House of Commons Culture, Media and Sport Committee Future of the BBC Fourth Report of Session 2014–15 Report, together with formal minutes relating to the report Ordered by the House of Commons to be printed 10 February 2015 HC 315 INCORPORATING HC 949, SESSION 2013-14 Published on 26 February 2015 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Mr Ben Bradshaw MP (Labour, Exeter) Angie Bray MP (Conservative, Ealing Central and Acton) Conor Burns MP (Conservative, Bournemouth West) Tracey Crouch MP (Conservative, Chatham and Aylesford) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Steve Rotheram MP (Labour, Liverpool, Walton) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South) The following Members were also a member of the Committee during the Parliament: David Cairns MP (Labour, Inverclyde) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Mr Tom Watson MP (Labour, West Bromwich East) Powers The Committee is one of the Departmental Select Committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume. All the evidence relating to this Report can be found on the Committee’s website. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Grahame Danby (Second Clerk), Kevin Candy (Inquiry Manager), Hannah Wentworth (Senior Committee Assistant), Keely Bishop (Committee Assistant) and Jessica Bridges-Palmer (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 14 Tothill Street, London SW1P 9NB. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected] Future of the BBC 1 Contents Report Page Summary 3 1 Introduction 7 Our inquiry 9 Background 10 Previous Charter Review 11 Preparation for the next Charter 12 2 A public BBC? 15 Beyond market failure 15 Quantifying public value 18 Training as a public purpose 20 Working with others 21 3 BBC’s performance 23 Reach and audience appreciation 23 Provision of news and coverage of national events 25 The World Service 26 Cultural and economic contribution 27 Serving all audiences 27 Out of London strategy 27 Diversity on and off screen 29 Children’s programming 31 Stewardship of the licence fee 32 Savings and efficiency 33 4 Scope and scale 35 A smaller BBC 37 Something for everyone 39 Enabling others 41 What next? 43 BBC One +1 44 Radio services 45 Patrolling the borders 47 Public value tests 48 5 “Compete or compare” 50 BBC Production 50 Window of Creative Competition 51 Publisher-broadcaster model 53 Open and fair competition 54 Loss of training ground? 55 Terms of trade 56 Provision of local news and online content 59 BBC Worldwide 64 BBC’s technology development, standard setting and championing role 66 2 Future of the BBC 6 Funding 70 Licence fee 70 Decriminalisation 77 Alternative models for funding PSB 79 Finnish system 80 German system 81 Collection costs 82 Conditional access 83 Setting the level of PSB funding 84 Sharing the licence fee 87 7 Governance, regulation and accountability 91 Creation of the BBC Trust 93 A unitary BBC Board 98 Licence fee payers’ interests: Public Service Broadcasting Commission 100 Regulation: Ofcom 101 Transparency in appointments 101 Chairman of the BBC 102 Composition of the PSBC 103 Ensuring value for money 106 Regulation of BBC content 107 S4C 110 8 Constitutional basis 112 Conclusions and recommendations 115 Annexes 127 Annex A: Comparison of the Trust, Burns and the Committee’s proposed models for oversight of the BBC 127 Annex B: Terms of reference for the inquiry into the Future of the BBC 130 Annex C: Visit to the Netherlands, Germany and Denmark – comparative visit looking at public service broadcasting 132 Annex D: Online consultation: Students’ views about the BBC and television 134 Formal Minutes 143 Witnesses 158 Published written evidence 160 List of Reports from the Committee during the current Parliament 163 Future of the BBC 3 Summary This inquiry is the first step in a wider process of examining the role and position of the BBC, as well as the way it has been managed, governed and held accountable, before the current Charter expires at the end of 2016. Over the last few years, at times, the BBC has been beset by mistakes of its own making but despite this many people judge the broadcaster first and foremost on the quality of its content, on its programmes, on its journalism, on the value for money they consider it delivers, and on the societal and cultural contributions it makes. The BBC makes a valuable contribution to many people’s lives as the nation’s broadcaster reaching 96% of the population on a weekly basis and many millions more overseas through the provision of its international services. Its continuing importance as a provider of impartial news and its capacity to bring the country together where its output remains universally available are aspects which many people continue to associate with the Corporation. Yet, given a public intervention of close to £4 billion is made in paying for the BBC’s activities, key questions arise in determining what purposes justify an intervention of this magnitude and what scope and scale are appropriate for the Corporation as a publicly-funded broadcaster, in a world where content is available in much greater volumes, from a multitude of sources and consumed in more ways than ever before. Moreover, the BBC is a powerful player and unchecked there is a danger that it will, by accident or design, crowd out smaller rivals and inhibit their ability to grow. There currently appears to be no better alternative to funding the BBC in the near-term other than a hypothecated tax or the licence fee. However, the principle of the licence fee in its current form is becoming harder to sustain given the changes in communication and media technology and changing audience needs and behaviours. We conclude that a degree of subscription could be a possibility in the future if the BBC moved to a more personalised service but as a minimum the licence fee must be amended to cover catch-up television as soon as possible. In any event, the BBC should look at the practicality of introducing controls for authorising access to the iPlayer. Our view is that the justification for criminal penalties for non-payment of the TV licence fee and the way TV licensing enforcement is carried out is anachronistic and out of proportion with responses to non-payment for other services. Decriminalisation of the licence fee could be linked to introducing controls for access to television services or moving to a German-style broadcasting levy. A move to a broadcasting levy on all households is our preferred alternative to the licence fee. Such a levy on all households would obviate the need to identify evaders and would be a fairer way of ensuring those people who use only BBC radio and online services contribute to their costs. A broadcasting levy would enable a small proportion of the revenue raised to be used to fund public service content and services provided by others, enhancing plurality in certain types of content. For example, we support a small proportion of the licence fee (or broadcasting levy) being made available for public service content priorities such as 4 Future of the BBC children’s broadcasting and local and regional journalism. In addition, we recommend extending the BBC’s independent production quota to cover local news. We challenge the claim that the BBC needs to provide “something for everyone”. The BBC should reduce provision in areas that are over-served or where the public service characteristics of its output are marginal or where others are better placed to deliver excellence and better value for money. As such, we believe the BBC needs to be able to make bigger, braver decisions on its strategy and inevitably must do less in some areas. In practice, the level of funding the BBC receives will be a principal lever in determining and adjusting the BBC’s scope and scale. Whilst we welcome the BBC removing in-house production guarantees and opening up the majority of BBC commissioning to competition, we are sceptical of the suggestion that the BBC should become solely a publisher broadcaster. Given the BBC’s long successful tradition of making high-quality television programmes, we conclude that it should continue producing content where its output is distinctive from the market and where it makes economic sense to do so. The challenge lies in the BBC demonstrating a transparency in its commissioning processes in its pursuit of the best content, and not favouring old ties with BBC Production, and a transparency of costs if it is to eliminate suspicions of cross-subsidy of its commercial work and production of content for others.