Examination of Witness (Questions 64 -
79)
TUESDAY 23 NOVEMBER 1999
LORD GORDON
OF STRATHBLANE
Chairman: Lord Gordon, welcome here today.
We have obviously read the Report and we have read your own reservation
on it. Since we know your view pretty thoroughly, I am going to
start the questioning right away.
Mr Fearn
64. The Davies Report and the Panel, with the
exception of you, argued that "it is unfair to charge analogue
households for the development of digital services which they
cannot receive". Why do you not support this principle?
(Lord Gordon) To some extent the licence
fee, let us be honest, is increasingly difficult to justify. I,
however, would justify it in that I think Government imposes a
great many universal imposts on people who do not use services
and the licence fee is by no means the largest of them. The interesting
thing is that the licence payer at the moment is subsidising digital
to the extent of about £10 out of the licence fee. What I
am suggesting is comparatively small. I also start with a viewpoint
that anything which depends on RPI increases does need a look
at it every five to ten years because there is no doubt that things
do get out of kilter with the general marketplace. You find that
inevitably happens with most public services. There is some form
of Government inquiry or pay award body which looks at things
every now and again just to make sure that things do not get too
far out of line. Although you cannot point to any one year where
an RPI increase is unfair, the cumulative effect of RPI alone
is to leave people a bit behind. I think the BBC needs a little
more money, somewhere between £5 and £7 on the licence
fee and I do not think the public at large would be too opposed
to that—saving your presence, Chairman, and your recent
speech. I think particularly, although I do not like disturbing
existing settlements, given that the licence fee is set to stay
put next year or even fall slightly and fall the year after, that
it would be acceptable to increase it very marginally next year,
say by £3 and by £4 the year after. I do not think the
public would complain about that and it would give the BBC an
extra £100 to £150 million which would ease the burden
and perhaps improve the quality of BBC terrestrial services which
should be their prime concern.
65. Then over the five years to reach a £7
increase. Is that what you mean?
(Lord Gordon) Over two years it would reach a £7
increase to be honest and then it would just go on with RPI. An
increase next year of £4 would bring it up to £105;
the following year, another year, would bring it up to £108.
I do agree very much with the Chairman of our Committee, Gavyn
Davies, in expressing things as a monthly rate, except I would
go for £9 not £8.99.
Chairman
66. May I just follow up what you have said
since you have been good enough to mention me? You say that this
kind of increase is tolerable to most people. I was besieged by
constituents over the weekend, some of whom were grateful for
the new decision to relieve people aged 75 and over of the licence
fee and others saying, "If them, why not us?". The licence
is expensive; certainly for pensioners and other people on low
or fixed incomes it is expensive. A great many of them do not
even watch the BBC anyhow. Why on earth should this aggressive
poll tax be increased above the rate of inflation simply because
the BBC wants to enter into services which others are providing
perfectly satisfactorily anyhow?
(Lord Gordon) There is a continuing role for BBC and
I would prefer to see it funded by the licence fee. I would agree
that there is a cosy duopoly argument on that. The main argument
against the BBC taking advertising is that the pool of advertising
is not sufficient to support both the BBC and the independent
sector and the quality in both would suffer. I fully accept, particularly
when the Government has allowed one concession, that other people
on the margin complain because they have not benefited from it.
However, in general most people grumble slightly at the licence
fee but there are many more things that Government does and sanctions
that the average citizen grumbles about and I do not think the
licence fee is by any means the worst.
Mr Fearn
67. Why did you support a privatisation of BBC
Resources?
(Lord Gordon) I am lukewarm about that and I was prepared
to go along with the Committee. At the end of the day, if it is
something the BBC is using regularly, having it inhouse has to
be more economic than having it run by somebody else and paying
regular fees to them, otherwise who would take it over?
Mr Maxton
68. Your background is in commercial radio.
Is your reason for continuing support of the licence fee based
upon the fact that you do not think there is enough advertising
to go round to support the BBC as a service paid for by advertising?
(Lord Gordon) No, it is one of the reasons; it is
not the sole one. It is certainly an important reason and should
be borne in mind. I do not go quite as far as the BBC, as in defence
of the House of Lords, that they are not accountable and therefore
they can do what they want and provide you with quality. That
is a rather arrogant assumption. I do, however, think a licence
fee is defensible. What worries me about the majority Report of
the Committee is that I think the real danger is that it has united
the commercial sector against the BBC in a way in which in my
35 years in broadcasting I have never seen before. It raises serious
philosophical question marks about the survival of the licence
fee in 2006. I would regret that very much.
69. May I turn to something which tends to be
ignored in all of this which is digital radio? The major developers
in that are in fact the BBC, are they not?
(Lord Gordon) Not really. We have to be clear. I shall
not take long on this because I imagine my colleagues in the Commercial
Radio Companies Association will elaborate on this. One of the
problems I have, is that because we allow the BBC to do almost
everything it can cross promote in a way which constitutes unfair
competition to anybody else. BBC can cross promote their radio
services on television. Nobody in commercial radio can do that.
That is a severe disadvantage. There are arguments about Radio
1. I am quite content to leave the BBC with the five services
they have, but I see no reason for them to expand. Just as I have
argued with television, if the BBC want to introduce another service,
there should be two thresholds for them to pass: one, an independent
review body, a regulatory body, should ask whether it is genuinely
public service. If it is, then the second hurdle is: is there
nobody else who could provide this under a regulated system? I
should be very surprised if there were any services of which the
BBC could be the sole provider, given regulation.
