Examination of Witnesses (Questions 20-33)
LORD BURNS
GCE, MR DAVID
ELSTEIN, MR
TIM GARDAM
AND MR
JEREMY MAYHEW
20 FEBRUARY 2007
Q20 Mike Hall: I think the answer
to that would be "Yes".
Mr Gardam: I think that is an
interesting question. How many people would agree with that? You
would have to be very bold to say public life would undoubtedly
be better if the BBC were less influential in our society. You
are then left with three options as to the way forward. The first
is: the BBC is good value for money and maintains its monopoly
of the licence fee, which is where we are for the next six years.
The second is: the BBC Trust repositions itself to become the
custodian of the licence fee to ensure a level of contestability.
The third option would be that the BBC moves towards subscription
and there will be a smaller fund for public service intervention.
Maybe we will get to three at some stage, but I think one has
to go through two before you can consider three and see what happens
if two works.
Lord Burns: I agree with that.
Q21 Chairman: It is probably an unfair
question, but, Lord Burns, am I correct that you are not one of
the ones on the long list of people who have ruled themselves
out of the position of Chairman of the BBC?
Lord Burns: I have not applied
for the post of Chairman of the BBC either this time or on any
other occasion.
Q22 Mr Evans: So you have not ruled
yourself out!
Lord Burns: I have ruled myself
out.
Q23 Mr Evans: You have ruled yourself
out?
Lord Burns: Of course. By not
applying for the post I have ruled myself out, because it is a
process that requires application.
Q24 Chairman: We do seem to be running
out of candidates very fast!
Lord Burns: It is not because
I think there is anything wrong with the job, although it is not
the one we proposed, but I do have a lot of other things to do.
I am quite heavily committed.
Q25 Adam Price: Remaining with funding
for the time being and how we raise it, you mentioned some of
the possibilities: the DTT spectrum and, David, you mentioned
some people have canvassed the possibility of a new turnover tax
on broadcasters in general, including Sky. Has that got any traction
whatsoever, do you think?
Mr Elstein: I do think it is mildly
perverse to say we should tax Artsworld in order to fund Channel
4, which is what that means. Special taxes are, on the whole,
pretty unwelcome in society. They tend to have effects which are
not what one originally intended, and they are highly distortive.
I worked in ITV during the days when there was a levy on ITV,
with the net result that 82% of every pound earned went to the
government, in which case, on the whole, why bother to make profits?
Let us spend it on parties or programmes that do not need to be
made or, indeed, trade union members being flown first-class to
Australia, and it was somebody else's money, so let us not worry
about it. On the whole I am not very keen on that to, but to pick
up the point that Mike Hall was making, in the past, although
I have been a strong advocate of subscription funding for the
BBC entertainment services, it has not been technically possible.
We are rapidly moving to a point where every household that has
a television will be able to exercise subscription options. Ten
million households already do—the Sky households, the cable
households—so we are much more used to it, but Panorama
did a survey a year or so ago on funding options. Actually subscription
proved to be most popular, ahead of advertising and the licence
fee, so how you get to a mechanism for differentiating between
what the BBC could easily fund through very normal mechanisms
and what you have to fund through direct public intervention,
that is a process. I do not think there is a moral issue here.
I do recognise what Tim has been saying, which is that you do
not lightly discard the non-financial benefits of having the BBC
simply for the sake of economic theory, and there is a whole range
of welfare economists who will argue the toss one way or the other
I just think that we have got to look at this argument in the
round, and one of the problems of coming up with a viable pluralistic
public service content policy is that virtually all the public
money in the future will be going to the BBC to pay for, not just
public service content, but the whole bunch of entertainment which
does not need that mechanism to deliver it. We need to take a
step back. I thoroughly agree with Lord Burns that an early review
(what Ofcom was recommending) in 2009 rather than 2011 or 2012
must be appropriate, and now that we actually have the last two
years of this particular licence fee deal kind of a bit vague
(the first four are much clearer), that is an indication that
even this Government will acknowledge what Ofcom has been urging,
which is that you have got to examine these issues early. Both
Tim and Jeremy have adequately argued, not least for the purposes
of deciding what you do about Channel 4, you are going to have
to address this thing early, and it would be a real dog's breakfast
if we left the BBC over here, dealt with Channel 4 over there,
put up the PSP as a straw man here and never got to grips with
what actually it is that we are trying to achieve in terms of
generating and funding public service content, and that is why
I so much welcome this Committee's entry into the argument in
the terms that it has chosen.
