Future of the BBC - Culture, Media and Sport Contents

2  A public BBC?

28. The BBC is seen by many as the standard setter in the provision of public service broadcasting content.[24] Lord Reith, the BBC's first director general, spoke about 'giving the public something slightly better than it thinks it wants'.[25] Although in the age of social networks and digitalisation some now might consider this view as being out-dated and too paternalistic, there is general agreement that the BBC should remain a standard setter. When considering the justification for a public BBC, many of the relevant questions are interdependent, and need to be considered in the round, as Lord Grade outlined to us:

    Until we know … what Parliament and the British people want from the BBC, what size it should be, what its mission is, you then decide how big it is going to be, how it is going to be funded, you can then decide what is the best method of governing the BBC.[26]

A public intervention of close to £4 billion[27] is made in paying for the BBC's activities, and a key question is what purposes justify an intervention of this magnitude. The level of funding for the BBC is not, nor should it be, the starting point for determining its ambit and ambitions. Rather, the purposes and remit set for the BBC, and the scope and scale deemed appropriate for the institution to deliver it, should determine the level of funding. We consider the merits and potential of different ways of funding the BBC and its scale separately later.[28] Here, we consider the case for a public BBC and its role but clearly the way the BBC is funded influences expectations about its output.

Beyond market failure

29. In 1999, Gavyn Davies considered the future funding of the BBC on behalf of the Department for Culture, Media and Sport (DCMS). At that time, he identified 'market failure' as a rationale for public service broadcasting, where a natural definition of public service broadcasting was broadcasting which, for one reason or another was desirable, but which the market would not provide or could provide only in insufficient quantity.[29] Mr Davies has also described market failure, in a broadcasting context, as existing when there is an under-provision of "Reithian" broadcasting under free-market conditions.[30] More recently he explained:

    in terms of does the BBC have to be justified in market failure language, I often wish I had not written that piece but I am usually brought down by logic. Logic to me says we cannot have an organisation that has 4 billion [pounds] of public funding to simply do what the private sector could do more easily of its own accord. We have to believe that the organisation, in the round, is doing something that the private sector would not duplicate, left to itself.

30. In a similar way, in 2007, Mark Thompson, as director general of the BBC, said that the only economic justification for the BBC or any public intervention in broadcasting was market failure.[31] He argued that if "purely commercial media" could adequately deliver all of the public value that the public wanted, then there was no need for a BBC or Channel 4. Based on the public service purposes presented in the Communications Act 2003, Ofcom developed a range of purposes and characteristics to provide a detailed description of public service broadcasting—these are given in the following box.[32]

PSB purposes

Informing our understanding of the world—to inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas

Stimulating knowledge and learning—to stimulate our interest in and knowledge of arts, science, history and other topics, through content that is accessible and can encourage informal learning

Reflecting UK cultural identity—to reflect and strengthen our cultural identity through original programming at UK, national and regional level; on occasion, bringing audiences together for shared experiences

Representing diversity and alternative viewpoints—to make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere

PSB characteristics

High quality—well-funded and well-produced

Original—new UK content rather than repeats or acquisitions

Innovative—breaking new ideas or re-inventing exciting approaches, rather than copying old ones

Challenging—making viewers think

Engaging—remaining accessible and attractive to viewers

Widely available—if content is publicly funded, a large majority of citizens need to be given the chance to watch it

Trustworthy—audience should trust PSB programmes, especially news programmes.

31. Recent Ofcom research, conducted as part of the public service television review, has revealed that a generational gap between younger and older people is widening, with significant differences in opinion, attitude and habits towards PSB and television. While younger audiences have always watched less television than older people, the research suggests the "connected generation" was watching less and less television, and that they may be taking the habit with them as they age. In addition, younger viewers did not appear to distinguish between PSB and non-PSB channels.[33]

32. The Voice of the Listener & Viewer (VLV) believe that 'market failure' should not simply refer to whether or not there are other providers in the marketplace. They referred to the fact that, whatever the number of providers in the market, the market may still fail the citizen if there is not a wide range of high quality, diverse and informative programming, especially in genres which may not be considered commercially attractive.[34] Similarly, it has been put to us by several witnesses that if the BBC only operated within a market failure envelope it would be self-defeating as the competition provided by the BBC is widely acknowledged to incentivise other PSB providers to meet the competitive challenge and broadcast better quality content.[35] According to BBC commissioned research, the BBC helps create 'competition for quality' between different institutions that grow the overall market.[36]

