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CULTURE, TOURISM, EUROPE AND EXTERNAL AFFAIRS COMMITTEE

AGENDA

25th Meeting, 2020 (Session 5)

Thursday 29 October 2020

The Committee will meet at 9.00 am in a virtual meeting and will be broadcast on www.scottishparliament.tv.

1. Decision on taking business in private: The Committee will decide whether to take item 6 in private.

2. Subordinate legislation: The Committee will take evidence on the Census (Scotland) Amendment Order 2020 [draft] from—

Fiona Hyslop, Cabinet Secretary for Economy, Fair Work and Culture, and Jamie MacQueen, Lawyer, Scottish Government;

Pete Whitehouse, Director of Statistical Services, National Records of Scotland.

3. Subordinate legislation: Fiona Hyslop (Cabinet Secretary for Economy, Fair Work and Culture) to move—

S5M-22767—That the Culture, Tourism, Europe and External Affairs Committee recommends that the Census (Scotland) Amendment Order 2020 [draft] be approved.

4. BBC Annual Report and Accounts: The Committee will take evidence from—

Steve Carson, Director, BBC Scotland;

Glyn Isherwood, Chief Financial Officer, BBC.

5. Consideration of evidence (in private): The Committee will consider the evidence heard earlier in the meeting.

6. Pre-Budget Scrutiny: The Committee will consider correspondence.

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Stephen Herbert Clerk to the Culture, Tourism, Europe and External Affairs Committee Room T3.40 The Scottish Parliament Edinburgh Tel: 0131 348 5234 Email: [email protected] CTEEA/S5/20/25/A

The papers for this meeting are as follows—

Agenda item 2

Note by the Clerk CTEEA/S5/20/25/1

Agenda item 4

Note by the Clerk CTEEA/S5/20/25/2

PRIVATE PAPER CTEEA/S5/20/25/3 (P) Agenda item 6

PRIVATE PAPER CTEEA/S5/20/25/4 (P)

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Culture, Tourism, Europe and External Affairs Committee

25th Meeting, 2020 (Session 5), Thursday 29 October 2020

Subordinate Legislation

Note by the Clerk

Overview of instrument

1. The following instrument, subject to affirmative procedure, is being considered at today’s meeting:

• The Census (Scotland) Amendment Order 2020

Background

2. The purpose of these regulations is to amend the Census (Scotland) Order 2020 to change the date on which the next census will be taken to 20 March 2022.

3. The Census (Scotland) Amendment Order 2020 provides the framework to change the date set out in the Census (Scotland) Order 2020 (“the principal Order”) on which the census is to be taken to 20 March 2022; and to make further amendments to the principal Order which are consequential to that change.

4. The instrument is attached at Annexe A and the policy note for the instrument is attached at Annexe B.

Delegated Powers and Law Reform Committee consideration

5. The Delegated Powers and Law Reform Committee considered this instrument at its meeting on 29 September 2020 and determined that it did not need to draw the attention of the Parliament to the instrument on any grounds within its remit.

Procedure

6. Under Rule 10.6.1 (a), this instrument is subject to affirmative resolution before it can be made. It is for the Culture, Tourism, Europe and External Affairs Committee to recommend to the Parliament whether the draft instrument should be approved.

7. The Cabinet Secretary for Economy, Fair Work and Culture has, by motion S5M- 22767, lodged on 21 September 2020, proposed that the Committee should recommend the approval of this statutory instrument. The Cabinet Secretary will attend in order to speak to and move the motion. Ahead of the formal debate (as part of an earlier agenda item), there will be an opportunity for members to ask questions of the Cabinet Secretary and her officials on the background to and purpose of this instrument.

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8. At the end of the debate, the Committee must decide whether or not to agree the motion, and then report to Parliament accordingly.

Supporting information

9. The Committee took evidence from National Records of Scotland (NRS), on 17 September 2020, regarding the process undertaken by NRS which led to the advice, to Scottish Ministers, to change the date of the Census. Following the evidence session, the Committee wrote to NRS seeking additional information. This correspondence and the response from NRS are attached in Annexe C.

Laetitia Jan Assistant Clerk Culture, Tourism, Europe and External Affairs Committee 26 October 2020

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ANNEXE A

Draft Order laid before the Scottish Parliament under section 1(2) of the Census Act 1920, for approval by resolution of the Scottish Parliament.

D R A F T S C O T T I S H S T A T U T O R Y I N S T R U M E N T S

2020 No.

CENSUS

The Census (Scotland) Amendment Order 2020

Made - - - - 2020 Coming into force in accordance with article 1(1)

At the Court at Buckingham Palace, the day of 2020

Present,

The Queen’s Most Excellent Majesty in Council

This Order is made in exercise of the powers conferred by section 1(1) of the Census Act 1920(a) and all other powers enabling Her Majesty to do so.

In accordance with section 1(2) of that Act(b) a draft of this instrument has been laid before and approved by resolution of the Scottish Parliament(c).

Accordingly, Her Majesty is pleased, by and with the advice of Her Privy Council, to order as follows:

Citation, commencement and extent 1.—(1) This Order may be cited as the Census (Scotland) Amendment Order 2020 and comes into force on the day after the day on which it is made. (2) It extends to Scotland only.

Amendment of the Census (Scotland) Order 2020 2.—(1) The Census (Scotland) Order 2020(d) is amended in accordance with paragraphs (2) to (4).

(a) 1920 c.41. (b) Section 1(2) has been modified by the Statutory Instruments Act 1946 (c.36), section 6(2), and by the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10), schedule 3, paragraphs 3 and 5. (c) The powers in section 1(1) of the Census Act 1920 (to prescribe particulars with respect to the matters mentioned in paragraph 6 of the schedule and otherwise) are exercised together by virtue of section

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33(2) of the Interpretation and Legislative Reform (Scotland) Act 2010. This Order is subject to the affirmative procedure by virtue of section 33(3) of that Act. (d) S.S.I. 2020/76.

(2) In article 2 (interpretation)— (a) in paragraph (1)— (i) in the definition of “census day”, for “21 March 2021” substitute “20 March 2022”, (ii) in the definition of “census night”, for “21 to 22 March 2021” substitute “20 to 21 March 2022”, (b) in paragraph (6)(a)(ii)— (i) for “22 March 2020” substitute “21 March 2021”, (ii) for “20 March 2022” substitute “19 March 2023”, (c) in paragraph (6)(b)(ii)— (i) for “22 March 2020” substitute “21 March 2021”, (ii) for “20 March 2022” substitute “19 March 2023”. (3) In article 3 (date on which census is to be taken) for “21 March 2021” substitute “20 March 2022”. (4) In paragraph 12 of schedule 2 (particulars to be stated in returns), for “21 March 2020” in each place where it occurs substitute “20 March 2021”.

Name Clerk of the Privy Council

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2 EXPLANATORY NOTE (This note is not part of the Order) This Order is made under the Census Act 1920. Article 2 amends the Census (Scotland) Order 2020 (“the principal Order”) by changing the date on which a census is to be taken from 21 March 2021 to 20 March 2022 and making further amendments to the principal Order which are consequential to that change.

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ANNEXE B

POLICY NOTE

CENSUS (SCOTLAND) AMENDMENT ORDER 2020

SSI 2020/XXX

The above instrument was made in exercise of the powers conferred by section 1(1) of the Census Act 1920. The instrument is subject to the affirmative procedure.

Purpose of the instrument: To amend the Census (Scotland) Order 2020 to change the date on which the next census will be taken to 20 March 2022.

Policy Objectives

The key policy objectives of this Order are to:

1. change the date set out in the Census (Scotland) Order 2020 (“the principal Order”) on which the census is to be taken to 20 March 2022; 2. make consequential changes to the principal Order to reflect the new census date.

The information collected through the census is a tool utilised by public bodies and other organisations across Scotland to inform key financial and policy decisions on how services such as transport, housing, schools and hospitals are planned.

The census also helps paint an important picture of the characteristics of our population, helping us to understand the similarities and differences in the population’s characteristics locally and nationally, now and over time.

Background

The Census Act 1920 allows for a census to be taken no less than five years after the last census. The census in Scotland is usually carried out every 10 years on behalf of the Registrar General for Scotland. The last census in Scotland was held on 27 March 2011.

The principal Order allowed for a census to be taken on 21 March 2021. Due to the significant impact of the COVID-19 pandemic Scottish Ministers have decided to move Scotland’s Census to 20 March 2022. This Order amends the principal Order to change the date on which the census is to be taken to 20 March 2022, and to make consequential changes to the principal Order to reflect the new census date.

Delivery of the census is a substantial logistical operation for National Records of Scotland (NRS), with preparations in the year up to census day critical to the successful delivery of the census. Whilst NRS had been on track to take a census on 21 March 2021, COVID-19 significantly impacted on a range of public engagement, testing, procurement and operational priorities.