Q26 Mr Evans: Can I ask David and
Lord Burns this question? The way things are going, am I right
in saying that you are both in favour of public service content,
we need public service content to elevate us, but we do not need
the BBC post 2012?
Mr Elstein: No, no, no. I am strongly
in favour of keeping what you have got.
Q27 Mr Evans: You are going to savage
it, David. To look at what you have said this morning, basically
it is that they get £3 billion worth of money, it should
not necessarily all go to the BBC, so we want to top-slice it.
None of you have actually said how much you want to top-slice.
You cannot. Otherwise you are going to have to be forever mugging
the poor viewer out there to say, "Let us have more and more
money." If you are going to damage any part of that £3
billion, you heard the BBC cry out the other day when they did
not get their increase, the one that they wanted, it was awful.
Mr Elstein: But did they cry out
when £100 million a year was peeled off to fund digital switchover?
I did not hear a peep out of the BBC. Obviously there are some
things that do close down Radio 4 and some things that do not.
Let us acknowledge the politics that are at work here. I am strongly
in favour of keeping your broadcasting institutions, the strong
brands that work, and also, by the way, keeping them in the public
sector. I have no wish to denationalise BBC broadcasting. I think
BBC production is a different matter, but we have got to have
a continuity of thought here. Here we are, February 2007. Some
time probably in the 2012, 2014 timescale, if we actually manage
it (and that was the subject of another inquiry by this Committee)
we may well have analogue switch-off. There is a clearly linkage
between funding mechanisms, technology, public service content
funding and delivery which we need to pull together. So beating
up the BBC is no part of this. Personally I am not strongly in
favour of top-slicing the licence fee as it is, because you put
too much pressure on the BBC overtly to reduce its own public
service content delivery. If you take £100 million out of
the BBC and hand it over to Channel 4 to make public service content
or Channel 4 News, whatever it might be, and the BBC says,
"Well, in that case we are not going to reduce the amount
of Strictly Come Dancing, we are going to reduce the amount
of peak time arts documentaries"—a natural response,
because the BBC has to maintain its weight in terms of viewing
share, reach, et cetera, otherwise the whole licence fee
mechanism comes tumbling down—
Q28 Mr Evans: Yes, but where you
put the money you have just top-sliced means that the programme
that the BBC have just sliced will go to another channel. Maybe
on ITV, instead of that rubbish they put on after midnight, you
might actually see some good quality programming.
Mr Elstein: You might, but in
the end that intervention is likely to lead to a zero sum benefit.
If you take money and quality out of X and deliver it to Y, is
the viewer any better off? I think we need more joined up thinking
about what is the destination we are trying to get to and when,
how do we get there, what are the steps on the way and what do
we have to have to pay attention to on route? If we wait to make
all our decisions until 2012, Channel 4 may have descended into
Big Brother 19-24 hours a day with the opportunity to phone
in and apply to be there and pay a pound to do so. Who knows?
It is a great shame; but Jon Snow as the presenter, I am sure,
will be great!
Q29 Mr Evans: Indeed, and I am looking
forward to a right-wing version of Channel 4 News at some
stage too. Maybe that could be a public service remit. Can I ask
Lord Burns for his response as well? Do you think, for instance,
looking at what the BBC does with the money, and with the new
digital age, that perhaps if we shelved BBC Three and Four, which
nobody watches, a load of those radio stations that nobody listens
to, that money could be going up for bid for somebody else in
order that a good public service content can be provided on channels
that people watch?
Lord Burns: I do not agree with
that. I belong to the camp that believes that it is important
to have a strong BBC. I think we get a wonderful array of programmes,
both on radio and on television. I think, however, the present
method of funding is not sustainable beyond digital switchover.
