BBC Licence Fee Settlement and Annual Report - Culture, Media and Sport Committee Contents


In October 2010, a comprehensive licence fee settlement was unexpectedly agreed between the BBC and the Secretary of State for Culture, Olympics, Media and Sport as part of the Comprehensive Spending Review. We recognise that the Government made the first move, that time was of the essence and that the BBC seized the opportunity to pursue a wider settlement, securing its immediate future. This meant, however, that the opportunity to consult licence fee payers and Parliament was lost, undermining confidence in both the Government's and the BBC's commitment to transparency and accountability. We recommend that this model for setting the licence fee is not used again.

In the current climate, we believe that the financial terms of the licence fee settlement are reasonable. However, some of the additional responsibilities that the BBC has taken on under the terms of the settlement widen the scope of licence fee spending beyond any previous interpretation of the BBC's mission and purposes. The BBC and Government will need to demonstrate how this will benefit the licence fee payer.

We believe that there is a very strong case for reversing some or all of the planned reduction in funding to the BBC World Service. We agree with the Foreign Affairs Committee that part of the funding requirement could be met by the Department for International Development. There is a risk that domestic services and content might be adversely affected if additional BBC funding is diverted to the World Service and we undertake to monitor very closely how the BBC strikes a balance between these important but competing claims. A formal concordat between the Foreign Office and the BBC World Service might provide helpful clarity of roles so long as it did not undermine BBC editorial independence.

There may be benefits to both the BBC and S4C from their new partnership but we remain unclear as to how S4C can retain its independence if the BBC Trust is involved at a strategic level. We find it extraordinary, however, that the Government and the BBC should agree such wide-ranging changes for another statutorily independent broadcaster without consultation and without S4C having any notice or say at all. Substantial public funding otherwise available for other BBC content and services will be diverted to S4C and we undertake also to monitor this aspect of the settlement.

The plans for local TV, however, are still in their formative stage and it remains to be demonstrated that the admittedly modest funds the BBC has undertaken to commit to this project represents good value for the licence fee payer.

The BBC Trust has made public commitments on transparency. This makes it all the more disappointing that banded information on talent salaries is still not in the public domain. We urge the BBC to increase the speed with which it implements this, and other, changes.

Having originally made a clear commitment to allow the National Audit Office unfettered access to the BBC, we are very concerned that the Government's proposals fail to deliver this. We urge the Government to address the concerns expressed by the Comptroller and Auditor General and to reach an agreement that will give the National Audit Office all the powers it needs to provide independent assessments of the value for money of BBC expenditure. These should be reported to Parliament rather than to the Secretary of State through the BBC Trust.

We assess that the new development at Salford Quays should deliver the creative and employment benefits which were hoped for, if not the immediate financial ones. We expect the BBC to keep under review the scope for transferring further production to its new home in the North West where there are clear benefits from doing so. The employment of a "migration manager", based in the US, opened the BBC up to ridicule. This lowers the esteem of the BBC, its senior management and the Trust in the eyes of the public and its own staff.

The main outcomes of the BBC Trust's strategic review do not move the BBC on to the extent required by current circumstances. Important questions remain as to how radically the BBC will need to re-configure both its content and the way in which it delivers its content in the years ahead. There is much for the incoming Chairman of the BBC Trust to get to grips with.

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© Parliamentary copyright 2011
Prepared 19 May 2011