33. Steven Barnett, Professor of Communications, University of Westminster, believed that it was important to start with a clear statement of what the BBC is not—nor should ever be allowed to become—a broadcaster or content producer which simply provides what commercial operators are unable or unwilling to deliver. He explained that "this 'market gap' model—which is appropriate for most consumer goods and services—is not sufficient in the realm of culture, creativity and citizenship where the market-place was notoriously risk-averse and uninterested in contributions to public welfare."[37]

34. The BBC pointed out that "there is a strong and long-standing consensus in favour of public service broadcasting as a means of promoting social and cultural goals that go beyond correcting 'market failures'".[38] These goals include: "reflecting and shaping the nation's culture and values through a breadth of UK-originated content; securing plurality of high-quality news and information to help the public engage in the democratic process; and ensuring that content is universally available, easy to find, and free at the point of use." In its view, "PSB also complements and underpins the editorial standards and risk-taking of the rest of the market."

35. As it stands, the BBC's non-commercial status and significant public funding has underpinned its role in the provision of high quality news services and a wide range of public service content, including comedy, drama, children's programming and factual formats. Since the BBC's beginnings, the aim of public service broadcasting in the UK has been to provide for the mass market on a universal, free-to-air basis, albeit with an obligation on householders to pay a licence fee if they watch or record any television services as they are broadcast.[39] Inevitably, in the UK, the way broadcasting funding evolved was in part a consequence of it having not been feasible to exclude someone from receiving an analogue signal. Even though technologies now make conditional access possible, many people continue to place value on PSB services and programmes being universally available. Greg Dyke, a former BBC director general, told us that the importance of the BBC to him was that it was available to everyone.[40] We consider the case for conditional access to BBC television services later in this report.[41]

36. According to the BBC Trust, the BBC has a clear mission that is well understood by the people who pay for it—to inform, educate and entertain—and this does not need to change. The Trust believes that "even as broadcasting and technology changes, the BBC will continue to have enormous value as a national institution which contributes to the future growth of modern Britain—economic and creative, democratic and cultural."[42] The Trust foresees this role being ever more important in the context of a global, digital media market.

Quantifying public value

37. At a top level, the BBC Royal Charter states that "The BBC exists to serve the public interest" and that its "main object is the promotion of its Public Purposes". In an effort to measure the BBC's public value, in preparation for the 2007 Charter, the BBC proposed codifying its public purposes for the first time.[43] In so doing, the BBC set out what its public purposes could look like and how they might help measure its value. As a result, six public purposes were agreed by the Government in its White paper on Charter renewal[44] and subsequently incorporated in the 2007 Charter[45] as follows:

·  sustaining citizenship and civil society;

·  promoting education and learning;

·  stimulating creativity and cultural excellence;

·  representing the UK, its nations, regions and communities;

·  bringing the UK to the world and the world to the UK; and

·  in promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television.

The 2007 BBC Charter states that the BBC's "main activities should be the promotion of these public purposes through the provision of output which consists of information, education and entertainment" by means of "television, radio and online services" and by similar or related services which make output generally available, including "by means of technologies which either have not previously been used by the BBC or which have yet to be developed."[46]

38. The Charter states that the BBC "may also carry out other activities which directly or indirectly promote the Public Purposes"[47] but such activities should "be peripheral, subordinate or ancillary to the main activities", "bear a proper sense of proportion to the BBC's main activities", and "be appropriate to be carried on by the BBC alongside its main activities."

