2 Spending Review 2010 and the World
scale of the cuts to the World Service
4. The World Service is currently funded through
a Grant-in-Aid from the FCO. In 2009-10 the World Service was
allocated a resource budget of £241 million by the FCO. The
Grant-in-Aid from the FCO will be progressively reduced throughout
the Spending Review period. Resource funding from the Department
for 2010-11 is £229 million. This is expected to fall to
£212 million by 2014-15, which taking account of inflation
is a 16% real-terms cut. In addition, there will be a real-term
reduction in capital spending of 49% between 2010-11 and 2014-15.
The table below sets out the Spending Review settlement for the
BBC World Service:
|Budget restated in 2010-11 prices
|Change since 2010-11 baseline
|Budget restated in 2010-11 prices
|Change since 2010-11 baseline
5. The Spending Review 2010 announcement stated that through
the SR2010 period the overall budget of the FCO would fall by
24%. The initial impression
conveyed by the announcement was that the World Service, facing
an overall reduction in Grant-in-Aid of 16%, had been treated
relatively favourably by comparison with the rest of the 'FCO
family' (an expression used to refer to the 'core FCO' together
with the World Service and the British Council). However, during
our inquiry into FCO Performance and Finances, it became
clear that this was not actually the case, and that the 'core
FCO' was facing a significantly lower budget reduction than other
areas of the FCO family. In a letter to us dated 13 December 2010,
the FCO's Permanent Under-Secretary, Simon Fraser, confirmed that
by the end of the Spending Review period, the Department would
face a "mathematical real terms cut of around 6%", and
that, taking into account membership subscriptions for international
organisations, "the predicted core FCO cut is a shade under
10%". This compares
to a 16% real-terms cut in resource budget to the World Service
(and a 25% cut to that of the British Council). We concluded in
our Report on FCO Performance and Finances that these cuts
to the World Service (and British Council) "will pose severe
challenges to those two organisations".
6. During our evidence session of 9 March, many
of our witnesses commented on the "disproportionate"
nature of the cuts as they affected the component parts of the
FCO family, with the 'core FCO' seemingly protected from the deepest
budget cuts. Luke Crawley of BECTU stated "that if there
was some equality or parity between the two levelsonly
a 10% cutthat would at least be seen to be equal treatment
in all areas of Foreign Office spending."
Jeremy Dear of the NUJ unfavourably compared the treatment of
both the World Service and the wider FCO with that of the Department
for International Development (DFID):
we can make an even stronger case that the cuts in
the World Service and BBC Monitoring are disproportionate to the
cuts that the Foreign and Commonwealth Office are facing and certainly
disproportionate to the increase in the budget for the Department
for International Development.
The Director of the World Service, Peter Horrocks,
argued that the World Service had, to some extent, been 'singled
through the investigations of the Committee and your
report, it has become clearer. The figure that I recall from the
evidence is that there is a 6% real terms reduction for the FCO
budget, so the strict comparison is between 6% and 16% for the
World Service. Clearly the difference in that number speaks for
itself. The Foreign Office has explained the rationale for that,
but there clearly is a discrepancy, and the reference to the FCO
family is the fact that different members of the family have clearly
been treated in different ways.
7. The Foreign Secretary told us that he did
not regard the cuts to the World Service as being "disproportionate"
if they were seen in the context of expenditure since the start
of the previous Spending Review period in 2007-08.
He repeated his position, first put forward in the Written Ministerial
Statement on 26 January, that "the FCO has provided a settlement
that keeps the BBCWS proportion of the FCO familys overall budget
at or above its 2007-08 level through to 2013-14".
He told us that:
over the full period in which the Foreign Office
has had to make spending reductions [...] the percentage of total
FCO spending accounted for by the World Service, as it transfers
into the BBC licence fee, will be the same as it was at the beginning,
having gone up in the middle.
8. We invited the World Service for its comments
on the Foreign Secretary's arguments. Its response was as follows:
- In common with all Government
funded operations, World Service must make cuts from its existing
levels of activity, i.e. its 2010/11 spend, not the level of spend
it had in 2007/08. It is not clear why the 2007/08 position should
be used as the relevant comparator.
- 2007/08 was the final year of the 2004 Spending
Review settlement. In the next year (following the 2007 CSR settlement),
the Government increased World Service's revenue funding by £18m
to enable it to launch BBC Persian TV and to take BBC Arabic TV
to 24 hours a day broadcasting. To reduce the level of cuts to
other services announced by the World Service in January 2011,
we could have closed these new television services to reduce spend
to 2007/08 levels. We have not proposed this because it would
not be appropriate to curtail the most modern and most needed
services in the portfolio, delivering significant benefit to their
audiences particularly in the context of ongoing instability and
uncertainty in north Africa and the Middle East. As a result,
bigger cuts are being made in other areas to achieve the higher
- There will be other variations to the BBC's and
to the FCO's budgets which provide important context to the historic
comparison. World Service additional money (for BBC Arabic and
Persian, see above) has not been excluded from the figures.
