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We are discussing a difficult problem today. We must realise that it is sometimes difficult for hard-up people to pay the licence fee. The value they get from it is immense but the very people who would stop paying it
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if it became a subscription would be those whose children would most benefit from it, so we must be careful.

I shall give an example of value for money. Again, I am repeating something that the Select Committee came across during its proceedings. A while ago, we had the chairman of Artsworld in front of us. He was complaining about the BBC stepping into areas from which the commercial world was attempting to make profits. I said to him that I would love to have Artsworld, which is free on Sky. Perhaps in a BBC debate, we should not advertise Sky, but Artsworld is a wonderful channel. That gentleman is a respected and skilled television executive. His company was charging £6 a month, or £72 a year for one arts channel, good as it is, compared with, at that time, £121 for the whole of the BBC’s output. That is why it is not a straightforward problem. We tend to see things in black and white in here, especially when we face each other across the Chamber. We need to give entrepreneurs and the people in the media who are proactive in the creative industries the opportunity to produce the sort of viewing that we want people to see, but it is expensive. It is a difficult problem to manage. I wish I knew all the answers. That is an example of the wonderful value of the BBC, even if the licence fee goes up to £180 a year.

Mr. Michael Wills (North Swindon) (Lab): I agree with almost everything that my hon. Friend says. He mentioned the argument that the BBC crowds out entrepreneurs such as those involved with Artsworld, but does he agree that that argument becomes less valid the more platforms there are for broadcasting? The BBC still sets a standard of quality against which all the new commercial offerings can be judged.

Alan Keen: I agree very much. We want the BBC to meet its minimum target of 25 per cent. of output from independents, which gives them the chance to flourish within the BBC’s orbit and receive support from it.

Accountability has been mentioned a few times already and it is a difficult problem. People have asked how the BBC is accountable, and I have pointed out that there is no strictly democratic system for the public to have a say, although they have to pay the licence fee. However, it is not true to say that the BBC has billions of pounds to do with what it wants. It is also important to note that the decision on the licence fee is for my right hon. Friend the Secretary of State and the Government, and they will not lightly take any decision that would damage the BBC. We all know that if the licence fee increases steeply, people blame the Government, not the BBC. I hope that people will accept that the Government have to follow a more stringent procedure before the decision is made. The Government will certainly care whether the voters agree with their decision.

7.2 pm

Mr. John Whittingdale (Maldon and East Chelmsford) (Con): It is a pleasure to follow the hon. Member for Feltham and Heston (Alan Keen), whose contributions in the Committee and in the Chamber are always interesting. I do not agree with everything he says, but he always makes some interesting points.

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I welcome this debate, which is the second that we have had on the BBC in only a couple of weeks. I said in the last debate that I regretted the fact that it had taken so long to get a debate on the BBC: it was the first since the general election. Like buses, they come along in twos.

I am glad that the Secretary of State was successful in her attempts to persuade the BBC to move the publication date of the report. It was slightly a case of the mountain coming to Mohammed rather than the other way round, because the BBC had to tear up all its plans for publication instead of our moving the date of the debate, but it was obviously sensible that the debate should come after publication.

The charter that we are debating will last for 10 years and take us up to the end of 2016. It is difficult to envisage what the broadcasting world will look like by then. Even during the 10 years of the last charter, we saw huge changes taking place. The charter began in 1996. On 1 June 1997, Five launched, so we had four terrestrial broadcasters. Shortly after that, Sky went digital and offered far more channels. In July 1998, ONdigital was launched, which soon became ITV Digital. Then it collapsed and eventually became Freeview. There has been a steady increase in digital penetration, and we have also seen the launch of digital audio broadcasting—digital radio.

In the next 10 years, the pace will get even faster. We are beginning to see what that world will look like. For example, later this year BT Vision will launch internet protocol television—IPTV—a serious option that will allow video on demand for hundreds if not thousands of movies and seven-day catch-up, as well as the digital channels through Freeview, and HomeChoice already offers that service to some extent. But that is just the beginning. Most broadband providers will move into television, with the consequence that we will have widespread video on demand, so scheduling will become a thing of the past. The viewer will become far more powerful—able to decide what he wants to watch and when, from a huge choice. Nor will he necessarily watch it on a television in the living room, but perhaps on a mobile device or an iPod.

The whole of broadcasting will look very different. Given that, it is strange that the BBC’s charter is to be renewed for 10 years and set in stone for that time. I agree with the Secretary of State that there will still be a role for the BBC, although it will be a different role.

Mr. Wills: I bow to the hon. Gentleman’s great experience in these matters, but we often hear that changes in technology will make scheduling a thing of the past. That has not been true with all the new technologies and radio: people still listen to radio even though they are able to programme their own music any way that they want. Why will the new world of audiovisual broadcasting be different?