I think it will become extremely difficult to use the policing
method that we use to put people in court for not paying a licence
fee when it is possible to simply turn off the programmes that
they do not wish to pay for. I am afraid that does take you into
subscription. I believe there should be a continuing amount of
public money that is available, whether it is in the form of the
reduced licence fee or the same licence fee, but which would then
be used for ensuring that we have an adequate amount of public
service content, which I would like to see bid for by alternative
providers, including the BBC. That is the picture that I see beyond
2015 when the new arrangements have settled down. As David says,
there is then an issue of how we get to that kind of world where
the BBC is funded by a mixture of subscription, possibly advertising
on some of its overseas websites, or whatever, and by some public
money which would be allocated by a body that was looking across
the alternative providers of public service content. But it is
no part of my agenda to weaken the BBC. I think that we are extremely
fortunate.
Q30 Mr Evans: Post-2012, do you think
that the BBC, even with some of the money taken away, will still
be a strong public service provider and it does not matter how
much they bleat, and they will, the BBC will still be there and
the public should not be scared to think that they are going to
lose all of this good quality service television?
Lord Burns: Providing this whole
process is managed in a sensitive way, I think we can get through
the whole digital switchover period. I do believe we can move
to a mixed funding model for the BBC and retain a strong BBC but,
similarly, have some public service content which comes via some
other providers. That is the outcome that I would like to see
in 10 years time. If one goes after the BBC with too much of a
blunderbuss here, one could always cause quite a lot of damage.
As something that has been built up over a long period, I would
be very reluctant to see that happen. In a lot of areas, I notice,
it continues to play extremely well in the new content world.
So there is no suggestion that people's appetite for the BBC in
the new content world is at all diminished. Just look at the success
of the website. Most of the podcasts that people listen to are
dominated by the BBC offering, but the present method of funding,
I do believe, is not sustainable beyond digital switchover.
Q31 Mr Evans: You say it is dominated
by the BBC, but maybe to the exclusion of commercial people coming
in, because they cannot afford to compete?
Lord Burns: Some people are in.
If you look, some of the newspapers figure in the list of the
top 50 podcasts. There are a variety of things, but it just happens
there are some very good BBC programmes, and I am not at all surprised.
Chairman: We are going to have to move
on to the next session. Philip and Adam.
Q32 Adam Price: I just wanted to
ask briefly, if Ofcom has scaled back the projected cost of the
public service publisher from £300 million to between £50
and £100 million, is that going to be enough?
Mr Gardam: I think the idea behind
the public service publisher is that it should have a catalytic
effect. I think it is very sensible of Ofcom to decide that it
should not become an extra brand in its own right, but if it can
become a partner in particular projects, new media projects that
otherwise would not happen (so opening up really interesting ideas
of public import to wider access that otherwise it would not be
there), then that is a very good idea. I think if you see that
money as essentially partnership money, leveraging extra investment,
then I think it would be quite an interesting intervention, but
I think it is a minor one.
Q33 Philip Davies: Can I briefly
follow on that? They have reduced the obligations of public service
broadcasters in some areas and maintained others, such as children's
TV. Can you say whether you think those actions have been the
right ones, are they proportionate and how much faith do you have
in Ofcom as a regulator in this area?
Mr Gardam: I think Ofcom was doing
a very important thing when it was created, which was that it
took the debate about public service broadcasting and public service
content beyond the realm of anecdote. When it arrived it became
quite clear there was not the data about what the level of public
service provision investment was in the United Kingdom. So its
first report on public service content was incredibly valuable
and led to a new perspective whereby we could get an accurate
idea of the nature of public service broadcasting in this country.
I think from there it is opening into a new phase where it has
got to join up its thinking as to what the shape of public service
provision will be, and there has been a series of interesting
initiatives—Channel 4, the news, children's television,
the PSP that we have mentioned. The challenge for Ofcom now and
its new chief executive, who I think is much more content-minded
than his predecessor, is to think overall about what public service
provision will look like. In the first phase of Ofcom's development
it was trying to establish exactly what was the case out there;
it is now moving into a new phase.
Chairman: Thank you very much for your
help.
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