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Lord Hussey of North Bradley: My Lords, I must first declare an interest as I was chairman of the BBC from 1986 to 1996 and was therefore involved in many discussions about the licence fee. The noble Baroness, Lady Anelay, has proposed that the regulations laid before the House on 11th March be annulled. It is the system under which the licence fee is arranged that I should like to raise with noble Lords rather than the details on the recent adjustment.
The licence fee is an integral part of the BBC's charter, renewed roughly every 15 years, and comprises a high percentage of its revenue. When I joined the BBC in 1986, there was a fierce debate about its level. Into that debate, the noble Lord, Lord Barnett, the vice-chairman and, as noble Lords know, a man of great wisdom, and I were pitched. The executives sought a very much larger increase than we believed could be justified. In those days there was commercial television and Channel 4, but no satellite, cable or digital services.
The debate followed a report produced by Professor Peacock, recommending that the licence fee should be linked to the retail prices index. That struck the noble Lord, Lord Barnett, and myself as a fair solution, acceptable to all those who had to pay it. We also believed, unlike the executives, that the BBC was not short of money. In fact, we thought that it was sloshing through the corridors of Broadcasting House in a great, unending stream.
We argued with the executives that the RPI would be a reasonable and fair settlement, acceptable to the Government and to the public, who had to pay it, but in particular to the Government, whose Prime Minister had already described the licence fee, not inaccurately but certainly not kindly, as a compulsory levy enforced by criminal sanctions.
There are only three ways of financing the BBC: by direct grant from government, by advertising or by an agreed formula. The noble Lord, Lord Barnett, and I settled for the Peacock formula, following the RPI, believing that the BBC already had ample funds for its purposes. Underlying that argument was the power of the BBC, emphasised by the noble Lord, Lord Callaghan, who had added:
- "But with that power comes an equal responsibility for impartiality, honesty and accuracy".
The compulsory levy argument illustrates the corollary that the BBC must show that the millions it receives are rewarded by a clear demonstration of those qualities emphasised by the noble Lord, Lord Callaghan.
Many years earlier, Lord Reith had laid down the BBC objective:
- "To carry into the greatest numbers of homes everything that is best in every department of human knowledge, endeavour and achievement".
The licence fee settlement is normally—I do not know about this occasion—the culmination of endless discussions at the BBC, by the BBC with various interested parties, not least political. Herein lies the clash. If the BBC exercises properly its remit it is inevitable that governments or oppositions will quarrel about the accuracy or justice of BBC programmes. Indeed, I would go further. Although I am no politician I have a keen interest in current affairs, and if there were no disputes between the politicians and the BBC, the BBC would probably not be carrying out its responsibilities so clearly clarified by the noble Lord, Lord Callaghan, and Lord Reith.
The independence of the BBC is rooted in the licence fee. Universally paid by everyone under 75, and enforced by the Government, the funding of the BBC is a touchstone of the confidence Parliament has in exercising the power entrusted to it.
The noble Lord, Lord Callaghan, summed up the current position when he said that democracy can exist only if there is a constant stream of information from politicians, governments, the press, television and radio. But he added that the new technology has radically altered the scene so that the media now not only records the news but can make the news, decide what is the news, or, even more dangerously, decide what is not the news.
There must always be a place for a powerful media voice that is not in the pocket of an individual proprietor nor interest group nor advertiser; a voice which does not give paramount weight to the choice of programmes for what will earn the most money from subscription, advertising or circulation—none of which is a recipe for high standards—but offers instead schedules to tempt audiences and uplift their interest and understanding. This is a demanding and honourable objective and the funds necessary to achieve it are delivered by the Government, usually
after a whole series of meetings, luncheons and discreet explanations, all arguing about what is a fair and proper level for the settlement.We are reaching a stage when the "compulsory levy" might possibly be looked at in a different way. This is a very difficult and confused area. If the National Audit Office, for example, was able to access the process and assumptions, I wonder whether Parliament would feel more comfortable about the result and, in consequence, have done something to lance this regular boil which springs up every time the licence fee is renewed. If it were possible for the National Audit Office to look at this issue, look at the process and look at the results, I believe we would solve a problem which is constantly coming back. That would be very much in the interests of licence payers.