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NRS conducted a comprehensive options assessment on the risks of COVID-19 to the delivery of the census in March 2021. A summary of this options assessment can be found on NRS’s census website. NRS advised the Scottish Government that the disruption caused by COVID-19 placed delivery of the 2021 census at considerable risk, with particular concern about the impact on achieving the comprehensive response necessary for the production of high quality outputs. Scottish Ministers agreed to NRS recommendation that the census be taken in March 2022 to best secure a census that allows everyone to participate and delivers its full benefit to the people of Scotland.

The census in 2022 will be the 22nd census to take place and the 17th to be managed independently in Scotland. For the first time, the census will be primarily online, which will deliver benefits in terms of ease of completion and the timeliness and quality of data.

Once this Order is in force, legislation will be made that will amend the Census (Scotland) Regulations 2020 to reflect the new date on which a census is to be taken.

Consultation

Stakeholders were not consulted about the change of census date. The census in March 2022 will follow the same model and question set as planned for March 2021. NRS will work closely with stakeholders and partners to ensure that appropriate data is available to support work that was expecting to make use of the census 2021 data.

Impact Assessments

There are a total of eight impact assessments for Scotland’s Census which have been updated to reflect the move to 2022. They are

• Equality – an assessment of the census with regard to the nine protected characteristics of the Equality Act 2010. • Data Protection – an assessment of privacy risks and the use of data for the census. • Business Regulatory – an assessment of the impact of the census on business. • Fairer Scotland Duty – an assessment of any socio-economic disadvantage in the taking of the census and responsibilities under the Fairer Scotland Duty. • Human Rights – an assessment of the census with regard to the European Convention on Human Rights. • Children’s Rights and Wellbeing - an assessment of the census with regard to the United Nations Charter for the Rights of the Child. • Strategic Environmental Assessment - an assessment of the census with regard to responsibilities under the Environmental Assessment (Scotland) Act 2005. • Island Communities - an assessment of the census with regard to island communities and responsibilities under the Islands (Scotland) Act 2018.

Copies of these impact assessments are available on the National Records of Scotland census website. 7

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Financial Effects

Programme lifecycle costs following the Scottish Budget 2020-2021 were £117m. The decision to move Scotland’s Census to March 2022 will have a financial impact with detailed re-planning activity currently ongoing in order to review previous estimates and update programme lifecycle costs.

The census is a central process funded directly by the Scottish Administration and carried out by National Records of Scotland.

National Records of Scotland Scotland’s Census 2022 Programme 17 September 2020

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ANNEXE C

Correspondence from the Convener to National Records of Scotland of 21 September 20

Dear Paul,

SCOTLAND’S CENSUS

On behalf of the Committee, I would like to thank you and your colleagues for your evidence to the Committee on the postponement of the Scotland’s Census to March 2022.

The Committee discussed with you the issues of variances in response levels, including from specific groups and geographical areas. The Committee welcomes your commitment to provide a paper on the level of variance in response rates to the census. In this regard, the Committee would welcome information on how response rates to the census have varied over time and how response rates, including with regard to the level of variance by geography, compare to other jurisdictions in the UK. The Committee would also welcome further information on how census data is quality assured in order to provide assurance with regard to the robustness of the census data.

The Committee also looks forward to receiving more information on NRS’ s re-planning exercise including detail of any extra resources required as a consequence of the decision to postpone the Census. More generally, the Committee would welcome regular progress updates on the delivery of the 2022 Census including details of Delivery Confidence Assessments provided to the Census Programme Board and of any concerns raised regarding deliverability.

In regard to differences in access to certain types of data between NRS and ONS, the Committee would welcome detail on the specific datasets that ONS have access to that NRS do not which are assisting ONS in delivering the Census in 2021. Further to this, the Committee would welcome your view on whether there are any restrictions on access to datasets that NRS experiences arising from the division of devolved and reserved responsibilities and whether potentially a Section 30 Order in this area could help address gaps in data that NRS experience in this regard.

Lastly, in evidence to the Committee, you confirmed that you have written to Professor Paterson and Professor McVie recently to clarify that the Committee does not have any locus in approving the Census’ guidance. As a courtesy, the Committee would welcome a letter from you confirming this and also a copy of your recent correspondence with Professors McVie and Paterson on this issue.

The Committee would welcome a response to the issues raised in this letter by Monday 12 October 2020.

Once again can I thank you and your colleagues for your assistance in our scrutiny of Census related matters and reiterate our joint ambition for the successful delivery of the Census.

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Yours sincerely,

Joan McAlpine MSP Convener, Culture, Tourism, Europe and External Affairs Committee

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Correspondence from National Records of Scotland to the Convener of 12 October 2020

Dear Convener

SCOTLAND’S CENSUS 2022

Thank you for your letter dated 21 September regarding Scotland’s Census.

Various indicators can be used to assess the quality of Scotland’s census data. An important indicator is the overall response rate which in 2011 was 94 per cent. Of the 5.3 million estimated people in Scotland in 2011, about 340,000 were thought to be missed and subsequently adjusted for during data processing. The 2011 Coverage Assessment and Adjustment (CAA) methodology was able to derive census population estimates that represented 100 per cent of the population, by using the Census Coverage Survey (CCS) and other statistical techniques to estimate the numbers and characteristics of the people who were missed.

In 2011, for every Local Authority in Scotland, with the exception of Glasgow (89 per cent), the person response rate was over 90 per cent with the highest rate in the Scottish Borders at 96 per cent. Table 9.3 on page 140 of Scotland’s Census 2011 – General Report shows the person response rates for each Local Authority in 2011. In 2001 the response rate for Scotland was 96 per cent.

In 2011, ONS achieved its response rate targets. The overall response rate was 94 per cent with at least 80 per cent in all Local Authority areas. Fewer than 5 per cent of Local Authority areas had a census response rate of less than 90 per cent. NISRA estimated that in 2011, responses were received from 94 per cent of households.

In November 2019 we published a Statistical Quality Assurance Strategy which provides an overview of how we will assess and measure the level of quality being achieved throughout the collection and processing of census data and the production and dissemination of statistical outputs. Key quality assurance activities we are developing include:

• Assurance of processes; • Validation of Population Estimates; • Topic-based Analysis; • Internal and External Assurance Panels; • National Statistics Accreditation.

We continue to work closely with our colleagues in ONS and NISRA to harmonise our approach to statistical quality assurance where possible. To support this, a UK Statistical Quality Working Group has been established to meet quarterly to share methodologies, best practice and lessons learned. Regular communication continues between meetings to keep up to date on work in the respective offices, and to identify areas for potential alignment and joint working.

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The census offices across the UK also continue to work closely with our colleagues from international census organisations in Canada, the Republic of Ireland, United States of America, Australia and New Zealand to share statistical quality assurance best practice and lessons learned across census operations.

As I advised during the evidence session on 17th September, NRS are making significant progress to conclude a detailed re-planning exercise which will produce a revised Programme Plan. Considerable work has gone on throughout the programme over this period, including substantial engagement with our suppliers.

As part of the re-planning exercise we are updating the full lifecycle resourcing plan and supplier costs to the Programme to inform the overall financial impact assessment and subsequent costings. Thereafter there will be further engagement with Ministers in relation to our analysis. I am happy to write to the committee and update them on this work once concluded.

Turning to ONS’s approach, as part of its long term work to develop the use of and maximise the value of administrative data held by the public sector, the ONS has been progressing data sharing agreements over some years to access data with departments such as HMRC (e.g. Self-Assessment Data, Migrant Workers Scan – United Kingdom, Pay As You Earn Real Time Information) and DWP (e.g. Benefits and Income Datasets, Customer Information System).

This work which uses a range of datasets including those above is progressing. We understand that ONS plan to use such data to support the English and Welsh Census Design and to contribute to a statistical solution, should the English and Welsh census return rate be low, miss sections of key population groups or geographical areas of these two countries. I have regular updates with colleagues in ONS, who are confirming their continued confidence in delivering a Census 2021, however they continue to recognise that there are still challenges in accessing and using these data to support their census. These include the availability of timely data covering the census period and also the technical and methodological challenges of linking these data.

The ONS have invested considerable resources over a number of years to understand the HMRC and DWP datasets, and to make them more useable for supporting operational decisions on census. They are now beginning to use this expertise to think about how they may potentially augment their census data through this route.

The sharing of data with ONS is enabled through section 47 of the Statistics and Registration Service Act 2007 and by amendments made to the 2007 Act by the Digital Economy Act 2017. These amendments also provide a route for data from UK and GB departments to be shared with devolved administrations, and progress is being made in Scotland. However, it is long-term, complex and challenging work which was not part of Scotland’s Census design.