70. That is fine, but let me say that there
will be some people, fairly wealthy people, who will buy digital
radios for their cars while the rest of us are still listening
to analogue radio on our normal car radio. Why should those essentially
wealthy people get that for the same amount of money as the rest
of us have to pay?
(Lord Gordon) I was very briefly Chairman of the Digital
Forum, looking at the development of digital radio. There is a
chicken and egg thing going on here. If the manufacturers see
a market, they will bring down the cost of sets and it will not
just be the very wealthy people. The received wisdom, as I understand
it, is that the first target will be cars, that when you are paying
X thousand for a car they will include in that a digital radio.
Arguably it will not just be the very, very wealthy people who
have digital car radios, it probably will be the vast majority.
71. Certainly to start with the cars those digital
radios will be going into will be Mercedes and BMWs. That is true
of almost every development so far. The original CD players in
cars went into the bigger cars to start with. They are now in
smaller cars as well but they went into bigger cars first. Why
should it not be my good friend Mr Fraser there who pays more
for it?
(Lord Gordon) He will be paying a bit more for his
car. It is the receiving equipment he is paying for there, not
the programme, in my view.
72. You are in favour of some form of advertising
on BBC Online.
(Lord Gordon) Yes. The Committee's argument against
advertising on Online is not sound. Online in my view is not broadcasting,
it is allowing the consumer to access material and advertising
would be a perfectly acceptable way of doing that and it would
also solve the problem the Committee were addressing at your hearing
last Thursday of half the hits being from abroad and them not
paying anything.
73. As a licence payer in Scotland, the only
way I can listen to BBC Scotland—when I can get it that
is—down here in London as a Scottish Member of Parliament
is in fact on Online, so why should I not get the service?
(Lord Gordon) There is always a difficult decision
about what should be made available as the generality of broadcasting
and what constitutes appealing to a minority market. I am not
saying the Scots in London are a majority or a minority, certainly
not in the House of Commons, but arguably it may be that is one
of the things you have to pay for if you choose to live in London.
Mr Maxton: I do not choose to live in
London, that is where Parliament happens to be.
Chairman
74. In response to Mr Maxton you made an eminently
rational point that the BBC ought not automatically to provide
services which other people are serving. You even suggested some
outside invigilation which would throw them into calculated hysteria.
There are certainly two, namely BSkyB and CNN and some would say
quite rightly a third, Bloomberg, who are providing round the
clock news. What justification do you think there is for the BBC
spending £30 million a year on BBC News 24 which is watched
by 0.1 per cent of the viewers?
(Lord Gordon) A lot of people regard BBC News 24 as
a mistake. That is partly because it is not generally held in
very high regard in terms of its editorial content. Were it an
outstanding success as a programme I imagine there would be a
lot of people justifying it. The argument I do not sympathise
with is that that is the way we are going to go in the future,
we are going to access news when we want it, not when programmers
want it and this, that and the other thing and therefore BBC must
be there. The BBC News 24 would fall exactly into the category
of the regulatory body saying they think there is a case for a
public service 24-hour news programme and asking whether anybody
can provide it. You have mentioned two. To be fair there is also
ITN. There might even be a consortium which includes the BBC and
ITN. There are all kinds of possibilities. The idea that the BBC
should have been allowed to start that without it having very
wide industry discussion is in danger of drawing Ministers into
direct control of broadcasting and I think that would be regrettable.
The buffer authority principle has been one of the very important
developments in British broadcasting and I think it should pass
muster with an independent review body before it goes to Ministers.
75. The BBC can do whatever it wants, can it
not? It does whatever it wants regardless of the expense and then
demands more money from the taxpayer to fund it.
(Lord Gordon) That might be overstating the position
slightly.
Chairman: Never; never; never.
Ms Ward
76. Did you at the time support the principle
of pay more for a colour television licence than for black and
white?
(Lord Gordon) I cannot recall. The honest truth is
that my family did not have a television set at that point so
I am not sure what my attitude would have been, but I would defend
colour. Colour actually improves the quality of all programmes.
The honest truth is that digital does not. Digital does not particularly
improve the quality of any one programme, it just increases the
range of programmes which might be available to you and that is
a fundamental difference.
77. On that basis, why should the vast majority
of people pay for a service which they are not actually going
to get?
(Lord Gordon) If you look at the licence fee and if
we assume for the moment—and indeed in fairness to the Committee
part of our remit was to assume—that the licence fee was
remaining, and I would defend it in any event, you have a situation
that the licence fee funds things that some people do not watch.
However, enough people watch a little or listen to a little of
the BBC each week to justify it. The BBC should be concerned not
about audience share but audience reach. Providing it is reaching
people in the population, even once a week or a few times a week,
that is a justification for the licence fee.
78. We have already touched on News 24 as one
of the services provided by BBC that is questionable. Are there
other areas of services provided by BBC that you believe could
be cut back or reduced in order to reduce the amount of expenditure?
(Lord Gordon) I am not wanting to cut the BBC back.
One of the things they had in mind was to turn BBC Choice into
a genuine BBC3, a fully fledged channel. Nobody had asked them
to do that. I am just slightly concerned. Without echoing too
much what the Chairman said before, the presumption must be that
BBC would not have started services as prudent managers of a public
funded organisation unless they could fund them. Therefore to
start them and then say they cannot go on unless we give them
a stack of money is not responsible. I do not go as far as the
Chairman I hasten to add.
Chairman
79. Why not? My position is a very good position.
(Lord Gordon) I think the BBC delivers a very good
service and it is value for money. Undoubtedly there will be elements
of wastage. In any creative organisation there will be elements
of wastage. Frankly that is a small price to pay and I would rather
have wastage and creativity abounding in the BBC than the place
run by McKinsey.
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