Examination of Witnesses (Questions 720
- 739)
TUESDAY 7 DECEMBER 1999
SIR CHRISTOPHER
BLAND, SIR
JOHN BIRT,
MR GREG
DYKE, MR
JOHN SMITH
AND MR
DOMINIC MORRIS
Mr Fearn
720. At the time the funding settlement until
2002 was agreed it was stated that your digital services would
cost £654 million. You have now stated that the cost will
be £1 billion. Why has it risen so much? It is an enormous
rise.
(Mr Smith) If I may say so, I am not entirely sure
about the £654 million figure, but they are almost certainly
different years and different periods therefore and inclusive
of different things. Perhaps we could look at that specific question
and give you a better answer than that, but that, broadly speaking,
is the answer.
721. I assure you that those figures are right.
I think that at our last meeting I did actually say was it grossly
inefficient, and I got a semi "Yes" to that, as it were.
Is that the reason why this big rise has taken place?
(Sir Christopher Bland) I do not think you got a "Yes"
to the BBC being grossly inefficient. The BBC is a very efficient
organisation. It is capable of still further improvements, like
most organisations in the United Kingdom, but I said last time,
very strongly, that the BBC has made huge strides, and you should
not underestimate the managerial effort and the pain which has
gone into reducing its workforce by probably gross 8,000 and net
6,000 over five years. This has been a major achievement on the
part of the BBC, and the BBC is now a pretty efficient organisation.
It is not world class, but it is certainly amongst the leaders
in the United Kingdom in terms of changes and the embracing of
new technology. It has led the way in outsourcing. It has done
huge amounts to get its house in order. It will go on doing that.
It becomes progressively harder. It becomes more reliant on fundamental
business process re-engineering, on even more clever uses of technology
to make progress more effectively, and that process will continue.
722. I would like to put a question to Sir John.
At your last appearance here you said that if you did not receive
the funding for your new vision "the first thing"—and
I quote—"we will think of is how we can stretch ourselves
even further to fund the new vision ourselves". Is not that
something you should have done before you came to us asking for
more money?
(Sir John Birt) As the Chairman has said, I think
we have thought very hard about the possibilities going forward.
We have very, very stretched efficiency targets built into our
plans over the next few years, and at this moment I find it very
hard to believe that we can stretch ourselves further than those
particular targets. Over three, four, five years maybe new ways
will emerge, but we are talking about further efficiencies by
the end of the period built into our forward planning to the extent
of something over 20 per cent a year. We want to stretch ourselves
further on commercial revenue if we can, but that is inherently
unpredictable. We will try as hard as we can, but we do not know,
of course, how far we can go. We will stretch ourselves further
on reducing licence fee evasion and collection costs. We can stretch
ourselves further in seeking to prioritise better even our existing
spend. We will stretch, but I would not want anybody to think
that we thought we could do anything other than ever slightly
better than our already very testing targets of all kinds built
into our forward projections. I think a lot of people in the BBC,
looking at our forward targets, would say that they will be very,
very hard to achieve indeed, but experience always is that two
or three years down the line you can sometimes see things that
you do not see now. As the Chairman has said, new technology,
process re-engineering, all of these things offer fresh opportunities,
but by any standards our existing targets are very, very stretched
indeed.
723. With 6,000 or 7,000 already gone from the
BBC—the redundancies or whatever you call them, this leaning-out
from now on—unless you get the funding, you cannot stretch
much more or you are going to stretch too far in the end, and
your "new vision", as you call it, will never be achieved,
will it?
(Sir John Birt) Gavyn Davies said that the BBC had
been on a diet too long. He paid handsome tribute to our successes
in recent years. We can stretch ourselves further. There is further
scope on our overheads. The new technologies offer new opportunities.
I do not believe we have gone as far as we can go, we can go further,
but plainly, as the Chairman has said, the opportunities going
forward are harder and tougher than they have been in recent years
and will be very difficult indeed to achieve.
724. You did mention evasion just then. Would
you have any objections to licence fee evasion becoming a civil
rather than a criminal offence?
(Sir Christopher Bland) The issue of whether it is
criminal or civil is a matter for Parliament. The fact is that
evasion now is at an all-time low at 5.9 per cent, and we believe
we can get it still lower both through more efficient methods
of collection and detecting evasion and, equally important, by
what we now have, which is a vastly increased set of alternative
methods of payment. So I think that is the way ahead. We take
no pleasure from anyone going to jail as a result of what is,
in effect, not refusing to pay the licence fee, but refusing a
court order directing them to pay the licence fee, and quite often
it is in a parcel of other debts or responsibilities for which
the person who goes to prison is responsible. It is the "won't-pays"
in the sense that criminal sanction is the last resort, but there
are very, very few of these now, the number is declining each
year, and on the whole the sooner it is zero the better.