The Scottish Census design, which was on track to deliver a successful census in 2021 prior to the pandemic, did not include the use of the UK datasets mentioned above. The Scottish Census Design solution was not developed with the intention of using administrative data to mitigate for a low and bias response rate. As mentioned

CTEEA/S5/20/25/1 above, while legislative gateways are available which could provide access to this data, that access would not deliver in the timescales required for a 2021 census. Altering the legislative competence of the Scottish Parliament (using an order under section 30 of the Scotland Act 1998 or otherwise) would not change this position.

You may be aware that NRS as part of our Census design is making use of some Scottish administrative data such as the National Health Service Central Register (NHSCR) to support the work to quality assure Census Output estimates. This is an important part of providing census users with assurance regarding the quality and use of Census Outputs in Scotland.

You may be interested to know that NRS is working with ONS, NISRA and the Welsh Government to issue a consultation paper to users to seek feedback on timescales for the next set of national population projections (NPPs). These are produced by ONS, on behalf of the National Statistician and Registrars General, for each part of the UK and for the UK as a whole. The consultation paper will update users on the change in the timing of the Scottish Census and consider when Census data is available across the UK and how this impacts on timescales for publication of the next set of projections. Census data will be used to provide the latest base population for the projections and to rebase the back series of population estimates. Analysis of these data then helps to inform the assumptions on future levels of fertility, mortality and migration which feed into the production of the NPPs.

Finally, please find attached my letter to Professors Paterson and McVie in which I clarified a point in my letter to them of 21 July 2020. As the Census (Scotland) Order 2020 and the Census (Scotland) Regulations 2020 are now in force, NRS is proceeding with delivering a census in accordance with the legislation which has been made. That will include issuing guidance on the sex question as was indicated to the committee during its consideration of what became the Census (Scotland) Order 2020. Scotland’s Census 2022 will follow the same model and question set as had been planned for 2021. This includes a binary sex question with guidance for a self- identification basis of response.

I hope that you have found this letter to be helpful.

Yours sincerely

Paul Lowe Registrar General for Scotland

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Correspondence from National Records of Scotland to Professors McVie and Paterson of 16 September 2020

Dear Professors Paterson and McVie

Guidance on sex and gender questions in 2021 census

Thank you for your letter dated 31 August 2020.

To clarify the point in my letter of 21 July 2020, the Cabinet Secretary confirmed to the Culture, Tourism, Europe and External Affairs Committee in her letter of 26 February 2020 that, subject to the Census Order and Census Regulations being in force, Scotland’s Census will ask a binary sex question with guidance that provides for a self- identification basis of response. This followed careful consideration of testing and feedback from stakeholders. Both pieces of legislation are now in force and as such NRS considers this issue to be settled.

During an evidence session on 30 January, the Cabinet Secretary noted that while the Committee had no legal responsibility in respect of the guidance, she recognised that the Committee had become heavily involved in the guidance. Following a request from the Committee, the Cabinet Secretary agreed, in her oral evidence to the Committee on 27 February, to consider whether further clarification of the legal status of the Census guidance was required.

The Cabinet Secretary’s letter of 28 April to the Committee addresses this issue and details the additional text to be added to the guidance documentation which covers the full census.

All of the correspondence between the Cabinet Secretary and the Committee can be found on the Scottish Parliament website.

Scotland’s Census 2022 will follow the same model and question set as had been planned for 2021. This includes a binary sex question with guidance for a self- identification basis of response.

Yours sincerely

PAUL LOWE Chief Executive

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Culture, Tourism, Europe and External Affairs Committee

25th Meeting, 2020 (Session 5), Thursday 29 October 2020

BBC Annual Report and Accounts 2020

Note by the Clerk

Background

1. The BBC’s annual report for the year between April 2019 and March 2020 was published on 15 September 2020. Since November 2014, there has been a memorandum of understanding (MoU) between the BBC, the UK Government, Scottish Government and Scottish Parliament. The MoU guarantees a full consultative role for the Scottish Government and the Scottish Parliament in the review of the Royal Charter and ongoing scrutiny of the BBC.

2. The requirements set out in the MoU are that—

• The UK Government will consult with the Scottish Government and Scottish Parliament before recommending that any Royal Charter on the BBC is granted, and also on the detail on the terms of engagement through the review process. • The BBC will send its annual report and accounts to the Scottish Government and that the Scottish Government will then lay these before the Scottish Parliament. • The BBC will appear before Scottish Parliament committees on matters relating to Scotland. • All the above will be enshrined in the BBC Charter (current Charter commenced January 2017 and runs to December 2027).

3. In addition to the Annual Report and Accounts, today’s evidence session provides an opportunity to reflect on the evidence taken on 8 October with representatives from independent Scottish production companies.

Evidence session

4. The Committee will take evidence, via video conference, from—

• Steve Carson, Director, BBC Scotland, and • Glyn Isherwood, Chief Financial Officer.

Supporting Information

5. SPICe have produced a briefing on the BBC Annual Report and Accounts and other related issues which is available in Annexe A.

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Mark Johnson Assistant Clerk Culture, Tourism, Europe and External Affairs Committee 26 October 2020

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ANNEXE A

Culture, Tourism, Europe and External Affairs Committee BBC Annual Report and Accounts 29 October 2020

INTRODUCTION

The BBC’s annual report for the year between April 2019 and March 2020 was published on 15 September 2020.

Since November 2014, there has been a memorandum of understanding (MoU) between the BBC, the UK Government, Scottish Government and Scottish Parliament. The MoU guarantees a full consultative role for the Scottish Government and the Scottish Parliament in the review of the Royal Charter and ongoing scrutiny of the BBC.

The requirements set out in the MoU are that:

This briefing explores the content of the annual report and accompanying publications in relation to the work of the BBC in Scotland. The BBC is undergoing a period of change in leadership and adapting to new technologies, new competitors a changing political discourse. The pandemic has also impacted on the BBC’s delivery this year. Lastly, the Committee has also taken evidence on the culture sector’s response to Covid, journalism and commissioning television programmes.

This briefing is structured into four sections—

• Funding and activity in Scotland; • Key challenges for the BBC; • Covid 19; • Outcomes.

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The BBC’s mission and purposes are set out in its Royal Charter and are included in the Annexe to this paper for ease of reference. While the focus of this paper is on the BBC in Scotland, the funding and leadership of the BBC Group is pertinent to the performance of the corporation within Scotland.

FUNDING AND ACTIVITY IN SCOTLAND

TOTAL FUNDING AND INCOME

The new Director-General’s statement in the Annual Report said—

“It is clear that the BBC will need to focus even more sharply on how to continue to serve all audiences in this fastmoving world. This report demonstrates how much great work has been done, but it also highlights that we will need to keep up the momentum of reform. In an increasingly tough financial environment, we know we need to set ourselves the objective of being as efficient an organisation as we can be. This work has already started and it will mean some tough decisions to come.” (P8)

The BBC has sought to make savings and maximise income from commercial sources in the past number of years. The BBC estimates that it had seen a reduction of 31% in its licence fee income in real terms since 2010. Mr Isherwood’s statement in the 2019-20 Annual Report and Accounts stated—

“This year we delivered £199 million of additional savings to help mitigate the loss of licence fee income and enable investment in services. Savings have been delivered across all areas, with a focus on maintaining our industry- leading overheads and support costs, at 5% of our total cost base. Savings have been achieved through production efficiencies, removing duplication and through careful management of contracts … We are addressing our future financial challenges to meet the reductions in underlying income and invest in modernising our services by delivering £1 billion of recurring savings over the period from 2016/17 to 2021/22. This enhances our original target of £800 million. We are making good progress against the target, delivering £618 million of cumulative savings to date.” (pp 47-48)

Within the current financial year, Mr Isherwood noted that the BBC had identified a further £125m in savings.(p49) The total income for the BBC in 2019-20 was £4.9bn, of which £3.5bn was from the licence fee. (p44)

The table below shows the annual income of the BBC Group in the past four years’ of reporting.

BBC Group Income (£m) 2016/17 2017/18 2018/19 2019/20 Licence Fee 3,787 3,830 3,690 3,520 Other 1,167 1,233 1,199 1,423 Total 4,954 5,063 4,889 4,943

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(Source BBC Annual Report and Accounts 2019/20 & 2017/18)

The table above shows that licence fee income is declining and that 2019/20 was a particularly strong year for other income. The BBC puts the reduction in licence fee income down to the UK Government phasing out funding of free TV licences for over- 75s. The increase in Other income is due to BBC Studios revenue growth. (p44).

The BBC has in recent years expanded its commercial activities. In 2019, BBC Studios acquired the UKTV group in June 2019; previously UKTV was jointly owned with Discovery. Also, in 2019, the BBC launched the UK version of Britbox, a subscription video on demand service alongside ITV.

The table above is in cash figures and does not account for inflation. The chart below shows the percentage change of income in real terms1 since 2016/17.

