The implications of Cuts to the BBC World Service - Foreign Affairs Committee Contents

Conclusions and recommendations

1.  We share the assessments of the observations made by commentators, institutions, statesmen and the Government: the World Service is a "jewel in the crown" which promotes British values across the globe and has a reputation exceeded by none. In an era dominated by the media and the internet its influence becomes increasingly relevant. (Paragraph 14)

2.  We conclude that the BBC World Service has suffered a disproportionate reduction in its future Grant-in-Aid under the Spending Review settlement, by comparison with that of the 'core FCO': allowing for inflation, 16% as against 10% across the four years 2010-11 to 2014-15. Furthermore, we note that this has to be seen in the context of the long-term trend whereby FCO spending as a whole has been eroded in relation to that on other areas of government. We consider that the relatively small monetary savings to be achieved through this 16% reduction in spending on the World Service are disproportionate to the World Service's actual worth to the UK. The value of the World Service in promoting the UK across the globe, by providing a widely respected and trusted news service in combination with high-quality journalism, continues far to outweigh the relatively small cost of the service. (Paragraph 15)

3.  In the current economic climate, there are very few bodies in the public sector whose value to the nation is so great that their income should be wholly ring-fenced from spending cuts. The Government has decided that spending on two institutions, the National Health Service and the Department for International Development, should be so protected. We believe that the BBC World Service, the costs of which amount to a tiny fraction of those of the NHS and DFID, should be likewise safeguarded against cuts. The recent dramatic events in North Africa and the Middle East have shown that the "soft power" wielded through the World Service is likely to bring even more benefits to the UK in the future than it has in the past, and that to proceed with the planned cuts to the World Service would be a false economy. We therefore recommend that the decision to reduce World Service spending by 16% during the SR2010 period should be reversed, and resources made available for it to continue its operations at roughly the 2010-11 level of staffing and output. (Paragraph 16)

4.  As we have made clear, we do not think there should be any cuts to the World Service. If, notwithstanding our recommendation, the Service's funding is reduced, it will be important that cuts are imposed in such a way as to minimise the damage done. In the following sections of this Report, we consider how World Service management has decided to implement the Government's imposed 16% reduction in spending, and express concern about some of the decisions taken. (Paragraph 17)

5.  We conclude that the announced loss of 650 out of 2,400 jobs in the World Service represents 27% of the total workforce, and that this level of job loss is disproportionate to the 16% cut in World Service funding under the Spending Review settlement. (Paragraph 25)

6.  We welcome the Foreign Secretary's assurance to the House that World Service journalists who lose their jobs will not be compelled to return to a country where they may face persecution or be placed in physical danger. We conclude that it is important that this assurance is honoured. We recommend that, in its response to this Report, the World Service update us on the continuing status of those individuals whose residence in this country depends on their employment with the World Service. (Paragraph 30)

7.  We conclude that the proposed closure of the BBC Hindi shortwave service is a matter of deep concern. The decision to offer the service a limited and temporary reprieve, contingent on alternative commercial sources of funding being found, offers only partial reassurance. We note that India is a major rising economic power and that the Government has professed its wish to improve bilateral relations as a priority. We further note that the estimated savings from reducing World Service operations in India, at £680,000, are small in relation to the nearly 11 million listeners that will be lost. While we welcome the temporary reprieve of the BBC Hindi shortwave service while alternative funding models are explored, and we recognise that the service's audience is likely to continue to fall as a long-term trend, we recommend that the World Service re-examine the limited "temporary" reprieve and commit itself to longer-term support for an unreduced BBC Hindi shortwave service. (Paragraph 39)

8.  We conclude that the decision to close BBC China's short-wave output in Mandarin does not meet the criteria for service closures set out by the BBC and the Foreign Secretary, particularly the criterion regarding the "strategic importance of the countries they serve and the need of their populations for independent, impartial news". The shift from short-wave to online services in China will leave World Service transmissions vulnerable to action taken by the Chinese government to suppress or block internet traffic. Although the number of shortwave listeners may be in gradual decline, the underlying strength of shortwave transmission remains that it is much harder to turn off, block or criminalise compared to online provision. We recommend that the World Service should commit itself to longer-term support for an unreduced BBC China short-wave service in Mandarin. (Paragraph 45)

9.  We conclude that it is unfortunate that the World Service has announced 60 job losses in its BBC Arabic Service, just as North Africa and the Middle East look likely to play an even greater role in foreign affairs, and as events are occurring which call for the provision within this region of high-quality, objective journalism and news coverage. As with the closures to the Chinese and Hindi services, we do not see how this change meets the agreed criteria, particularly those concerning the strategic importance of the countries they serve and the impact of BBC services in those markets. (Paragraph 49)

10.  While we accept that the World Service could not have anticipated these events, we conclude that they require a reconsideration of the announced changes. We note that the 'core FCO' has responded to recent events in the Arab world by diverting considerable resources to the region, and we recommend that the World Service re-order its priorities along the same lines. The World Service should commit itself to providing enhanced resources to BBC Arabic as required by the recent and continuing political developments in the region. (Paragraph 50)

