Statement from Culture Secretary John Whittingdale MP to the House of Commons on the BBC Charter Review and the consultation paper published
With permission, Mr Speaker, I should like to make a statement. I have today laid before Parliament a BBC Charter Review consultation paper, copies of which are being deposited in the House libraries.
The British Broadcasting Corporation is cherished and admired - not only in this country but around the world. At its best, the BBC sets international standards of quality. Even in a multi-media age, its most popular programmes continue to draw the country together in a shared experience, as with the London Olympics and world-beating dramas like Sherlock and Doctor Who.
The BBC reaches 97 per cent of the UK population every week. And the BBC has a pivotal role in helping the United Kingdom to reach every corner of the globe – as reflected in a recent report that found that the UK leads the world in terms of soft power.
The BBC is almost a hundred years old, Mr Speaker. There have been many changes in this time, but the scale of change in the media sector over the last decade has been unprecedented. People are consuming a vast array of content from multiple sources, using technology that either did not exist or was in its infancy ten years ago.
Ten years ago, when a government last conducted a Charter Review, millions of households still received just five television channels. Much of the social media that is now ubiquitous was - at most – at an embryonic stage. And few of us owned the sort of devices which colleagues use daily, including in this chamber.
One of the few things that is certain about the media landscape of the future is that we cannot be sure how it will look. Not least, Mr Speaker, because we cannot predict how much will stay the same.
Predictions about the demise of television have proven premature, undoubtedly in part because technology has evolved but also because many people still enjoy sitting down to watch TV in their living room. Radio also retains an important place in people’s daily lives.
The current BBC Royal Charter will expire at the end of 2016. This paper launches the Government’s consultation, which will inform a number of decisions that we need to take about the future of the BBC.
The BBC Trust will play an integral role in this process, running a series of public seminars and events.
Fundamentally, Mr Speaker, we need to consider four questions. What is the overall purpose of the BBC? What services and content should the BBC provide? How should the BBC be funded? And how should the BBC be governed and regulated?
1. The BBC’s mission, purpose and values
The BBC has six public purposes, set out at the last Charter Review. They are:
- sustaining citizenship and civil society;
- promoting education and learning;
- stimulating creativity and cultural excellence;
- representing the UK, its nations, regions and communities;
- bringing the UK to the world and the world to the UK; and
- delivering to the public the benefit of emerging communications.
We need to ask whether these purposes are relevant and right.
One key task is to assess whether the idea of “universality” still holds water. With so much more choice in what to consume and how to consume it, we must at least question whether the BBC should try to be all things to all people – to serve everyone across every platform - or if it should have a more precisely targeted mission.
Along with considering the mission and purpose of the BBC, Mr Speaker, we will consider whether the Charter should also define its values – and what those values should be.
2. The BBC’s scale and scope
The public purposes set the framework for what the BBC should be seeking to achieve, Mr Speaker, and the Charter and supporting Framework Agreement articulate what activities it should undertake to accomplish this.
The upcoming Charter Review will look at whether the scale and scope of the BBC is right for the current and future media environment and delivers what audiences are willing to pay for.
Twenty years ago the BBC had two television channels, five national radio stations and a local radio presence. It is now the largest public service broadcaster in the world, with nine television channels, five UK-wide radio stations, six radio stations that reach one of the Home Nations, 40 local radio stations, and a vast online presence.
This Charter Review will look at whether this particular range of services best serves licence fee payers. It will also assess what impact the BBC has on the commercial sector. There is evidence that the BBC helps to drive up standards and boosts investment, but also concern that public funding should not undermine commercial business models for TV, radio and online.
The BBC is highly used and valued by the majority of people in this country. But variations exist, and there are particular challenges in reaching people from certain ethnic minority backgrounds and in meeting the needs of younger people, who increasingly access content online. Variations exist among the different nations and regions too. These are issues which we will need to take into account throughout the process of the Charter Review.
The BBC’s global reputation is second to none and the BBC has a central role in determining how the UK is perceived internationally. Each week, BBC services reach more than 300 million people across the world, and the Director General has set a target of 500 million.
The Charter Review also gives us an opportunity to look at the content the BBC provides, both in terms of the mixture of that content and its quality.
