The UK has built something special in the BBC. That’s what our audience surveys tell us. It is a very British institution with an enduring mission which countries around the world respect and would love to call their own. It’s certainly not perfect. But it is something of real and lasting value. It informs us. It educates us. It entertains us. It creates economic wealth through support for key industries like music and television production and plays a critical role in the UK’s position as a creative powerhouse. It brings editorially independent news into people’s homes throughout the four nations of the UK on television, radio and online. It brings people together to witness and enjoy significant events in our national life. And through the quality of its content, it encourages other broadcasters to up their game, improving standards across the board to the benefit of all viewers.
But it is also clear that the BBC needs to reform in a number of areas including its costs, the complexity of its structures, its governance, how it works with other parts of the industry and the way it serves an increasingly disparate nation.
The formal charter review debate has now begun. The over-arching question for that debate is: what is the right BBC for the next generation? And from that come other questions. What should its role and mission be? Should it still seek to serve everybody in return for a licence fee that we all pay? How can it best serve generations to come, both in terms of its programmes but also the wider benefits it brings to society and the economy? How can it best maintain its independence from politicians and commercial interests? How can it partner more and stimulate, but not crowd out, the competition? When does it need boundaries and what form should they take, including around its online services? And how can it most effectively and efficiently serve audiences when it faces increasing financial constraints that will entail ever tougher choices? While we are still in the foothills of charter review, I will set out the thoughts of the trust on these questions, largely rooted in what the public have told us over the past eight-and-a-half years. Despite the incessant noise around it, the future of the BBC needs to be driven by evidence and fact, not by prejudice and not by vested interest.
First, and most profoundly, there is good evidence that audiences very much want the BBC to continue to be part of their lives and that they believe that a significant public benefit arises from the existence of a strong, independent BBC that provides a universal service. That is to say a BBC that provides programmes people love at a lower cost than would be possible for a niche broadcaster, and that brings a multitude of other benefits, like jobs, economic growth, social cohesion and enhanced international standing. That’s why 97 per cent of the population still use the BBC every week and 46 million of us use it every day. The trust’s research shows an extraordinarily high level of public support for the Reithian mission to inform, educate and entertain (although not necessarily in the order Reith originally expressed it). Four out of five believe the BBC achieves its mission objectives. And it is worth stressing that the public strongly back the ‘entertainment’ part of the package. They expect their BBC to give them high quality entertainment as well as high quality drama, and high quality coverage of the great events – from state occasions, to moments of high political tension, to iconic sporting moments – that bring the nations together. The trust has seen no evidence that the public want less entertainment from the BBC. What they want is a broad range of programmes with a common theme – and that’s quality. Audiences take it as axiomatic that the BBC should set higher editorial standards than they demand of other broadcasters – not just in terms of accuracy and impartiality and fairness and respect, but in the way the BBC goes about the business of making its programmes. That’s why, on those occasions when the BBC fails the test, audiences feel genuinely let down.
Significant majorities also support the idea of a BBC that provides something for every household; that reflects lives as they are lived in the different nations and regions and communities that make up the UK; that contributes to UK prosperity; provides programmes that bring people together; gets the UK public talking and debating. They also still want a BBC free of advertisements, commercially independent. Paradoxically, while audiences largely want the BBC to remain true to its past, they also want it to embrace the future: to experiment, and to lead them into new technologies with content they can trust. The truth is – and it’s sometimes a difficult one for governments to accept and for the BBC to live up to – there isn’t a lot in broadcasting that audiences don’t want from the BBC, and most of them are prepared to pay for it.
It is important to acknowledge from the outset that, in addition to what it actually broadcasts, the BBC also brings very significant wider benefits. These are many and diverse. For example, the BBC is a hot-house for nurturing and training talent in the broadcasting industry. While it is important that the BBC does everything it can to hold on to its best people, it is also right that it provides a training ground from which the rest of the industry benefits. Indeed, it is inevitable – and healthy too – that some of the top talent the BBC develops both on and off air will leave to work in other parts of the industry. A recent independent study for the trust found that 49 per cent of ITV’s factual, lifestyle, entertainment and comedy talent began their careers at the corporation.
Bringing benefits to the UK economically and internationally
The BBC brings important benefits to the UK internationally, most notably through the World Service, which in 2015 reached 210 million people, going above 200 million for the first time. People around the world have respect and affection for the BBC – Kofi Annan, the former UN secretary general, called the World Service ‘Britain’s greatest gift to the world’. This has tangible knock-on benefits for the UK, encouraging people to do business, visit and study here. This respect for the World Service also helps the BBC to make programmes in other parts of the world and attract global talent. Perhaps most importantly, the World Service plays a key role in bolstering the UK’s ‘soft power’. A recent analysis, launched by the strategic communications consultancy Portland, ranked the UK top for soft power in a league table of global leaders and found that it performed particularly strongly in relation to culture, digital, and global engagement.
