The Implications of Cuts to the BBC World Service: Responses from the Government and the BBC to the Committee's Sixth Report of Session 2010-12 - Foreign Affairs Committee Contents


BBC response


Introduction

The Foreign Affairs Committee invited the BBC to respond to its recent report, The Implications of Cuts to the BBC World Service.

The Corporation welcomes the Committee's strong support for the BBC World Service and the benefits it brings in promoting British values and providing a widely respected and trusted news service around the world.

The Committee raises some important issues regarding the level of funding provided to the World Service. The cuts being made to the World Service are a consequence of last autumn's spending review and the BBC regrets the scale and pace of cuts that have been necessary.

It is of course for the Government and Parliament to decide the priorities for public spending. If, in the light of the Committee's report, the Government is prepared to reconsider the level of funding available to World Service, the BBC will be very pleased to engage with them in further discussion. Notwithstanding this, our immediate priority is to minimise the impact of the spending review settlement on services valued by audiences around the world. We are exploring ways to mitigate the impact of the cuts on the World Service's strategically most important services; for instance, the BBC-wide pensions fund has recently been revalued and this may create some greater financial flexibility for the World Service. The BBC is urgently exploring the implications of this. However any resulting benefits would be small relative to the overall funding challenge the World Service faces.

The BBC is fully committed to the long-term future of the World Service. The new Chairman and Director-General have both stated it is their aim to reinvest in the World Service when responsibility for funding transfers to the licence fee in 2014.

Our response addresses the Committee's conclusions and recommendations under the three categories of issues raised: funding, operational matters, and future governance.

Funding

The funding of the BBC World Service is currently covered by grant-in-aid from the FCO; from 1 April 2014, the funding for the World Service will transfer to the licence fee.

The BBC has developed a framework to deliver the World Service within the constraints of the funding available until 2014. This has involved difficult decisions and has resulted in the BBC having to close and reduce services that it would have preferred not to have done. To mitigate the impact, the BBC has made available up to £20 million of licence fee funds to help meet the restructuring costs within the World Service over the next few years.

If any additional funding over and above the spending review settlement were to be made available to the World Service, then the BBC would be pleased to discuss with Government how that could best be used to mitigate the impact of the cuts and to provide sustainable new investments.

The Committee also raised the issue of commercial activity. The World Service already has a small commercial income stream, and has been set a target by the Government as part of the spending review to increase this by £3m per annum. We have started exploring how this target could be achieved, and the potential impacts on the services that are provided through the World Service. Under the BBC's governance arrangements a proposal to significantly increase the commercialisation of the World Service would require approval from the BBC Trust, and potentially the Foreign Secretary.

Operational matters

Under the current governance and constitutional arrangements pertaining to the World Service, the Government provides grant-in-aid funding through the FCO and, notwithstanding the consent required for the opening and closing of complete World Service language services, the World Service is operationally and editorially independent. Within this context we have set out below our response to some of the operational concerns raised by the Committee.

SERVICES

Decisions to open and close complete language services as a result of the reduction in funding for the World Service under the spending review were, as required, jointly agreed by the BBC Trust, the Corporation's governing body, and the Foreign Secretary.

Within the resources available, the BBC must determine how services are managed and programming distributed in the context of an overall strategy for the World Service approved by the BBC's Executive Board and the BBC Trust. In restructuring the World Service following the spending review, decisions were based on three criteria: strategic importance, impact and cost-effectiveness.

With regard to the specific services about which the Committee raised concerns:

BBC Hindi

The BBC remains committed to providing news to India but to secure its long term relevance needs to respond to rapid and significant changes in the media market. TV is now the key medium for news, and is already in six in ten households. FM deregulation has led to a steep decline in shortwave listening, despite the ban on news from any provider except the state broadcaster (All India Radio). Mobile phones are now ubiquitous in India, with 0.5 billion subscribers, and internet availability continues to grow. These changes have created commercial opportunities which have drawn a plethora of new competitors meeting the Indian preference for localised content.

This is the background which has seen the BBC Hindi audience in India decline by almost half in only three years, from 17.8m weekly listeners in 2008 to 9.7m in 2010—still significant in numerical terms, but representing only 1.3% reach among Hindi-speaking adults. As shortwave listening continues to decline in India, it is to be expected that the BBC shortwave audience will decline further.

As the Committee has noted, the BBC has announced the retention of one hour of Hindi shortwave for one year, in response to audience concern, and while it explores whether sustainable commercial funding can be found for the longer term. The BBC has noted the Committee's recommendation regarding longer term support for an unreduced service. The original decision to cease Hindi short wave broadcasting was a difficult choice and sooner than we would have liked, however one that we believed was necessary given the resources available at the time. The BBC is examining whether any further retention is possible within the funding constraints.

BBC Mandarin

The Chinese authorities are dedicated to limiting the impact of foreign media in China. While it is true that online services are vulnerable to action by the authorities, BBC Mandarin radio transmissions have been very successfully jammed by the Chinese authorities for decades.

While the strategic importance of China is clear, the impact of BBC Mandarin radio was extremely low, with 0.6m listeners in a country of 1.34 billion. This partly reflects the continuous jamming, but in any case short wave listening is now a marginal activity in most of China. Within the reduced funding available it was judged no longer sufficiently cost effective to retain, as to have done so would have required further cuts to other services which make a more significant impact upon the countries they serve.

BBC Arabic

Arabic was the World Service's first vernacular language service, and the World Service has been broadcasting continuously in the language since 1938.

