19
Examination of witnesses
Julia Lopez MP and Robert Specterman-Green.
Q141 The Chair: I welcome the Minister of State for Media, Data and Digital Infrastructure, Julia Lopez, and the director of media and creative industries at DCMS, Robert Specterman-Green. We are grateful to you both for being here. This is the final public session of our inquiry into the BBC's future funding. Since we started this inquiry, the Government have announced that they will conduct their own inquiry—or an independent inquiry—into the BBC’s future funding. We may have some questions to ask you about that later.
As part of our work, we have been clear from the beginning that, in looking at future funding, we have to be clear about the BBC's purpose and role, which is where I want to start. Minister, could you give us your view on how the BBC is delivering on its purpose and role at the moment, and how you see that evolving in the next 10 to 15 years? We are obviously quite conscious that the Government's White Paper referred to the way you see some of the remits and purposes of public service broadcasting being simplified.
Julia Lopez MP: First, I genuinely thank you for this inquiry, which is very timely. It is particularly helpful for this committee to be doing it because of your collective experience; with a former director-general and a number of former BBC governors, you have experience on the corporate BBC side, so we will read your review’s conclusions very closely.
Your question touched on one of the big challenges in how we answer the question of funding, which is that there is inevitably a bit of a chicken-and-egg situation in any debate on the BBC—I have watched some of the previous panel sessions. The funding settlement dictates what the BBC can do, but what you want the BBC to do determines which funding model you decide is best for its future sustainability and delivery. So a challenge is being surfaced in this committee.
Two recent pieces of BBC coverage touched on what, in essence, the BBC is great at delivering and should focus on in future. I put on the record that the broadcast on the recent jubilee weekend was fantastic and world class. It told us domestically, and told the world, who we are as a nation and what our values are. It was an accessible event that was universally watched, and the quality of the production was absolutely phenomenal. That is the kind of thing that people seek from the BBC, and it must be at the heart of what it seeks to deliver long into the future.
Secondly, and rather sombrely, on the BBC’s coverage of the Ukrainian crisis, I note the quality of its journalism and, as was touched on in some of the previous panels, its commitment to truth, impartiality, high-quality journalism and facts. It is a trusted broadcaster, so it has impact not just on the domestic audience but on a global stage, and it says something about us in the UK and our values. But it also serves a purpose for a global audience when it comes to democracy and what that means in the modern day.
Those two pieces of coverage tell us something about what we should seek to preserve for the BBC in the future. Did you want to add anything, Robert?
Robert Specterman-Green: Not at the moment.
Julia Lopez MP: I do not want to be mealy-mouthed about it, but some of these questions will be surfaced in our processes that are under way. As you are aware, the current charter is in place until 2027, and we will shortly launch an independent review on whether the licence fee is the right model going forward. We also have the mid-term review, which will look at questions of impartiality, whether the governance framework is currently working as it should, and so on.
The Chair: Bearing in mind all the reviews that you have announced or that are ongoing, do you think that the role of the BBC should change? When you think about the various strategic challenges that it faces—as you will have seen, we have talked in this inquiry about the rapid pace of technological change, the impacts that that is having on consumer behaviours and the greater choice—do you see a different role for the BBC or do you see it as just preserving all that you have outlined but doing it in a different way? What sort of thinking is behind the Government's decision to focus so much attention on the BBC now, ahead of the charter coming to an end in five years’ time?
Julia Lopez MP: There are two different challenges for the BBC, as you say. There is the pace of technological change and whether what the BBC currently delivers can continue to be delivered in the same way going forward. There are also the questions that are being raised publicly about the licence fee and whether it sustains public support. Those things are intrinsically linked.
The change in the view of the licence fee comes in part because viewers are moving away; they can and desire to watch a greater variety of things, and the BBC is losing younger eyeballs. As Tim Davie said, it is competing not only with other broadcasters but with other types of entertainment, including video games. The audience also has questions about BBC impartiality and, therefore, whether the social compact in relation to the licence fee remains.
Because of those questions, we have to ask ourselves whether the BBC can continue to deliver all that it does at the moment, whether it should and, if it should not, what it should continue to deliver. This goes to the conversation about universality on the panel with Tim Davie, which was picked up in a number of Andrew Neil’s comments. If the BBC seeks to deliver everything for everyone, it risks diluting what it needs to do in the future.
To come to the nub of your question, the BBC should focus on what makes it distinct. The two examples that I cited are the kind of broadcasting that makes it distinct: it is that public service content. Whether it is educational, about democratic awareness or a wider piece about serving the creative economy, that is where our focus needs to be in terms of delivery in the years ahead.
The Chair: What role do you think the BBC should play in deciding its own future, or proposing a future role for itself? Do the Government think that the BBC should take a lead in this?
Julia Lopez MP: In short, yes. I am keen to hear what the BBC's ideas are for the things that it should focus on. The review that we will launch on the licence fee will have to be a collaborative discussion with the BBC, and I am keen to hear its ideas about the core that it seeks to deliver. Some of those questions are already being answered, because this is about how it chooses to fulfil its remit—it is already making some of those choices, as we have seen in some of Tim Davie’s pronouncements in recent weeks.