39. The means by which the BBC is, or is not, to promote its public purposes within this broad scope is not elaborated or in effect restricted in the Charter but—as with many other fundamental matters—is left to the Framework Agreement with the Secretary of State. The Charter does task the Trust with the function, inter alia, of "setting multi-year purpose remits, and approving strategies which include high-level budgetary allocations", and of "defining suitable performance criteria and measures against which the effective promotion of the Public Purposes will be judged", as well as "approving individual strategic or financial proposals where they stand to have significant implications for the fulfilment of the purpose remits and strategies".[48]

40. Under the present Framework Agreement, the Trust sets purpose remits for each of the six public purposes which set priorities and specify how the BBC's performance against them will be judged. The Trust must consult publicly in developing purpose remits and once they have been adopted, must keep them under review and may amend them. Before an amendment is made there must be a process of public consultation "appropriate to the nature of the change". For example, any substantial change to the priorities set within a purpose "must be subject to a particularly thorough process of full consultation".[49]

41. In its White paper in advance of the current Charter, the then Government also set out five characteristics that would distinguish BBC content: high quality; challenging; original; innovative; and engaging.[50] These do not appear as Charter requirements but are referred to in the Framework Agreement and every programme included in the BBC's public services must exhibit at least one of these characteristics.

42. Since their introduction, the public purposes have assisted part of the BBC Trust's oversight of the BBC. Each year the Trust commissions annual tracking surveys asking people to express their views on the importance they attach to the purpose priorities and the effectiveness of the BBC in delivering them. It also has introduced service licences for each of the BBC's television and radio channels as well as its online services. In its annual report to Parliament, the BBC Trust reports in part on the previous year's survey findings and gives its assessment on the Executive's performance in fulfilling the purpose remits. We have used the Trust's accounts of BBC performance during our own regular assessments and scrutiny of the BBC.

43. Some consider that the BBC's public purposes are too broadly set and consequently a wide variety of programming and activity can be justified by them. The Friends of Radio 3 suggested that the BBC could be set tighter "public service commitments" and that the Charter ought to make it clear that there was no obligation on the BBC in delivering its purposes to reach as many licence fee payers as possible.[51] Professor Patrick Barwise, Emeritus Professor of Management and Marketing at the London Business School, thought that the public purposes were broadly fine, although they could risk distracting the BBC from its main task of making and commissioning great programmes.[52] David Elstein, Chairman of openDemocracy.net and the Broadcasting Policy Group, argued that as the purposes stood they were too wide and could catch most programme types and were not useful in focusing the BBC on core PSB activity. He explained:

    We can all set ourselves things that we know we are going to do. There cannot be a single programme the BBC transmits that does not fulfil one or other of the public purposes. That is the whole point of having them—that you cannot fail the test.[53]

44. We recommend that the independent panel and formal Charter Review consult on the BBC's current public purposes and purpose remits set out for them, to determine whether and how they might be revised and to examine their effectiveness in measuring the BBC's public value. We believe a critical review of the purpose remits, and consultation and research on BBC performance, including on people's willingness to pay for BBC services, could help clarify the BBC's core purposes and suggest strategic and funding priorities.

Training as a public purpose

45. Training is not currently recognised within the BBC's specific public purposes despite the BBC's widely acknowledged role in training many newcomers and incumbents in Britain's creative industries and within journalism. However, there is a training provision in the Framework Agreement. Clause 84 states that:

    the Executive Board must make arrangements for the training and retraining of staff engaged in connection with providing any of the BBC's UK public services or making programmes for inclusion in any of those services. The training and retraining under those arrangements must "make an effective contribution" to "(a) the promotion of the BBC's Public Purposes, and in particular that of stimulating creativity and cultural excellence"; "(b) the preparation and maintenance of a highly-skilled media workforce across the audio-visual industry"; and "(c) competitiveness and productivity in that industry."

The clause also states that the Executive Board "shall use its best endeavours to work in partnership with others in the audio-visual industry in the planning and provision of training and retraining across that industry".

46. According to Creative Skillset[54] the development of talent and skills for the creative media industries should become a new public purpose of the BBC in its future Charter.[55] This new purpose should come with the expectation that the BBC would continue to work in partnership with industry-wide organisations. Commenting on the BBC's position, Professor Barnett explained that while the commercial sector had reduced funding to organisations like Skillset and the National Film and Television School, the BBC had continued to fund external training bodies as well as its own internal programmes.[56] According to Directors UK, without the BBC's contribution there would be a "disastrous reduction" in training provision across the industry.[57] During our visit to BBC North's centre in Salford, we met several young apprentices who were currently on a placement at the BBC and some who had recently secured permanent positions at the BBC. All of those we met were very positive about their experience with the BBC and displayed a realisation that they had been afforded a valuable opportunity.

