Culture, Media and Sport committee — House of Commons, 2015-02-26
Topic: Technology
John Flasby Lawrance Whittingdale (Conservative, Centre-right): I am pleased to have the opportunity to present to the House the Committee’s report "Future of the BBC". Our major inquiry began well over a year ago, and I express my thanks to my colleagues on the Committee, our Clerks and our specialist adviser, Mr Ray Gallagher As is well known, the BBC charter expires at the end of 2016. The renewal process provides an opportunity to examine all aspects of the BBC—scale, scope, governance and funding. Since the previous charter renewal, huge changes have taken place to the way in which people watch television. At the time of that renewal, most households had access to only four channels, but since then we have had analogue switch-off, meaning that everyone has access to 40 or more digital channels. Many people also access catch-up television through the iPlayer or some of the new streaming services. The whole media landscape therefore looks very different from how it did 10 years before The Secretary of State has said that it will be for the next Government to consider the future of the BBC and charter renewal—I understand his reasons—but the Committee points out that at the time of the previous review, an independent panel led by Lord Burns conducted a long public consultation before reaching conclusions. We think that this matter is so important that a similar process should take place this time, and there is no reason why that could not be initiated as soon as possible. Either way, I hope that our report will set the agenda for the forthcoming debate There is no question but that the BBC produces many outstanding programmes. Many of our witnesses told us that it is the finest broadcaster in the world. Its reach is 96%, it has an unrivalled reputation for accuracy and impartiality, and it is hugely respected, but any organisation that gets £4 billion of public money should be subject to close scrutiny. There have also been significant failures in recent times: the episodes of executive pay-offs, pensions and severance payments; the loss of £100 million on the digital media initiative; the disastrous acquisition and then sale of Lonely Planet; and, of course, the editorial failures regarding programmes about Jimmy Savile and then Lord McAlpine When one looks at the BBC, one must first ask what it is there to do. There are six stated public purposes, which are pretty broad and uncontroversial, although we thought that they could be expanded to take in training and the development of skills, and the need for collaboration and partnership When we looked at the scale of the BBC—what the BBC does—we were unconvinced by the argument that it should continue to try to provide something for everyone. Instead, we say that its principal focus should be on its public service remit and that it should not be afraid to do less when the market is clearly providing a lot of existing content. The BBC has already embarked on some radical thinking, which we welcome. For instance, it has decided to make BBC Three a purely online service, which we generally support. BBC Three has cost something like £1 billion during the decade in which it has been in existence, yet it has not been especially successful at reaching its target audience, so it is right to consider other means of doing so. However, we do not support establishing a BBC One+1 service in its place, especially given that people can already see programmes that they have missed through means such as catch-up services on the iPlayer We welcome moves to remove the in-house production guarantee and to open up all BBC commissioning to competition. We also support allowing a separate BBC production house to compete for commissions from other broadcasters. However, if the BBC production unit is to remain within the BBC, there must be full transparency and no cross-subsidy so that there is fair competition with the independent production sector. We think that the time has come for the charter review to consider the terms of trade. There have been huge changes since those terms were originally put in place, given a large number of acquisitions of independent production companies by American studios, so they need to be looked at again We want more partnership and collaboration with the private sector, and we specifically want more support for local media. They play a vital role in supporting local democracy and ensuring that electors are aware of what happens in council chambers and local courts, but because of economic conditions, a lot of that activity is no longer happening. We think that the BBC could play a role in supporting that, perhaps by using some licence fee payers’ money for local media and by extending the independent production quota to cover local news The two key aspects, however, are governance and funding. On governance, almost every single witness from whom we heard was highly critical of the BBC Trust model. Not only is there an in-built conflict between the two roles of acting as a regulator and arbitrator of complaints, as well as providing the highest level of oversight and management of the BBC, but there is confusion about the trust’s responsibilities. There have been public arguments between the director-general and the chairman of the trust, as well as the management failures to which I referred The Committee is clear that the trust should be abolished and replaced by a unitary board with a non-executive chairman and a majority of non-executive directors. Responsibility for all aspects of the BBC’s operation would lie with that board, as is the case for many big organisations. We accept that there would need to be external scrutiny, but we are determined that we should not recreate the BBC Trust with a different name. We suggest that there could be a smaller public service broadcasting commission to scrutinise the overall strategic plan of the BBC and assess performance, as well as to determine public funding and perhaps withhold it, in the event of failure The National Audit Office should be given unfettered access. The Comptroller and Auditor General complained about the difficulties that he still faces and we see no reason why the NAO should not have statutory access. We also believe that Ofcom should have responsibility for all content regulation Funding was always going to be the most controversial aspect of the inquiry. The licence fee is simple and universal, and it arguably maintains arm’s length independence from the Government, but it is regressive, compulsory and expensive to collect, so we considered various alternatives. In the short term, we found that there is no realistic alternative to some form of licence fee or household tax, although we support a number of changes. The arrangements should immediately be amended to cover catch-up services as well as live broadcasting We also see the case for decriminalisation of failure to pay the licence. The penalties that are in place are anachronistic and disproportionate, but we think that decriminalisation may create a risk of much greater evasion, so we see the case for a move towards a household levy, perhaps similar to the German model, which will be simpler to collect and much harder to avoid In the longer term, we think that, as viewing habits change, the licence fee becomes harder to sustain and justify, and that we should at least consider introducing an element of subscription to give viewers the choice of whether they wish to subscribe to all the BBC’s services. There would still need to be public finance for the core services—radio, news, public service programming—but the more premium content would be available as a matter of choice for the viewer through a subscription model. That would need conditional-access technology in the home and it certainly cannot be put in place immediately, but that is the direction in which we believe the Government should look as we begin the process of the charter renewal Again, I thank my colleagues for their assistance and contribution. We had some fierce arguments in the Committee and we did not always obtain agreement on every point, but I hope the report will stand as a working document to allow the extremely important debate on the role of the BBC in our country. That debate is starting and will continue, I have no doubt, until charter renewal at the end of 2016.