognise that bill rises are never welcome and family budgets remain under pressure.

Today, I am announcing that we will use the annual rate of CPI in September to calculate the increase of the BBC licence fee in April 2024. This is the same way the Government calculate inflation-linked increases to state pensions and benefits. The decision means next year’s licence fee increase will be kept as low as possible. In April, the licence fee will rise by 6.7%, to £169.50 annually. That will minimise the rise for households, keeping it to £10.50 over the year, or 88p per month, rather than a rise of £14.50 that would have happened under the previous CPI measure.

While we recognise that household budgets remain under pressure, the decision, alongside the two-year freeze, will save individual licence fee payers over £37 by the end of 2024. These interventions support households, while providing the BBC with £3.8 billion to produce its world-leading content. The Government engaged with both the BBC and S4C to understand the impacts on the finances of both broadcasters. The decision will ensure that S4C, which is also funded from the licence fee, can maintain its unique role in promoting the Welsh language and supporting our public service broadcasting landscape.

Although we have taken steps to ensure that the uplift is kept as low as possible, we recognise that a £10.50 increase will still be felt by licence fee payers. The number of licence fee payers is also declining, with an increasingly competitive media landscape. We need to make sure that the cost of the BBC does not rise exponentially, and that it is not borne by a smaller number of fee payers. We are already seeing an increasing number of households choosing not to hold a TV licence. The number of households holding TV licences fell by 400,000 last year, and has declined by around 1.7 million since 2017-18. That is placing increasing pressure on the BBC’s licence fee income.

We are also seeing a rapidly changing media landscape, with more ways for audiences to watch content. The reach and viewing of broadcast TV fell significantly in 2022, with weekly reach falling from 83% in 2021 to 79% in 2022. As this trend continues, linking the TV licence to watching live TV will become increasingly anachronistic, as audience viewing habits continue to move to digital and on-demand media.

We know that if we want the BBC to succeed, we cannot freeze its income, but at the same time we cannot ask households to pay more to support the BBC indefinitely. We are already supporting the BBC to realise commercial opportunities that will make it more financially sustainable, and will continue to explore them provisionally with the BBC.

The situation clearly shows the need to consider the BBC’s funding arrangements to make sure they are fair for the public and sustainable for the BBC. Therefore, I am also announcing that today the Government are launching a review of the BBC’s funding model. The review will look at how we can ensure the funding model is fair for the public, sustainable for the long term, and supports the BBC’s vital role in growing our creative industries.

The review will be led by the Department for Culture, Media and Sport and supported by an expert panel. It will assess a range of options for funding the BBC. We are clear that we want the BBC to succeed. The review will include looking at how the BBC can increase its commercial revenues to reduce the burden on licence fee payers. Given pressure on household incomes, I can explicitly rule out this review looking at creating any new taxes. The findings of the review will support the Government to make an informed choice on whether to consult the public on moving to alternative funding models. That would take place as part of the charter review process, in which any final decision on reforming the BBC’s funding model would be taken.

The BBC is a great national institution. We want to ensure that it is fit for the present and whatever the future holds, while keeping costs down for the public. That means ensuring that the BBC is supported by a funding model that is fair to audiences, supports the creative industries, and is sustainable in the age of digital and on-demand media. I commend this statement to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Secretary of State.

--- Later in debate ---

[Lucy Frazer]

I think the shadow Secretary of State needs to live in the real world like the rest of us. People are struggling with the cost of living, and the Government have continued to take steps to protect them. She needs to live in the real world, in which the media landscape is changing. It is totally inappropriate just to sit still and do nothing, because that would destroy the BBC and make it unable to live in this changing world, and it would do nothing to protect licence fee payers. If that is the Labour plan, I do not want see it.

The shadow Secretary of State talked about what we are doing for working families. She knows that this is not the only step that we are taking. We have spent £97 billion supporting families across the country, saving a typical family about £3,300, and cut inflation by half.

The hon. Lady mentions the creative industries. She might have forgotten that since I have been in this role, I have used tax reliefs to support the creative industries. The Labour party voted against that. In fact, the Conservative party has brought in tax reliefs for the creative industries year on year for 10 years, and they were voted down by the Opposition on every single occasion.

Labour does not support the creative industries. The shadow Secretary of State for Education, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), said that we should be spending more money in schools not on the creative industries, but on others. Under this Conservative Government, the creative industries are growing at double the rate of the rest of the economy and employing 2 million people.

