- Statement
- The following Statement was made in the House of Commons on Thursday 7 December.
- “With permission, Madam Deputy Speaker, I would like to make a Statement on the BBC.
- The BBC is a great British institution and plays a vital role in our culture and creative economy. It broadcasts our values and identities all over the world, reaching hundreds of millions of people every day. In January 2022, the Government and BBC agreed a six-year funding settlement, which froze the licence fee at £159 for two years. The two-year freeze has already saved every fee payer £17 over 2022 and 2023. That settlement provided vital support for households when inflation was at its highest, while giving the BBC the funding it needed to deliver on its remit.
- Under the terms of the settlement, the licence fee must now increase annually in line with the consumer prices index, with the first increase due in April 2024. The Government are committed to supporting families as much as possible during these difficult times. We recognise that bill rises are never welcome and family budgets remain under pressure.
- Today, I am announcing that we will use the annual rate of CPI in September to calculate the increase of the BBC licence fee in April 2024. This is the same way the Government calculate inflation-linked increases to state pensions and benefits. The decision means next year’s licence fee increase will be kept as low as possible. In April, the licence fee will rise by 6.7%, to £169.50 annually. That will minimise the rise for households, keeping it to £10.50 over the year, or 88p per month, rather than a rise of £14.50 that would have happened under the previous CPI measure.
- While we recognise that household budgets remain under pressure, the decision, alongside the two-year freeze, will save individual licence fee payers over £37 by the end of 2024. These interventions support households, while providing the BBC with £3.8 billion to produce its world-leading content. The Government engaged with both the BBC and S4C to understand the impacts on the finances of both broadcasters. The decision will ensure that S4C, which is also funded from the licence fee, can maintain its unique role in promoting the Welsh language and supporting our public service broadcasting landscape.
- Although we have taken steps to ensure that the uplift is kept as low as possible, we recognise that a £10.50 increase will still be felt by licence fee payers. The number of licence fee payers is also declining, with an increasingly competitive media landscape. We need to make sure that the cost of the BBC does not rise exponentially, and that it is not borne by a smaller number of fee payers. We are already seeing an increasing number of households choosing not to hold a TV licence. The number of households holding TV licences fell by 400,000 last year, and has declined by around 1.7 million since 2017-18. That is placing increasing pressure on the BBC’s licence fee income.
- We are also seeing a rapidly changing media landscape, with more ways for audiences to watch content. The reach and viewing of broadcast TV fell significantly in 2022, with weekly reach falling from 83% in 2021 to 79% in 2022. As this trend continues, linking the TV licence to watching live TV will become increasingly anachronistic, as audience viewing habits continue to move to digital and on-demand media.
- We know that if we want the BBC to succeed, we cannot freeze its income, but at the same time we cannot ask households to pay more to support the BBC indefinitely. We are already supporting the BBC to realise commercial opportunities that will make it more financially sustainable, and will continue to explore them provisionally with the BBC.
- The situation clearly shows the need to consider the BBC’s funding arrangements to make sure they are fair for the public and sustainable for the BBC. Therefore, I am also announcing that today the Government are launching a review of the BBC’s funding model. The review will look at how we can ensure the funding model is fair for the public, sustainable for the long term, and supports the BBC’s vital role in growing our creative industries.
- The review will be led by the Department for Culture, Media and Sport and supported by an expert panel. It will assess a range of options for funding the BBC. We are clear that we want the BBC to succeed. The review will include looking at how the BBC can increase its commercial revenues to reduce the burden on licence fee payers. Given pressure on household incomes, I can explicitly rule out this review looking at creating any new taxes. The findings of the review will support the Government to make an informed choice on whether to consult the public on moving to alternative funding models. That would take place as part of the charter review process, in which any final decision on reforming the BBC’s funding model would be taken.
- The BBC is a great national institution. We want to ensure that it is fit for the present and whatever the future holds, while keeping costs down for the public. That means ensuring that the BBC is supported by a funding model that is fair to audiences, supports the creative industries, and is sustainable in the age of digital and on-demand media. I commend this Statement to the House.”
