BBC licence fee raid ̶̶ The consequences for Wales

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This blog appeared on 10th July 2015 on the IWA’s clickonwales blog site.

For the second time in five years Government Ministers have backed the BBC into a corner, issued a ‘money or your life’ threat, walked away with a big chunk of the licence fee and left a Director General making as good a public fist of defending ‘the deal’ as he can. Has this been a fair trade between a willing buyer and a willing seller?

As in 2010 the needs of transparent government have been jettisoned in favour of providing Ministers with the fleeting satisfaction of pulling off a clever stroke. Back then, it was a matter of freezing the licence fee till the end of the current charter period (2016) and shifting running costs for the BBC World Service, BBC Monitoring and much of S4C onto the Corporation.

This is clearly no way to consider the long term funding of the most important civic and cultural institution in the land. Former Director General, Lord Birt, once no slouch himself on the cost-cutting front, has called the announcement, “deeply shocking”, stressing the assault on the BBC’s independence and the lack of public discussion and concluding that “a very dangerous precedent” has been set.

By proceeding in this way Ministers have separated key elements of the licence fee decision from the fuller consideration of the future of the BBC’s services and its governing document, the Royal Charter. They have pre-empted public discussion and debate or, at least, attempted to render much of it nugatory. Not least here in Wales. That must not be allowed to happen.

So, to wrest back some of the impetus here, what must we consider? The independence of the BBC has never been an unstained garment. Reliance on so much public funding inevitably makes it vulnerable to pressure from time to time. That much is understood by public and politicians, and even by the BBC itself. But imperfect though that independence might be it is in the public interest that it should be conserved as far as possible; and important that politicians should not make light of it through their words or actions.

If we are to believe the press, the deal is done. A chunk of social policy has been transferred, entirely inappropriately, to a public broadcasting organisation. If we are to believe the public pronouncements other promises have been made that will leave the BBC with a cash standstill for five years – that is five years on the top of the last five years of standstill.

But what of these mitigating promises?  The first is that the government will find a way of extending the licence fee to those watching online who have been exploiting a loophole. As Diane Coyle, a former acting Chair of the BBC Trust, said in a radio interview, http://www.bbc.co.uk/programmes/b061czby,  that would almost certainly have been part of any sensible arrangement for the future. A minor concession, therefore.

Second, is the promise that the licence fee will be linked to inflation – to CPI (the Consumer Price Index). Both Ministers and the BBC’s Director General, Lord Hall, have made much of this promise. Yet, when one reads the text on the DCMS website, it is hedged around with words that might yet turn out to be weasel.

The DCMS text does not have an unequivocal ring: “The Government anticipates (my italics) that the licence fee will rise in line with CPI over the next Charter Review period, subject to: (a) the conclusions of the Charter Review, in relation to the purposes and scope of the BBC and, (b) the BBC demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector.” No shortage of wriggle room there then.

If the Government were to decide that the scope of the BBC should be less than it is now – let us say, by reining in its website  that George Osborne described as ‘imperial’ in scope here – then the cash standstill might turn out to be illusory.

In an interview with the Guardian the Culture Secretary, John Whittingdale underlined the precarious nature of the deal when he said, “If the conclusion of charter renewal is that the BBC should not be doing all the things it is doing now, then it [the funding formula] will not be going up with inflation.” He added that the promise to increase the licence fee linked to inflation was dependent on “the BBC continuing to do all of the things it is doing at the moment that’s a big if”.

It is not clear either that the Government would fully compensate the BBC for any loss of licence fee revenue were the Government to decide to decriminalise non-payment of the licence fee. The effect of decriminalisation has been estimated at around £200m.

Why should this matter to us in Wales? Some of the answers to that question were contained in another document published last week by the regulator Ofcom. This was the report on Ofcom’s third statutory review of public service broadcasting Its concerns about public service broadcasting in the ‘nations and regions’ were such as to justify a separate document.

A reading of both the main report and the supplementary report on the ‘nations and regions’ (here) suggests that the decline in expenditure on programming for the nations and regions has been greater than for broadcasting as a whole, and that within the three devolved territories the decline in Wales has been by far the steepest.

Spend by the public service broadcasters – the BBC, ITV, Channel 4, Channel Five S4C and BBC Alba in Scotland – on new UK-originated programmes has fallen by 15% in real terms since 2008 – down to £2.5bn, the same level as 1998. But some of this decline was compensated for by income coming from other sources, some of it from overseas, as co-production or sales income.

Expenditure on programming for the nations and regions – which, by definition, is less likely to attract commercial investment – declined from £404m in 1998 to £358m in 2008 to £277m in 2014, a total drop of 31 per cent. All these Ofcom figures are expressed in 2014 prices, and exclude Gaelic and Welsh language programming (S4C).

The impact on the three nations differs sharply. Expenditure on non-network programmes for Scotland increased from £60m to £68m (13.6%). Expenditure for Northern Ireland dropped from £34m to £27m (-21%), but expenditure for Wales dropped from £39m to £27m. (-30.5%). In addition, within Wales, S4C’s expenditure on first-run originations between 2009 and 2013 dropped from £87m to £64m (-26%).

This emphasises that English language output for Wales is losing out just as much, if not more, than Welsh language programming. Even if one understands the extra spend in Scotland, why is expenditure in Wales now at the same level as Northern Ireland, which has a population of about 60 per cent of our own?

A large part of the drop in English language services for the nations and regions will be down to reductions in ITV regional output that were agreed with Ofcom as a set of reduced licence obligations for ITV, but there are hefty reductions in BBC Wales spend too. The number of hours it produced has dropped by 15 per cent over the period. So far during this Charter period the reduction in the BBC Wales spend on English language programming has been 32 per cent.

Ofcom made two other observations. It said that the nations and regions are the area where there is the largest gap between the public expectations of the public service broadcasters and their actual delivery. And in the case of Wales it commented that we are “served less comprehensively, outside the BBC, than any of the other UK nations, with weaker print media and commercial radio services offering a reduced challenge to the BBC in terms of plurality of voices.”

Many might have hoped that in a period when devolution is accelerating, this deficiency in Wales would have been one of the issues to be addressed in the context of the renewal of the BBC’s Charter. While the scope for improvement now seems limited – within a static licence fee – the case still needs to be made loudly.

Loudly and on the basis of facts. To this end, and looking well beyond the BBC, the IWA’s Wales Media Policy Group is updating its Wales Media Audit, last done in 2008. A new audit is underway of the provision and take-up of TV and radio broadband, online services and press circulation in Wales.

Alongside this a review of reports and policy recommendations on media issues from a spectrum of relevant interests is being conducted. This process will result in a set of policy recommendations for media in Wales, to be launched mid-October, ahead of the IWA’s Cardiff Media Summit. This will be held in the Wales Millennium Centre on 11th November. A similar consideration of cinema and publishing is on the horizon.

We in Wales must work out what sort of media resources we want and be prepared to defend them robustly or this recent daylight robbery will not be the last.

See also: Western Mail 10.7.15

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