BBC Group Income (Real terms) Indexed to 2016/17=100 120

+14%

100

-6%

-13% License Fee Other Total

80 2016/17 2017/18 2018/19 2019/20

Since 2010, the BBC has taken on additional funding responsibilities, including for the World Service, which previously was funded through a grant from the FCO. The World Service accounts for around 8% of the BBC expenditure on public service broadcasting (p50).

OVER-75 LICENCE

On 9 November 1999, the UK Government announced that television licences would be free for the over-75s from autumn 2000. This policy was intended to help reduce pensioner poverty. The UK Government’s scheme provided a free licence for the main home of every household containing at least one person over the age of 75.

1 Using HMT Deflators (Sep 2020)

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On 6 July 2015, the UK Government announced that DWP funding would cease and the BBC would be expected to take on the full costs of any ongoing concession offered to older viewers by the start of financial year 2020/21. As part of this change, it was agreed that the BBC could decide whether there should continue to be an age-related free TV licence scheme after June 2020; and if so, what form any concessionary scheme would take. Responsibility for this decision was formally transferred to the BBC by section 89(7) of the Digital Economy Act 2017.

The three years from 2018/19 to 2020/21 will see a phased reduction in DWP funding to cover the cost of providing the over-75 TV licence. Details on how the phased reduction are being calculated and the proportionate reduction as it impacts on licence holders in Scotland have not been reported. However, there is data published by DWP showing expenditure on the over-75s TV licence2. Figures for 2017/18 (when DWP covered the whole cost of the concession) show that expenditure for Scotland was £52 million. 2018/19 (the first year of the phased reduction of DWP funding) saw funding to Scotland reduced to £38 million and in 2019/20, it was reduced to £20m.

On 20 November 2018, the BBC published a consultation paper looking at possible options for the scheme when UK Government funding ends. The consultation paper contained detailed economic analysis of the current scheme (produced by Frontier Economics). It also considered the financial implications for the BBC should it decide to maintain the scheme or replace it with something different.

The consultation paper outlined a range of potential options for the BBC to pursue:

• Copy the existing scheme – likely to cost £745 million per year by 2021/22, or around one fifth of the BBC’s total budget. This is equivalent to the current total spend on all of BBC Two, BBC Three, BBC Four, the BBC News Channel, CBBC and CBeebies. Over-75s would not have to pay the licence fee, but the scale of the service cuts that would be required to fund this commitment would fundamentally change the nature of the service the BBC is able to provide. • Restore the universal licence fee – meaning an end to free TV licences for the over-75s. This would avoid the BBC having to make significant cuts to services; but would have a financial impact on lower income households who may be reliant on the concession to access television services. • Reform the scheme – this could be done in different ways, including: Discounting the cost of the licence fee for older people. Raising the age that someone qualifies for the scheme from 75 to 80. Introducing means-testing to ensure that older people in greater financial need wouldn’t pay, but those who could afford it would.

Following the consultation, the BBC Board concluded that, from June 2020, households that contained someone aged over 75 who is in receipt of Pension Credit will be entitled to a free TV licence. This House of Commons Library briefing sets out the process to arrive at this decision in more detail. The BBC estimates that over 1.5 million households could get free TV licences under the new scheme. The press release accompanying the decision noted that “the Board

2 https://www.gov.uk/government/publications/benefit-expenditure-and-caseload-tables-2020 (See XLS file benefit expenditure by country and region.)

CTEEA/S5/20/25/2 believes this is the fairest option to help the poorest pensioners. It is also the fairest option for all licence fee payers as this means everyone will continue to receive the best programmes and services that the BBC can provide.”

The BBC announced a delay introducing licence fee for over-75s from June to August. Matt Warman MP, Minister for Digital Infrastructure told the House of Commons on 9 July—

“The fact is that the BBC has had a generous licence fee settlement, and it is deeply disappointing that it has chosen to go down the path that it is apparently going down. I hope, of course, that there is yet time to reconsider that, because the hon. Gentleman is right to say that television has been a vital comfort for many people in the past few months, and it is a vital part of our national economy as well.”

Age UK said that the decision was a “kick in the teeth” and that the UK Government should work with the BBC to come up with a “solution to keep TV licenses free”. The House of Lords Select Committee on Communications and Digital 2019 report, Public service broadcasting: as vital as ever argued that this should not have been a decision for the BBC to take—

“The decision on whether to provide free licences to the over-75s is a matter of welfare policy. The BBC should not have been asked to take on this decision, and the BBC should not have accepted it. Responsibility for licences for over- 75s should be off the table in future licence fee negotiations.” (Recommendation 23)

ACTIVITY IN SCOTLAND

The BBC provides a breakdown of expenditure by service of “direct and indirect spend relating to programmes produced in the nation.” The table below shows, in cash terms, the BBC’s expenditure in Scotland. Expenditure by service in Scotland (£m) 16/17 17/18 18/19 19/20 Network Spend TV (inc. Sport and Children’s) 84.2 79.9 80 71 Radio 3.5 3.2 3 3 Online 5.5 2.5 2 3 Total network spend 93.2 85.6 85 77

Local spend TV – BBC One 43.0 42.0 40 35 TV – BBC Two 17.0 12.0 11 TV – BBC ALBA 6.0 7.9 9 8 BBC Scotland* 12 44 Radio Scotland 21.1 22.6 25 24 Radio nan Gàidhael 3.7 4.0 4 4

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Online (and red button) 6.6 8.0 11 10 Total local spend 97.4 96.5 112 125

National Orchestra 4.8 4.8 5 5 Development 1.6 2.2 6 7 Distribution 36.0 33.5 41 37 Total 233.0 222.6 249 251 Source: BBC Annual Report and Accounts 2019/20 and 2017/18. Difference in presentation of data (ie 1dp/0dp) reflects the presentation in those reports.

The trends here are that in the past four years network spend has decreased by 17% while local spend has increased by 28%. The expenditure on “development” has more than tripled in this period. The overall spend has increased by around 8% in cash terms.

However, in real terms the picture is different. There was a drop in spend in 2017-18 but the total BBC spend in Scotland has remained constant at around £250m in 2019- 20 prices. The table below show this—

Expenditure in Scotland (Real terms) (£m 19/20 Prices) 16/17 17/18 18/19 19/20 Total 249 233 255 251 Source: BBC Annual Report and Accounts 2019/20 and 2017/18. HMT GDP Deflators Sep 2020

The chart below shows the spend in 2019/20.

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Since the establishment of the BBC Scotland Channel, BBC Two Scotland no longer carries opt out hours (i.e. hours of programming that is only for Scottish audiences). This has led to a fall in opt-out hours in the past four years from 927 in 16-17 to 604 in 19-20. Taking the opt-out hours together with the new channel shows a large increase in hours to 2,595 in 2019-20.

BBC Scotland employs currently employs more than 1,000 workers across the country. In June this year it announced it was seeking to reduce spending by £6.2m by the end of next March and that it planned to cut around jobs by around 60 jobs (c5% of the workforce). This follows an increase in the headcount in Scotland in the previous year. The table below shows the headcount in Scotland over the past 4 years. The BBC reports on two different figures: the number of individuals employed to directly support the services produced in Scotland; and the number of individuals

CTEEA/S5/20/25/2 based in Scotland across all services including support functions. For the purposes of comparison, the average FTE figure for the BBC Group is also shown.

Scotland (Headcount) Support the BBC Group services Individuals average (FTE) produced in based in Scotland Scotland 2016/17 1,104 1,199 21,271 2017/18 924 1,108 21,583 2018/19 988 1,203 22,328 2019/20 1,039 1,310 22,749 Source: BBC Annual Report and Accounts 2019/20 and 2017/18.

Spend in Scotland Compared to Other Nations

The Committee has explored the extent to which the licence fee monies collected in Scotland are spent in Scotland. The three tables below show, licence fee income and spend (including distribution etc) for the four nations and GB and Northern Ireland as a whole. The third table show the level of spend as a percentage of fee income. The totals for licence fee income do not match the figures reported in the section above – the licence fee is also required in the Channel Islands and the Isle of Man. The total for Wales includes the grant to S4C.

(£m) License fee income by nation 2016/17 2017/18 2018/19 2019/20 England 3,164 3,201 3,085 2,946 Scotland 322 324 311 294 Wales 189 191 184 175 Northern Ireland 100 101 97 93 Total GB & NI 3,775 3,817 3,677 3,508 (£m) Spend 2016/17 2017/18 2018/19 2019/20 England 2,095 1,954 2,136 2,028 Scotland 233 223 249 251 Wales 186 176 179 207 Northern Ireland 97 89 94 105 Total GB & NI 2,611 2,442 2,658 2,591

* Network content is attributed on an Ofcom basis, which excludes foreign productions. Spend as % of Fee income 2016/17 2017/18 2018/19 2019/20 England 66% 61% 69% 69% Scotland 72% 69% 80% 85% Wales 98% 92% 97% 118% Northern Ireland 97% 88% 97% 113% Total GB & NI 69% 64% 72% 74%

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Source: BBC Annual Report and Accounts 2019/20 and 2017/18.