The World Service remains committed to the Arabic-speaking world, and has responded to the increased significance of that part of the world in recent years by diverting resources into further broadcasts as well as requesting additional funds from the Government. BBC Arabic radio broadcast 24 hours a day for the first time on 11 September 2001. BBC Arabic television, which now reaches 13.5 million viewers each week, was set up on a 12 hour basis in 2008 by cutting other language services, and was taken 24 hours in 2009 with additional Grant-in-Aid—a move that was strongly supported by the Committee.

The World Service has responded to more recent events by diverting considerable newsgathering resources to the region and creating new programmes to enable audiences across the region to interact and discuss common issues. The World Service has also submitted some project proposals to the Arab Partnership Programme Fund set up by the FCO recently in response to the 'Arab Spring', though should these proposals be funded, these would not provide a direct replacement for programming or transmission cuts necessitated by the spending review.

BBC Arabic remains the World Service's best-funded language service. Protecting it entirely from the spending review cuts would have required either the complete closure of several other services or much deeper cuts to other ongoing services. Consequently there has been some reduction in transmission hours on short wave and medium wave, and a reduction in the number of hours of live news on both radio and television may be unavoidable. However, the World Service is continually assessing the situation in the light of unfolding events.

STAFFING

The level of post closures set out by the World Service in January 2011 was a direct consequence of the reduction in funding in the spending review, and the decisions to change the mix of services to respond to the financial constraints. It is important to note that the 16% cut in funding required significantly greater cuts in services, because of the additional impact of the BBC-wide pension deficit and the lack of funding in the original settlement for restructuring.

There are large restructuring costs associated with implementing such significant change. As such, the Trust and the Executive Board—with the consent of DCMS to amend the BBC's Agreement to allow this—agreed to a one-off contribution of up to £20m from the licence fee to partially fund restructuring costs at the World Service. There was also further assistance from the FCO via a one-off payment of £3m to support restructuring costs.

The reduction in the size of the World Service workforce is expected to be less than 27%. The figure of 650, as quoted in the Committee's report, represents the estimated number of existing posts to be proposed for closure, not the number of job losses. Some posts are already vacant and some new posts are being created as departments are re-structured and new investments made.

The number of compulsory redundancies is expected to be still less, as the World Service has sought volunteers, and staff in closing posts are being given priority to fill both vacant and newly-created posts. The BBC is doing its best to minimise the impact upon staff.

The BBC is grateful for the assurances offered by the Foreign Secretary with regard to staff who may have to return to their home countries after working for the World Service. However the World Service is still in the process of identifying which individual members of staff will unfortunately face redundancy. Over the next few months the picture should become clearer, at which point we will seek the support of relevant government agencies to minimise the impact upon such staff.

Future governance

The decision to transfer funding responsibility for the World Service from the FCO grant-in-aid to the licence fee from April 2014 was taken by the Government with the BBC's agreement. The BBC believes that a number of strategic and financial benefits will arise from the arrangement and is working to implement the changes, as described in the BBC's evidence to the Committee's inquiry. Some of these benefits are:

Firstly, while the BBC has always had editorial control of the World Service, there is now an increased clarity about the World Service's independence. There can now be no doubt in the minds of overseas audiences that the services provided—funded directly by the British public through the licence fee—are fully independent.

Secondly, there is scope for further cost-effectiveness when two newsrooms join together at Broadcasting House.

Thirdly, licence fee payers may gain greater awareness of the availability of services from the World Service within the UK, for instance World Service English via DAB and digital TV and many of the foreign language radio and television programmes online. Through these means licence fee payers will be able to access a deeper range of international news from the BBC.

Fourthly, and most importantly, the new arrangements will provide greater financial stability and certainty for the World Service. The World Service has only ever known its funding two to three years ahead, and in recent years has suffered additional budget cuts, outside of formal Government spending reviews. Licence fee funding arrangements allow the BBC to plan over longer periods than is presently the case for the World Service, and furthermore the Chairman and Director-General have stated that it is their aim to increase funding for the World Service once it is funded from the licence fee.

The formal accountability for spending of the licence fee is to the BBC Trust, and this will be the case for the World Service when it is funded through this mechanism. Though the World Service has some additional responsibilities to account for its current grant-in-aid funding, it has always been an integral part of the BBC, and its activities, strategies and finances have always been overseen by the BBC's Executive Board and ultimately the BBC Trust.

The BBC, including the World Service, has always been willing to answer questions from, and give evidence to, the UK's Parliaments and Assemblies, and will continue to do so when the World Service's funding transfers to the licence fee. We would wish to continue to have a strong working relationship with the Foreign Affairs Select Committee.

The BBC has already reached in-principle agreement with the Foreign Secretary and the DCMS regarding the future governance of the World Service, the detail of which will be published in an amending agreement to the formal BBC Framework Agreement between the Government and the Corporation.

Lord Patten has also agreed to look at the governance of the BBC as he starts his term as the Chairman of the BBC Trust. This review will look, inter alia, at whether the governance arrangements for the BBC's international service—including the World Service—are appropriate given the new funding arrangements. The Chairman is in discussion with the Secretary of State for Culture, Media, Olympics and Sport about whether the current vacancy on the BBC Trust could be filled by a person who would have a specific duty to oversee the BBC's strategy for its international services, which includes the World Service.

The World Service will continue to be represented on the BBC's Executive Board by the BBC's Director of News, who has formal responsibility within the BBC for all news output, both domestic and international, including the World Service.

16 May 2011


 
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© Parliamentary copyright 2011
Prepared 17 May 2011