We will analyse the way that the BBC’s content is produced. This is essentially shaped by two main elements: the broader regulatory framework including the Terms of Trade – which set out how the BBC and other broadcasters work with independent producers – and the BBC’s quota systems.
The BBC executive has made some radical proposals that would remove quotas and turn the BBC’s production arm into a commercial subsidiary. These and other reform options will all need to be considered as part of the Charter Review. We will also look at BBC Worldwide, which contributes a substantial amount of additional income to the BBC.
3. BBC Funding
Mr Speaker, I turn now to the issue of BBC funding – a subject on which I know that many Honourable and Right Honourable Members hold strong views.
The licence fee has proven to be a very resilient income stream for the BBC – bringing in £3.7 billion last year – but it is not without its challenges.
There is no easy solution to the broad question of how the BBC should be funded.
Mr Speaker, the licence fee is levied at a flat rate, meaning that it is regressive. A subscription model could well be an option in the longer term, but cannot work in the short term because the technology is not yet in every home to control access.
Therefore, Mr Speaker, the three options for change that are viable in the shorter term are a reformed licence fee, a household levy, or a hybrid funding model. In the longer term we should consider whether there is a case for moving to a full subscription model. All have advantages and disadvantages.
There are a number of other funding issues that the Charter Review will cover. I have already announced that the BBC, rather than taxpayers, will meet the cost of free TV licences for over-75-year-olds. This will be phased in from 2018-19, with the BBC taking on the full costs from 2020-21.
We also anticipate that the licence fee will rise in line with the Consumer Prices Index over the next Charter Review period – but this is dependent on the BBC keeping pace with efficiency savings elsewhere in the public sector and it is also subject to whatever conclusions are drawn from the Charter Review about the BBC’s scope and purpose.
I am grateful to David Perry QC, who has conducted an independent review of the sanctions appropriate for non-payment of the licence fee. The TV Licence Fee Enforcement Review, which is being published today, has concluded that decriminalisation would not be appropriate under the current funding model, Mr Speaker. The Government will now consider the case for decriminalisation as part of the Charter Review.
I am today before Parliament laying the TV Licence Fee Enforcement Review and placing copies in the House libraries.
More people – especially younger people – now access catch-up television exclusively online and without a licence. This is perfectly legal, as the existing legislation was drawn up when the iPlayer did not even exist. The Government has committed to updating the legislation, Mr Speaker.
We will also analyse the merits of a contestable public service funding pot that would not just be limited to the BBC.
And we will look again at what areas and activities should have their funding protected in future. Broadband rollout, digital switchover, local television, the World Service and the Welsh language channel S4C were protected in the last Charter period. As I announced the other day, Mr Speaker, the broadband ring-fence is to be phased out by 2020-21. And S4C will be expected to find similar savings to those in the BBC.
4. BBC Governance and Regulation
Finally, Mr Speaker, there is the matter of how the BBC is governed and regulated.
Any organisation as large as the BBC needs effective governance and regulation. There have been occasions when the BBC has fallen well short of the standards that we expect of it.
Editorial failures in light of the Jimmy Savile revelations, the aborted Digital Media Initiative, and the level of salaries and severance payments are among the issues that have caused disquiet. A lack of clarity in the BBC’s governance structures has contributed to these failures.
The last Charter brought in a new regulatory model, creating the BBC Trust – which exists to represent licence fee payers and hold the BBC to account. This structure has been widely criticised and the Chair of the BBC Trust herself has called for reform.
There are three broad options: reforming the Trust model, creating a unitary board and a new standalone oversight body or moving external regulation wholesale to Ofcom. As with funding options, each of these has pros and cons.
Mr Speaker, while the BBC’s editorial independence must not be compromised, that does not mean that we are not entitled to ask whether the BBC could be more transparent and to scrutinise how the BBC relates to the public, Parliament and Government.
Any public body should be fully accountable to the public. People should be able to give voice to how well they think the BBC spends public money – some £30 billion over the current Charter period – and how well it meets its myriad other responsibilities.
Mr Speaker, the British Broadcasting Corporation is part of the fabric of this country, and a source of great pride. We want it to thrive in the years to come. This consultation paper sets out the framework for what I hope will be a wide-ranging and informative national debate about the future of the BBC.
I commend this statement to the House.