The tables above show that in each of the four years over a quarter of the fee income was not identified as spend in any of the four nations. England has the lowest percentage of licence fee income identified as being spent in that country and this is lower than the average for GB and NI. All the other nations’ percentages are higher than the average for the whole of GB and NI, with Wales and Northern Ireland being significantly over 100% in the previous financial year.

The percentage increase for Scotland between 2018/19 and 2019/20 was largely due to a fall in licence fee revenue. In Northern Ireland and Wales, there was both a fall in revenue and increase in spend.

Mr Isherwood told the Committee last year that one of the reasons for Wales’ percentage being higher is the amount of drama produced in Cardiff. Furthermore, he said that there are fixed costs in having nation-based organisations which means that the spend per head is higher in smaller nations (Col 22).

The Committee explored the reasons for the large gap between licence fee income, at a GB and NI level, and the amount identified as being spent within that territory by the BBC. Mr Isherwood told the Committee—

“The World Service accounts for more than £250 million of that expenditure. There is a cost for sports rights, and last year we had the Commonwealth games and the world cup. We also have distribution contracts with international companies that operate satellite contracts. There is a range of costs, including for outsourced provision of services and facilities in other parts of the world. Specifically, there is a financial and administrative operation that works from Chennai.” (col 28)

The gap between the income generated by licence fees and territorial spend was £917m in 2019/20. To further complicate matters, as noted above, the BBC’s commercial activities are becoming more important in the funding of the service and it is unclear to what extent the activities and profits of those businesses support different nations’ creative industries.

At the time of the last Charter renewal, the then Director General, Tony Hall, wrote to the Secretary of State and representatives of the four devolved governments. In this he set out the progress at that time on the BBC’s activities in the devolved nations. Among other things, Lord Hall said—

“In the next Charter [i.e. 2017-2027] we plan to make Scotland one of our Centres for Excellence for factual television production, mirroring our drama production success in Wales. This builds on the factual base we currently have in Scotland, particularly in arts and science, and supports the established independent sector there.”

BBC Scotland Channel

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The BBC Scotland channel was launched on 24 February 2019. The latest BBC annual report covers the channel’s first full year. The proposal for the channel, presented to Ofcom in November 2017, said—

“This will be a channel for modern Scotland, a home for compelling, quality content that appeals to and reflects the diversity of Scottish audiences today. It will provide an ambitious and innovative destination for those seeking to see more of their lives, stories and interests on screen.”

News and current affairs was identified as the “heart of the schedule”, particularly with the flagship hour-long weeknight news broadcast, The Nine. However, the BBC saw the channel providing the opportunity to engage and enhance the culture of Scotland. The proposal said—

“The channel will look to create close bonds with its audience, bringing high quality drama, comedy, factual, sport and entertainment programmes that will seek to inform, to educate and to entertain. The channel will offer the space for the creative sector to try new things, bringing new voices, new genres and new perspectives to broadcasting in Scotland. The additional investment is an opportunity for the sector to grow and flourish, helping to develop a sustainable training and production base for the industry in Scotland.”

The BBC has been positive in its assessment of the channel. The Chair of the Scotland Nation Committee said in the recent annual report—

“The BBC Scotland channel has the highest reach in Scotland after the five main channels and it attracts a younger, more diverse audience than the BBC’s more established channels and therefore adds unique reach to the BBC’s portfolio. The Nine also attracts a younger audience than other BBC news programmes in Scotland. And it’s not just the linear channel that’s performing well; the performance of BBC Scotland content on iPlayer was quite outstanding, with requests to view BBC Scotland-commissioned and co- commissioned content having more than doubled since launch.” (p107)

The broad share of genres of programmes broadcast on BBC Scotland are shown in the chart below:

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BBC Scotland

Drama, Comedy, Entertainment, Music & Arts, 25% Education, Factual & Religion, 44%

Sport & Leisure, 9% Daily, Weekly News and Current Affairs, 22%

As noted above, the expenditure on BBC Scotland was £44m in 2019/20. The Annual report provided a further breakdown of these costs—

“£35 million of this was spent on programming, including a ‘programme inventory’ from 2018/19 of £4 million. The rest of the cost relates to support costs (£8 million) and presentation and commissioning costs (£1 million)” (footnote on p144).

Donalda McKinnon, the previous head of BBC Scotland, told the Committee last year that in the first year of operation BBC Scotland was “working with around 80 different independent production companies as well as our own in-house teams and creating 80 new jobs in our newsroom, we have either met or are ahead of what Ofcom set out for us” (Col 2).

Ofcom’s Media Nations report for Scotland, published in August noted that the BBC Scotland Channel “had an average viewing share of 2.1% between April 2019 and March 2020 during its broadcast hours between 7pm and midnight, with a reach of 15.5%”, which was in line with expectations. However, Ofcom noted that “among the harder-to-reach 16-34 demographic, the channel had an average viewing share of 1.5% over the same period, ranking 11th behind the main five PSB channels and other channels such as Dave and E4.” A theme of Ofcom’s criticism of the BBC in recent years has been the way in which the BBC attracts younger viewers and listeners.

BBC Alba

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The BBC contribution to BBC Alba in 19/20 was £8m, which is a cash decrease from the previous year, which was reported as £9m. Given the figures are rounded to the nearest million it is difficult to quantify the change as a relatively small change could affect the rounded figure.

BBC Alba’s reach among the Gaelic-speaking 16+ population in Scotland is 57.4%. And the average viewer spent around 3hrs20m watching per week. Among the overall 16+ population in Scotland, the reach was 10% and the average viewer watched around 1hr53m a week.

BBC Alba broadcast 2,595 hours in 2019-20. The broad share of genres of programmes broadcast on BBC Alba are shown in the chart below:

BBC Alba Drama, Comedy, Entertainment, Children's, 22% Music & Arts, 26%

Daily, Weekly News and Current Affairs, 8%

Education, Factual & Sport & Leisure, Religion, 35% 9%

Radio

The most recent data on radio listenership shows that by reach BBC Radio 2 was the most popular radio station in Scotland with a weekly reach of 24%, followed by BBC Radio Scotland (18%), and BBC Radio 1 (13%). Taking the measure of listening hours, BBC services accounted for 41% of total listening; over a third of total listening was to UK-wide services such as BBC Radio 2. BBC Radio nan Gàidheal was estimated as reaching 58% of the Gaelic speaking community in Scotland.

How people are accessing radio output is changing. The most recent data shows that two thirds of adults own a DAB radio and 27% of homes own a smart speaker. Radio

CTEEA/S5/20/25/2 listening through digital platforms made up 57% of all listening in the first quarter of this year. 3

The output of both Radio Scotland and Radio nan Gàidheal is identified in the annual report either as “News and Current Affairs” or “General”. For Radio Scotland the split of these categories in 2019/20 was 38% News and Current Affairs and 62% General. For Radio nan Gàidheal it was 13% News and Current Affairs and 87% General. These proportions have been stable over the past four years.

Spending in 2019/20 on BBC Radio Scotland was £24m, around £1m less than the previous year. Spend on BBC Radio nan Gàidheal was unchanged at around £4m.

The chart below shows the pence per user hour4 for the five national non-digital stations and the regional/national services. By this measure, in 2019/20, Radio Scotland is more expensive than other English-medium stations in Wales and Northern Ireland and twice the average for regional stations in England.

Radio - Cost per user hour (pence)

0 10 20 30

BBC Radio 1 BBC Radio 2 BBC Radio 3 2018/19 2019/20 BBC Radio 4 BBC Radio 5 Live

BBC Local Radio (in England)

BBC Radio Wales BBC Radio Cymru

BBC Radio Scotland BBC Radio nan Gàidheal

BBC Radio Ulster/Radio Foyle

KEY CHALLENGES FOR THE BBC

The Chair’s statement on the BBC’s annual report set out some of the broad issues facing the BBC, including the policy changes around the licence fee. Sir David Clementi said—

3 Data quoted in this and the previous paragraph is sourced from Ofcom’s Media Nations report for Scotland, published in August 2020. 4 The cost in pence for every hour listened. (Total cost/(listeners x avg hours spent listening to service))

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“The next few years will define the long-term future of the BBC. In part, this is because of the continued growth of well-funded competitors in the global marketplace. In part, it is because there are important milestones ahead: Ofcom’s review of Public Service Broadcasting; the setting of the licence fee for the second half of the Charter, effective from April 2022; the mid-term review of governance and regulation; and, the Charter itself coming to an end in 2027” (p6).

The current BBC Royal Charter runs from 1 January 2017 to 31 December 2027 – an eleven year period.