I will happily update the shadow Secretary of State for Culture, Media and Sport on other details relating to the panel. The timetable is that the report will come into play, to me, by the autumn of 2024.

[Madam Deputy Speaker]

I call the Father of the House.

[Sir Peter Bottomley (Worthing West) (Con)]

At the risk of correcting the hon. Member for Bristol West (Thangam Debbonaire), I think the Housing Minister has changed more often than the Secretary of State for Culture, Media and Sport.

I say to my right hon. and learned Friend the Secretary of State that I do not think that anyone will go to the stake for the difference between the September CPI and others, although we can note that, were the BBC licence fee to go up by another 10%, it would still be 50p a week per household, which is probably the best value in broadcasting anywhere.

I am worried that the Government have decided, again, to make a decision without consulting Parliament. If we are to have a public broadcaster funded by a licence fee or some equivalent, Parliament should be brought in more often by Governments. This is probably the fourth time that there has been an announcement of what will happen without Parliament having been consulted first. I hope that my right hon. and learned Friend and others will say that Parliament should be brought in. If the choice is between the United States model and public broadcasting, Parliament ought to be able make its views known.

The House will have noticed that the Secretary of State said that the review will look at alternative options for funding the BBC and then said that she

“can…rule out…creating any new taxes.”

I thought that it was Parliament that decides whether we have taxes. The review may want to consider some kind of household payment, whatever we call it—at present it is called the licence fee; if we do not call it a tax, we call it a charge or something else—or something to be taken from existing taxation. If the BBC is a public benefit, why not add to whatever households pay for the licence fee the implied tax on the income that they use to pay it, for example? That would allow the income from existing taxes to go up.

The BBC needs defenders, and I am one of them. As long as I am here, the Government can expect detailed attention, and a great deal of support for doing sensible things.

[Lucy Frazer]

I, too, am a defender of the BBC. It provides an outstanding service across the world. I am proud to have seen at first hand the fantastic job that it did for Eurovision, for the coronation and for the last night of the Proms. If we were to create something that spread our values and soft power abroad, we could not do better than creating the BBC. I certainly do not want to see its services diminished, but I want to ensure that it continues to survive in this changing media world. At the moment, it is losing audiences and licence fee payers, and I want to help to support it. That is one thing that we will look at carefully in the review.

The Father of the House rightly mentions the importance of discussion and consultation. My door is open to all those who want to raise points with me. Of course, in due course, we will need to consult, and this is part of the charter review, which will involve a wider consultation exercise.

[Madam Deputy Speaker]

I call the Scottish National party spokesperson.

[John Nicolson (Ochil and South Perthshire) (SNP)]

The Conservatives agreed to increase the licence fee in line with inflation, but their own economic mismanagement means more misery for UK citizens. The Government are now desperately trying to wriggle on how they calculate inflation for the purposes of this agreement. There is a pattern among those on the Government Benches that they will breach an agreement, convention or protocol whenever it suits them. Let the Conservatives take responsibility for this BBC uplift, as the need for the rise is entirely due to their mismanagement of the economy.

We all have some criticisms of the BBC. Sometimes they are centred on its domestic news coverage, but the BBC goes far beyond that, extending to drama, radio, documentaries, Gaelic broadcasting and sports coverage. To those who would ding doon the public service broadcasters, I say: be very careful what you wish for. Of course, for many Tories the ideal would be GB News 24 hours a day, with Tory MPs talking to Tory MPs about Tory policies. I believe it is known as “GBeebies”, as one Tory MP after another is wheeled in to rant culture war tosh at the camera, in a pale imitation of American shock jocks. It is a breach of Ofcom rules. Democracy needs tough journalism and MPs scrutinised in long-format interviews by objective journalists.

We have seen what the cuts lead to. The BBC agreed, most foolishly, to take responsibility for over-75s’ licences, under the previous director general, Tony Hall. That has led to cuts in news, most recently at “Newsnight”, which I was once proud to serve as a reporter. The BBC opposed the Government’s reneging on their agreement on that at the time, and we have seen the results.

In the years to come, the BBC may need a different funding format, but that time is not now. In closing, may I ask the Secretary of State, on behalf of my colleagues on the Select Committee, to explain why the news of the new BBC chair was leaked to the press, rather than being given directly to Committee members or the Committee Chair?