PROCEEDINGS OF THE COMMITTEE RELATING TO THE REPORT
WEDNESDAY 15 DECEMBER 1999
Members present:
Mr Gerald Kaufman, in the Chair
Mr David Faber
Mrs Llin Golding
Mr Alan Keen
Miss Julie Kirkbride |
Mr John Maxton
Ms Claire Ward
Derek Wyatt |
Draft Report (The Funding of the BBC), proposed by
the Chairman, brought up and read.
Draft Report (The Funding of the BBC), proposed by
Mr John Maxton, brought up and read, as follows:
"Introduction
1. We are living in the middle of the most profound
and rapid period of change that the world has ever seen. The Twentieth
Century has been one of scientific, technical and technological
revolution unlike any in the millions of centuries that preceded
it. The decade that is now drawing to a close has seen the speed
of change accelerate at an unbelievable rate.
2. The developments in information technology have
led this rapid acceleration. The technologies of television, wireless,
computer and the Internet have separately and increasingly together
altered forever the way in which we learn, communicate, entertain
ourselves, shop and use our leisure time.
3. Can Britain play a significant part in this revolution
and if so how?
4. Throughout this century of change we have played
an important part in many scientific and technological developments.
But it is perhaps in broadcasting that British influence has been
greatest. Throughout the world our broadcasting services have
been the envy of others, often copied and its products widely
and increasingly used.
5. While others in the UK have played some part it
is the BBC that has been at the heart of these services. It has
provided entertainment, education, information and news of a breadth,
quality and reliability that is unequalled anywhere else in the
world. It is probably the most significant factor in Britain's
"brand" abroad. Millions on all continents listen to
the World Service knowing they will get news that is current,
reliable and unbiased. It not only sells its other products to
discerning audiences round the world but its known quality helps
to sell other goods to people who put quality and Britain together.
Like our film industry it helps to attract tourists to this country.
6. Of course the BBC is not perfect. Who or what
is? With the range of programmes both for viewing and listening
produced it is inevitable that almost everyone dislikes something
they have seen or heard so complaints about the BBC are many and
often very vocal. The BBC is not always as efficient as it ought
to be nor is its present management as diplomatic as it might
be, but both at home and abroad it has an enviable reputation
upon which we should build. It is also the only broadcasting organisation
owned by all the people of this country and responsible to them
through Parliament for its operations. We do not believe it is
our responsibility or that of the Government to reduce or constrain
its activities for the benefit of commercial organisations.
7. How over the 75 years of its existence has the
BBC been able to develop the range, quality and reliability of
its output? Obviously there is no one ready answer but perhaps
the most important factor has been its funding by the licence
fee which all users of broadcast equipment in Britain have had
to pay since the 1920s.
8. The funding has meant that the BBC has been free
of political influence which would not have been the case if it
had been directly funded by government grant and free from the
market pressures that funding by advertising or subscription would
have meant. It has thus been able to innovate, producing programmes
both informative and for entertainment that no company looking
to audience figures would have produced. Its news services have
built a reputation for reliable, impartial information.
9. Thus the BBC and the licence fee are inextricably
linked. Funded any other way and the BBC would be a completely
different animal.
10. Can, indeed should, the BBC survive in the rapidly
changing technological world? If so, should its main source of
funding remain the licence fee which some see as a regressive
tax that hits hardest at the poor?
11. However regressive the licence may seem, the
range and quality of programmes provided by the BBC make it very
good value for money at £101 a year. It reaches 99 per cent
of the population. Throughout a year there would be few who do
not watch or listen to many BBC programmes. Consider the cost
of taking a family to the cinema and compare it with watching
one film on television from the BBC.
12. For the reasons given above we recommend that
the licence should remain the main source of BBC revenue certainly
until the end of the review period and indeed should remain throughout
the remainder of the period covered by the present Charter.
13. Inevitably, however, as the choice of channels
and platforms for programmes increase so the percentage of the
population watching the BBC decreases and there are those who
suggest that the time has come to scrap the licence and privatise
the BBC. We do not agree with them.
14. Even some who wish to retain the BBC believe
it should continue to provide only those services that it provides
at the moment and should not spend licence money on developing
new innovative services either for digital television or the Internet.