(Sir John Birt) Can I add that, as the Committee will
recall, the BBC has only had responsibility for collecting the
licence fee during the course of the 1990s. That has been a major
success story. By introducing many more easy-payment methods,
we now have the second lowest rate of evasion and collection costs
in Europe, and if our present targets are met we will become the
most effective in Europe in collecting the licence fee. So the
present system is working, including the sanctions on the one
hand, but, more importantly, our introduction of many more ways
of paying the licence fee, making paying the licence fee a lot
easier than it was when the Government itself had responsibility
for it and it was a single charge once a year on most households,
has broadly worked.
725. On the 5.9, it is nice that you have come
up with a figure, because the Secretary of State did not know
that figure. However, 5.9 is still a considerable number of people.
You must have a breakdown of those people as well. Are they mainly
pensioners, or single people, or single mothers?
(Sir Christopher Bland) We do, and by geography. It
will not come as any surprise that there are certain parts of
Northern Ireland where we expect the peace process to produce
a significant dividend for the BBC in terms of improved collection,
and 5.9 would be the decimal point in the wrong place on some
parts of Belfast and Londonderry. So it will continue to come
down.
(Mr Smith) Let me answer the point, if I may. Obviously
it is 5.9 per cent now, and as has already been said, it has come
down to the lowest rate which we have on record, which we are
very pleased about. So from our point of view, the system we have
in place is going in the right direction and will continue to
go in the right direction. It is not in the BBC's interest to
see people prosecuted. It is in the BBC's interest to get the
evasion level falling by people paying, and the whole emphasis
of our approach—which is different, I think, to how it was
in the past—is about encouraging those people who find it
difficult to pay to have a way in which they can pay. That is
why we have introduced schemes like the cash-easy entry scheme,
the cash-plan scheme. These are schemes which are designed for
those who are the poorest in society to be able to get into the
licence paying system without getting into a situation where they
are possibly seeing debts which they just cannot do anything about.
Over the same period the number of prosecutions has halved. The
number of custodial sentences—which, remember, are for fine
default, they are not for non-payment of the licence fee—has
fallen 60 per cent in two years. The Davies Panel itself congratulated
us (and I think this went into its third report) on our efforts
in this area to make it easier for people to pay. Our aim is to
get a sale, not a prosecution.
Mr Maxton
726. Since everyone is so concerned about the
cost of BBC News 24, could you tell me how much it costs to provide
BBC Parliament and how many viewers there are?
(Sir Christopher Bland) Chairman, that bears out my
point that you can always ask a question that will produce a small
number.
(Mr Smith) It is 2 million in the current year, 4
million next year.
727. I am on your side. I do not hear many Members
of Parliament objecting to the fact that you do provide BBC Parliament
on not quite a direct 24-hour basis, but it is about a 14-hour
or 16-hour per day basis. Can I also congratulate you on the fact
that we can now get BBC Parliament on your website, live, with
continuous provision. I happened to watch myself on Sunday afternoon.
Can I say that the website keeps improving almost on a weekly
basis. I gather you now have all radio stations broadcasting live
on the website, subject to some problems with copyright, is that
right? Would that be the case?
(Sir John Birt) Yes, that is right.
728. There are those who are suggesting that
the Online service should be separated out and paid for by advertising
or by some other means. If you did that, would you have to separate
it away from the BBC into a separate company?
(Sir John Birt) We do not welcome the idea. The Secretary
of State made clear that there is a real difficulty over state
aid if we had any kind of mixed funding. I think that under the
present EU provisions, it would be ruled unlawful. I would rather
deal with it as a matter of principle, and the matter of principle
is, should we have services which have public purposes funded
by advertising? I think the history of the BBC, the history of
broadcasting around the world, shows the danger of introducing
advertising into the mix, because broadcasters around the world,
including those who claim themselves to be public service broadcasters,
have again and again shown that at the margin they make commercial
decisions rather than public service decisions, because of the
means of their funding. So we would not like to see advertising
on our public services Online. The final point to make is that
it is very dangerous to think of Online just in terms of where
it is now. In a very, very short space of time it is going to
be the means of delivering moving pictures, old programmes and
extracts. As the Chairman, I think, pointed out at the last session,
if you take a very long view, it may prove to be the main way
by which people receive broadcast services. If you do take that
view, the idea of funding it by advertising would be a real strategic
threat, because in the end—as Parliament has taken this
view over 75 years—the unique funding and the unique system
of governance of the BBC has given us the organisation we know,
at the heart of which are public services.
729. I am still trying to tease out from you,
if it were a commercial operation, would that commercial operation
then have to pay the mainstream BBC for all the broadcast services
that it provided?
(Sir John Birt) Of course, yes.
730. So the advertising would have to cover
a very much larger cost than the present cost of providing that
Online service?
(Sir John Birt) It is impossible to imagine at this
moment in time, given the advertising revenue on the Internet.
They could not begin to fund the BBC's activities Online.
