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British Broadcasting Corporation (Finance)

Volume 884: debated on Thursday 23 January 1975

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5.52 a.m.

Thanks to your prompt intervention some 10 hours ago I am able to address the House, Mr. Deputy Speaker, on the subject of the finances of broadcasting. I am delighted to see you in your place, Mr. Deputy Speaker, knowing as I do your long interest in broadcasting.

I have chosen to raise this matter, particularly as it affects the BBC, because it seems that the whole question of the financing of broadcasting and public service broadcasting is now in doubt at a time when the structures of broadcasting have been re-examined and major policy decisions and initiatives are being sought along the lines suggested by the hon. Member for Berwick-upon-Tweed (Mr. Beith), who has spoken about the implications of the Crawford Committee's Report.

My concern is that we may be in a situation now where the financing of the BBC is in doubt precisely at the moment when it should be examined as a healthy going concern. As the House knows, I am a member of the Annan Committee, although I am not speaking for it. It has no collective view, but is collecting views about the future of broadcasting. One of the things it is hoping to do is look at the present structures of broadcasting and not find by the time it reports that half of these structures have been irredeemably altered by financial factors.

I am sceptical, and have been for some long time, about the licence fee alternative as the long-range answer to the problem of financing public service broadcasting. By opting for an inquiry into the future of broadcasting, with the implication that the present broadcasting structures are continued at least until the Annan Committee has deliberated and its deliberations have been debated in Parliament and then acted upon by the Government of the day, we have committed ourselves to seeing the present structures continued through that period.

There is cause for concern in the areas of both the largest and the smallest sections of broadcasting now under consideration. I refer to the BBC, and the whole question of its finance, and to the small and struggling experimental cable stations, which are now in a serious position.

The present position has given rise to unreasonable suspicions on both sides. There is a suspicion on the BBC side, echoed in Mr. Peter Jay's article in The Times yesterday, that the Government are delaying action on reconsideration of the level of the BBC licence fee in order that the BBC shall be cut back or otherwise altered or forced into an act of self-mutilation—a kind of death of a thousand cuts—while the committee is sitting. I do not believe that that is true. I do not think that the Government have entered upon a policy of malign neglect of the BBC. But it is true that since July 1974 the BBC's application for an increase in the fee has been held up. As a result, a considerable amount of revenue which the BBC might have expected from 1st January, or perhaps 1st April 1975, has been lost to it for good.

There is a second fear, the fear of many hon. Members and perhaps some people in the country, that the BBC is crying "Wolf". The General Secretary of the Association of Broadcasting Staff, Mr. Tony Hearn, said the other day, with some truth, that the problem of the BBC was that it had cried "Wolf" so often and now realised that the wolf was at the door.

In many people's minds, including mine a few months ago, there was a suspicion that this orchestrated campaign for a considerable increase in the licence fee was in a sense a major public relations exercise. Obviously, there had to be some increase, but we suspected that all the talk of economies was somewhat overdone. I do not hold that view today.

The licence fee was set in 1971 at £7 for the monochrome licence and £12 for the colour licence. That is quite a while ago. It is not fair to argue, as is sometimes argued by those who wish to see a considerable increase, that that in a sense fixed the BBC's income. It did not, because although the licence fee was set at that level the income has been rising considerably, because of the enormous expansion, particularly in the sale and rental of colour television sets. In an odd way, inflation has helped that along. There has been a transfer of money into the purchasing of commodities, and such items as colour television sets in particular, by people who think that in that way they will beat or get ahead of inflation. But nobody gets ahead of inflation. That is a sad fact of the declining value of real money as against paper money. The BBC has not got ahead of inflation either. The effect of inflation, in the past two or three years in particular, has been to make the financial situation of the corporation somewhat parlous.

I understand that the application for an increase in the licence fee was made last July. The delay thus far, which has resulted in a considerable number of small and perhaps rather niggling economies, has led to its losing about £17 million in the first three months of this year—the difference between the estimate of what it needed last July and what it has today. It is usually reckoned that what it was asking for then, when it could foresee continuing inflation, although perhaps it could not quite look into the crystal ball for 1975, was what was called the £9-£18 increase. That is an increase in the monochrome licence to £9 from £7 and an increase in the colour licence to £18 from £12.

The deficit of the BBC at the end of March, at the end of the financial year, is likely to be about £20 million. My guess is that its borrowing powers must also be almost exhausted or will be exhausted by the end of February. They will be exhausted not merely in terms of long-term capital expenditure but in terms of paying the monthly bills.

