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BBC: Charter

My Lords, the disagreements between the Select Committee and the Government are very succinctly set out in the letter of the noble Lord, Lord Fowler, to the Secretary of State for Culture, Media and Sport. It may therefore seem strange that I feel able to congratulate both the Government and the Select Committee on the work that they have done. I feel that both have done their job well. My noble friend Lord Davies, in opening the debate, said that this had been the most open and transparent review ever, and I think that that is true. I think that the Government have not moved in the direction of agreeing with me as they should have done—but that is entirely up to the Government. They have moved some way on a lot of issues. It is also a hugely difficult process to manage the renewal of the BBC charter and licence fee. In some ways, if we could decouple one from the other, it might help, because we are left with the most important question of all—the quantum of the licence fee—still hanging in the air. I would recommend that a committee from time to time be set up. My noble friend Lord Lipsey and I served on the previous one, under Gavyn Davies, looking at the licence fee. That helps to distance the matter a bit from the Government and it gives the Government an outside viewpoint on what might be appropriate. I should also like to congratulate the committee under the noble Lord, Lord Fowler, on its work. It has been a very thorough series of reports. This is now our third debate, and each of them has been highly illuminating. The clamour of support for a permanent Select Committee on communications and the media evidenced in this House on Wednesday is not only tribute to the importance of the subject—which is, I think, vital in a modern democracy—but a recognition of how well the committee did that job. I open with one regret. Exactly as happened 10 years ago—when, slightly ahead of time, on 9 January, this House was having exactly this debate, with exactly the same concerns about governance and accountability, and about the renewal of the charter—a speaker observed how convenient it was that the next week we would have the Second Reading of a broadcasting Bill where we would be able to look at the rest of broadcasting. I have never understood the logic of looking at all of broadcasting except the BBC, which is the biggest part of it, and then at the BBC. That simply cannot make sense. You cannot look at the ecology of broadcasting and divorce from that survey the activities of its major player. I am on record throughout all the debates on the Ofcom Bill as wanting the BBC under Ofcom. I think that that would have safeguarded the BBC. The Government have set their face against that. They have moved in some regards, but I think that to some extent we may well have the worst of both worlds. We will have a board of trustees who are more divorced from the day-to-day running than the governors were and therefore cannot influence from the inside, and yet not sufficiently divorced to satisfy those who feel that the board should be wholly independent. That could well create problems. For example, I foresee problems, although I hope that they will not occur, between the market impact assessment that will be conducted by Ofcom and the public value test that will be conducted by the trustees. Ultimately, however, the trustees will be able to overrule Ofcom. That is a recipe for tension which need not exist. It is very important to recognise, as the noble Lord, Lord Bragg, and others have, that the BBC is our most important public service broadcaster. But broadcasting in this country would be immeasurably the poorer if it were the only one. The commercial sector has exactly the same public sector obligations as the BBC. It discharges them without the subvention of the licence fee; it discharges them by raising money through advertising revenue. Once we have a private sector that no longer values the licence—because, frankly, you can replicate access to the viewers through other means—the incentive to retain that licence and to perform public service at no cost to the public disappears. I share the view of the noble Lord, Lord Bragg, that the Government should bring forward their review of public service broadcasting in the round so that we do not wait until 2011, which may well be too late. As regards the points on which the noble Lord, Lord Fowler, disagreed with the Government, I should indicate which side I am on. I am afraid that I agree with the Government regarding the Royal Charter. I recognise the point about Acts of Parliament, and it all sounds very nice and democratic, but the grave danger is that we would end up with amendments from pressure groups changing the nature of the charter. The noble Baroness, Lady Deech, pointed out that the current charter has four times as many clauses as the previous one. No one could quarrel with the new public service obligations, but why should we not add promotion of a healthy Britain or promotion of a safe Britain? The problem is that, the more clauses you add, the less severe the scrutiny will be of any of them. We shall end up with corporate governance, ticking boxes; there will be no real scrutiny. We need to be careful about that. I will make some broad points on the quantum of the licence fee. We need to be careful here. I fully appreciate that the BBC does its job extraordinarily well. It would do other jobs extraordinarily well, but is it in the public interest that we have a degree of mission creep, as it were, where the BBC gradually moves more and more into other fields, thus making it impossible for a commercial operator with public service obligations to operate in those fields? I suggest that it is not. Most of the BBC’s morning programmes are concerned with home improvement. Should the BBC publish magazines on home improvement? If it did, would it not have a considerable advantage over a commercial provider of such a magazine, simply because of its ability to promote it on air? The BBC does excellent holiday programmes, but should it produce a holiday magazine? Should it even run BBC holidays? Where do you stop? The BBC would do all those things extraordinarily well, but