In addition, the World Service commented that:
the WS share of the total budget is not unchanged
over the period. It declines from 16.0% in 2007/08 to 15.6% in
13/14. That 0.4% reduction costs World Service £6.6m per
annumequivalent to one-seventh of the £46m total savings
the World Service is required to make by 2014.
9. The extent to which World Service funding
has remained relatively constant as a proportion of overall FCO
funding has to be seen in the context of the long-term trend in
that funding as a whole. In our recent FCO Performance and
Finances Report, we concluded that:
cuts to the core FCO budget even of 10% may have
a very damaging effect on the Department's ability to promote
UK interests overseas, given that these will come on top of previous
cuts to the FCO's budget in the very recent past, which our predecessor
Committee described, as recently as March 2010, as "unacceptably
disrupting and curtailing" the Department's work and representing
a threat to its effectiveness. We further conclude that the Spending
Review settlement will accentuate the regrettable long-term trend
for the FCO to lose out relative to other departments and agencies
in the allocation of government spending.
10. An argument advanced by many of our witnesses
was that the cost of the World Service has to be assessed
in relation to its value. Sir John Tusa, the distinguished
journalist and commentator, and a former Director of the World
Service, described it as being "a key national global institution"
and "at the forefront of international broadcasting".
He added that:
Since the Second World War BBCWS's reputation as
the trusted voice of international broadcasting has been recognised
as preeminent by audiences, other governments and other broadcasters.
Likewise Kofi Annan, former United Nations Secretary-General,
told us that:
In the late 1990s, I described [the World Service]
as 'perhaps Britain's greatest gift to the world this century'.
He stated that "for many communities around
the world, BBC short wave broadcasts in their own language are
a lifeline, a window to the outside world, an opportunity to learn
11. BECTU commented that "The World Service
is currently the world's most-recognised news service. [It] is
seen by the public as the organisation that does most to serve
UK interests internationally. This is confirmed by surveys conducted
by Chatham House and Populus."
The NUJ cited an unnamed Chinese journalist who said that "the
BBC is the most trusted and respected" news service.
Support for the BBC World Service has also been widespread throughout
the media. The Financial Times called the World Service
"one of Britain's principal sources of soft power,"
and The Economist recalled that Mikhail Gorbachev
reportedly listened to the World Service while resisting a military
coup in 1991.
12. Writing in The Daily Telegraph, Mark
Thompson said that:
The World Service is rightly considered a jewel in
the crown of the United Kingdom. For generations, it has been
a source of news, unvarnished and unbiased, to listeners in democracies
and in dictatorships alike. For those who lived behind the Iron
Curtain or who live today under other repressive regimes it has
been a beacon of lighta source of truth and impartial analysis
in a sea of propaganda and censorship.
He repeated this in oral evidence to us, calling
the World Service "one of the most precious things the BBC
does" and "a lifeline to many tens of millions of people
around the world who don't enjoy proper access to accurate, impartial,
13. Giving evidence to us in September 2010,
the Foreign Secretary described the World Service as:
A very important part of Britain's presence in the
worldof our soft influence, as it is sometimes described,
or our smart power, as the Americans sometimes describe it. So
I attach huge importance to the World Service.
He went to say that:
the BBC World Service will remain of fundamental
importance to this country's presence in the world.
In the Strategic Defence and Security Review, published
October 2010, the Government said that the FCO will "continue
to support the BBC World Service and British Council which play
unique roles in promoting our values, culture and commitment to
human rights and democracy".
14. 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.
15. 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.
16. 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.
17. 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.
4 FCO Performance and Finances¸ Ev 35 Back
House of Commons Scrutiny Unit analysis of BBC World Service data.
Data submitted to FAC inquiry into FCO Performance and Finances,
Ev 35 and 77. Back
Spending Review 2010, HM Treasury, page 11, table 1 Back
FCO Performance and Finances , Ev 47 Back
Ibid., para 26 Back
Q 1 Back
Q 2 Back
Q 35 Back
Developments in UK Foreign Policy, Transcript of session
of 16 March 2011, HC 881-i, Q 65 Back
HC Deb, 26 January 2011, col 13WS Back
Developments in UK Foreign Policy, Q 35 Back
Ev 43 Back
Ev 43 Back
FCO Performance and Finances, para 25 Back
Ev w8-10 paras 2.1 and 2.4 Back
Ev w8-10 para 2.5 Back
Ev w21 Back
Ev 22-23, paras 7 and 8 Back
Ev 23-28, para 29 Back
"BBC World Service: Government must clarify broadcaster's
overseas role", The Financial Times, 29 January 2011 Back
"BBC Funding", The Economist, 27 January 2011 Back
"The World Service can survive these cuts", Mark Thompson,
The Daily Telegraph, 25 January 2011 Back
Q 96 Back
Developments in UK Foreign Policy, Transcript of session
of 8 September 2010, HC 438-i, Q 17 and Q 21 Back
Strategic Defence and Security Review, October 2010, Cm
7948, page 67 Back