The corporation outlined in December a number of cuts that it felt it had to make. They have now been enumerated in the BBC publication "BBC Record", Issue 92. So they at least are a matter of public record and are not in dispute. It proposed that television afternoon programmes between 2 p.m. and 4 p.m., excluding school programmes, should close down from Monday to Friday, that the evening shutdown should take place at 11.30 p.m. and that afternoon programmes should be cut on BBC 2 on Saturdays in the summer and on Sundays in the winter. Various radio amalgamations were proposed. There was to be a further amalgamation of Radio 1 with Radio 2, a deferring of the start, an advancing of the closedown on Radio 2, an advancing of the closedown on Radio 3, and the amalgamating of Radio 3 and Radio 4, perhaps the most serious matter, from 12.5 to 12.55 on Saturdays.

Those were small economies. They amounted in total to a saving of about £1 million. No one considering those suggestions when they were first made some two months ago could then have said for sure whether they were just a part of the process of the serving of notice by a great estate of the realm on the Government of the day as it was in financial straits or whether the situation was more serious.

I am inclined to the view now that the situation was more serious. I believe that in the immediate future we shall see further cuts unless something is done. I do not believe that the Government can will the end of public service broadcasting without willing the means. We cannot maintain the institution of broadcasting until 1977 or 1978 without allowing it the means to continue in something like its present form.

We could have gone a different way. The Government of the day or the previous Government could have said that because of anomalies in the licence fee system or because of concern or disquiet about this or that section of broadcasting they would alter the system unilaterally. They could have said that there would not be a committee of inquiry set up to consider the whole system and to report upon future prospects. We have chosen to have a committee of inquiry. We have chosen to have a period of deliberation that must be prolonged for two or three years. During that time we must maintain the system as it is. That seems to imply that we must make arrangements for the financing of the whole of the public service system for a further two and a half or three years, plus all the additional responsibilities which are laid upon the corporation and upon broadcasting in general by the ongoing consideration of technical matters.

The hon. Member for Berwick-upon-Tweed referred to the Crawford Committee and its recommendations. Some of its recommendations have been accepted by my right hon. Friend the Secretary of State for the Home Department. They lay further duties by way of recommendation upon the BBC. It is clear that those duties cannot be carried out and that the recommendations will not be implemented unless the BBC is in a healthier financial position.

We must consider not merely the possibility of a certain number of cuts in the services provided by the corporation—perhaps some of them are inevitable—but a situation where there is bound to be a foreclosing of the further responsibilities laid upon it by the Crawford Committee and by other bodies.

How are we to go about getting a better system of broadcasting? We cannot do this unless we are able to examine the full potential of the BBC as it stands. It is clear from representations that have been made to us that the BBC is now in a situation where it is contemplating much more serious cuts in programming output and staff than was suggested in these reports made in December of last year. It has been forcefully suggested to us by the Federation of Broadcasting Unions that there is a real fear now of additional cuts and that these cuts might involve things as serious as laying off of staff. Initially, this would mean creative staff, people on short-term contracts, particularly actors, freelance producers and writers who work on the creative side of television and would be gravely affected by some of the things now threatened or suggested.

None of this has been said publicly, and I do not think it would be. If there were now to be a situation in which it was considered, for example, that the operation of BBC 2 was no longer viable because the service had to be cut back—and the view was taken that if the BBC 2 service was cut back below two or two-and-a-half hours a night it would no longer be a viable service—and the main emphasis were put on the maintenance of the one truly national service as the BBC sees it—that is, BBC 1—that would mean a considerable cutback in jobs and employment prospects and in the whole creative potential of public service broadcasting.

Similarly, if local radio stations were threatened—my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) will probably refer in more detail to that —there would admittedly be a saving of millions of pounds for the corporation in its present situation. But there would be an immeasurable loss by way of the local community service which would no longer be provided. That is a serious matter. The position, as I understand it, is that we can perhaps now look at various alternatives open to the Government.

How are we to tackle the problem of what inflation has done to the costs of the BBC? There are various ways. There is the possibility of a straight increase in the licence fee to the extent that the BBC wishes. It would be fair to say that, in view of the accelerating pace of inflation, to increase the licence fee to £9 and £18 respectively would mean that a number of cuts that have been made or are contemplated would still be effective. It is not a question of increasing the services or even maintaining full output, as it was a year or two ago. It is a question of treading water at that level of increase.

