Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 2029 - 2039)

TUESDAY 24 JANUARY 2006

Ms Jocelyn Hay CBE and Mr Robert Clark

  Q2029  Chairman: Welcome, and thank you very much for coming. Mrs Hay, we have seen you before and your colleague is, just for the record?

  Ms Hay: My colleague is Robert Clark, one of our Voice of the Listener and Viewer members.

  Q2030  Chairman: I think we saw you before, did we not?

  Mr Clarke: Only in the public gallery.

  Q2031  Chairman: Your face is certainly familiar.

  Ms Hay: My apologies if I am slightly out of breath. I thought it would be much better to get a taxi and I have been sitting for half an hour in a traffic jam.

  Q2032  Chairman: I think you know where we are at the moment. We are coming to the end of taking evidence. You are our last public witness before we get back to the Secretary of State again. We are producing our report on a number of issues which we have gone through, so, without more ado, perhaps I could start the questioning. One of the things that we are interested in obviously is the cost of the licence fee. We have come from a position where we have supported the principle of the licence fee, but is your organisation concerned that, as the licence fee appears to be going up and up in real terms, let alone in cash terms—by 2014 the fee will be around £180 in real terms, so in cash terms much more—that it is going to lead to a greater level of public resistance about the whole licence fee itself?

  Ms Hay: I think that will depend on a number of issues. It will depend partly on the BBC demonstrating that it is giving very good value for money. In comparison with subscription services, it certainly is. We are looking ahead eight years here, which is a long time away. The environment will have changed; a lot of other factors will have changed. A lot of people are prepared to pay more for their television and audio-visual services—that is obvious in the rate at which subscription and other pay services are rising—but I think it will depend on the BBC showing that it is not profligate or wasteful with its money, and which costs of digital switch-over and demonstrating very good value for money are being palmed off on the BBC.

  Q2033  Chairman: We will come to those costs, which, as you put it, are being palmed off on the BBC in a moment, but from your experience is there a growing resistance to people paying the licence fee?

  Ms Hay: There is some resistance, definitely, and it is very much orchestrated by the press. One sees, every time there is a mention of the BBC or the licence fee, it is a very easy cause to take up, but when you actually look at the numbers of people who, when they think about it and when they actually know what the BBC pays for, I do not in there is such a great resistance. Amongst some people, yes, but what that fraction of the total population is I do not think is significant yet, and, provided the BBC continues to show that it is not profligate or wasteful of the licence payer's money and that it is providing very good value for money, then I think that that can be demonstrated to be reasonable.

  Q2034  Chairman: How does it absolutely show that it is getting value for money? How does it demonstrate that?

  Ms Hay: Partly in its popularity, partly in the knowledge that people and the viewers and listeners and licence payers have of the services that it provides, because, in our experience, very few people appreciate the breadth of the BBC services, not only across television and radio and, indeed, its on-line and website, but in the BBC's patronage of things like music and the arts and the spoken word in drama. Whether that should originally have fallen to the BBC is a separate point, but if the BBC were to drop that patronage now, who would pick it up? The result would be that, right across the board, from pop music to classical music, the visual arts to the spoken word, I think the nation would be poorer.

  Q2035  Chairman: Perhaps there needs to be a little more open scrutiny, public scrutiny of the costs that are involved, just demonstrating to the public that money is not being wasted?

  Ms Hay: That is right. The public is, I think, largely unaware of how the BBC's money is spent and it should be transparent.

  Q2036  Lord Holme of Cheltenham: In that context, Ms Hay, I wonder if could ask you whether you are happy with this notion that the RPI is a sort of starting point from which we add costs, because there are two possible objections to it. One is if you take the RPI as a given and then add an extra amount for new requirements to generate it forward by the BBC, the danger is that there is not a physical enough incentive to be cost-efficient because it is assumed that your costs are going to advance in tandem with RPI or should they produce a saving? The other problem is one that anybody who is fortunate to have a saving account knows about, which is compound interest, and if you add compound interest to compound interest, as the banks would like to tell you, it can amount up to a tidy sum. I wonder whether there is a problem in the notion of taking RPI as a starting point rather than trying to take a figure which is the appropriate figure with cost efficiencies on one side and extra requirements on the other. Is there a problem there, do you think?

  Ms Hay: There may be, and certainly the RPI is not an indicator of broadcasting costs, because the broadcasting market works differently from normal markets, and, because of the competition now from new services, particularly for talent and for programme rights and sporting rights and anything that is attractive, the bidding process goes up. Therefore inflation in broadcasting costs has increased enormously with the growth in the number of services.

  Q2037  Lord Holme of Cheltenham: Although some would argue that there are savings in other areas, in technology and in more efficient use of—

  Ms Hay: Yes, there are certainly some savings in technology, but I think in many cases that is offset by the competition for sporting rights for popular events and for talent. One can see this in the way that popular figures are being poached from one service to another, and, indeed, in the cost of programme rights now that we have satellite services. In particular, the irony is that many people are paying subscriptions for channels which are largely repeating programs that were originally commissioned and made and broadcast free-to-air by one of the four public service broadcasters, either the BBC Channel Four or Five. If you look at a whole string of the satellite services, they are broadcasting largely repeats of programmes that were made by the terrestrial broadcasters which are now being bid up in cost. It is very difficult,, for anyone outside the broadcasting industry to calculate what those costs are, and the RPI is a blunt instrument, I think.

  Q2038  Lord Maxton: You used the term "BBC being palmed off with the costs of digital switch-over". Do we take it from that that you do not believe the BBC ought to be carrying that cost?

  Ms Hay: We do not believe that the BBC should be carrying all the costs. The cost of developing new technology has always been part of the BBC's remit, and its research and development department, together, indeed, with the research and development department of the old Independent Broadcasting Authority, were largely responsible for creating and developing new technology, including digital. We would not have digital terrestrial had it not been for the research and development departments of the IBA and the BBC—a lot of the Blue Sky thinking, before it became economically viable, materialised there—but what we do not think is right is that the social costs of helping vulnerable viewers to access a highly desirable service which should be paid for publicly, but somehow normally would be paid for out of general taxation. So it is that additional cost of paying for helping people, both in providing equipment and in providing the expertise and the one-to-one help that a lot of the vulnerable viewers will need, that is what we think is not fair, for the licence fee payer to bear that social cost, highly desirable and necessary as it is.

  Q2039  Lord Maxton: Some of do not believe that digital terrestrial television is the best way of switching over. Do you have a view on that?

  Ms Hay: We certainly believe that there should be a free-to-air satellite service that should be launched, and we have been advocating that for some time, a genuinely free one. Sky services provided a free satellite, but it does have some strings attached to it, and we believe that, again, this is the only area of broadcasting where there is no actual free market in the supply of goods, because Sky at the moment, more or less, has a monopoly on satellite and a genuinely free-to-air satellite, we believe, would provide some horizontal competition for the first time at every level of the market.


 
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