Mr. Whittingdale: Well, to an extent I am crystal-ball gazing, but I think that the new technology will make a difference. For the first time, the viewer will have access to thousands of different programmes and films that can be summoned up with the press of a button. We have not had anything like that before, and it is bound to change people’s habits. Scheduling will continue to
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some extent, and the Secretary of State was right to talk about the importance of water cooler moments. People will still want to all watch the same programme and then gather the next day to talk about it, but broadcasting will be hugely different in the future. In fact, that will make it harder to enforce public service obligations on commercial channels, so to that extent the BBC will have a stronger role in providing real public service broadcasting. My criticism of the BBC in the past is that it has strayed too far from that core responsibility of the provision of public service broadcasting.

Given that the BBC rightly has ambitions to move into the new areas of technology, it is right for it to say that whichever platform the viewer or listener chooses to access programmes, they will find the BBC there. That means that very strong safeguards need to be built in, as several hon. Members have pointed out. There is a real danger that the BBC, with all its resources and power, will distort the market in those new areas. That is why the charter is so important.

The Secretary of State has talked about the charter being subject to greater consultation and transparency than ever before. It is true that we have had consultation, with lots of seminars, a Green Paper and a White Paper. However, all the feedback from that consultation has been largely ignored. The enormous reports commissioned at vast expense by the commercial broadcasters have all reached conclusions, none of which seems to have been accepted by the Government. The Burns committee, set up by the Government, produced some very good recommendations, including the establishment of a public service broadcasting authority, but that too was rejected by the Government.

The House of Lords Select Committee wrote to the Secretary of State saying:

There is not much point in having huge amounts of consultation if the Government give the impression that their mind has been made up before the consultation even started, and nothing will change as a result of it.

The concerns rightly centre on the new structure of governance. I admit that the BBC Trust is an improvement on the board of governors, in that the separation between the board and the executive will be clearer. They will actually be geographically separate, but the trust will still be part of the BBC. According to the charter, the first job of the BBC Trust will be to set the strategic direction for the BBC. It still looks very like a board of governors: the first four appointees to the trust are all existing BBC governors. I have a great deal of respect for some of those individuals, especially one of them, whom I worked alongside for some time and for whom I have a high regard. However, I hope that in future appointments to the BBC Trust we will look a little further than those who have worked inside the BBC or who have a history of working with the BBC.

I hope that the new appointees will bring a degree of scepticism. If the BBC Trust is truly to be a proper
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external regulator, as the BBC likes to claim and the Government try to claim, its members must be genuinely independent of mind and willing—indeed, positively keen—to criticise the BBC when it is going wrong.

The most important factor will be oversight of the new services. The creative future spelled out by Mark Thompson represents a huge ambition. The Beethoven week experience, when the number of downloads of Beethoven symphonies was far in excess of the BBC’s expectations, shows that even a pilot scheme can have a vast impact on the market. I welcome the BBC’s recognition that the Beethoven week caused the music industry profound concern, so it changed the format for the Bach week so that whole BBC symphonies were not available free for downloading. That was a welcome recognition of the fact that the BBC needs to work with commercial companies, not in competition with them.

Even BBC pilots can have great impact, so I was slightly concerned when Mark Thompson announced recently that the corporation is to extend its podcasting trial

That initiative has not been subject to any of the tests to which the Secretary of State has rightly drawn attention, and there is concern that such trials, which may last for several months, may themselves distort the market. There is a case for their being subject to some kind of assessment before they are launched.

When new services are launched each should have its own service licence and be subject to a market impact assessment. The fact those assessments are to be conducted by Ofcom is a step forward, but even though Ofcom has some role in the process, the eventual decision about the public value test still rests with the BBC, which is unsatisfactory. Furthermore, it is of some concern that although the market impact assessment is carried out by Ofcom, it is subject to the oversight of the joint steering group, half of whose members are from Ofcom and half from the BBC. The BBC will still have considerable power over the assessment.

That situation is unsatisfactory. It bears a depressing similarity to the arrangements for the National Audit Office, which has some access to the BBC’s accounts, but only subject to agreement with the BBC. I fully endorse the comments of my hon. Friend the Member for East Devon (Mr. Swire) and all the others who have said that the situation must change. The BBC enjoys vast amounts of public money, so it should be subject to the same efficiency scrutiny as every other part of the public sector.

As the chairman says in his annual report, the missing piece of the jigsaw is the licence fee settlement. He told the Select Committee a year ago that the figure for which the BBC has bid—2.3 per cent. above inflation—was a reduction from the original sum proposed in the BBC, and that he had somehow beaten it down to 2.3 per cent. over inflation. The Secretary of State, on the other hand, has said that she regards that figure as an opening bid.