Q142 Baroness Bull: Continuing to think about the BBC’s purpose and role, my question is about its role in supporting the creative and cultural industries in the UK. Previous briefs to this committee have talked about one of the purposes being the production of industrial value, which is defined as investing in skills, infrastructure and innovations that would support the indie production sector and shape new markets. Other people point to the BBC as the biggest commissioner of new classical music, a platform for new bands and a development route for new writing and talent. So, when I talk about the creative industries, I am thinking of both the independent production sector and cultural and arts activities.
When Peter Bazalgette sat here, he said that the BBC was “capital investment in the creative industries”. In fact, in 2015, NESTA proposed that the BBC should have a distinct public purpose that was about “maximising” its “contribution to the UK’s creative economy”. What is your take on that? Do you see it as a function of the BBC to be part of ensuring that there are thriving and growing creative industries, or is that best left to other people?
Julia Lopez MP: I think that is absolutely fundamental to what the BBC delivers. Peter Bazalgette put it nicely in terms of the three things that the BBC should seek to do, which are in relation to democracy, culture and the creative economy. The outcome of one of our negotiations or discussions on the framework agreement was 1,000 new apprenticeships that the BBC is launching.
If I think about my conversations with other parts of the creative industries, skills come up time and again. That is where an organisation such as the BBC, with the scale that it has, can play an incredibly important role. That also plays into some of the priorities that we have set on accessibility and our desire to make the creative industries an attractive career prospect to a much wider social range of people. The BBC has an important role in that, as I say, both in scale and in terms of its brand and the recognition that that brand has in communities across the country.
Baroness Bull: Would you consider the potential for enshrining that as a core purpose?
Julia Lopez MP: I do not want to start redesigning the next charter. A frustrating thing about being in front of these committees is that I have to make sure we are not creating too many hostages to fortune or trying to pre-empt things that have a proper process to them. However, that is certainly something that we would be keen to look at.
Robert Specterman-Green: As the Minister said, the charter review is the process where you look fundamentally at the BBC’s mission and public purposes. Its existing fourth public purpose already acknowledges the BBC’s role in “supporting the creative economy across the United Kingdom”, so to a degree what you are suggesting is already enshrined in its public purposes. That is an important part of the economic pillar, the cultural pillar and, as the Minister referred to, the social pillar of the contribution that it makes in supporting citizenship and promoting the values of democracy and free speech and the understanding of your local place.
Baroness Bull: You are right that the creative economy covers creative industries and the cultural sector, but it is quite a broad term and the outcome there is the economy. Of course talent development is linked to the economy, but it might also be linked to other things such as the fulfilment of individual potential growth in specific areas. I take your point that it is there, but perhaps we should keep an eye on it.
Q143 Lord Young of Norwood Green: I was pleased that you mentioned the 1,000 apprenticeships. Do you recognise that it is not just the BBC and that it is working in conjunction with all the public service broadcasters? Do you recognise the importance of that in creating the ability to deliver that part of the creative economy, and that these days it is ensuring diversity in the people it recruits? Do you see that as a key part of its continuing role?
Julia Lopez MP: Certainly. One of our focuses as a Government is to try to widen out socioeconomic accessibility. This goes to the fact that the BBC is seen as a legitimate public service broadcaster in the national mind if it is perceived to serve every community in the country. There has been a challenge to the BBC in recent years with the idea that it has a metropolitan bias. That is something that we can start to address when we start to look at how we bring a broader range of talent into the organisation.
I want to say something about the creative economy. One of the challenges facing the BBC is that you want it to be of sufficient scale to be able to do some of the things that we want it to do but not so large that it starts crowding out some of the other competition. That is another difficult balancing act that the BBC has to try to fulfil, and it is another tricky question for us as policymakers to try to get that balance right and help the BBC to do so.
The Chair: We might pick up on that theme as we move into the next question.
Q144 Lord Foster of Bath: I shall move on to the commercial activities of the BBC in a second, but first I want to set the scene. I am conscious of what you said about the chicken-and-egg problem: what do you want the BBC to do and, therefore, how much money does it have and what can it do? Leaving that to one side to some extent, I want you to tell us whether, bearing in mind the growing competition, the massive increase in the cost of production of programmes and so on, you envisage a future BBC needing more, less or the same amount of money.
Julia Lopez MP: That is an incredibly difficult question. I will set out what we are trying to do in a process sense. We have 2027 in mind and we will look at the core purpose and future of the BBC in the charter review. In advance of that, we will try to have the independent review of the licence fee so that we have a sense of what different options we might consider for the financing model.
In the meantime, we have the media Bill, which will bring forward a number of broadcasting reforms that will help to sustain the BBC and the other PSBs in relation to some of the challenges of digital prominence and so on. We are also trying to help the BBC to become more financially resilient in lifting the borrowing cap so that BBC Studios—or rather the BBC—can get a bit more diversity in its funding and, again, some of the commercial stuff can feed some of the public service stuff. In 2027, with those things in place, we can decide how to marry what the future remit needs to be with what the financial options are.
In advance of that, it is difficult to decide whether the BBC needs to be bigger or smaller or stay the same. I am sorry, I am not trying to be evasive, but I think these are quite difficult questions to answer at this particular time when there are a number of reviews and so on under way.
