Previous Section Index Home Page

Sammy Wilson (East Antrim) (DUP): The Department for Employment and Learning in Northern Ireland is about to implement proposals in
18 Jan 2007 : Column 932
“Further Education Means Business”, the implications of which are wide ranging. It is feared that they will decimate many community education projects, exclude people on low incomes from adult education and lead to massive redundancies for lecturers in further education. Will the Leader of the House provide time for a debate on those implications before the proposals are introduced?

Mr. Straw: I accept the importance of the matter raised by the hon. Gentleman, and I shall follow it up with my right hon. Friend the Secretary of State for Northern Ireland. The quicker we get the Assembly going, however, the sooner there will be a full opportunity for those issues to be debated where they should be debated, which, in our judgment, is on the ground in Northern Ireland.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): May we have an early debate entitled, “Threats to the Union”, as many of us believe that one of the greatest threats is the perceived injustice created by Members of Parliament who do not represent English constituencies voting on English-only business? We want that matter to be resolved, and if that is uncomfortable for the Chancellor of the Exchequer, may I suggest that that is simply a result of the democratic principle that in the absence of accountability there can be no democratic legitimacy?

Mr. Straw: It depends on whether I can find the time, but I should be delighted to hold a debate on perceived threats to the Union, one of which is the unacceptable proposal for an English Parliament, with the implication that it is all very simple to deliver. As for the issue of injustice, as the right hon. and learned Gentleman very well knows, the Scots, the Welsh and the Northern Irish could equally say that a perceived injustice results from the fact that 85 per cent. of Members of Parliament represent English constituencies. It is we, therefore, who determine the funding that goes to Scotland, Wales and Northern Ireland. The arrangements for governance in this country are not symmetrical, precisely because of England’s huge dominance, both in gross domestic product and representation. They are not symmetrical, but they are fair, and as many wiser Conservatives have recognised, to challenge those arrangements and disturb the balance would be very dangerous indeed for the Union.

18 Jan 2007 : Column 933

BBC Licence Fee

12.17 pm

The Secretary of State for Culture, Media and Sport (Tessa Jowell): With permission, Mr. Speaker, I should like to make a statement on the BBC licence fee.

Over the past three years, the public, industry and Parliament have all contributed to a national debate about the BBC, its future shape and its funding in an unprecedented exercise in public involvement. I am now in a position to announce what the funding will be over the first part of the new 10-year charter period. The settlement will be for six years, with annual nominal increases in the licence fee of 3 per cent. for the first two years, and 2 per cent. in years 3, 4 and 5 of the settlement. There will be an increase in the sixth year—2012-13—of up to 2 per cent., depending on a further review nearer the time. I have written to the BBC Trust today setting that out. Those are cash increases.

The price of a colour TV licence will rise from its current level of £131.50 to £135.50 from 1 April this year, reaching a figure of up to £151.50 in 2012. Based on the Treasury forecast of the consumer price index—the Bank of England’s inflation measure—that will either be above or in line with inflation for each year of the settlement. That will enable the BBC to deliver its new public purposes, which we set out in the new charter. As digital technology transforms the media world, it will enable the BBC to take a leading role in making the most of such technology. Investment in high-quality content—the driver of creative industry and what audiences value most of all—will remain high. The settlement will enable the BBC to do that. It will also allow the BBC to move key departments, including children’s programmes, sport, new media and learning, to Salford in the north-west of England. I, like hon. Members in all parts of the House, will welcome the trust’s confirmation, due later today, that that will happen.

This is a vital opportunity for the BBC to widen its geographical spread and relevance, and make better use of the creativity and talent that exist right across the United Kingdom, bringing huge benefits to the regional economy, estimated at £1.5 billion and 15,500 jobs. Through greater efficiency, the settlement will allow the BBC to maintain all its current services and provide up to £1.2bn for investment in new activities.

The people of the United Kingdom spend more of their money on the BBC than any other country in the world spends on public service broadcasting, except Germany. So the new BBC Trust must ensure that licence fee payers get the best possible value for that investment. We expect the trust to ensure efficiency in the BBC. On the basis of independent evidence from the consultants PKF and others, we believe that the BBC can realise up to 3 per cent. cash-releasing savings annually from 2008. A separate report published today by the National Audit Office confirms that our judgment is based on adequate evidence. It will be the trust’s responsibility to set specific targets and hold the management of the BBC responsible for meeting them.

