Supplementary written evidence submitted by the BBC

We welcome the opportunity to submit additional evidence to the CMS Select Committee’s inquiry on Film and High-End TV (HETV).

We are starting to face significant and urgent challenges in getting productions across genres made, even those that have been greenlit by our commissioners to move forward into production. That includes a range of programming – both high-end productions, but also other vital scripted and unscripted shows that are made across the UK, which support portrayal, skills, and the production sector. We would welcome the opportunity to speak to the Committee about these issues in more detail at a future date.

As we set out to the Committee previously, culturally important content and genres that attract less investment have been particularly harmed by the challenges facing the sector. We think the UK Government should prioritise additional/enhanced tax relief for children’s, comedy, and audio content – set out in more detail in the second part of this response.

Supporting culturally-relevant content

The BBC – and the other PSBs – play an essential role in investing in backing the best storytelling from across the UK, investing in homegrown talent and creativity. From Shetland to Sherwood to I May Destroy You, we bring audiences authentic stories that they value. But there are headwinds that mean it is increasingly difficult for the BBC to make the same volume of content, while still ensuring that we fulfil our remit by taking risks and remaining creatively ambitious:

• reduced co-investment – many of our former co-production partners are now focussed on exclusive rights in the UK as they launch their own content services and platforms, therefore want exclusive rights to that content rather than sharing them with public service broadcasters (PSBs);

• a difficult global sales market – content distributors often provide upfront funding in exchange for rights, but a difficult global sales market means there is less incentive to invest from one series to the next;

• persistent high inflation due to demand for talent and infrastructure – as we set out in more detail our previous response to the Committee;

• a smaller BBC licence fee – at the same time as costs are going up and the BBC is facing more competition than ever, our licence fee is worth 30% less in real terms than it was in 2010/11. We also note that challenging market conditions are also impacting the other PSBs.

The current challenges are detrimental for both audiences, who could start to see less high-quality, free, and distinctive public service content, and the sector. Multiple greenlit

BBC productions are now stuck in funding limbo and are not progressing to production. Many freelancers are out of work and long-standing and successful production companies are closing: for example, just ten days before the BBC aired Nightsleeper (which has been watched by over 8m people), all staff at Fremantle’s Euston Films, the production company that created it, were laid off.

The Government should recognise the screen sector as a priority sub-sector in the Industrial Strategy given its economic benefits, cultural and societal importance, and unique challenges – including urgent issues such as this one.

Sustaining vital genres

As we set out to the Committee previously, there are some culturally vital genres that have been under pressure for some time: they are seen as riskier investments, in part due to their domestic focus, therefore find it more difficult to secure third-party funding due to challenges outlined above. In addition to their cultural impact, they also make an economic impact, whether through direct, indirect, or spillover benefits. Lower-budget or smaller UK-focussed productions across genres often provide a training ground for the skills and talent that then go onto work for larger or higher-budget productions.

There are three genres that we believe would benefit from targeted tax relief support – comedy, children’s, and audio. We have also set out some more information on challenges facing the independent film sector.

• Comedy: as we set out in our previous response, comedy defines what it means to be British. Between 60-70% of BBC spend on comedy is in the English regions, Wales, Scotland, and Northern Ireland – not only ensuring that communities across the UK are represented on screen, but also supporting jobs and the sector outside of London. The same producers who make comedy also make drama – and many are increasingly prioritising TV drama as it is financially less risky. Comedy is vulnerable to the same pressures that are now impacting higher-end co-productions (inflation, difficulties securing co-investment, reduced PSB budgets) – but they are exacerbated, in particular because comedy tends to be highly localised, therefore it’s even more difficult to find international funding partners. We therefore reiterate our recommendation for the Government to introduce tax relief for all scripted comedy, not just those productions that meet the HETV tax relief expenditure threshold.

• Children’s: children’s TV offers social and cultural benefits, helping children understand themselves and the world around them and introducing them to the stories, ideas, and perspectives that shape our national identity. Nearly seven in 10 under-16s used the BBC each week in 2023/24[1], and we’re proud to continue offering a diverse choice of public service content at scale (with the BBC responsible for 80% of the PSBs’ first-run original children’s hours in 2023)[2]. Like

comedy, the majority of BBC Children’s commissions are devolved across the UK – over 70% of spend takes place in the English regions, Wales, Scotland, and Northern Ireland. The recent uplift to the children’s TV and animation tax relief credit rates were welcome, and will make the UK a more competitive place to make children’s content. However, global content providers are not incentivised to provide culturally British content at scale. Co-production is common with children’s content, especially animation shows, and – as set out above – we’re seeing investment declining here too. Culturally-relevant content therefore runs the risk of being eroded if the already small UK children’s production sector dwindles to almost nothing, and the audience is left with only US-centric programming from SVOD platforms. The BBC alone can’t meet this audience and industry challenge. In order to support culturally-vital children’s content, the Government should consider targeted changes to the existing animation and children’s tax relief – namely, an uplift for culturally-relevant content that already qualifies for the existing relief.

• Audio: while we recognise that this inquiry is focussed on film and HETV, audio is another critical way people consume content. RAJAR figures for Q2 2024 showed that 32m people tuned into live BBC audio output each week and that BBC Sounds had an average weekly audience of 4.88m – listening to high-quality public service audio content from dramas to comedy to documentaries. 2022 Mediatique research for the BBC found that the audio production market has evolved to meet demand for content such as podcasts and audiobooks, and that the sector is likely to grow as new digital opportunities arise – however, the market remains a cottage industry in some ways, with low levels of resource and staffing and limited access to financial capital. The research also found that audio producers have typically been unable to get value from secondary markets. The BBC supports AudioUK’s recommendation to introduce an audio production tax relief[3], which could help to drive inward investment in a globally growing market where the UK is already strong and support culturally important BBC content. The BBC supports AudioUK’s recommendation for the Government to introduce an audio production tax relief.

• Film: We welcomed the Government’s introduction of an independent film tax relief to support growth and address some of the challenges facing the independent film sector. We note that there is still significant pressure on areas of the independent film supply chain, for example in access to equity finance for producers building projects of scale and across distribution and exhibition.