Lord Foster of Bath: I appreciate that it is difficult for you to express a personal opinion, given your role. Can we look at an issue that you touched on? You talked about lifting the borrowing cap, giving greater freedom to BBC Studios and so on, and I think we all welcome that decision, but what is your view of the BBC’s own plans to improve and increase its commercial income? How much do you see that as a future important issue in relation to whatever funding mechanism is chosen?
Julia Lopez MP: There are two separate challenges, and you see this not just in broadcasting but in a number of other areas that DCMS covers: the need to be relevant domestically but also to be able to compete globally. In the global sense, you will need greater collaboration between the BBC and other British broadcasters. You will need each of them to have greater and deeper financial resilience, and that plays to the importance of the commercial income, but you also have to be mindful of the impact of that on your own domestic broadcasting landscape. Ultimately, I want the BBC to be financially resilient, and for that financial resilience to come because it has a certain amount of its budget covered publicly but a larger amount covered by commercial income.
Lord Foster of Bath: I would like to explore this and get your understanding of the situation. The BBC has put forward proposals to increase its commercial income from, roughly speaking, £200 million a year to £300 million a year. Whichever figure it is, either the current one or the future one, as a percentage of the BBC’s total income we are talking about 6%, 7% or 8%. Unless there is a huge ramping up of its commercial income, that is not a significant factor in the determination of how it will be funded in future, is it? Or do you have a different view?
Julia Lopez MP: I accept your point, but it is not a substitute for the debate about the main part of the BBC’s income, which is currently the licence fee. We will have to start looking at the organisation in terms of its core and what it can deliver beyond the core, and the commercial income is relevant in that sense. If you start to look at it in those terms, the commercial income might start to allow the BBC to keep various options open that in future might not be funded by the core settlement.
Robert Specterman-Green: To link it to your earlier question, we look at it as being less about specific quanta of money and more about the sustainability of the funding model. It is clear from the data that there are fewer people taking out a licence, not because they are evading the licence fee but because they are choosing not to take it because they have much more choice elsewhere, so the BBC sees its otherwise relatively certain levels of income dropping. The charter already allows for it to undertake commercial activities, as long as those are linked to its mission and public purposes, and the revenue that it derives from those commercial activities is allowed to supplement its licence fee income. So, within the parameters of the current funding model, it is entirely reasonable for us to have worked with the BBC to look at what greater flexibility we can give it on the commercial side.
That is partly why we have increased its borrowing levels. However, it is really for the next phase of the work, including the independent review that we intend to launch, to look at the full range of potential models and the role that the BBC’s commercial activities can play in that. One also then has to be mindful of the impact that that has on the rest of the broadcasting ecology.
Lord Foster of Bath: That is all incredibly helpful, and I am very grateful, but what I am not getting is an understanding of whether it is the belief in the department that somehow it would be possible for the BBC to significantly increase its commercial income. Bearing in mind that to get a £208 million return it has to spend £1.5 billion, that production costs are rising rapidly and that there is tons of competition out there also seeking to grab commercial businesses, I just wonder whether in your heart of hearts you believe it is possible for the BBC to significantly increase over and above the figures that it is already talking about.
Robert Specterman-Green: The fact that we have increased its borrowing capacity reflects our belief that there is scope for it to do more commercially.
Lord Foster of Bath: And the BBC is demonstrating that it is using that to increase it. My question is: can it go from £300 million to £1 billion?
Julia Lopez MP: That is something for the BBC to work out in its own strategy. The question for us as a Government is whether that will ever be a substitute for public spend. Whether the BBC is successful in growing its commercial arm more is a question for the BBC in how it strategises that. For us, it is a question of whether we can make the organisation more financially resilient, if that is what it seeks to do. It asked us to increase the borrowing limit, which we agreed to because we think that financial resilience is a good thing overall for our creative economy and for the BBC’s sustainability. But do we think that will be a substitute for a difficult debate about the right funding model for the BBC? No.
Lord Foster of Bath: That is very helpful, thank you.
Q145 Baroness Featherstone: Slightly sideways on to this, we have heard a lot about the soft power of the BBC and I wondered, when you are doing your sums, how you quantify that. What financial value do you put in there that means that it succeeds and you do not have to spend money as you would on, say, the Foreign Office to get that soft power? Does it count as a value in your calculations?
Julia Lopez MP: I do not quite know how to answer that. There is an amount of money in the Foreign Office budget to give to the BBC World Service. Are you asking whether we have looked at whether some kind of economic value can be placed on the soft-power projection of the BBC World Service? That sits in the FCDO.
Baroness Featherstone: Do you mean that it is outside your scope? It is just that I think it has huge value, but I do not know whether, when you are looking at the licence fee, it has an impact on that and can be counted. You seem to be talking about very basic stuff, but when it comes to the role of the BBC, its national glue and its soft power, as the Chair was talking about earlier, I wonder whether that has a financial value in your calculations.
Julia Lopez MP: That is something we want the BBC to continue to deliver. We continue to value the BBC World Service, and that is an ongoing discussion that we will have in advance of the charter review in 2027. It already has a budget in the FCDO to fund the BBC World Service. In terms of quantifying it, as I say, I do not know if there has been any calculation of the overall economic value that it provides to the UK economy, although I would be in no doubt of the importance that the UK Government place on that soft-power projection from the BBC World Service.