On digital switchover, the BBC has been given a leading role in the delivery of this revolution. In particular, the licence fee settlement will fund the
18 Jan 2007 : Column 934
£600 million scheme that we are putting in place to help elderly and disabled people make the switch to digital, as part of our commitment to universal broadcasting and to ensure that no one is left behind. The Government’s expectation is that the BBC will lead the delivery of the scheme. We respect the independent status of the trust, and clearly there are details of the implementation of the scheme still to be discussed. The Government will retain responsibility for the policy, including helping with procurement and determining eligibility for the scheme.

The BBC will also pay for the £200 million public communications campaign being run by Digital UK to ensure that people are properly prepared and properly informed about switchover. Those sums will be ring-fenced within the settlement and so will not form part of the BBC’s baseline at the end of the settlement. We have made it clear that carrying out these responsibilities will not impact on the BBC’s core services and budgets. We are giving the BBC a 12.5 per cent. increase in its borrowing capacity to help deliver this commitment. We will ensure that the BBC’s services are protected from any cost increases in the help scheme, above our existing estimates.

In last year’s White Paper on the BBC, we noted that Channel 4 was likely to face major financial challenges from digital switchover. Ofcom is assessing the potential scale of those challenges. We said at the time that we would consider potential forms of help, including asking the BBC to help towards meeting Channel 4’s capital switchover costs, and possible access for Channel 4 to some of the BBC’s digital TV capacity. As I said, Ofcom’s review of Channel 4 is looking in detail at its financial prospects and is expected to report towards the summer. I am therefore keeping open, within the licence fee settlement, the possibility that we may require the BBC to contribute to the first six years of Channel 4’s switchover costs. This will be no more that £14 million in total.

I welcome the BBC’s conclusion that, in principle, it can make available some spare digital terrestrial capacity, amounting to a TV slot in England and three radio slots, at switchover. Under the BBC agreement, I can direct the BBC to make capacity available to another public service broadcaster, where it is in the interests of public service broadcasting in the UK. I shall decide whether and how to use that power in the light of the Ofcom review.

The settlement that I have set out for the BBC provides stability and certainty over the crucial period of digital switchover. The sixth year will, in effect, also form the first year of the following settlement. It will allow us to undertake a further review of the licence fee level in the run-up to the mid-charter point, taking account of the wider review of public service broadcasting, consistent with our commitment in the White Paper.

A strong, independent BBC, accountable to its licence payers—its paymasters—and providing the highest public value: that has been our fundamental goal throughout this long process. It is now complete, and the BBC, along with other broadcasters, can plan and prepare for digital switchover, the next great revolution in television, ensuring that the most vulnerable are protected and that the founding
18 Jan 2007 : Column 935
principle of public service broadcasting in this country, universal access, is secured. I therefore commend the settlement to the House.

Mr. Hugo Swire (East Devon) (Con): I thank the Secretary of State for her statement and for allowing me prior sight of the text.

As is so often the case with the Government, the House is the last to know the details. The licence fee settlement was not announced in today’s statement by the Secretary of State. It was leaked by Treasury officials to Channel 4 News two days after Parliament rose for Christmas, and in a series of subsequent leaks to the media. Will the Secretary of State therefore apologise to the House for the shameful way in which it has been treated over the announcement?

Is not the real point that the statement is the Chancellor’s announcement, not the Secretary of State’s, and that it is as much a defeat for the right hon. Lady as for the director-general of the BBC? Not for the first time, the Secretary of State has had an unfortunate collision with the great, clunking fist.

None the less, we are grateful that the process of negotiating the licence fee has at last drawn to a close. There have been three years of what the Secretary of State would call consultation, which has in fact been dithering and indecisiveness on her part and the part of the Government. Time and again, the Secretary of State let it be known that an announcement was imminent, and time and again she was forced to postpone it—first, last summer, then the autumn, then Christmas. Finally, a decision has been reached, and months of damaging uncertainty may at last be coming to an end.