The BBC incentivises its domestic competitors to improve the quality of their programmes to stay in the game. When Michael Grade was chief executive of Channel 4 he liked to say: ‘It’s the BBC that keeps us honest’ – the existence of the BBC gives its competitors an incentive to compete on quality rather than on purely commercial criteria. This produces higher quality across the whole UK ecology. Anyone looking at the generality of, say, US television, where public service broadcasting plays a much smaller role than in the UK, would be unlikely to disagree with this analysis. This is the case even though there are clearly examples (House of Cards, Breaking Bad, Game of Thrones spring to mind) across a narrow range of genres where the US system produces some extraordinarily high quality output – but at a price already way beyond the BBC's capacity to pay.
The evidence shows that the UK would be a far less formidable force in world markets if the BBC did not exist. According to the DCMS, the UK creative industries employ 1.7 million people. They account for 5 per cent of the UK economy. They are responsible for more than £17 billion of exports. It is generally accepted that the existence of the BBC underpins a significant part of this success, particularly in the film, television and music sectors.
The corporation’s commercial arm, BBC Worldwide, acts as a global showcase, not just for BBC productions, but for programmes from a wide range of UK independents. In 2013/14, Worldwide paid more than £116 million to UK independent rights holders in upfront rights investment, profit share and royalties.
At its foundation, the economic value of the BBC relies on a strong intellectual property framework to both protect and exploit its creative content in the UK and globally. Without the protection that this affords, the BBC and other content creators would find our strength as an economic powerhouse diminished and our power in global markets significantly weakened. It is, therefore, imperative that the BBC maintains a strong intellectual property regime.
The UK pop music industry – a world leader – freely acknowledges the BBC’s key role in finding and developing new talent and creating an audience for it. When the trust reviewed the BBC’s music radio services recently, the BPI, the trade body representing the UK’s recorded music industry, told us: ‘The BBC is a fundamentally important part of the ecosystem for British music, and for the UK creative industries as a whole. BBC Radio is a critical part of the success of British Music and the recorded music sector.’ Overall, this adds up to a real economic benefit. A study by Deloitte found that each pound of the BBC licence fee produced two pounds of economic value for the UK, adding some £8 billion to GDP.
Nonetheless, the trust is clear that the BBC must do much more by way of partnerships and collaboration. The trust wants to see a more open BBC, actively seeking to broker alliances right across the cultural and creative spectrum, sharing its content and its technologies, acting as a catalyst, a platform, and a connector for new kinds of creative endeavours that deliver real benefits to all the partners involved, as well as to the wider creative economy – and thereby to the public. In particular, we want to see whether the BBC can partner more with local media who in some cases may no longer have the resources to adequately cover areas like local government and court reporting. The trust would encourage the BBC to help plug the democratic deficit here. To achieve all this, the BBC needs to become easier and more welcoming to work with, less bureaucratic, more agile, with fewer managerial layers – all issues where there has been progress but where more needs to be done. But, even while pressing the BBC hard to do more, and to make the structural and attitudinal changes needed to enable it to do more, we should not underestimate the contribution it already makes to the UK’s creative industries and the economic benefit this generates for the wider public.
A BBC for everyone
So the evidence suggests that the BBC maintains public support (and our consultation process will further test the level of that support), has an enduring mission and brings real benefits across a broad spectrum of areas, but there remains the question of whether it should be a universal service. Some argue that the BBC should address only areas of market failure, with a schedule consisting of news and current affairs, children’s, science, the arts, religion and so on. We recognise that the BBC can’t be all things to all people, but we fundamentally support a BBC that everyone pays for and from which everyone benefits. This is not just in terms of its programmes, but the wider benefits that I have just set out and the economies of scale that enable the BBC to produce great programmes at a cost-effective rate that makes them available to all.
By definition, a BBC limited to areas of market failure would benefit principally the commercial interests of its competitors, so it is hardly surprising that some of them find this prospect attractive. It is essential that we don’t get seduced by a short-term market failure argument with long-term irreversible consequences. It is, of course, right that the BBC constantly needs to evolve; the deliberations we have been going through about the future of BBC Three show the BBC taking this process seriously, however painful it may be. But we are concerned that some changes to the BBC could be irreversible. If we end up cutting the BBC back to an irreducible minimum, we should be under no illusions about the cultural, societal, educational and economic benefits that will be lost, in addition to the great programmes that would go.