I have to be careful, because the BBC is fundamentally an independent institution but, given the work that it has been doing in Ukraine and some of the cost pressures that that has introduced, we wanted to acknowledge that by providing further budget from both the FCDO and DCMS budgets to be able to support the incredibly important work that it is doing there. That should be seen as a mark of the value that we place on the organisation, not just as a journalistic force but as an important democratic tool for the world.
Baroness Featherstone: I am arguing that that is very obvious support because you can see cause and effect, but there are much broader aspects that do the same work but do not come to the high points of a war in terms of you funding it. I realise that it is an impossible question.
Julia Lopez MP: Are you asking whether there is a process by which we seek to place an economic value on that?
Baroness Featherstone: When you are considering the licence fee and money, is there a question of equivalence where you say, “Because of what this contributes to our nation, we will contribute to it”? You are saying that you are doing that in relation to the war in Ukraine.
Julia Lopez MP: We already do it via the budget that is provided from the FCDO to support the BBC World Service.
Robert Specterman-Green: Monetising things like soft power is notoriously difficult, and I am not in a position today to give you an exact sum. Clearly the Government recognise that it has a value because of the amount of money that the Foreign, Commonwealth and Development Office gives in grant in aid alongside the money that the BBC allocates from the licence fee to the World Service and its other international activities. There are both quantitative and qualitative benefits that derive from that, otherwise it would not exist. It is an area that is definitely worth considering when one looks in the round at how the BBC and its services are funded.
Julia Lopez MP: It will be a relevant question in terms of what money the BBC needs to continue to do the things that we want it to do, but that has not been quantified ahead of 2027.
Baroness Featherstone: No. I am just suggesting that it should be.
Julia Lopez MP: I do not disagree.
Baroness Featherstone: I am asking if you think it should be.
Julia Lopez MP: Yes.
Lord Young of Norwood Green: You have acknowledged that it is not just the World Service with your important point about Ukraine and the quality of what is seen as independent, impartial journalism. That is something else that contributes to soft power, if that is how you want to describe it. Would you agree?
Julia Lopez MP: Yes, I do, but it also contributes to the sense of legitimacy in the BBC being a public service broadcaster, which is why a lot of our focus in the Government is on the BBC reasserting its impartiality, because that is where it derives legitimacy in the eyes of the public. That is where there is some challenge in terms of the social consent that underpins the licence fee model.
Q146 Baroness Buscombe: That question brings us on to the next, probably even more difficult, question, although I would add that the Government have to be careful about their spend being seen to be independent; the BBC must be independent of government and impartial in that sense, so it is a fine balance.
What criteria would an alternative funding model need to satisfy? This is really important, because it speaks to what principles you will apply in the funding models. Have you thought yet about the different possibilities? We know that the Secretary of State has said that in her view the licence fee should be changed because it is regressive and unfair and leads to criminal conviction and so on for non-payment. Are there principles in your mind when you are assessing the funding models? Are you looking at the possibility of some sort of hypothecated funding, subscription or some advertising? I know that you do not want to be too pinned down, but that would be really helpful to hear.
Julia Lopez MP: That is precisely why we have commissioned an independent review into this. The Government are genuinely open-minded about the right model. We are seeking for someone to surface the choices open to any Government about the right way of funding the BBC, and we are doing so in advance of 2027, so that when we look at what we seek the BBC to achieve post 2027, we have a sense of the best way of funding that.
The licence fee itself is challenged by the technological revolution. Robert talked about the fact that lots of viewers now choose not to pay the licence fee anymore. It is regressive, in the sense that you pay the same regardless of your circumstances. It is enforced through criminal sanction, which I know the Secretary of State is particularly exercised about because she is concerned about conviction rates for women, who are disproportionately taken to court over this. It is also quite expensive to administer, which is an issue that some of your other panellists have raised. From the peak of 2017-18, when about 26 million people were paying the licence fee, that figure has dropped by 700,000. So any model has to seek to overcome some of the shortcomings of the existing model.
There is an open question as to whether it can, and the Government may decide that it cannot. Although the Secretary of State has made clear her own position that she has some serious concerns about the licence fee, she has also said that she is open-minded about what the right model is. If the review comes back and suggests that on balance, given the pros and cons of other models and those of the licence fee, the licence fee is better, I do not think she would entirely dismiss that.
As to what the right model is, we are looking for the review to surface the options. I do not go into this with any preconceived ideas. The department has not run any numbers on different options.
Baroness Buscombe: Would you include in your review something that I have often thought about when I am abroad, which is international subscription? A lot of people around the world are enjoying the BBC, which we in this country are paying for.
Julia Lopez MP: There is some level of international subscription in a sense with BritBox, which is doing very well in North America. Your highlighting of the international situation is important, because a number of other countries are looking at their own licence-fee models and choosing to move away from them. Every country seems to recognise the challenge of global broadcasters now and what they mean for public service broadcasting in your own country.