The Opposition fully support the important contribution that the BBC makes to the lives of the British people. The BBC is clearly one of our greatest organisations, and one of the most effective global ambassadors that we have. Of course we wish to see it appropriately resourced.

The Secretary of State was originally convinced by the BBC’s inflation-busting argument. We were not. We argued that, at a time of falling advertising revenue, no other media business could expect such a substantial guaranteed income stream over the next seven years. We believe it is right that the BBC should be asked to live within the realities of today’s rapidly changing media environment. This is a more realistic settlement.

The settlement, combined with greater income from household growth, means that the BBC will receive substantially more money than it does today—something that none of its competitors can hope for. However, no other media organisation has been asked to take on the huge new responsibilities that the Secretary of State has foisted on the BBC. The BBC is now responsible for digital switchover. At least the right hon. Lady said in her statement that the Government’s expectation remains that the BBC will lead the delivery of the scheme. Perhaps she could take the opportunity to clarify whether the BBC Trust has agreed to deliver on targeted assistance on the terms that she articulated.

18 Jan 2007 : Column 936

Not only that, the BBC is expected to move a large part of its organisation to Salford—a move that will cost at least £400 million. Those two new obligations will cost the BBC about £1.5 billion over the next four years—money that will have to be taken out of the licence fee. According to the Library, the cost of targeted help for digital switchover— £600 million—would, on its own, add £7.20 to the cost of the licence fee. Does the Secretary of State believe that those new obligations can still be met under this settlement? Can she assure us that programme quality will not be jeopardised? That is certainly not what the director-general, Mark Thompson, is on record as saying this afternoon.

On digital switchover, given that the Secretary of State has said that the money will be ring-fenced, will it appear as a separate item on the licence fee so that viewers know that they are meeting that cost? Where will any extra money come from if the cost of switchover exceeds the Department’s estimates? Will it come from the licence fee or from the Treasury? Once switchover has been accomplished, will the level of the licence fee be reduced accordingly?

Even after today’s announcements, there is still a huge degree of uncertainty. The reason is clear. The Chancellor, who cannot resist interfering with anything and everything, could not resist the chance to meddle with the licence fee. He has loaded it with a stealth tax and forced obligations onto the BBC that it did not want. Future licence fee settlements must not be negotiated in that way. Under the next Conservative Government, it will be for Parliament to debate the role of the BBC in a rapidly changing, technologically driven media world.

The Secretary of State cites the National Audit Office, yet the NAO has not seen the books. As an organisation in receipt of more than £3 billion of public money, it is surely right and proper that the BBC should be subject to independent scrutiny and that the results should be debated properly here in Parliament. Will she at least allow the NAO full access to the figures outlining how the BBC spends £3 billion of public money?

This licence fee settlement has been subject to superficial consultation and grubby, behind-closed-doors negotiations. The right and proper place to debate the future role of the BBC, the future of public service broadcasting, and the right level of the settlement is here in this Chamber, and we will make sure that that is the case in future.

Tessa Jowell: As usual, we have had a diatribe from the Opposition about process, but we are none the wiser about what their policy on the BBC would be. It is extraordinary that they are so contemptuous of the three-year consultation process, a process that recognises the fundamental point that the BBC does not belong to Government—it belongs to, and is paid for by, the people of this country, and it is therefore to them that the BBC should ultimately be accountable. I make no apology whatsoever for inviting people of this country to participate, for the first time, in the consultation on the charter review and the future of the BBC. The unprecedented level of participation was a measure of the importance that the public attach to the
18 Jan 2007 : Column 937
BBC—an importance that the Opposition ride over in a rather arrogant and slipshod way.

This is a timely settlement. The last licence fee settlement was not reached until the middle of the February before the new licence fee level came into effect at the beginning of the following April. That is an important lesson. I hope that when the next Labour Government negotiate the licence fee, time will be allowed for consultation with the licence fee payer.

Let me deal with the couple of specific points that the hon. Gentleman made. I have underlined in the statement, and to the BBC, the ring-fenced nature of the moneys that will be raised from the licence fee to pay for targeted help and the costs of switchover. That money is ring-fenced subject, on the Government’s decision, to very clear protection of the BBC’s major function, which is to put high-quality programming on to people’s screens. That ring-fenced sum will ensure that the BBC’s role in running the targeted help scheme and leading on the digital switchover will not be detrimentally affected by other considerations.

