2 A public BBC?|
28. The BBC is seen by many as the standard setter
in the provision of public service broadcasting content.
Lord Reith, the BBC's first director general, spoke about 'giving
the public something slightly better than it thinks it wants'.
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.
A public intervention of close to £4 billion
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.
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.
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.
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. 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 broadcastingthese are given in the following
Informing our understanding of the worldto 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 learningto 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 identityto 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 viewpointsto 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
High qualitywell-funded and well-produced
Originalnew UK content rather than repeats or acquisitions
Innovativebreaking new ideas or re-inventing exciting approaches, rather than copying old ones
Challengingmaking viewers think
Engagingremaining accessible and attractive to viewers
Widely availableif content is publicly funded, a large majority of citizens need to be given the chance to watch it
Trustworthyaudience 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.
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.
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.
According to BBC commissioned research, the BBC helps create 'competition
for quality' between different institutions that grow the overall
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 notnor should ever be allowed
to becomea broadcaster or content producer which simply
provides what commercial operators are unable or unwilling to
deliver. He explained that "this 'market gap' modelwhich
is appropriate for most consumer goods and servicesis 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."
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
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.
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.
We consider the case for conditional access to BBC television
services later in this report.
36. According to the BBC Trust, the BBC has a clear mission that
is well understood by the people who pay for itto inform,
educate and entertainand 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 Britaineconomic
and creative, democratic and cultural."
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. 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 and subsequently
incorporated in the 2007 Charter
citizenship and civil society;
education and learning;
creativity and cultural excellence;
the UK, its nations, regions and communities;
the UK to the world and the world to the UK; and
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
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."
38. The Charter states that the BBC "may also
carry out other activities which directly or indirectly promote
the Public Purposes"
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 butas with many
other fundamental mattersis 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".
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".
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.
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.
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.
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 themthat you cannot fail
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
the development of talent and skills for the creative media industries
should become a new public purpose of the BBC in its future Charter.
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.
According to Directors UK, without the BBC's contribution there
would be a "disastrous reduction" in training provision
across the industry.
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. 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.
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
See: Arts Council England (FBB0094), para 2.2 Back
This figure includes expenditure on broadband rollout, local
TV, and S4C Back
See Chapter six Back
The future funding of the BBC: Report of the Independent Review
Panel, July 1999 Back
The BBC and Public value, published by the Social Market
Foundation, November 2004 Back
Delivering Creative Future: The BBC in 2012-speech given by Mark
Thompson at QE2 Conference Centre, London, on 10 July 2007 Back
Ofcom's First Public Service Broadcasting Television review,
Ofcom-Public Service Content in a Connected Society: Ofcom's
third review of public service broadcasting-Consultation,
15 December 2014, para 1.14 Back
Voice of the Listener & Viewer (FBB0030), para 4 Back
Professor Beveridge (FBB0020); Campaign for Press and Broadcasting
Freedom (FBB0036); ITV (FBB0066); Channel 4 (FBB0067); and Teledwyr
Annibynnol Cymru (FBB0069). Back
Public and Private Broadcasters across the world - The Race
to the Top, BBC, December 2013 Back
Professor Barnett (FBB0078) Back
BBC (FBB0097), para 18 Back
The requirement for licences for radio use was abolished in 1971
Q77 (Greg Dyke) Back
See para 237-245 Back
BBC Trust (FBB0096), para 21 Back
Building Public Value, Renewing the BBC for a digital world,
BBC, June 2004 Back
A public service for all: the BBC in the digital age,
Cm 6763, March 2006 Back
Royal Charter for the continuance of the British Broadcasting
Corporation, CM 6925, October 2006, see para 4 Back
Ibid, para 5 Back
BBC Charter, Clause 5. Back
BBC Charter, Clause 24(2)(a), (b) and (e). Back
BBC Framework Agreement, schedule 5 Back
A public service for all: the BBC in the digital age,
Cm 6763, March 2006 Back
Friends of Radio 3 (FBB0025), para 3.1-2 Back
Professor Barwise, (FBB0128) Back
Creative Skillset supports skills and training for people and
businesses in the UK Creative Industries Back
Creative Skillset (FBB0084), para 3.3 Back
Professor Barnett (FBB0078), para 11 Back
Directors UK (FBB0057) Back
See: Speech given by Lord Hall, BBC Director General, at the
BBC Radio Theatre in London, 8 October 2013 Back
Professor Beckett (FBB0022), para 2.4 Back