Ever more acute pressure on BBC budgets
The problem for the BBC, of course, is not lack of aspiration to meet audience expectations, but ever more acute pressure on budgets. This stems in large part from five years of the licence fee being frozen, and increasing additional burdens placed on it – most recently the budget decision to give the BBC full responsibility for the over-75s television licence concession from 2020. As the trust has already set out, we accept that this was a decision the government was entitled to take. But it should make the BBC wary of, ever again, accepting money under the direct control of government. The BBC’s role is to hold politicians to account – and any ability to influence this through the control of funding has a potentially chilling effect on the BBC’s independence. Nor can we endorse the process of agreeing a financial framework when the public, who – let us not forget – pick up the bill, were by-passed. As for the decision on the over-75s itself, we argued, along with the director general, for additional measures that, we believe, make the BBC financially sustainable in something like its current form: measures that include what the government have assured us about the licence fee rising in line with CPI over the charter period. It is on that basis that we agree with the chancellor’s statement that he has given the BBC a sustainable income for the long term.
The immediate question, though, is where the budget decision leaves the charter review process. It is essential that we now have an open and honest discussion with licence fee payers about what sort of BBC they want for their money, given that the financial framework has been set. We have already started that conversation but it might ultimately mean presenting the public with pick-and-mix options to establish their priorities.
The trust is determined this charter review should establish that future changes to BBC funding should require public consultation and some form of parliamentary scrutiny. This will help protect both the BBC’s financial and its editorial independence, for the two are entwined. Research carried out for the trust shows clearly that the public see a need for independent scrutiny and regulation, but they want this done by a separate body representing licence fee payers, not by politicians. That independence has needed defending over decades, not just from governments but also from parliament, with a growing tendency in recent years for select committees to question BBC executives about detailed editorial decisions. We believe that this charter review gives us a chance to codify the relationship between the BBC and the state, and the BBC and its public, so that the terms of engagement are clear, the processes transparent, and the BBC can be seen to be both accountable and independent.
Era of rapid technological and market changes
One undeniable fact is that the context within which the BBC will operate during the next charter period will be one of rapid technological change. The public have made it very clear they have a voracious appetite for the opportunities that new technologies offer. The BBC cannot sit still here, and audiences do not want it to. It has a strong history of initiating high-ly-valued technological change – the iPlayer being only the most recent example. But the iPlayer is now more than seven years old – which makes it venerable in digital time-scales. Everyone wonders where the next great innovation in delivery will come from, so the BBC must have the technical and research capacity, if not to invent new technologies, at least to adapt and exploit them.
Technology is not the only area of rapid change. The competitive environment in which the BBC operates is also changing fast. 2014 saw an extraordinary process of consolidation in the UK independent sector – home of some the BBC’s most important creative partners. Super-indies became mega-indies as three of the top four production companies were taken over by international groups that dwarf the BBC. Meanwhile, global giants such as Google, Apple, Amazon and Netflix are all investing heavily in content. We need to see clarity from the BBC about how it intends to respond to these dramatic changes in its competitive environment.
Across many fronts it is clear that demands on the BBC budget will only increase. Significant new costs will arise from the need to construct new online delivery while maintaining existing broadcast networks. There is strong public demand for more tailored services for the nations and regions. Rights costs for some key genres are spiralling upwards, with high-end drama and sports-rights being particularly demanding. Where sport is concerned, there may be a case for new regulation to protect certain crown jewel events that bring the nations together if we are to be able to keep them on free-to-air networks. But even if that were achieved, the problem of the rapidly escalating cost is not going away.
Giving the public value for money
You might not believe it if you rely on what some of the BBC’s harshest competitors in the press report, but actually the corporation has a good record of becoming steadily more effi-cient in recent years, and we know it can do more. The trust is determined that the BBC becomes a leaner organisation, with less complexity and clearer responsibilities. We are confident that the management recognises this need and can rise to the challenge. The BBC also needs to build further on the work that BBC Worldwide is doing to increase other sources of funding, and that in turn will reduce the pressure on the licence fee. We want to explore options for commercial partnerships or investment that could strengthen Worldwide’s position and deliver long-term growth. However, we oppose outright privatisation because of the dramatic impact that would have on long-term revenue and on up-front investment in producing public service content. The global exploitation of its intellectual property rights is a critical part of the future funding of the BBC.
But nobody should be under doubt that budget pressures on the scale that the BBC is facing, together with the responsibility for paying the licence fee for the over-75s, will lead to some impact on programmes and services. The charter review public consultation will be critical to determining the nature of the changes that entails.