NEW LEADERSHIP

This year has seen a change in leadership of the BBC Group and BBC Scotland. Tim Davie took over as DG in September, having previously been CEO of BBC Studios. His introductory speech argued that the BBC’s faced a potentially existential risk, he said, “the future of a universal BBC can no longer be taken for granted”. In response to this risk, he said—

“I want a radical shift in our focus from the internal to the external, to focus on those we serve: the public. From Cornwall to Shetland, from Suffolk to County Fermanagh. This is not just an obsession with youth, it is a determination, an obligation to make all parts of the UK feel it is their BBC. Ensuring everything we do is not only in line with public service values - that is no longer enough by itself - but also making the highest impact with our limited time and money.”

Mr Davie suggested that the BBC should not try to compete on the same ground as other media organisations and that there will be a “focus on being more rather than less BBC, more distinctive, and committed to our unique public service mission”. Mr Davie identified four priorities—

• Renewed commitment to impartiality • Focus on unique, high-impact content • Extract more from online • Build commercial income

In July the BBC announced that Steve Carson would take over as Director of BBC Scotland this autumn. Mr Carson was previously been Head of Multi-Platform Commissioning for BBC Scotland.

FUNDING SETTLEMENT

The Charter provides for two funding settlements. The first runs for the period 1 April 2017 to 31 March 2022, and the second will be from 1 April 2022 and last for at least 5 years. The Secretary of State will be able to determine “level of the licence fee and the level of licence fee revenue for the period of the settlement”. The Secretary of State, in determining a funding settlement, must—

• assess the level of funding required for effective fulfilment of the Mission and promotion of the Public Purposes;

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• consider an assessment of the BBC’s commercial income and activities; and • consult the BBC.

House of Lords Select Committee on Communications and Digital 2019 report, Public service broadcasting: as vital as ever recommended that a BBC Funding Commission be established to oversee the process for setting the licence fee. It said—

“In the current competitive and fast-moving environment the BBC needs to be properly funded. The BBC Funding Commission should consult widely on the BBC’s role and functions, taking account of all its duties and privileges, and public expectations, before making a recommendation to the Secretary of State. The BBC’s responsibilities to serve both young and old audiences, to compete with big tech and to remain a source of soft power, require a generous settlement” (Recommendation 24).

The recommendation was rejected by the UK government but the Government response said that it “recognised the importance of greater transparency in future settlements” and would set out more detail on the process to be followed in the next financial settlement in due course. The UK Government set out more detail on its areas of focus on this topic in its submission to the House of Commons Digital, Culture, Media and Sport Committee inquiry into The future of public service broadcasting; the UK Government stated—

“In the coming years we will of course be taking a proper look at our public service broadcasting system, including how it should be funded, and the BBC’s central role within it. This will start with the consultation on whether to decriminalise TV licence evasion, which will be followed by the process for agreeing the next licence fee settlement. And then, the midterm review of the BBC Charter, due to take place by the end of 2024, which is an important process and will consider key questions including whether the current regulatory arrangements for the BBC are working effectively and whether any reforms are necessary. All of this will be in the context of a licence fee based charter that runs until 2027. The Government will consider the future of wider PSB reforms throughout this period to ensure that public value is delivered in a sustainable way.”

Decriminalisation of TV licence fee non-payment

A TV licence is needed to:

• watch or record programmes as they’re being shown on TV or live on an online TV service; • download or watch BBC programmes on iPlayer.

In some cases, where there is a refusal to pay the fine and where all other enforcement methods have been tried, a person can be sent to jail. The BBC contracts companies to collect the fee under the trade mark “TV Licensing”. The Policy for TV Licensing Prosecutions (May 2019) sets out the factors that are taken into account in determining whether to prosecute in a particular case. Decisions to prosecute involve an evidential test and a public interest test.

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Section 77 of the Deregulation Act 2015 required the Secretary of State to carry out a review of the sanctions for non-payment. An independent review was established and was led by David Perry QC. The review looked at options for changing the current enforcement measures, including the decriminalisation of TV licence evasion offences, and whether these options would represent an improvement to the existing system. The Perry Review was published on in July 2015. This found that the current regime represented a “broadly fair and proportionate response” to the problem of evasion and provided “good value for money” for both licence fee payers and taxpayers. It recommended, among other things, that while the current licence fee collection system was in operation, the existing system of criminal deterrence and prosecution should be maintained.

In 2015, the UK Government agreed that “the current regime represents a broadly fair and proportionate response to the problem of licence fee evasion and provides good value for money (both for licence fee payers and taxpayers)”. The UK Government continued—

“However it is not the case that the criminal sanction is endorsed; rather it is necessary because of the characteristics of the licence fee framework.”5

On 5 February 2020, the DCMS launched a consultation on whether to decriminalise licence fee evasion and introduce a civil enforcement scheme. In reaching a decision, the DCMS said that it would consider:

• whether an alternative, non-criminal enforcement scheme is fairer and more proportionate; • the cost and difficulty to implement any alternative scheme; • the potential impact on licence fee payers, particularly the most vulnerable and those with protected characteristics; and • the overall impact on licence fee collection.

The consultation closed on 1 April 2020. In its consultation the UK Government stated that the landscape for TV Licences had changed including the requirement of a licence to use the iPlayer and the BBC’s decision not to maintain free TV Licences for all over- 75s. The consultation stated—

“The Government remains concerned that, combined with the threat of a criminal prosecution, such enforcement approaches may appear disproportionate, heavy-handed and may cause considerable stress and anxiety, in particular to the most vulnerable in society.”

The Perry review estimated the impact on Licence fee revenue to moving to a civil procedure for recovery as falling between losses of £16m and £156m each year as well as increased administration costs. (p83) The BBC Chairman’s statement in the 2019-20 Annual Report stated—

5 DCMS A BBC for the future: a broadcaster of distinction (2015) p99

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“[The Perry Review] calculated that the cost of decriminalisation to the BBC was likely to be at least £200 million a year” (pp6-7).

OFCOM’S ROLE

The current charter provided a new role for Ofcom. In summary these powers are:

• Set an operating licence regime for the BBC’s UK public services containing its regulatory obligations. • Producing an operating framework, setting out how Ofcom are to regulate the BBC. • When the BBC proposes service changes, Ofcom have the final say on whether the BBC has considered all relevant matters and whether any impact on the market is justified by the public value of the change. • Ofcom must report annually on how it has discharged its duties and carry out further reviews of the BBC during the Charter period. • In the first instance, the BBC handle complaints. If a complaint is not resolved to the complainant’s satisfaction, they may then appeal to Ofcom. The regulator will be able to consider complaints about all BBC content.6

The BBC and Ofcom both report on the BBC’s duties, for example quotas. Members will recall from the Committee’s recent session with producers that the BBC met its quotas for producing and commissioning programmes identified as Scottish and on independent productions.

At the time of writing Ofcom’s annual report on the BBC has not been published. Last year, Ofcom reiterated “recurring themes” of—

• Engaging young people; • Representation and portrayal of the whole of the UK society; • Embedding transparency into its working practices, specifically explaining its decisions and undertaking external engagement; and • Recommendations in relation to News and Current Affairs, highlighting four key areas of action: o Continue to prioritise accurate news provision, o Have greater confidence in its approach to due impartiality, o Represent the whole of the UK better, and o Online content to “stand out and engage younger people”.

This year’s Ofcom review is expected shortly.

Ofcom has recently issued a call for evidence on the market impact of BBC Sounds. The BBC’s annual report stated “BBC Sounds has taken off this year, ending significantly ahead of our all-audience targets for users”. (p2) CHANGING MARKETS

6 House of Commons Library Briefing: BBC Charter renewal (Dec 2016)

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In terms of markets, there have been two fundamental shifts over the past two decades. In terms of TV, the House of Lords Select Committee on Communications and Digital 2019 report, Public service broadcasting: as vital as ever said—

“The way in which we watch television is changing. Twenty years ago, most people relied on five free-to-air terrestrial channels provided by public service broadcasters (PSBs). These broadcasters now face competition from hundreds of other channels and online services. Subscription video on demand services (SVODs) such as Netflix and Amazon Prime have enjoyed rapid success. They have made available thousands of hours of content at relatively low prices and offer each viewer a personalised experience. Almost half of UK households now subscribe to an SVOD, while YouTube is also a major competitor.” (p3)

Similarly, the market for the consumption of music and spoken word has undergone radical changes with streamers and on demand services playing an increasing role.

In the news market, much more news is consumed online. Therefore, the importance of the online space to other news organisations business models has increased.

The BBC’s annual plan also noted that consumption of alternatives to TV, e.g. gaming and video calling, had increased during the pandemic but that the longer term impacts and trends are unclear.

Ofcom has launched Small Screen: Big Debate to “seek ideas and prompt discussion on how to make sure the UK has a resilient public service broadcasting system that continues to meet audience needs.” To support this, in February 2020 Ofcom published a five-year review of Public Service Broadcasting (from 2014-2018).