7.45 p.m.
Lord Lipsey: My Lords, the licence fee is a stinking, lousy, rotten, unfair, unjust poll tax. Someone on the national minimum wage has to complete a full week's work to earn enough to pay it. I therefore very much regret to this day that the Government turned down the proposal made by the Davies panel in regard to the BBC licence fee that the extra money needed by the BBC should come from a digital licence fee, which would fall more fairly on less poor people rather than on licence payers. That is water under the bridge, but I shall require the strongest possible arguments before I am convinced that the increase proposed by my noble friend is justified.
I require the strongest possible arguments and I believe that they exist. It is fashionable to argue that the advent of digital TV and the proliferation of channels and programmes means that public service broadcasting no longer has a role to play. It may be fashionable to argue it, but the reverse is the case. For instance, the more of those kind of channels that we have, the more we require public service broadcasting. If you divide the broadcasting cake among 500 channels, the amount per hour spent on programmes plummets. Without the BBC and the public service broadcasters to set standards that would mean cheap programming to the great disadvantage of the viewing public.
If we did not have public service broadcasters there would also be a great worry in regard to monopoly. That has come a step nearer with the near platform monopoly that Rupert Murdoch will enjoy as of tonight unless a buyer is found for ITV Digital.
There are public service broadcasters other than the BBC. It is a great mistake to think of the BBC as being the only public service broadcaster. There is Channel 4 and there are onerous public service obligations on Channel 5 and on ITV. But, at the moment, the commercial public service broadcasters are in a weak position because of the slump in advertising. According to the ITC report last week, it was some 7 per cent down in the year to 11th September, but that underestimates the true situation because it has gone on falling since then.
When advertising falls off a cliff like that there is a delay before the programming falls with it because budgets cannot be cut in an instant. I am afraid that we have not yet seen the full effect on programmes of that cut in the budgets of commercial public service broadcasters. In such a situation we have to rely very heavily on the BBC to provide the quality of public service broadcasting that will complete the crucial broadcasting ecology and keep up the standards of programming.
I do not often disagree with the noble Baroness, Lady Anelay of St. Johns, but I do disagree that the broad case for the increase in the licence fee of 1.5 per cent above inflation when it was accepted by the Government two years ago was not investigated. The BBC put its proposals to Davies. As the noble Lord, Lord Gordon of Strathblane knows, the panel crawled over them for hour after hour, day after day, meeting after meeting and trimmed them back to what it felt was fair. That was not the end of the process. The Government then called in their own independent accountants to have a crawl of their own.
It is perfectly true that Gerald Kaufman, the chair of the Select Committee in another place, did not think that the case had been made. He never would. He is against the BBC. He wants it privatised. So he would never think that it had made the case for more money. But if ever a case was made, it was made for that increase.
I question whether it is enough. It is not an awful lot—it is only 1.5 per cent above inflation—and as in general broadcasting costs rise not in line with inflation but in line with earnings, there is not a great pot of money being handed to the BBC.
On reflection, however, I think it is enough for the following reasons. First, there have been enormous savings under the John Birt regime at the BBC of £700 million a year—which is often forgotten in the criticisms made of John Birt—which has made possible its present achievements. Secondly, bureaucracy can be cut further. Last year the bureaucratic costs of the BBC went down from 24 per cent of its budget to 19 per cent. That is good progress, but I do not believe that even the BBC's friends would suggest that there is no more fat to cut. Anyway, if you gave them more money they would want to put more into BBC 3, which is the greatest waste of the licence fee payers' money ever invented by man or beast. I strongly hope that my noble friend will persuade the Secretary of State finally to turn it down.
In all these matters of funding there is a balance to be struck between too much and too little. This is an important moment at which to have a strong BBC and I think that the Government have got the balance just about right in the order.
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