there has to be a limit. We have to be careful about whether we are funding a public service broadcaster or a public service provider of things well beyond broadcasting. That will be a constant problem. My next point relates to the market impact assessment of the size of the BBC settlement in relation to other broadcasters. I hope that it is not intended to safeguard anyone from competition. The BBC does extremely good programmes, but it is important that we do not have a settlement that fuels inflation in broadcasting rather than simply enabling the BBC to meet it. The BBC is the biggest payer in broadcasting because it has the most money. If you exacerbate that situation, you will further weaken the rest of the sector. The popularity of some BBC radio programmes is fully justified, but I hope that no one would suggest that the BBC should be under less stringent regulation when changing a service than the commercial sector is. They both should have identical obligations to say what they are going to do and then stick to that. One should not be weaker than the other. On the process for determining the licence fee, the case for NAO involvement in scrutinising the BBC’s bid is overwhelming. It would help the BBC. The BBC did not do its own case any good when the figure for Manchester suddenly switched from £600 million to £400 million. It gave some credibility to the crack made by Charles Allan of ITV that these were calculations done on the back of a fag packet. I am sure that they were not, but it did not help the BBC’s case. As the noble Lord, Lord King, observed, the BBC had seriously underestimated the benefit to it of the increasing number of households in this country brought about for very distressing reasons, such as single parent families and divorces. There are more households than ever before and the benefit to the BBC in increased licence income has not been fully brought out. I recommend that all noble Lords read the evidence given to the Select Committee by the noble Lord, Lord Birt. I am concerned that he thought that it would be impossible for an outsider to decide whether the BBC was giving value for money. In a way, that is quite worrying, and his criticisms of the previous regimes at the BBC as being profligate with licence fee payers’ resources are quite worrying. It is a pity that that was not recognised more at the time. I have very quick points on things that should be included in taxation rather than in the licence fee. Digital transmission is properly part of the licence fee, because one of the key obligations of public service broadcasting is universality of provision. There was a time when the BBC owned its own transmitters, before it sold them to an American company, Crown Castle, and the ITV transmitters used to be owned by the Independent Broadcasting Authority to make sure that they were held in the public interest. By contrast, I agree with the Select Committee that, as it were, the social costs of giving free licences to people, or helping people with the licence fee, is frankly a perfectly laudable social objective; however, it should be met out of general taxation and not out of the licence fee. Most important of all, I am concerned about moves to charge for spectrum and the unfortunate unwillingness of the Secretary of State to rule that out when asked about it directly by the noble Lord, Lord Fowler, in the recent hearing. Spectrum will be auctioned off by the Government; no Treasury will resist the opportunity to make a bit of money. All public service broadcasters should be exempt—not just the BBC, but all who profess public service and adhere to public service obligations—from paying that. That is the only carrot that you can offer a public service broadcaster nowadays to retain public service obligations. If you do not, you will gradually have more and more of a free-for-all, with fragmentation replacing regulated competition and a resultant loss of quality. We must also consider the impact of high definition television, which will require more spectrum. Will that be held up because it is using more spectrum and therefore, arguably, costing more money? I have two closing points. Fragmentation of the industry has caused a major problem in the commercial radio sector. A few years ago, the commercial radio sector had a 51 per cent listener share against the BBC’s 49 per cent, and the BBC fully expected its share to go down. In fact, the BBC share has now gone up to 56 per cent and commercial radio is at 44 per cent, although it is much higher in the younger age groups. The reason for that is not only very good programmes from the BBC—which they are—but the increase in the commercial sector of about 100 new stations, very few of which are making any money whatever. They are fragmenting the audience. It is incumbent on the regulator to ensure that we do not over-saturate the market with more services than can reasonably exist. We must ensure that we have enough human, technical and financial resources to support the services that are introduced. My final point is linked to the technology argument. The real danger that we now face, and we will certainly face it when we next have this debate in perhaps 10 years’ time, is that technology is taking over. I am afraid that a lot of the public service arguments have disappeared. The pupils are now deciding the curriculum. The days when someone at the centre could give the listener or the viewer a tolerable leavening of what they should have are gone. The viewer or listener demands the news bulletin that he or she wants, when he wants it, for as long as he wants it. If his only interest in life is Wayne Rooney’s metatarsal, ““Big Brother””, and one other thing, fine: that is the news bulletin that he will get. I am afraid that that is happening increasingly. I recommend to the Select Committee in its new form the following subjects for early discussion. Do we need to regulate the internet in the light of what is happening? How do we recognise the effect of internet migration on existing broadcasting and newspapers that depend on advertising? Those are only two subjects among many that would justify the continuance of a Select Committee on media and communications, which I hope this House will set up shortly.