Ofcom’s five-year review had five key findings—

• Audiences continue to highly value the purposes of PSB, including trustworthy news and programmes that show different aspects of UK life and culture. • Viewing, especially among younger people, continues to decline. Online and on-demand services like the BBC iPlayer and All4 have not to date fully made up for the loss of live broadcast viewing. • The PSB channels have generally fulfilled the PSB remit. Investment by the PSB channels has also played an important role in supporting the UK’s creative economy, including an increasingly vibrant production sector across the nations and regions. • Maintaining the current level and range of programmes is a challenge for the PSB channels. Other providers such as Sky and Netflix are offering both a large volume and wide range of high-quality content to UK audiences. • The extended choice in content and growing investment in original UK programming is generally positive both for audiences and for the sector as a whole. However, there are some significant differences in the mix of genres offered by different providers as well as the availability of this content to all audiences in the UK.

EQUAL PAY

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Along with the Annual report, the BBC has published its Pay Gap Report 2020. The headline median gender pay gap was reported to be 6.2%. There has been a steady reduction in the gender pay gap since 2016/17 when it was reported to be 9.3%.

There is a negative median pay gap for BAME employees of -0.3% (i.e. the median pay was higher than the median pay for those not identifying as BAME). Within the individual categories, mixed race and black employees’ pay gap was positive (ie lower median pay), 3.4% and 6.9% respectively. Asian, “Other BAME” and “Other white” employees had a negative pay gap.

BBC Reported Pay Gaps 2020

2019/20 2018/19 Difference in Difference Median Mean Median Mean Medians in Means Gender 6.2% 6.3% 6.7% 6.8% -0.5% -0.5% BAME -0.3% 3.0% -1.1% 3.2% 0.8% -0.2% Disability 3.6% 4.9% 3.1% 4.8% 0.5% 0.1% LGBTQ+ 0.8% -0.3% 0.7% -0.7% 0.1% 0.4% Part-time 2.6% 3.9% 1.7% 1.5% 0.9% 2.4% Source: http://downloads.bbc.co.uk/aboutthebbc/reports/reports/pay-gap-report-2020.pdf

Mr Davie’s introductory speech set out his ambition for the BBC. He said—

“Our ambition is to create an organisation which reflects more accurately the society we serve. That’s 50% women and 50% men, at least 20% Black, Asian and Minority Ethnic, and at least 12% Disabled. A modern 50/20/12 organisation. Alongside this, we will deliver plans to build our socioeconomic diversity, as well as ensuring we are truly inclusive for all LGBTQ+ employees.”

COVID-19

Ofcom’s Media Nations 2020 Scotland report stated—

“The role of broadcasters has rarely been so important as in the early stages of the Covid-19 pandemic. The public looked to broadcasters – TV and radio – to keep them updated on news about the pandemic, and entertained as the lockdown kicked in. Viewing figures from the end of March onwards underline what a key role all broadcasters played at that time.

“The pandemic has had a significant impact on all aspects of the broadcasting sector in Scotland and will continue to affect the industry for many months to come.” BBC Scotland set out its actions in the face of the initial lockdown in a submission to the Committee in May. The submission was in broadly two parts: the impact of the pandemic on the BBC’s operations and finances, and the BBC’s contribution during the coronavirus crisis.

IMPACT ON BUSINESS

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The submission in May noted that production of programmes was interrupted and this will impact on the pipeline of programmes. In addition, the orchestras and choirs funded by the BBC had to cease live performances. The stopping of production was an issue the Committee discussed at its last Committee meeting; Claire Mundell from Synchronicity Films told the Committee—

“When productions are pushed along the line, that has a knock-on effect on commissioning opportunities. The terrestrial broadcasters are mostly still operating linear channels with slots. That means that new opportunities are now well into 2023, if not 2024. That is a long time for companies to sustain their businesses and still be available to compete for those projects.”

The BBC’s income has also been impacted. The submission said—

“Income has been impacted as it has become more difficult to collect the fee during lockdown, there has been a delay to the implementation of the over 75s policy and commercial income has reduced.”

As noted above, BBC Scotland has planned redundancies and is seeking to reduce spending by £6.2m by March 2021.

BBC’S SOCIAL ROLE AND RESPONSIBILITIES DURING THE PANDEMIC

Ofcom reported that the BBC was the most-used news source for information about Covid-19. Its Media Nations 2020 Scotland report stated—

“More than seven in ten (76%) online respondents in Scotland used the BBC, either through TV, radio or online, during the first four weeks of the lockdown period. This was the most used service, as it was across all the nations (England 79%, Northern Ireland 83% and Wales 78%) for the 12 weeks to mid- June.” (p7)

BBC Scotland commissioned topical programmes during the lockdown, including Socially Distant with Susan Calman, filmed from the presenter’s garden and utilising video conferencing. The People’s News: Virus Diaries gave an insight into life in lockdown for families across Scotland, with participants sharing advice on how to cope. The BBC broadcast content to support home-learning during lockdown as well as religious programming while places of worship were closed.

In April. the BBC announced a “package of measures to maintain creative health of the independent production sector during the COVID-19 pandemic”. This included doubling the Small Indie Fund to £2m. The Small Indie Fund had been launched in January 2020 and had a “strong focus on diverse and out-of-London producers”. The Committee has explored the impact of the pandemic on freelancers across creative industries. The BBC’s submission in May stated—

“For those on a fixed term contract or those engaged by the BBC as a PAYE freelancer, and who joined the BBC before 28 February 2020, the BBC will pay their full salary (or £3,000 per month, whichever is the lesser amount) for up to

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three months from 1 March 2020. … For those who were previously engaged by the BBC’s commercial subsidiaries, … this financial obligation will be aided by funding from the Government’s Coronavirus Retention Scheme.”

The BBC annual report noted that demand during lockdown for its online services, including the iPlayer, were unprecedented. It also outlined its work, along with others, to “rapidly identify and stop the spread of harmful coronavirus disinformation”. It also stated—

“BBC News played a key role in providing audiences with trusted and accurate information, refocusing its output to provide a continuous news service on television, radio and online. In the first week of social distancing, nine in ten UK adults consumed BBC News across all platforms. The same was true for eight in ten young adults (16-34 year olds)” (p4).

BBC Scotland continues to air the First Minister’s daily briefings. The BBC had indicated in early September that continued live coverage would be based on “editorial merit”. On 17 September, the BBC said it would continue the live coverage at least in the short term, and that "other voices and perspectives" would now feature alongside the FM's weekday briefings.

OUTCOMES

The BBC’s mission and purposes are reproduced in the Annexe to this paper. Large parts of the annual report are structured around those purposes. Taken together the BBC has an expansive and ambitious role. It’s Annual Plan for 20-21 said—

“As the national broadcaster, the BBC has a crucial and central role to play at this time of crisis. Uniquely, we connect and serve every Nation of the UK, every region and local area, on TV, radio and online. We serve all audiences, no matter who they are or where they live. We are a trusted provider of public information, a forum for discussion, debate and the sharing of experience. We help keep the UK entertained and laughing when we need it most. We are doing everything we can to inform, educate and entertain the British public at a time when that has never been more important.”

This section will not tackle the breadth of this ambition. Rather, it will look at the public perceptions of the BBC and reflect on recent work the Committee has undertaken on journalism and TV commissioning.

PUBLIC PERCEPTIONS

Ofcom’s report on the BBC last year, reflecting on the 2018-19 Annual report, noted—

“Our research shows that certain groups continue to have a lower than average perception of the BBC; people from lower socio-economic groups, people aged over 65, especially disabled people in this age group, and people in Scotland continue to rate the BBC’s delivery less favourably than the population as a whole.”

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The table below shows the answers to three questions on people’s views on the BBC based on survey data, the percentages shown are those that agree with the statement. The bottom three rows show metrics of reach across the three main platforms, TV, Radio and online.

Northern England Scotland Wales Ireland BBC is effective at informing, educating and 71% 64% 66% 62% entertaining people in the UK/them

BBC is effective at providing content/services 69% 61% 74% 60% that set a high standard for quality

BBC is effective at 57% 51% 56% 52% reflecting people like them

BBC Television reach 78% 79% 78% 79%

BBC Radio reach 62% 53% 69% 58%

BBC Online reach 53% 58% 60% 45% Source BBC Annual Report and Accounts pp32-35.

COMMISSIONING

At its last meeting on 8 October, the Committee took evidence from three independent producers exploring public service broadcasters’ (PSBs) commissioning. PSBs have quotas requiring them to commission 25% of their original hours from independent producers. Independent is defined for the purpose of these quotas as not being part or fully owned by other broadcasters. This quota is set out in section 277 of the Communications Act 2003.