- 4:44 pm
- My Lords, we on these Benches are clear that the BBC must continue as a universal, publicly owned and publicly funded public service broadcaster, with funding that is both sufficient and sustainable. After flirting with the privatisation of Channel 4, the Government’s somewhat chop and change approach to BBC funding is creating significant uncertainty for our valuable public service broadcasters and the wider creative ecosystem. Have the Government undertaken an assessment of the likely impact of the additional pressure being placed on BBC budgets? Is this likely to lead to more journalist job cuts, disruption to commissions and supply chains, or harm to the organisation’s soft power across the world? If an assessment has been undertaken, will it be published?The BBC has already scaled back some of its public service output in response to the licence fee freeze. This has seen, for example, local radio services streamlined. From my time as an MP in the other place, I recall how local communities had the greatest trust in local TV and radio stations as a source of news and information. Does the Minister agree with the continuing importance of local provision of news and information at a time when fake news proliferates, particularly online, and when many local newspapers are scaling back their operations? To turn to the national sphere, most recently, the format of “Newsnight” has changed, with its important investigative journalism scaled back and moved elsewhere.The Government’s desire to focus on the cost of living is understood, but it is their actions which have stretched household budgets to breaking point. Does the Minister accept that this change in how the licence fee is calculated will have a negligible impact on working people’s finances, through a saving of just £4 a year, while having a far bigger impact on the BBC’s ability to fulfil its public service duty and role?We also understand the desire of the Secretary of State to launch the future funding review. She is, after all, not the first person to have had that idea, but many lack confidence that the process is about getting the right result for the BBC. What steps will be taken to shore up confidence in the review among stakeholders, staff and the public?
- My Lords, in 2022, the Government made a firm commitment that, after two years of freezing the licence fee, they would allow it to rise for the following four years according to the rate of inflation. The BBC kept its side of the bargain, despite having to make heavy cuts. The Statement repeated here today makes it clear that the Government have not. The Government’s excuse—that their below-inflation settlement is about helping with the cost of living—will not wash. The difference between an inflation- linked settlement and the actual one is 45p per month, yet this will deprive the BBC of £400 million over the next four years, causing enormous damage to an institution already reeling under successive cuts by this Government. There are more direct ways to help those who are trying to deal with the burden of inflation and increased energy bills.What does this mean? It means less investment in the nation’s creative industries, fewer jobs created nationwide, more job cuts at the BBC and, almost certainly, fewer journalists dedicated to checking facts and reporting impartially, which is so important in the world of the internet. The BBC feeds into the Government’s levelling-up agenda, making programmes across the country while boosting local economies and utilising local skills—except that cuts to BBC local radio, already in train, mean that the spotlight on the local level is increasingly dim and will grow dimmer, thanks to today’s Statement.As mentioned by the noble Baroness, Lady Merron, another casualty is investigative journalism. I used to work on “Newsnight”; we criss-crossed the UK and the world seeking out stories and telling them in depth, not just reacting. Now, it is another current affairs programme shunted off to an existence solely in the studio. As my former colleague Michael Crick—he may not be the favourite person of some of your Lordships, but he is one of mine—noted:
- My Lords, I am grateful to the two noble Baronesses for their questions. I was not clear from the contribution of the noble Baroness, Lady Merron, whether the Labour Benches are closed-minded to the future funding model of the BBC and wedded to the licence fee model. Nor was I clear from the noble Baroness, Lady Bonham-Carter, whether the Liberal Democrat Benches think the rise for licence fee payers ought to be higher.What we have done this year and since the beginning of 2022 is, initially in 2022, agree a funding settlement with the BBC, which froze the licence fee at £159 for two years. That has already saved households £17 over this year and last. Under the terms of the settlement, the licence fee must now increase annually in line with CPI but, because of the decision we have taken to calculate this using the annual rate of CPI in September, rather than a rolling six-month period, the increase will be kept as low as possible.In April the licence fee will therefore rise by 6.7% to £169.50 annually. That is an increase of just 88p per month, as opposed to a rise of £14.50, which would have happened under the previous way of measuring CPI using an average of the 12 months preceding September. We have done this because we recognise that household budgets remain under pressure. This decision, alongside the two-year freeze, will save individual licence fee payers more than £37 by the end of 2024. It will also ensure that the BBC is provided with more than £3.8 billion to continue to produce the world-leading content for which it is rightly renowned across this country and the world. That is a fair deal which provides value for money for the licence fee payer, while ensuring that the BBC can continue its important work and play its important role in our national life.The BBC has made a statement about the impact of the decisions as it sees them—the noble Baroness, Lady Merron, asked about that. It is of course for the BBC to make its decisions about how it spends this £3.8 billion, but we are providing it with a significant cash uplift that will support the corporation in delivering its mission and public purpose and continue to deliver for licence fee payers.