We are talking to Japanese officials, because they are at a similar stage of this debate to us. They are looking with close interest at what we are doing on digital prominence. In France, President Macron committed to removing his own licence fee and is moving on to a different system. No details of that have yet been forthcoming, but our officials are seeking to make contact with his to see where he seeks to take that debate. I think Germany has already introduced a model whereby it is a household tax.
These are all things that we will be considering in the independent review, and we hope that it will surface and say what some of those choices and the pros and cons are. That will also help us to stimulate a public debate about the right model. We have to make sure that the public have a voice in this. That is one reason why this inquiry is quite important: it is one of the starting guns on that debate. As I have alluded to, one reason why we are interested in having the debate is because there is waning public consent for the licence fee which we as politicians have to address.
Q147 Lord Vaizey of Didcot: One of the things that the Secretary of State said—or rather the press have interpreted her as saying—is that the licence fee will go by 2027. Can I just clear up that that is not actually what she said? If your independent review comes up with an alternative, clearly one has to be open-minded about how quickly one could transition to a new system.
Julia Lopez MP: You are right to highlight the challenge of the transition. If we were to move away from the licence fee, it would take some years to be able to implement that, and we would want to give the BBC sufficient notice of that transition away.
On the Secretary of State’s comments, she appeared in front of the Select Committee before the main Recess and was asked these questions. She set out all the reasons I have given for why she is not attracted to the licence fee and why she has sought to challenge it as the correct model. However, she has said that the review she has launched will be genuinely independent and that she is genuinely open-minded, and that if the recommendation came back about the licence fee, she would be open to looking at that recommendation.
Q148 Lord Lipsey: My question is really about the politics of the licence fee. It is terribly easy to see flaws in the licence fee, but we also know that people do not like new taxes. The poll tax was a supreme example of that; whether it was a good tax or a bad one, people did not like it because it was new. Do you have similar concerns about the licence fee? If you have to replace it, whatever you replace it with will mean some people paying more and some paying less. You will hear nothing from the people paying less, but an awful lot from the people paying more.
Julia Lopez MP: I completely agree with you. As a politician, who wants to introduce a new tax? If we remove the licence fee, we will have to look with seriousness and candour at an alternative that may include some kind of tax or levy. That is why I think it is important that the public are taken into this debate and have a chance to express a view on it.
It also goes to the heart of how we make sure that the BBC is seen as a legitimate and relevant force in the future of our broadcasting system. That is a really difficult question to answer, which is why we seek to start the debate now. It will be a long public debate but one that we have to have if we value what the BBC does. For some of the reasons that I have set out, I think that broadly there is public consent for the BBC, but there is a trickier question to answer about what the BBC should seek to continue to do, what it needs to move away from, and whether it is seen as a genuinely impartial broadcaster that is delivering public value.
Lord Young of Norwood Green: There is a bit of mythology about the BBC and criminalising women for non-payment of the licence fee. Actually, that is the very last thing that it does, because it is involved in other non-payment things. Are you aware of that role of the BBC in trying to make sure that it does not criminalise people just as a result of the licence fee?
Julia Lopez MP: Yes, that is a discussion that is had with the BBC. The licence fee is quite expensive to collect, partly because you go through those other collection methods before you go down that route.
Lord Young of Norwood Green: It is a very small number. That is what I was trying to say.
The Chair: I am not sure whether, in response to the questions you have answered in this section, you have said whether the Government have a view—whichever public funding mechanism is part of the future, whether a licence fee or any other—on whether it should none the less be progressive, as in whether there should be something different from what we have now.
Julia Lopez MP: I did not give a view because, without wishing to be evasive, that is the kind of question that we seek to be answered by the independent review.
Q149 Lord Hall of Birkenhead: You said at the beginning that the work of this committee was timely, and likewise you used that word about the licence fee review that you are about to set going. I have also got from you a sense of proper urgency—that if you are going to make any changes, you have to get on with it pretty quick. Do you have in your mind a sense that the independent review will have its work done in a year, nine months or 18 months, so that you have enough to work on before 2027?
Julia Lopez MP: There is an urgency not just to the question about the BBC but to how we set up our broadcasting landscape for the very large changes that are already under way, which are happening very quickly and changing the broadcast landscape. That is why we have brought forward the media Bill. Questions about prominence have been knocking around for a very long time, as have questions about the licence fee and, although I do not really want to mention it, questions about the privatisation of Channel 4.
Fundamentally, we as a department and a Government value public service broadcasters and want to try to set them up for a successful and sustainable future. We are raising a lot of these questions now because we think there is a greater urgency to them, and that has come through in a number of panellists’ contributions during your inquiry. On the timing of our independent review, we are seeking to conclude it within 12 months.
Q150 Lord Hall of Birkenhead: I would like to ask you about the independent chair and whether there might be other independent members as well. One of the issues that the review will have to deal with in its 12-month period is to look at some of the blocks to change and to make a judgment on some really tricky questions, such as whether to get rid of DTT and whether you bring some sort of paywall in on radio. Do you see it as one person acting alone or a group of experts coming together?
Julia Lopez MP: We see it as a single reviewer who will have a number of conversations and engage widely. They will be supported by the DCMS secretariat, but ultimately it will be a single reviewer who will come up with a set of recommendations based on the engagement that he or she has had with a wide range of people. Key to that engagement is the BBC itself; as I alluded to in previous comments, it will be fundamental to helping us to surface some of the fundamental choices, challenges and options.
