House of Commons - The implications of Cuts to the BBC World Service

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

2 Spending Review 2010 and the World Service

The 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.[4] The table below sets out the Spending Review settlement for the BBC World Service:[5]

Resource budget Capital budget

Actual budget

£m
Budget restated in 2010-11 prices
£m
Change since 2010-11 baseline Actual budget

£m
Budget restated in 2010-11 prices
£m
Change since 2010-11 baseline

2010-11 229 229 - 27 27 -

2011-12 231 227 -1% 22 22 -20%

2012-13 226 217 -5% 16 15 -43%

2013-14 222 207 -9% 16 15 -45%

2014-15 212 193 -16% 15 14 -49%

5. The Spending Review 2010 announcement stated that through the SR2010 period the overall budget of the FCO would fall by 24%.[6] 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%".[7] 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".[8]

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 levels—only a 10% cut—that would at least be seen to be equal treatment in all areas of Foreign Office spending."[9] 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.[10]

The Director of the World Service, Peter Horrocks, argued that the World Service had, to some extent, been 'singled out':

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.[11]

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.[12] 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".[13] 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.[14]

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 savings target.
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.[15]

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 annum—equivalent to one-seventh of the £46m total savings the World Service is required to make by 2014.[16]

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.[17]

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".[18] 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.[19]

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 and develop".[20]

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."[21] The NUJ cited an unnamed Chinese journalist who said that "the BBC is the most trusted and respected" news service.[22] 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,"[23] and The Economist recalled that Mikhail Gorbachev reportedly listened to the World Service while resisting a military coup in 1991.[24]

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 light—a source of truth and impartial analysis in a sea of propaganda and censorship.[25]

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, open media".[26]

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 world—of 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.[27]

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".[28]

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

5 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

6 Spending Review 2010, HM Treasury, page 11, table 1 Back

7 FCO Performance and Finances , Ev 47 Back

8 Ibid., para 26 Back

9 Q 1 Back

10 Q 2 Back

11 Q 35 Back

12 Developments in UK Foreign Policy, Transcript of session of 16 March 2011, HC 881-i, Q 65 Back

13 HC Deb, 26 January 2011, col 13WS Back

14 Developments in UK Foreign Policy, Q 35 Back

15 Ev 43 Back