Public service broadcasters are also under obligations to ensure that a proportion of the programmed hours and the money spent on making programmes are classed as being made outside London. In terms of programmes made in Scotland, the nature of this obligation is different for different PSBs. The BBC has specific targets for each of the nations. For Scotland, this is 8% of qualifying network spend and hours. The BBC met its quota in 2019 with 9.1% of qualifying spend and 15.1% of qualifying hours deemed to be Scottish under Ofcom’s criteria.7

7 See https://www.ofcom.org.uk/tv-radio-and-on-demand/information-for-industry/public-service- broadcasting/annual-report-2020

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The BBC’s Commissioning Supply Report 2019 provides a summary of the BBC’s activities in Scotland (p21). This stated—

“In 19/20 we produced 1,400hrs of originated programming across BBC One Scotland and the new BBC Scotland Channel. The BBC Scotland Channel transmitted 890 originated hours (50% of its schedule). This was provided by around 80 suppliers from across the sector, representing a mix of both established and new companies.”

The Commissioning Report stated that 99% of first run originated programmes were made in Scotland. This report also stated that 61% of factual programmes were made by independent producers; however, that figure is much smaller for Drama, Entertainment and Sport, where BBC or BBC Studios play a much larger role.

A recent submission to the House of Commons’ Digital, Culture, Media and Sport Committee by Screen Scotland stated—

“While a rich, highly competitive and diverse PSB ecology is one of the UK’s great strengths, the fact that broadcasters remain too focused within London and the South East of England is a weakness.

“Commissioning power – the ability to ‘green light’ a project - has become highly centralised since the start of the 21st Century.

“To the best of our knowledge the BBC has no network genre controllers outside of London, C4 has one. No UK network PSB has a channel controller based outside of central London. London-to-London patterns of commissioning where London based commissioners commission London based producers remain the norm across all of the PSBS, the creative and economic opportunities the PSBs can enable remain overwhelming centralised within the M25.”

Screen Scotland went onto argue that this situation should change so that those making decisions on programs have a wider geographic spread. A particular issue was highlighted by Neil Webster from Happy Tramp North who told the Committee—

“With decentralisation, one big issue that we always find is that when commissioning power is diluted—for example, when a show is made between BBC Scotland and BBC Two—the speed of decision making is slowed down, and speed is crucial, particularly for small companies.” (Col 9)

The MOU between Screen Scotland and the BBC was agreed in 2019 and sets out three shared ambitions—

• Nurture Scottish talent and enable its progression • Stimulate production growth and economic success across the film and television sectors • Extend the range of Scottish film and television and its global reach

The BBC made a number of commitments around producing, commissioning and supporting the industry in Scotland. This included—

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• Deliver on its commitment to open up 100% of television content to competition in Scotland by 2027, other than where it is not value for money to do so. • Ensure commissioners with decision-making power in a range of relevant genres visit Scotland to communicate their ambition and programming needs, and actively develop relationships with production companies who have ideas or potential to deliver against them. • A number of commitments on spend and delivering a minimum number of titles in different genres per year.

The BBC’s Commissioning Supply Report 2019 stated that “in 2019 the BBC met or exceeded its MOU commitments.” One of the BBC’s and Ofcom’s aims is to ensure that the BBC reflects the UK’s diverse cultures, regions and nations. However, Clare Mundell argued against too much focus on Scottish production companies telling only stories about Scotland. She said—

“Although we are here to take Scottish stories to the world, to the rest of the UK and to ourselves, we also try to think of ourselves as a great production company based in Scotland, rather than a Scottish production company. A sea change has to happen, so that Scottish production companies can just as easily make a story that is set in London, but we make it here instead of in London. Scotland doubles for lots of different countries, towns and cities.” (Col 20)

NEWS GATHERING AND JOURNALISM IN SCOTLAND

The Committee held an evidence on journalism on 1 October. The Committee explored the importance of public interest journalism and issues facing the industry.

The BBC’s Local Democracy Reporters scheme has allocated 21.5 posts to local news organisations in Scotland. These journalists are funded by the BBC as part of its latest Charter commitment but employed by regional news organisations. They cover local authority and other public bodies. The review also recommended that this scheme be reviewed and potentially moved away from the BBC and noted that this scheme ideally should be a short term support. However, Peter Geoghegan from The Ferret suggested that this support had led to newspapers shoring “up their bottom line to allow them to continue to make [cuts]” (Col 12)

The Committee’s evidence session looked at some of the conclusions of the Cairncross Review. That review was mindful of the tension between public support of media and maintaining independence of the press. The BBC is a major public intervention into the news market in the UK. Publishers have been concerned that particularly the online offering is difficult to compete against. The Cairncross review stated—

“[The BBC] is successfully delivering the objectives driving this Review: high- quality journalism, a substantial part of it in the form of public-interest news. It seems unlikely that its news provision – free at point of use (and completely free to anyone who has not paid the licence fee) – has much effect in undermining people’s willingness to buy subscriptions. After all, it is not alone in offering high-quality news without directly charging for access. Sky News

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online, The Guardian, the online Independent and indeed most regional and local papers also do exactly that. As for “soft” content, the BBC argues that a diverse spread of material is essential in order to serve all audiences, especially the young, and may indeed lure readers to public interest news, which might not be their first priority.” (p96)

The Review recommended that—

“Ofcom should assess whether BBC News Online is striking the right balance between aiming for the widest reach for its own content on the one hand and driving traffic from its online site to commercial publishers (particularly local ones) on the other. The BBC should do more to share its technical and digital expertise for the benefit of local publishers.”

The Annual report noted that there was a high level of demand for BBC news through television and particularly online. The BBC’s annual plan 20/21, published in May 2020 stated—

“BBC TV news audiences during the crisis are at their highest for many years, some of our strongest growth has been in digital news where browsers have been almost 60% higher than the previous record just five months ago.” (p21)

Sir David Clementi said in his statement in the BBC’s annual report—

“At the end of 2019, the Board approved bold plans for BBC News to modernise our news services in order to serve audiences better” (p6).

The BBC’s 2020 Annual Plan provided a little more detail on how the BBC plans develop a “story-led” approach to news. This approach is intended to “ensure the most important stories will be produced with our increasingly digital audiences in mind” rather than, for example, being produced only to support a linear output in radio or television (p21). Ned Sharratt SPICe Research 26 October 2020

Note: Committee briefing papers are provided by SPICe for the use of Scottish Parliament committees and clerking staff. They provide focused information or respond to specific questions or areas of interest to committees and are not intended to offer comprehensive coverage of a subject area. The Scottish Parliament, Edinburgh, EH99 1SP www.parliament.scot

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ANNEXE

MISSION AND PURPOSES OF THE BBC

The BBC’s Mission The Mission of the BBC is to act in the public interest, serving all audiences through the provision of impartial, high-quality and distinctive output and services which inform, educate and entertain.

The Public Purposes

The Public Purposes of the BBC are as follows.

(1) To provide impartial news and information to help people understand and engage with the world around them: the BBC should provide duly accurate and impartial news, current affairs and factual programming to build people’s understanding of all parts of the United Kingdom and of the wider world. Its content should be provided to the highest editorial standards. It should offer a range and depth of analysis and content not widely available from other United Kingdom news providers, using the highest calibre presenters and journalists, and championing freedom of expression, so that all audiences can engage fully with major local, regional, national, United Kingdom and global issues and participate in the democratic process, at all levels, as active and informed citizens. (2) To support learning for people of all ages: the BBC should help everyone learn about different subjects in ways they will find accessible, engaging, inspiring and challenging. The BBC should provide specialist educational content to help support learning for children and teenagers across the United Kingdom. It should encourage people to explore new subjects and participate in new activities through partnerships with educational, sporting and cultural institutions. (3) To show the most creative, highest quality and distinctive output and services: the BBC should provide high-quality output in many different genres and across a range of services and platforms which sets the standard in the United Kingdom and internationally. Its services should be distinctive from those provided elsewhere and should take creative risks, even if not all succeed, in order to develop fresh approaches and innovative content. (4) To reflect, represent and serve the diverse communities of all of the United Kingdom’s nations and regions and, in doing so, support the creative economy across the United Kingdom: the BBC should reflect the diversity of the United Kingdom both in its output and services. In doing so, the BBC should accurately and authentically represent and portray the lives of the people of the United Kingdom today, and raise awareness of the different cultures and alternative viewpoints that make up its society. It should ensure that it provides output and services that meet the needs of the United Kingdom’s nations, regions and communities. The BBC should bring people together for shared experiences and help contribute to the social cohesion and wellbeing of the United Kingdom. In commissioning and delivering output the BBC should invest in the creative economies of each of the nations and contribute to their development.

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(5) To reflect the United Kingdom, its culture and values to the world: the BBC should provide high-quality news coverage to international audiences, firmly based on British values of accuracy, impartiality, and fairness. Its international services should put the United Kingdom in a world context, aiding understanding of the United Kingdom as a whole, including its nations and regions where appropriate. It should ensure that it produces output and services which will be enjoyed by people in the United Kingdom and globally.