Again, I am interested in some of the comments, particularly from Archie Norman, about the need for change to come from within the organisation. One of the BBC’s challenges is a sense of defensiveness, because there is concern that people are trying to chip away at it. I suspect that a number of people in the BBC fundamentally understand that the organisation needs to change to survive. It is about trying to make sure that those voices are heard and allowing the BBC to drive its own reform. The most sustainable way of reforming the organisation will be if an amount of change comes from within and the Government play the role of external challenger.
You mentioned the idea of DTT and whether a difficult decision needs to be taken on that. One of my other roles, in my brief as Minister of State for Media, Data and Digital Infrastructure, concerns the quality of our digital infrastructure and the importance of getting good connectivity to people across the country—the pandemic underlines the importance of this. The technological acceleration that is under way is incredibly important in order not just to get everyone connected but to get high-quality connections. Again, in relation to the BBC and its sense of legitimacy in the country, if it served only people with high-quality digital connections, this would start to chip away at that sense of legitimacy, trust and accessibility that means that the BBC is seen as valid as a public service broadcaster. So, on DTT, you have to be careful about a very rapid move to digital.
You may look at some core services that everyone has to have, including on traditional transmission, with digital perhaps for certain things, but you have to make sure that the core is still available to people on a free-to-air basis.
Lord Hall of Birkenhead: That is interesting. Of course, that applies to an even greater degree with radio; it is very hard to see that being behind a paywall.
Julia Lopez MP: Yes, I think so. As I say, in another part of my portfolio, I have to look at digital infrastructure. There are still significant challenges in delivering for the very hardest to reach in our country, and I would not want to see a situation where they were cut from off from important broadcasts.
Lord Hall of Birkenhead: I completely agree with you about the public debate, and it is good to hear you say that, because a number of discussions about the BBC and BBC charters have happened with a kind of write-in vote but a singular lack of big public debate. I am not saying that you should go down the route of Switzerland, which had a referendum on the licence fee, because we have probably had enough of referenda, but could you give us some ideas about how that public debate could take place? It is really important to get the users and licence fee payers involved.
Julia Lopez MP: It is not a single event; it is a process and a conversation, and, as I say, this committee has already started that. I watched the sessions myself and I saw a lot of the coverage; this has already had a lot of pick-up, because it is a debate that the public are very interested in. The contributions of Andrew Neil and Tim Davie in particular received a lot of pick-up. The public will find a way of raising this. Whether through individual campaigns, support for particular programming or whatever, the public will find a way of getting involved. Similarly, some of these things will no doubt become part of the debate in the media Bill. As I say, I do not think that there is a single thing that will be done to engage the public; there has to be a conversation in various arenas.
Lord Hall of Birkenhead: Lord Lipsey mentioned the political difficulty of licence fee increases and so on. Might this process look at whether some independent body might advise government on an appropriate level of licence fee funding, or other funding, for the future of the BBC?
Julia Lopez MP: The independent review will give us the different options, and there will probably then be a conversation about the optimal amount that needs to be raised at the point when you look at what the charter seeks the BBC to be in the next charter period. All these conversations are intertwined. Robert, do you have anything to add on the choreography of this?
Robert Specterman-Green: On that specific point, that might be one of the recommendations of an independent review, covering not just what the funding model is but how it should be operated: should there be some kind of independent process on a multi-annual basis, for example? We will have to see what the reviewer comes up with.
To supplement what the Minister was saying, all of this ultimately culminates in the charter review process. The charter requires the Government to consult the public and others on charter reviews. These take a certain amount of time anyway, and changing the funding model is arguably one of the biggest components of a charter review. Given all the other dynamics in the broadcasting market—audience trends and other data—this is why we think it is important to start now: so that there is a lead time for both the thinking and, potentially, the implementation. But all this will come together in the charter review process.
Any independent reviewer will both want and need to engage widely with a very broad range of experts, stakeholders and commentators, which will add to the richness and credibility of that review. Of course, the department itself is not completely without expertise—you would expect me to say that. We consulted on the future of the DTT multiplex licences last year—we got rich inputs from that—and we recently concluded a review of the digital audio ecology, so we are not starting from a completely blank page. I am sure the reviewer will want to consider all that as part of their deliberations.
Lord Hall of Birkenhead: That is really helpful. To be clear, can I confirm that the licence review will be done over a period of about a year, with an expert who will bring in whatever advice they need to advise you, and that there will then be a charter review process, looking at the BBC in its entirety up to 2027?
Robert Specterman-Green: That is correct. The charter review is obviously prescribed in the charter. We are starting the funding review now—we look forward to being informed on this through the committee’s findings—because it will feed into that, alongside the other steps in the reform road map outlined by the Government. These include the mid-term review of the BBC's governance and accountability, the terms of reference for which we published just the other week.
Lord Hall of Birkenhead: Going back to what Baroness Featherstone asked, roughly £250 million of licence fee money goes towards the World Service. So the appropriate way of funding its work, which the Minister and all of us agree is important, would also be part of this 12-month review. In other words, is that the best way of funding the World Service?