11.  We note the discrepancy between the relatively small amounts of money needed to avoid the most damaging cuts to the World Service—those to BBC China Mandarin, BBC Hindi and BBC Arabic—and the scale of the Department for International Development Spending Review settlement. We accept that under the terms of the International Development Act 2002, DFID is not able to fund substantial parts of World Service activity directly, because that activity cannot be directly demonstrated to contribute to poverty reduction. However, we conclude that some of the activity of the World Service does contribute to the wider aims of DFID and it would therefore be appropriate to consider how an additional small element of the DFID budget might be spent on specific activities and projects of the World Service which are consistent with the terms of the International Development Act. Our figures show that just 0.35% of DFID's budget would be enough to compensate for the Government's planned cuts to the World Service. We conclude that there is no reason why such a transfer should not be made if the political will to carry it out is present. (Paragraph 62)

12.  While we note that the opportunity for expanding commercial activity is much greater for the British Council than the BBC World Service, we recommend that the World Service, in its response to this Report, provide us with a detailed memorandum setting out the extent to which there is realistic scope for it to increase turnover from its commercial arms such as advertising on its websites and to work more closely with private sector firms in host countries, and indicating how it proposes to exploit any such opportunities to raise revenue. (Paragraph 65)

13.  The decision to transfer funding responsibility for the BBC World Service from the FCO to the BBC will have major long-term ramifications for the future of the World Service. We were told that the BBC carried out "modelling" of a transfer of funding during summer 2010, because such a decision was, according to the Director-General, "in the air" during the run-up to the Spending Review. We recommend that, in its response to this Report, the Government should clarify exactly when and by whom such a transfer was first mooted in discussions between the Government and the BBC, who initiated those discussions, and to what extent the BBC's "modelling" work and internal discussions about a transfer carried out prior to October 2010 were encouraged by the Government. We note that following this preliminary work by the BBC, discussions between Ministers and the BBC about a funding transfer did not take place until nine days before the formal announcement of the change on 20 October 2010, and the agreement of the Foreign Secretary was secured only 48 hours before. We conclude that taking this decision in such a short space of time cannot have allowed the FCO to consider the full range of options and implications. We further conclude that the decision was essentially financial, taken at very short notice, with the full agreement of BBC top management. (Paragraph 75)

14.  We do not believe that the decision to transfer funding responsibility for the World Service from the FCO to the BBC will make the World Service's funding more secure. We are concerned that, despite the mechanisms and procedures we have been assured will be put in place, this decision could lead to long-term pressure on the World Service budget, with the risk of a gradual diversion of resources from the World Service to fund other BBC activities. The freezing of the BBC licence fee for six years from October 2010 may increase the temptation for BBC senior management to "raid" World Service funding. In addition, the BBC may be vulnerable to media campaigns confronting the British public with a choice between, for instance, BBC spending on popular light-entertainment programmes and spending on news services in foreign languages in remote parts of the world. There is also a risk that Parliament's current ability to oversee the work of the World Service, in particular through select committee scrutiny, may be weakened under the proposed new arrangements. We therefore recommend that no transfer of funding responsibility for the World Service from the direct FCO Grant-in-Aid to the BBC should take place until satisfactory safeguards have been put in place to prevent any risk of long-term erosion of the World Service's funding and of Parliament's right to oversee its work. (Paragraph 80)

15.  The FCO has attempted to reassure us about governance arrangements after the proposed transfer of funding, by arguing that "the terms of the relationship [will] remain unaffected, other than in the sense of who holds the purse strings". Unfortunately, whoever holds the purse strings exercises a great deal of power. It is not difficult to imagine a situation some years in the future in which the BBC Trust might present the Foreign Secretary of the day with a fait accompli, along the lines of, "You can have a Russian service or you can have an Arabic service, but you can't have both because we are not prepared to fund both". We therefore conclude that a formal concordat should be drawn up between the Government and the BBC Trust, to make detailed provision for future funding and governance arrangements for the World Service. We recommend that this concordat give the Foreign Secretary not only the final decision over service closures, but also the right to stipulate minimum levels of service provision which the BBC will have a formal responsibility to fund. (Paragraph 81)

16.  In the event that the proposed transfer of funding in April 2014 goes ahead, then, in view of the Foreign Secretary's retained oversight responsibilities for the World Service, we intend to continue after that date, in conjunction with our colleagues on the Culture, Media and Sport Committee, to monitor the funding, policies and performance of the World Service, its links with the FCO, and its role as an important projector of the UK's influence and 'soft power'. (Paragraph 82)

17.  We further recommend that, if the transfer of funding takes place, the Foreign Secretary ensure that the World Service is adequately represented at the top levels of BBC management; and in particular that the Director of the World Service should have a place ex officio on the new Executive Board of the BBC, and that the International Trustee of the BBC Board of Governors should be given the specific responsibility of representing the interests of the World Service. (Paragraph 83)

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Prepared 13 April 2011