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Electronic Communications

I warmly congratulate my hon. Friend the Member for South-West Surrey (Mr. Hunt) on initiating this debate on the licence fee. If ever there was a time when it was right to ask again whether the licence fee should continue to increase, it is now. My hon. Friend set out some of the background to the increase in the fee against the rate of inflation, but the BBC's income is determined not just by the level of the licence fee, but the number of households that pay it, which also has been going up. As a result, the BBC has enjoyed perpetual income increases, year on year, at a time when the rest of the media sector is facing its worst crisis for 50 years. The media are affected by the recession in the same way as every other industry. As many people who have been in business will know, one of the first casualties in a recession is advertising spend, and there has been a significant drop in advertising expenditure across the board. On top of that, we are seeing a fundamental structural change in people's consumption of media. More and more people consume media online, and as they move from traditional media outlets advertisers are following them. The result is that every commercial operator is under greater pressure than ever before. ITV has moved from children's programming and regional programming, and it has now pulled out of arts programming with the ending of "The South Bank Show". It has also cut drama. Channel 4 has identified a £150 million gap in its funding. Channel 5 is struggling to survive. Every commercial radio station is now considering its economic prospects and wondering whether it will still be in business in a year's time. As we know, local newspapers are going out of business every week. All those sectors face competition from the BBC, and that has always been a matter for concern, but the disparity between the amount available to commercial media and that available to the BBC has now become enormous, and it is distorting the market. For the first time, the BBC's income will exceed the total advertising revenue of the entire commercial sector. That gap will grow to more than £1 billion.