Robert Specterman-Green: We are finalising the exact scope of the review, and we will clarify that when we publish the terms of reference.
Julia Lopez MP: That will be in the not-too-distant future.
Q151 Lord Vaizey of Didcot: I suppose this is an utterly pointless question, but when will you appoint the independent reviewer?
Julia Lopez MP: We hope to make an announcement before the Summer Recess.
Lord Vaizey of Didcot: That is in six weeks’ time—fantastic.
Julia Lopez MP: That was the commitment that the Secretary of State made in her Select Committee appearance, so I do not think I am speaking out of turn.
Lord Vaizey of Didcot: Does “independent reviewer” mean independent of you, of the BBC, or of both?
Julia Lopez MP: They could have had previous experience in the BBC, but we would not want someone who is actively employed by the BBC to be the independent reviewer; they would not be independent.
Lord Vaizey of Didcot: Would they be independent of government and the Tory party?
Julia Lopez MP: I do not think we are looking at people in the current parliamentary party.
Lord Vaizey of Didcot: I am just checking, because Robert knows that I apply for every job going at DCMS—
Julia Lopez MP: I hope that I have not delivered any bad news.
Lord Vaizey of Didcot: So I assume that Tory Peers are excluded from being the independent reviewer of the BBC?
Robert Specterman-Green: The Secretary of State said that if anyone was interested in leading the review, they should let her know.
Lord Vaizey of Didcot: So it could be a Tory Peer.
Robert Specterman-Green: We are not going to announce who it is today.
Lord Vaizey of Didcot: Okay, that is a “yes” then.
Lord Lipsey: I go back to the point about the public debate. No one dares to be against it these days, but it has a particular flaw in this area: some people have massively magnified voices—namely, other media tycoons and people who have a vested interest. Have you thought at all about using a citizens’ jury as a way of doing this? In such a jury, you would put a cross-section of the public in a room and educate them on the facts about something, and they would come to a conclusion. At the very least, this might be a very powerful weapon to get the genuine public opinion and see whether they have a genuine conclusion on these things. Would you consider this and put it to the independent reviewer?
Julia Lopez MP: We have considered that, but, speaking candidly, we would probably not do it. Citizens’ assemblies have been proposed as a means of settling various contentious national questions, but I am not necessarily attracted to them; that is why we have a Parliament to represent constituents. One of the methods by which some of these debates and public opinions will be surfaced will be in Parliament, via the media Bill and other parliamentary debate.
Lord Foster of Bath: I am being terribly stupid, and I probably missed this, so I apologise profusely, but I listened to what you were saying about the review and wondered whether the terms of reference have been published.
Julia Lopez MP: No, not yet.
Lord Foster of Bath: Picking up your answers to Lord Hall, will the terms of reference include looking at the future functions of the BBC, or will they just look at a funding mechanism, regardless of the chicken-and-egg question earlier about how much money the BBC needs?
Julia Lopez MP: I will pass this over to Rob to answer, because I am not sure that I will not give away something that I am not meant to reveal ahead of any announcements. Could you carefully navigate this one please, Robert?
Lord Foster of Bath: Clearly my naive question, deliberately so put, did not work as I had hoped.
Julia Lopez MP: Okay, the answer is that the terms of reference are not published, although they have effectively been drafted. I do not know the extent to which the department wants me to give a preview in this forum ahead of that publication.
Lord Foster of Bath: We will allow Robert to say what he can.
Robert Specterman-Green: I will wait for Lord Vaizey to catch me out again.
We are very clear that the charter review is the place to look at the BBC's mission and public purposes, and we do not want to pre-empt that. At the same time, one recognises the slight chicken-and-egg nature of this. So in the terms of reference we are likely to outline some broader strategic considerations to assist the review but without crossing the line and therefore prejudicing the ultimate charter review. When we get to the charter review, one would hope to take the findings from the review of future funding models and map them on to the conclusions about the future direction of the BBC in order to work out what the most optimal alignment is.
But we recognise that this is a complex line to tread, and we are trying to respect the charter review process while at the same time collecting as much evidence and as many findings as possible to inform the overall decisions when we get there. I hope that, when we publish the terms of reference, that slightly vague articulation will become a bit clearer.
Lord Foster of Bath: Will the terms of reference be published at the same time as or before the announcement of the person who will lead the inquiry, or will the sole person be doing it?
Robert Specterman-Green: There is a strong case for doing them both together.
Lord Vaizey of Didcot: That would make life much simpler. By the way, I was not applying for the job earlier—I just want you to know that. I realise that it came out a bit wrong.
Lord Foster of Bath: Are you leaving a vacancy for me?
Lord Vaizey of Didcot: Yes, I think you are properly independent.
Q152 The Chair: I will press you a little on the timeline. I understand what you have described and the reasoning or logic behind that. When do you envisage that a decision would be made about the method or the way in which the BBC will be funded in the future? Will that happen before you start the charter review process or as part of it? The charter is up in 2027 and, as you have acknowledged, decisions about this are quite urgent because of the time it will take to implement change, so I am still not absolutely sure that I understand when the Government expect to make a decision.
Julia Lopez MP: It will be part of the charter review process, I believe.