Working with others

47. Lord Hall of Birkenhead, Director General of the BBC, has made partnerships one of his key ambitions over the next few years.[58] As such, partnerships and collaborating with others could also be recognised in the BBC's public purposes, or in a requirement that in undertaking activities to fulfil the public purposes, the BBC should do so in partnership and collaboration wherever practicable.

48. Several witnesses have suggested that the BBC will have to find new ways of working in partnership with others during the next Charter period in order to continue to benefit from the privilege of its public funding to ensure maximum public value. For instance, Professor Charlie Beckett, Director of Polis, hopes that the BBC will become an "Open Source, Open Studio" organisation that uses its training resources and its facilities as a support structure for local and national content creation rather than always seeking to provide those services itself.[59] One way this ethos could be achieved would be to recognise partnership working in the BBC's public purposes.

49. Given the BBC's vital contribution to training and development of talent and skills in the UK's creative media industries and in journalism, we believe this function should be reflected in the BBC's core public purposes. Similarly, we believe that the success of a future public BBC will depend on its ability and willingness to collaborate and work in partnership with others at all levels to maximise its public value and that of others. The necessity for collaborative engagement should be enshrined in the BBC's public purposes.

24   For example, see Equity (FBB0038), para 3; Directors UK (FBB0057), para 7 Back

25   See: Arts Council England (FBB0094), para 2.2 Back

26   Q126 Back

27   This figure includes expenditure on broadband rollout, local TV, and S4C Back

28   See Chapter six Back

29   The future funding of the BBC: Report of the Independent Review Panel, July 1999 Back

30   The BBC and Public value, published by the Social Market Foundation, November 2004 Back

31   Delivering Creative Future: The BBC in 2012-speech given by Mark Thompson at QE2 Conference Centre, London, on 10 July 2007 Back

32   Ofcom's First Public Service Broadcasting Television review, 2005 Back

33   Ofcom-Public Service Content in a Connected Society: Ofcom's third review of public service broadcasting-Consultation, 15 December 2014, para 1.14 Back

34   Voice of the Listener & Viewer (FBB0030), para 4 Back

35   Professor Beveridge (FBB0020); Campaign for Press and Broadcasting Freedom (FBB0036); ITV (FBB0066); Channel 4 (FBB0067); and Teledwyr Annibynnol Cymru (FBB0069).  Back

36   Public and Private Broadcasters across the world - The Race to the Top, BBC, December 2013 Back

37   Professor Barnett (FBB0078) Back

38   BBC (FBB0097), para 18 Back

39   The requirement for licences for radio use was abolished in 1971  Back

40   Q77 (Greg Dyke) Back

41   See para 237-245 Back

42   BBC Trust (FBB0096), para 21 Back

43   Building Public Value, Renewing the BBC for a digital world, BBC, June 2004 Back

44   A public service for all: the BBC in the digital age, Cm 6763, March 2006 Back

45   Royal Charter for the continuance of the British Broadcasting Corporation, CM 6925, October 2006, see para 4  Back

46   Ibid, para 5 Back

47   BBC Charter, Clause 5. Back

48   BBC Charter, Clause 24(2)(a), (b) and (e). Back

49   BBC Framework Agreement, schedule 5 Back

50   A public service for all: the BBC in the digital age, Cm 6763, March 2006 Back

51   Friends of Radio 3 (FBB0025), para 3.1-2 Back

52   Professor Barwise, (FBB0128) Back

53   Q1 Back

54   Creative Skillset supports skills and training for people and businesses in the UK Creative Industries  Back

55   Creative Skillset (FBB0084), para 3.3 Back

56   Professor Barnett (FBB0078), para 11 Back

57   Directors UK (FBB0057)  Back

58   See: Speech given by Lord Hall, BBC Director General, at the BBC Radio Theatre in London, 8 October 2013 Back

59   Professor Beckett (FBB0022), para 2.4 Back

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© Parliamentary copyright 2015
Prepared 25 February 2015