731. Are there any websites of that nature at
the present time?
(Sir John Birt) There are not, although obviously
the market is taking the view over the long run that they will,
but certainly in the short run they would not, and certainly the
BBC could not do it without a vast external investment and without
it being a co-venture. It is impossible for me, in those circumstances,
to imagine that the services would bear any relationship to the
services we presently offer Online, not just a rich, deep news
site of range, but educational sites and a whole host of other
sites, including supporting programmes like Dinosaurs.
732. Taking that point about the deep range
of news service, as you have put BBC Parliament Online do you
intend to put BBC News 24 Online?
(Sir John Birt) I think so over time. We have to do
these things one at a time. We obviously have to watch the level
of investment which we place in it, but over time we have the
ambition of making all of radio and television services presentable
Online. However, that has to be subject to costs and funding,
subject to its making sense as an investment case. We look very
carefully at everything in which we invest. We look at forecast
take-up, the likely consumption, always taking the long as well
as the short-term and medium-term view. So subject to that assessment,
it would be our long-term ambition.
733. Again coming back to BBC News 24, have
you any intention to regionalise it at any point, so you are going
to be providing a regional service to those who live in other
parts of the country?
(Sir John Birt) On News 24?
734. Yes.
(Sir John Birt) I think that would be a wonderful
thing to do but, frankly, at our present level of funding, I just
could not see our way to doing it, because the cost contribution
would grow enormously as well as the cost of providing the extra
service. I think it is an ambition we would have, but it would
be subject to the level of funding we enjoyed as an organisation.
735. I asked this question the last time you
came. Do you intend to try to sell it abroad, as Sky News sells
itself abroad into hotels, etcetera, on the Continent and so forth?
(Sir John Birt) In the long run, yes. Of course we
have BBC World at the moment, which is commercially funded, going
around the world, which is growing in success as a service. Would
we like to see at some point in the future British people travelling
or living abroad having access to BBC News 24? Yes, we would,
but the market would have to develop around the world, I think,
for that to be possible. What I think it would need to be is a
commercially-funded proposition. I do not think the market would
support it at the moment, but as digital distribution around the
world increases, I expect at some point in the future it will
be possible.
736. That, of course, will then offset some
of the costs of the 24-hour service?
(Sir John Birt) In the long term, yes.
Mr Maxton: Lastly, may I make a statement
that I congratulate you on your refusal to grant Scotland its
news service at 6 o'clock. I think that is a very wise decision.
Chairman: I am not getting involved in
that.
Mr Maxton: Nor are they, I notice.
Chairman
737. Could I clarify what I understand you have
been telling Mr Maxton. With regard to Sky News—let us set
aside its quality, though I watch it a lot—it is £30
million a year, available all over the world. BBC News 24 is £53.9
million a year, confined to the United Kingdom.
(Sir John Birt) News 24 has a companion channel—BBC
World—and there is a certain amount of material which will
appear on both services. Unlike Sky, therefore, we have a tailored
service for a world audience, which works to a global rather than
a United Kingdom agenda. That very much matches the tradition
of World Service radio. Chairman, on the costs, one has to say,
I do not think it is possible at this moment to make a like-for-like
comparison. Our accounts, for reasons much discussed because we
have fair trading obligations, are transparent, and we identify
the full total costs with apportioned overheads and apportioned
costs of our news-gathering capability in News 24. As the Chairman
has said, we have made a strategic judgment about the value and
a strategic judgment about the investment in News 24, but I do
not think it is possible to make a like-for-like comparison with
the cost of Sky News. I would be astonished if we knew the true
cost of Sky News. We do know the true cost of BBC News 24. We
know the marginal cash cost, for instance, of the programme service
on BBC News 24 is way below the total figure because that has
an apportioned cost of the existing cost base.
(Sir Christopher Bland) Round about £28 million.
Derek Wyatt
738. I want to start with questions about the
Internet side. I pay a licence fee, I watch television, I watch
the BBC. To get BBC Online I have to pay an ISP provider—sometimes
that is free now—for the local telephone call, so actually
I am having to pay additionally to the licence fee to get BBC
Online. Two questions from that: is it your intention, so that
100 per cent of the public are able to have access to the Internet,
to subsidise from the licence fee the cost of Internet access
per home?
(Sir John Birt) I am sorry, Mr Wyatt, I may not have
entirely understood the question and forgive me if I have not.
There are obviously many ways for an Internet user to receive
services free. I am sure you obviously know a great deal about
it and you are aware of Freeserve and BBC Worldwide has introduced
its own means of receiving Internet services for free, though,
of course, as you say, it is true that the Internet is not entirely
free at the point of delivery. Anybody using the Internet is paying,
certainly in the United Kingdom, a telephone charge.
739. But for the public service Internet access
in this country, should it be part of your brief, and if it is,
should you be subsidising the use from the licence fee?
(Sir Christopher Bland) We think not.
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