As to how the BBC is paid for, our research currently shows that the licence fee remains, by some margin, the system that commands the most support among the public. It has the advantage of being widely understood and accepted. We welcome the government’s commitment to modernise the licence fee by closing the iPlayer loophole that lets people watch television programmes on demand without a licence as long as they are not viewed ‘live’. The trust has an open mind about the longer term, and as traditional broadcast services perhaps make way for online delivery in the future, technology could offer new funding opportunities too. However, the trust’s clear view is that any model needs to be universal – it must offer something for everyone. A subscription model for the BBC’s public services would be incompatible with this, although it is worth exploring for the BBC’s commercial services. In the meantime, we are consulting licence fee payers about the funding options put forward in the green paper, including a universal household levy and a combination of public funding and ‘top-up’ subscription services.
The question of governance
Finally, there is the question of governance. This is not the place to explore this question in any depth. Any system of governance has both strengths and weakness. The trust’s strength has been in bringing transparency and accountability to the BBC's range of services, each one with its own ‘licence’ setting out what the trust requires it to deliver within its headline budg-et. The trust’s service reviews have given both audiences and the whole industry a voice in assessing the BBC’s performance. The trust has shown its willingness to curb the BBC’s am-bitions when they would not have served audience interests well or would have caused undue impact on the BBC's competitors. We have set – and effectively policed – the highest editorial standards in broadcasting, putting complainants and the BBC on an entirely equal footing in the hearing of appeals. And the trust has been instrumental in driving efficiencies from the BBC over years of frozen funding.
But there have been failures too, often exacerbated by the blurred lines of accountability in oversight and governance. So we think reform of BBC governance – intelligent reform – is necessary, and we have set out our proposals to bring greater clarity over responsibilities and accountabilities. In brief, our view is that the BBC needs to be run by a stronger unitary executive board with an independent chairman and a majority of non-executive directors. It would have sole responsibility for running the BBC and its strategy and corporate governance. The BBC’s services would be scrutinised by an external regulator, taking over the trust’s responsibilities for quality control and accountability. It would regulate the BBC’s market impact and ensure that it abided by fair trading principles. We think it needs to be a bespoke regulator for a whole range of reasons. Audiences have higher expectations of the BBC than of other broadcasters, and they want the BBC to be held to higher standards. And we believe the BBC’s regulator should have a public role in providing guidance on what would be a sufficient level of funding to enable the corporation to fulfil its public purposes and meet the expectations of the public.
If the regulation of the BBC is to be kept beyond the immediate direction of ministers, any future regulator should be established, like the BBC itself, under royal charter. The new regulator would continue to provide a buffer between BBC management and government to ensure the BBC’s independence is maintained – a matter of central importance to the public.
Whatever the ultimate BBC governance solution set out in the new charter, and however the responsibilities are shared between regulator and board, we are clear that the system must fulfil three roles:
• regulation to apply the appropriate checks and balances to what is a major market in-tervention;
• oversight of the BBC’s strategy, operations and management, and
• representation of licence fee payers to ensure the public voice is heard, that value for money is achieved and that quality and editorial standards are met.
And so to return to the beginning: what is the right BBC for the next generation? Answering this will be the fundamental challenge of charter review. And it now needs to be answered within a defined funding package. What we do know is that people value the BBC. As its owners, they rightly have huge expectations of it; expectations that need to be met as far as possible within these ever tighter funding constraints and in the face of arguably the greatest external challenges the BBC has confronted in its lifetime.
It is clear to me and my fellow trustees that the status quo is not an option. We need to be clear about the BBC’s future priorities, and exactly what changes need to be made. But this should all happen through a proper debate where the public’s voice is heard loud and clear. The BBC’s future is simply too important to be settled behind closed doors.
Importance of public engagement
And it needs to be a debate based on evidence, not anecdote. To help achieve this, as representatives of the licence fee payer, the trust has launched its most comprehensive programme of public and industry engagement, including a public consultation, seminars throughout the UK, greater use of social media to canvass views and engage in debate, and more surveys and polling.
The public have the right to play a central role in deciding the future of their BBC. We will do everything we can to encourage them to seize the opportunity. They have all grown up with the BBC. Now they must say what BBC they want to hand on to the next generation.
You can contribute to the Trust’s Charter Review consultation by visiting www.bbc.co.uk/tomorrowsbbc
This extract is taken from The BBC Today: Future Uncertain, edited by John Mair, Professor Richard Tait and Professor Richard Lance Keeble, published by Abramis, Bury St Edmunds on 5 September. Also available from mid August from Richard@arimapublishing.co.uk
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