Those costs will be levied on the licence fee payer specifically for the period of switchover. If the hon. Gentleman had listened to the statement—he continues not to listen to my answer to his question—he would know that they will not form part of the BBC’s baseline. That means that at the end of the switchover period the BBC Trust will be able to return those moneys to the licence fee payer or, in consultation with licence fee payers, to make judgments about how else they might be used.

Mr. Chris Mullin (Sunderland, South) (Lab): I welcome my right hon. Friend’s statement. Does she agree that the strongest case for the licence fee is that it helps to maintain standards across British broadcasting and ensures that the BBC acts as a bulwark against the descent into junk journalism that we are witnessing in other parts of the televised media?

As regards Channel 4, may I put it to her that the case for public subsidy of any sort is rapidly diminishing with every day that passes, and that the vulgarity currently arising from the “Big Brother” programme is a classic example of the case against any kind of public subsidy to Channel 4?

Tessa Jowell: I thank my hon. Friend for his comments. I entirely agree with his observation about the importance of the BBC’s role in maintaining standards of journalism. That is not something that the BBC merely discharges—it has an absolute responsibility to honour its obligations in terms of accuracy and impartiality. The people of this country have a very clear understanding—much clearer than they are sometimes given credit for—of the difference between opinion and the vociferous comment of newspapers. That is partly because when they turn on BBC television, they know that they can expect the news and information that they receive to be accurate and impartial. It is a heavy responsibility and one that licence fee payers expect it to discharge.

On Channel 4, the decision about whether to provide assistance will be heavily informed by Ofcom’s regulatory assessment of the justification for doing so. Of course, every public service broadcaster has a
18 Jan 2007 : Column 938
particular obligation to maintain the trust and confidence of the public who pay for them.

Mr. Don Foster (Bath) (LD): For more than 80 years, the BBC has been the envy of the world and has had the reputation of setting the gold standard for TV and radio. Does the Secretary of State acknowledge that based on realistic, not Treasury, estimates, this is a below-inflation rise in the licence fee, and that that will put the BBC’s reputation at risk? Surely the only person who will cheer her statement is Mr. Rupert Murdoch.

The Secretary of State accused the hon. Member for East Devon (Mr. Swire) of being contemptuous of consultation. Does she not recall a survey that she commissioned that demonstrated that the vast majority of licence fee payers are willing to see a modest real-terms increase in the licence fee in return for improved quality? Why is she ignoring her own research?

Surely it is the case that for the equivalent of buying only five copies a year of Radio Times, licence fee payers could have what they wanted—a modest increase in the licence fee in return for improved quality and more services. Perhaps the hon. Member for East Devon put his finger on the problem in that the Secretary of State should not be entirely blamed because the statement has “Treasury” stamped all over it. It means that, for the period of the settlement, the BBC will have £2 billion less than it said that it needed to deliver the Government’s White Paper vision. Even if the BBC estimated its costs wrongly and underestimated the amount of income that it can make, the shortfall means that it will have to slash its plans for new services and investment in new programming.

The settlement confirms that the licence fee payer will pay for the Government’s policy of targeted assistance to help vulnerable people switch to digital. Surely the Government should pay for that. Will the Secretary of State answer the question that she has still not answered and say whether she has confirmed such a scheme with the BBC? What will happen if the cost is higher than the £600 million that the Government predict? Will she pay the extra or will the BBC have to cut its programme budget?

The Secretary of State offered warm words about the BBC’s future, but they are not backed by the reality of her announcement. Against the wishes of listeners and viewers, and in response to Treasury demands, the BBC has to face a real-terms cut in its income, bear the risk of inflation and fund the cost of the Government’s policy of digital switchover out of its programming budget. The Prime Minister tried to bully the BBC over Iraq, but his likely successor appears to want to destroy it.

Tessa Jowell: I thank the hon. Gentleman very much. It is a great pity that he did not listen more closely to what I said.

Mr. Foster: I listened carefully.

Next Section Index Home Page