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BBC

I by thank my colleagues on the Opposition Front Bench for giving us this opportunity to debate the future of the BBC. Despite the Minister’s claims about the number of debates that have been held and the scrutiny that has occurred, this is the House’s first opportunity to debate it since the general election. We last debated it in March last year, when we considered the report of the Select Committee on Culture, Media and Sport, which I now chair, but which at that time was chaired by the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman). It is a great pleasure to follow him this afternoon. Since then, the Government have published a White Paper on charter renewal, and the BBC has unveiled its bid for a licence fee settlement to cover the seven years from next April. The BBC’s chairman and director-general chose to reveal the bid for the first time during the course of their evidence to the Select Committee last October. The Select Committee was able to question them about their plans, and I congratulate the BBC on a bold and brave initiative, which I hope will be maintained. The BBC bid was for 2.3 per cent. each year, over and above inflation. At the time, it looked excessive, but increasing pressures since on commercial broadcasters have made it look even more disproportionate. However, if we are to consider the case for a licence fee increase, we must look at the case made at the time of the previous licence fee settlement. That was for 1.5 per cent. over inflation each year for seven years from 2000, and has led to the licence fee rising by well over a third since 1997. Yet the income from the fee has risen much faster, as the number of homes has increased steadily as well. As a result, the BBC’s total licence fee income has grown by more than 50 per cent. At the time of the previous settlement, the then Secretary of State said that he was"““not going to allow the BBC the massive injection of funds that it has sought from the licence fee—an increase reaching more than £700 million a year by 2006.””—[Official Report, 21 February 2000; Vol. 344, c. 1239.]" In fact, the BBC’s income in the period will have risen by very nearly £1 billion, so it is no wonder that the present director-general said—when he was in another capacity at Channel 4—that the BBC had been bathing in a jacuzzi of cash. At the same time, the funds available to commercial broadcasters have been squeezed. There has been a proliferation of digital channels, and the switch to digital has meant that the main commercial broadcasters have seen a steady decline in the market share that they command and, as a result, in their advertising revenue as well. Moreover, advertising spend has been diverted to online services. Yesterday, the Select Committee heard that TV’s share of advertising had declined from 32 per cent. in 2004 to a forecast 27 per cent., while internet advertising has grown by 50 per cent. The introduction of personal video recorders and timeshifting will exert even greater pressure on commercial television. For that reason, the BBC’s claims that, even after the licence fee settlement, it will have a smaller share of media revenues is at best disingenuous, since that includes internet advertising. In 1998, ITV and Channel 4 revenues exceeded the licence fee income by £300 million. Indeed, the BBC argued at the time of the previous settlement that it needed an increase to keep up with commercial television. Now, the income from the licence fee is significantly greater than the combined advertising income of ITV, Channel 4, Channel 5, GMTV, S4C and all their associated channels. That is the context in which this licence fee bid must be judged. The BBC is already by far the biggest player: an increase of the size suggested would distort the market still further, and place it in too dominant a position. Of course, the BBC claims that the licence fee is good value for money. That is supported by some opinion surveys, but as long as the fee remains a compulsory television tax that people have no choice but to pay, it is difficult to judge its acceptability. The Government claim that the licence fee is subject to parliamentary scrutiny, but the Minister said earlier that that is achieved through the negative procedure. In no other area is a £3 billion tax increased by a procedure that does not allow amendment and which is often not even debated. When it is debated, the proceedings last 90 minutes in a Committee Room upstairs. The negative procedure also means that Parliament has no ability to approve or disapprove particular uses of licence fee money. We know that the BBC has asked for an increase of 2.3 per cent., but that does not include the cost of the assistance package. My Committee, like others, took the view that the licence fee is a social rather than a broadcasting cost, and that it should therefore be financed from Exchequer funds. I regret that the Government are unwilling to accept that.