Robert Specterman-Green: The Government may choose to respond quite definitively to the findings of the independent review and indicate clearly at that point that this is the funding model that they intend to plug into the charter review process, so that when they then consult the charter review, everything is looked at in the round. But I do not think we can give a cast iron guarantee that there may be an alternative way of approaching it.
The Chair: So that would be your expectation, which would be more logical than—
Robert Specterman-Green: It would certainly be a very logical way of approaching this.
The Chair: While we are on the announcement of the reviewer alongside the terms of reference, this suggests to me that the reviewer may not have any input into the terms of reference of the review that you are asking them to carry out.
Julia Lopez MP: I do not know to what extent I can reply.
Robert Specterman-Green: Generally speaking, one would try to give the reviewer an opportunity to opine on the terms of reference, but we will have to see how the next six weeks evolve.
The Chair: Putting Lord Vaizey to one side, have you identified a reviewer?
Lord Vaizey of Didcot: You must have a shortlist.
Julia Lopez MP: There is a shortlist.
Robert Specterman-Green: The only important thing is who the independent reviewer is, and that will be clear when it is announced.
Q153 Lord Young of Norwood Green: You said that the Secretary of State was genuinely open-minded, but you had a consultation on Channel 4 that was overwhelmingly against privatising it, and you seem to have ignored that. Is that a contradiction?
Julia Lopez MP: It is not; the Government are still within their rights to come to a different view from the one expressed by the majority of those who have responded to a consultation. On the consultation itself, you will be aware that thousands of people replied to a 38 Degrees interpretation of the consultation, if I may put it that way, where the questions had been rewritten and there was a sustained political campaign. It is fair for the Government to take that sustained political campaign into account, and it is also fair to say that those consultation responses were considered extremely carefully.
DCMS put a huge amount of resource into processing, reading and evaluating all those consultation responses, and they were provided to us as Ministers. However, we as Ministers have a responsibility to look at a whole range of questions, and the fundamental ones that we look at in relation to Channel 4 are these. What is the best thing for the sustainability of the PSB sector? How do we make sure that Channel 4 is economically resilient? How do we make sure that the taxpayer is not in a situation in future where they need to support the business? We came to the conclusion that the way in which Channel 4 is structured is a future impediment to it being a successful business. People can disagree with that as a position, but ultimately it is the role of the Government to take decisions, and we have taken a decision.
Lord Young of Norwood Green: I take the point you make about the campaign. Nevertheless, there were those who you could not just dismiss in that way who made perfectly reasonable comments pointing out that it has proved itself to be resilient during the pandemic, when there was quite a lot of challenge in relation to advertising. Critics of the Government’s decision would say, “They’ve made their mind up. This is an ideological decision”.
Julia Lopez MP: That can be asserted, but I know the truth, which is that the decision had not been made. When the decision came to be made, a huge range of factors were taken into account.
As I expressed earlier in this session, there are a number of questions in the broadcasting sector that have been bobbing around for quite some time. Among them are: whether the licence fee is the right way of funding the BBC; how we make sure that broadcasters are relevant in the digital age; whether we have to do something on prominence, which is something that broadcasters have been asking us for; and whether Channel 4 in public hands is the best model for the sustainability of that business.
I happen to feel proud of being in a Government who have grasped a number of these questions and taken decisions and who seek to drive them forward, precisely because we recognise that the pace of change means that small “c” conservatism in the broadcasting sector is not going to sustain it in the way we seek for it to be sustained. I fundamentally believe in the importance of public service broadcasting, which I think has great value to this nation economically, democratically and culturally, and I want to take decisions that sustain that sector. I appreciate that people have different views about how to do that, but I am not going to apologise for decisions that have been taken, because we believe them to be in the best interests of the public service broadcasting sector.
Lord Young of Norwood Green: I hope you take it that mine was a probing question.
Julia Lopez MP: I have no problem with debate, Lord Young. It is fair for people to challenge us on these issues.
Lord Young of Norwood Green: I was going to say that I actually welcome the candid nature of your reply and the analysis that you gave.
Julia Lopez MP: I really want to put on record that this is not some kind of culture war. I think it is about valuing public service broadcast. We can have a debate about the best way of sustaining its future, but what I take issue with is people trying to put words into the mouths of Ministers when I know the true intention. That is why I will say. I welcome civilised and spicy debate on these matters. I accept that people have different opinions from me on these issues.
The Chair: On that note, I will draw this session to a close and say huge thanks to you, Minister, and to you, Mr Specterman-Green, for your candour today. I realise that you have been somewhat constrained because you are not yet in a position to make announcements on the reviewer or the terms of reference for the review. I do not know whether, when you get back to the department, they will be pleased with the way you have navigated your way through these questions, but we are very grateful to you.
I should say before we finish that, as I said at the beginning, this is the final session as part of our inquiry into BBC future funding and we as a committee will now turn to writing our report, which we hope to publish before the Summer Recess. There is lots to be said about the BBC and future funding.
Julia Lopez MP: I would like to say in return that I am truly grateful to the committee for being open to debating these issues, probing and asking some really important questions. I genuinely look forward to your report. I have found the panel sessions so far incredibly useful in helping to surface some of the questions that I think need to be asked in this very important public debate.