Again we do not agree and give our reasons below, although we
accept that it is more difficult to justify such expenditure than
it is to justify the present services provided by the BBC.
15. While often seen as a "Great British Institution",
the BBC has been an innovative broadcaster throughout its history
both technically and more importantly in the content of its programmes.
If now it is not allowed to be part of the technological revolution
and only allowed to continue providing its present radio and television
channels its audiences will wither, it will lose its creative
talent who will seek pastures new and eventually the demand for
the end of the licence and the BBC will become overwhelming.
16. Perhaps most of the BBC's many critics do not
actively wish to seek its demise, but the scenario we paint above
is a real possibility. If the BBC eventually disappears then it
is difficult to see what other British broadcasters would replace
it either at home or abroad.
BBC Online
17. The Internet is now a major source of news and
information through an infinite variety of web-sites. It provides
shopping facilities which are easy to access, give an enormous
choice and are normally cheaper than high street shops. Music
and radio are already provided at an acceptable quality. In the
future we will download most of the music we listen to from the
net rather than buying CDs or tuning into radio stations. The
constant improvements in bandwidth mean that video quality television
will be possible in the very near future through the Internet.
18. The BBC has, for some time, believed that they
should be part of this new exciting world. They have developed
their own web-site accordingly. It provides a whole range of information
and news. Most of its news and current affairs programmes both
television and radio are broadcast on their web-site including
the main news bulletins, Question Time, Westminster Live and BBC
Parliament. Other BBC radio stations are being added almost weekly.
The written news service provides easily read in-depth articles
on the latest events around the world with the ability to link
to other stories and articles which are relevant. The web-site
has been much praised and those who make regular use of the Internet
believe it to be one of the best there is. We indeed congratulate
them on the success they have achieved.
19. It has, however, been set up with licence money
and is free. It does not carry advertisements. There are those
who argue that because not all licence fee payers can use the
facility they should not have to pay for it while others argue
that with 50 per cent of all "hits" on the site coming
from abroad then they should either pay for its use or its cost
should be covered by advertising.
20. We do not agree. The BBC should be allowed to
continue to develop the site without resort to advertising that
would be intrusive as well as taking valuable space on each page.
It has been suggested to us that if they took advertising then
a separate commercial company would have to be set up to manage
it. If that were the case the company would have to purchase from
the BBC all the broadcast material the web-site at present uses.
It is difficult to see the advertising revenue the site would
be able to generate being sufficient to do this.
21. We believe that those from abroad using the BBC
web-site are similar to those around the world who listen to the
BBC World Service. It could easily become as important as that
service in promoting the image not just of the BBC but also of
the UK. It is therefore possible to justify the expenditure of
licence fee payers' money on this innovative site.
22. We recommend therefore that BBC Online should
remain an integral part of the BBC services and that the BBC should
continue to invest in it to ensure that it remains as innovative
and interesting as it has been to date.
Digital Television and Radio
23. Digital television is now with us. Both terrestrial,
satellite and cable services have begun although the latter are
still at a very early stage. Sky TV launched their service in
October 1998 offering an extra sports channel and extra film facilities
and has had over 1.8 million sales. Ondigital launched their digital
terrestrial service in November 1998 and has over 400,000 subscribers.
Telewest has just launched its digital cable services and ntl
is about to do so.
24. It is the hope of the Government that 99 per
cent of the population will have subscribed to some form of digital
service by 2006 so that the analogue wave bands can be made available
for other uses.
25. Digital gives more TV channels and radio stations
with much improved quality of picture and sound. It will also,
however, give subscribers interactive services like banking and
home shopping. The cable companies tell us that they will eventually
be able to provide high speed continuous access to the Internet
through the television set to those who wish to pay for it.
26. Should the BBC be part of this digital world
beyond providing existing BBC services to the platform providers
which they do at present to both the analogue satellite and cable
companies?
27. We believe they should. Digital should not just
be about providing more of the same. At present both Sky and the
cable companies are offering more sports and more films but nothing
new in terms of content. This will attract the early subscribers
who are addicted to either of the above but will do little to
attract those who at present are content to watch the terrestrial
channels and see little point in changing their viewing and listening
habits. Many want their television without the constant interruption
of advertisements.
