Examination of Witnesses (Questions 2029
TUESDAY 24 JANUARY 2006
Ms Jocelyn Hay CBE and Mr Robert Clark
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.
I think we saw you before, did we not?
Mr Clarke: Only in the public gallery.
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.
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 termsby 2014 the fee will be around
£180 in real terms, so in cash terms much morethat
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 servicesthat
is obvious in the rate at which subscription and other pay services
are risingbut 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.
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.
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.
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
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
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 BBCa lot of the Blue Sky thinking, before it became
economically viable, materialised therebut 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
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.