Select Committee on BBC Charter Review Second Report




The BBC is respected for the quality of its broadcasting and for its independence. We support the continuation of the licence fee which has been vital to building the strong and world renowned BBC of today. However we are concerned by how much it has risen in recent years. If the licence fee continues to rise steeply it will damage the Corporation by undermining the public support it currently enjoys.
The licence fee was linked to the Retail Price Index (RPI) in 1988. In every year since 1997 it has risen by more than RPI. The BBC is now asking for a settlement of RPI plus at least 2.3 per cent. We do not support the link between the licence fee and RPI. It gives the BBC less incentive to make economies and efficiency gains. RPI should not be taken as a baseline for licence fee bids.
The BBC's current licence fee bid would result in a fee which will cost about £180 in cash terms by 2014. The Chairman of the BBC told us that the bid was an accurate costing of the proposals that the Government had endorsed for the future of the BBC. However, examination of one part of the bid—the cost of the proposed move to Greater Manchester—has shown that the costs presented could be significantly reduced. We are concerned that the BBC has failed to base its bid on the most cost efficient proposals possible.
Parliament and not Government should set the level of the licence fee. In January 2006, the Office of National Statistics classified the licence fee as a tax for the first time. We are very concerned about the consequences that this decision will have for the BBC's independence. We also believe that Parliament should be given a real opportunity to scrutinise the proposed licence fee agreement which forms the basis upon which it will be asked to increase the fee each year. The National Audit Office should be involved in scrutinising the licence fee bid. Its report should be published in full. For the first time the public and Parliament would have the information necessary to make an independent and informed judgement on the BBC's plans. The licence fee is rising at an unprecedented rate and it is time that it is open to proper scrutiny.
We emphasise however, the BBC is not solely to blame for the level of the bid. The Government are asking the BBC to shoulder costs that previously have been borne out of general taxation. This includes the costs of helping the elderly and disabled with digital switchover. We can see no reason why helping these groups should be borne by the BBC. The Government already accepts that it is responsible for bearing the costs of the licence fee for over 75s. We are also concerned that Ofcom may decide to charge the BBC for its use of spectrum. We recommend that the Government should use its power of direction, granted by the Communications Act 2003, to instruct Ofcom to exempt the BBC and Channel 4 from spectrum charging. We do not believe it is justifiable to raise the licence fee in order to pay the Treasury for a resource that has always been supplied to the BBC free of charge and that the BBC has always used efficiently.
The World Service is one of the undoubted successes of the BBC. Its success comes from being seen as a politically independent and trustworthy news source. The World Service is not, and must never become, a tool of the UK Government. We are therefore concerned by a recent report to the Foreign Secretary that suggests that the BBC World Service should operate in a manner "consistent with UK governmental medium and long term goals". The BBC World Service is a UK national asset not a Government asset. We support the recent proposals to re-prioritise BBC World Service services and launch an Arabic language television channel. However we are concerned that the Government are not providing the modest marginal extra financial support to launch this channel on a 24 hour basis as the BBC and other experts have suggested. We also recommend that the BBC conduct a full scale review of its international services including the loss making BBC World.
We support the BBC's Out of London strategy which aims to ensure more programmes are made outside of the M25. A flagship part of this plan is the proposal to move several BBC departments to Greater Manchester. We support this move which we believe must go ahead irrespective of the next licence fee settlement. We also emphasise that the departments concerned must be moved route and branch. However, we are concerned that the BBC's original costings were extremely high and were calculated in a rudimentary manner.
The BBC has an important role to play in uniting the United Kingdom around flagship sporting events and in supporting grassroots sports. The cost of sports broadcasting rights has grown considerably in recent years. In order to ensure that viewers and listeners get the best service and that free-to-air channels can afford to bid for sports rights we believe the approach taken by the competition authorities of breaking up exclusive sports rights into packages is the right one. However, with regard to the football Premier League's live television rights we have concerns about the European Commission's decision. We do not believe the Commission's proposal goes far enough to create a competitive market.
Religion is traditional public service broadcasting territory. The BBC must continue to explore innovative ways of approaching religion and other belief systems and the areas of spirituality, ethics and values. We are eager to see more high quality, innovative and thought provoking programmes emerging from the BBC Religion and Ethics Department.

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