28. If digital is to attract these viewers and the
Government must have them on digital if they want to switch off
analogue by 2006 then there must be more interesting, innovative,
quality programmes and channels than are being offered at the
moment. The BBC is ideally placed to offer this. Indeed who else
would? It will give the BBC the opportunity to exploit their unique
archive, an archive that has been paid for by the licence payers
and should be freely available to them at the point of use. The
process of digitising that archive has begun, but with proper
funding it could be extended beyond carrying out the process simply
to preserve material that is in danger of decaying.
29. As the link between the Internet and digital
broadcasting becomes ever stronger then the ability of the BBC
to give access to their archive material almost on demand becomes
a real possibility.
30. Even now the only new channels being offered
by the cable and satellite companies in their basic packages are
from the BBC with BBC News 24, Parliament and Choice. As yet they
have very small viewing figures, but cable has hardly begun to
broadcast and there are many people yet to be convinced of the
need to switch to digital.
31. Before turning to the question of how the BBC
should be funded to provide these new services it is necessary
to say something about BBC News 24 which seemed at times to dominate
our inquiry.
BBC News 24
32. The BBC launched a 24-hour news service in November
1997. During our inquiry the BBC has been heavily criticised both
by members of the Committee and by other witnesses for the nature,
expense and viewing figures of the service. Although the BBC witnesses
have not always given satisfactory explanations for establishing
this channel we do believe they were right to do so.
33. Some argue that CNN, Bloomberg and, in this country,
Sky News offer 24-hour news and therefore there is no need for
another service. Viewing figures for all such services are low
and so far the BBC has failed to attract large numbers either.
It is, however, clear that there is a demand for such services.
If this were not the case then ITN would not at a late stage be
contemplating setting one up.
34. BBC 24-hour News is different from its main rival
Sky News. It does more in-depth analysis particularly on major
foreign stories. It is not interrupted by advertisements. It is
impossible to judge its effectiveness as yet and we agree with
Sir John Birt when he told us it was an investment for the future.
Comparisons between Sky News and BBC News 24 are unfair as they
are not comparing like with like. Sky has been operating their
programme for 10 years and set up costs have been absorbed.
35. However, there is a need for the BBC to continue
to improve their 24-hour News. BBC 24-hour News is already included
among the channels provided by some cable companies to their analogue
subscribers and will be included in their digital services as
well. Unlike satellite, digital cable will be able to provide
more local services.
36. We would recommend that the BBC develop regional
and local news services whenever possible.
37. BBC 24-Hour News should be available on the
BBC web-site as soon as possible.
38. The BBC should seek to sell this service abroad
particularly to hotels operating in areas where there are large
numbers of British tourists, thus recovering some of its costs.
The Digital Supplement
39. The Davies Panel proposed that subscribers to
digital companies should pay a supplement to their licence which
would be used by the BBC to develop further their digital services.
Lord Gordon of Strathblane, in a minority memorandum, suggested
that there should be a small increase in the licence paid by everyone
rather than a supplement on those subscribing to digital.
40. All members of the Panel agreed that the BBC
should have extra funding to finance their new services. We agree
with this general position.
41. The major objection to the digital supplement
has come from those who argue that such a supplement would deter
many from moving to digital. This appears to have been supported
by the NERA research, although Gavyn Davies refuted this when
he gave evidence to us.
42. Obviously if this would be the result and the
ability of the Government to switch off analogue would be seriously
delayed then it would be wrong to impose such a supplement. We
therefore recommend that the Government carry out further research.
If it shows that there would be no or a very small impact on the
take-up of digital then we believe that the supplement should
be applied. We would recommend that it would be most convenient
for customers that it should be paid with the other payments they
make to their digital provider.
43. If, however, further research confirms the
findings of NERA then we would recommend an increase in the licence
for all above the rate of inflation to allow the BBC to develop
their digital services.
BBC Resources
44. The Davies Panel proposed the privatisation of
BBC Resources. We do not believe this is necessary or desirable.
If, as appears to be the case, sourcing the services that BBC
Resources provide from a commercial company would be more expensive
than at present there seems little purpose in handing the organisation
over to a private company.