I hope that we shall look carefully at each part of the bid, because each seems somewhat excessive. The BBC says that it needs an extra £1.4 billion just to meet the
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increase in base costs. It talks about super-inflation in broadcasting costs, but if anybody is responsible for that, the prime culprit is the BBC itself. I shall not get drawn too far down the salaries road, although it seems extremely unwise to award quite such enormous increases at a time when the BBC is asking its staff to suffer painful reductions in the number employed and in their pension entitlements. At the very least, such increases are somewhat insensitive.

On top of the base cost increase, the BBC wants another £1.6 billion for quality content. No new services are being launched in the main broadcasting area, so that £1.6 billion will go straight into programming, which must further increase the inflation. Then there are things such as the spectrum tax, for which the BBC says it needs £300 million. However, Treasury Ministers tell me that currently there are no proposals for such a tax, so the BBC has put in a bid for a precise—and large—sum before any proposals for the tax have even been introduced. I hope that we shall look at all those components, and I look forward to hearing the Government’s announcement, when it finally comes, about the future of the licence fee.

I want to touch on the contribution made by the BBC’s commercial activities to keeping down licence fee costs. It is certainly right that the BBC should exploit the value of its assets to the full. The BBC brand is a powerful one and it is worth money, so it is right that the commercial arm of the BBC—BBC Worldwide—should try to get a return for the licence fee payer from the use of that brand. However, that has resulted in the BBC extending its activities into areas that are a million miles removed from broadcasting.

The BBC is now the third largest consumer magazine publisher in Britain; it has 50 titles, 21 of which are in the children’s market. It recently launched a magazine called Amy for five to eight-year-old girls. Apart from the fact that CBBC was printed across the top of the magazine, it bore no relation to any BBC programme. The BBC decided that it wanted to become the third biggest magazine publisher in Britain, and I am sure that it has ambitions to become the second, if not the first.

BBC Worldwide recently bid for and acquired seven radio licences in India—not the World Service, but BBC Worldwide. The BBC is now a big player in the radio market in India. It also has a joint venture to create one of India’s largest magazine companies. Where does it stop? Would it be right for the BBC to set up a chain of antique shops under an “Antiques Roadshow” brand? Perhaps it could move into car dealerships based on the success of “Top Gear”. There must be a limit to what the BBC does.

The BBC’s original purpose was to provide public service broadcasting—to do things that the market will not provide. That is why I support the BBC, but it worries me when it extends its power and we hear the director-general saying that he wants to build the BBC into a competitor to Microsoft or Google. It is all very well to be ambitious, but the evolution of the BBC into a worldwide conglomerate is not appropriate. It takes us too far away from the corporation’s original remit.

As long as the BBC is capable of providing good-quality public service broadcasting, of which there are plenty of examples, I shall support it, but
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strong safeguards are needed. I am not sure that the charter proposed by the Government goes far enough in building in safeguards to ensure that the BBC maintains the quality we expect in its public service output while not becoming over-mighty and inflicting real damage on some of its commercial competitors, who are struggling to survive in a difficult broadcasting environment.

7.18 pm

Mr. Austin Mitchell (Great Grimsby) (Lab): I shall not follow the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) in his detailed criticisms, many of which were telling. I want to take a more broad-brush approach, because as this is probably our last debate on the BBC before charter renewal we should take the opportunity to look at the institution and its effectiveness overall, in the round, rather than going into the detailed criticisms that we all want to make.

We must accept that the BBC is a great British institution. The BBC is a nursery of talent, a sustainer of quality and a bastion of public service; abroad, it is often a better flag-bearer for Britain than the Foreign Office. We should defend it rather than, as the Opposition seem to be doing, damning it with faint praise, or, as the commercial rivals seem to be doing, praising it with loud damns. That is the approach of Rupert Murdoch, ITV, and Kelvin MacKenzie.

I am a big admirer of Rupert Murdoch—perhaps the only one on the Labour side of the House—but he uses The Times and The Sun to snipe constantly at the BBC and defend the interests of Sky. The commercial rivals praise competition, then blame their own failures on the idea that the BBC is too powerful a competitor. I admit that the BBC can be infuriating, particularly to anybody who has ever worked for it, but it is a magnificent institution, which we should praise and try to improve rather than carp at as opponents outside and inside the House are doing.

I too want to express broad support for the Government’s proposals. My support is, however, not unqualified. Like the previous speaker, I do not see how the trust is going to emerge. These days it is all trusts; we are creating trusts all over the place. Well, I do not necessarily trust the trusts. The original concept of the governors was that there would be a buffer to protect the BBC from attacks from outside, relating to the corporation through the director-general. If there were points of dissatisfaction with the corporation, the governors would not intervene; the director-general would simply be fired. That was the original approach—but it has certainly broken down, and something had to be done. It has broken down because the governors began to interfere far too much, and because many of the appointments, particularly under the Conservative Government, were mediocrities. They were political appointments.

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