45. At present the BBC carries out more training
at all levels of its organisation than any other similar media
company. While no-one seemed able to quantify the exact percentages
carried out by the BBC and the private sector, we were left with
the impression that the BBC probably did more training of managerial,
technical and creative employees than all the other companies
put together. We fear that this would be lost if BBC Resources
were privatised.
46. The training carried out by the BBC is a hidden
subsidy to other broadcasting companies and we believe that it
gives extra weight to our argument that there should be an increase
in the licence as stated above to ensure the BBC develop their
digital services.
BBC Worldwide
47. We are equally opposed to the recommendation
by the Davies Panel that 49 per cent of BBC Worldwide should be
sold off. In the past we have criticised the BBC for failing to
exploit the potential sales of the output abroad. They are now
beginning to make profits from this and it would appear absurd
to deny the BBC and the licence payers the rewards of programmes
they have paid to produce.
Conclusion
48. English is fast becoming the common language
of the world. Driven by the rapid spread of computers and television
peoples throughout all continents are having to learn our language.
The numbers doing so will grow even more rapidly during the first
part of the next century.
49. Obviously the United States will lead this revolution
but other English-speaking nations are uniquely placed to exploit
the markets that will be opened up. This is particularly true
in broadcasting where there will be a demand for high quality
innovative television among the growing wealthy English-speaking
middle classes in all countries. At the moment the United States
is not well-placed to meet this demand. The United Kingdom through
the BBC is well- placed to do so.
50. No other company in Britain can exploit this
market. The BBC will remain a major provider of television and
radio to the home audience but it can also be a major player on
the world television stage. We believe it should be given the
resources to do so while remaining a publicly-owned company. Its
funding must remain the licence fee to ensure its products remain
trusted, high quality and innovative.
51. Of course the BBC must constantly seek to review
its operations and to streamline its management but to restrict
and limit its operations as some suggest at this time of technological
revolution will not only do irreparable damage to the BBC it will
leave Britain without a major player on the burgeoning international
market."
Motion made, and Question proposed, That the Chairman's
draft Report be read a second time, paragraph by paragraph.—(The
Chairman.)
Amendment proposed, to leave out the words "Chairman's
draft Report" and insert the words "draft Report proposed
by Mr John Maxton".—(Mr John Maxton.)
Question put, That the Amendment be made.
The Committee divided.
Ayes, 1
Mr John Maxton
Noes, 5
Mr David Faber
Mrs Llin Golding
Miss Julie Kirkbride
Ms Claire Ward
Derek Wyatt
Main Question put and agreed to.
Ordered, That the Chairman's
draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 36 read and agreed to.
Paragraph 37 read, amended and agreed to.
Paragraphs 38 to 44 read and agreed to.
Paragraph 45 read, amended and agreed to.
Paragraphs 46 to 57 read and agreed to.
Paragraph 58 read, amended and agreed to.
Paragraphs 59 to 71 read and agreed to.
Paragraph 72 read, amended and agreed to.
Paragraphs 73 to 96 read and agreed to.
Paragraph 97 read, amended and agreed to.
Paragraph 98 read and agreed to.
Paragraph 99 read, amended and agreed to.
Paragraphs 100 to 104 read and agreed to.
Paragraph 105 read, amended and agreed to.
Paragraphs 106 to 114 read and agreed to.
Paragraph 115 read, amended and agreed to.
Annex agreed to.
Motion made, and Question put, That the Report, as
amended, be the Third Report of the Committee to the House.
The Committee divided.
Ayes, 6
Mr David Faber
Mrs Llin Golding
Mr Alan Keen
Miss Julie Kirkbride
Ms Claire Ward
Derek Wyatt
Noes, 1
Mr John Maxton
Ordered, That the Chairman
do make the Report to the House.
Ordered, That the provisions
of Standing Order No. 134 (Select committees (reports)) be applied
to the Report.
Several papers were ordered to be appended to the
Report.
Ordered, That the Appendices
to the Minutes of Evidence taken before the Committee be reported
to the House.—(The Chairman.)
Several Memoranda were ordered to be reported to
the House.
* * * * *
[Adjourned to Tuesday 18 January at a quarter to
Ten o'clock.
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