This is what is suggested. If it were politically possible to raise the licence fee by this amount it would still be cheaper than in most other European countries operating systems which have a considerable amount of public service broadcasting financed this way. The colour television service licence in Ireland is already £20 for the more restricted service of necessity provided by Radio Telefis Eireann. It can be said that it is a small country, the burden is spread less widely than the service provided and, therefore the licence fee is larger, but it is fair to point out that the amount actually collected is not so large in respect of the service provided when we compare it to the cost of a daily newspaper and the extent to which that has risen in price dramatically over the past three or four years.

The problems and anomalies come from the fact that the licence fee is in a sense regressive, that it is difficult and expensive to collect and that there is a wide measure of public resentment when a Government particularly a Government committed, as ours is, to counter-inflation policies suddenly impose some increase of this sort. It may be that the Government feel that they cannot concede a straight increase on those lines. If we were to dock £1 from each licence, monochrome and colour, that would be a considerable amount lost in terms of revenue over the next two and a half to three years. It would be, for example, a loss, by my rough and ready calculation and not on official figures but an informed guess, of about £50 million in an overall budget of about £500 million over the next three years.

If that were the case, how might the Government be making it up? There have been various suggestions, and the Federation of Broadcasting Unions suggested, when it came to see us the other day, that the Government might make up that amount in an action which might be politically more acceptable, raising the licence fee by a once-for-all grant-in-aid to a time-limit when the Annan Committee proposals have been discussed, or raising the borrowing powers, or something else, but inevitably that kind of budget will be needed if public service broadcasting—and that means the BBC—is to continue until 1978.

Some kinds of revenue service could be achieved with little legislation. Mr. Jay suggested in his article in The Times a levy on the rental and sales of television sets to supplement the licence fee for two or three years. It might be felt that that would be an innovation and—and it would be stoutly maintained by the BBC—that it would be a threat to the concept of the licence fee, the whole licence fee and nothing but the licence fee and a threat to its independence, but it would help finance those three years. Additional revenue raised in some such way will be needed.

I should like to say a word about the other end of the spectrum. We have talked of the great public service corporation disposing of millions but at the other end is a small area of concern. Before I came into the debate I was handed a telegram from Bristol which read:
"a group representative of community interests helping Bristol Channel TV meet today with Rediffusion executives and learnt that a board meeting on Monday is likely to decide the fate of the station. Stop. We urgently request you to ask Lord Harris to reconsider the terms of the licence so as to allow Bristol's own TV station to continue its valuable service to the community. Stop. We think we can persuade Rediffusion to continue to underwrite that experiment. Stop. Will you support us in our attempt to get the terms of the licence changed so that we can accept aid from other bodies?"
I shall have to reply that it would be out of order to go into this in detail now, but what I said about the BBC also applies here.

Those of us who have seen small experiments set up—one at Greenwich has already virtually folded and most of the others face trouble of one kind or another—will be concerned that, through Government inactivity, the experiments may expire before they are considered by the Annan Committee.

I could not pass a judgment, as a member of the committee, whether local community and cable television are good and deserve to continue but I am greatly impressed by some experiments in handing power and access to television to people in local communities, as seen in Bristol and Greenwich, and the same is true of other cable stations. Here we have a situation where the alternatives open to us which can be considered as ongoing by the Annan Committee might be put at risk by the financial situation and where it is in the remit of the Government to do something about it.

The Annan Committee wants to see how the present systems are operating, not how they are dying. It would be a matter of infinite regret if this long-delayed inquiry were to find that it had strayed into a sort of elephants' graveyard where sick broadcasting systems had come to die. That should not happen. We have to maintain as best we can the widest range of alternatives within broadcasting over the period in which the future structure of the system is to be arrived at. No proper synthesis of what we have at the moment can be arrived at by the committee or by Parliament if some parts of the system are withering on the vine meanwhile.

For example, the thought that local radio as the BBC has operated it is threatened is serious. I hope that the Government will stir themselves and intervene positively between now and 1st March to ensure that the future of public service broadcasting in this interim period when the whole structure is under review is properly safeguarded

6.16 a.m.

Order. I take it that the hon. Member for Newcastle-under-Lyne (Mr. Golding) wishes to speak now with reference to his subject, the Home Office and the British Broadcasting Corporation?

I gave an intimation of that to the previous occupant of the Chair, Mr. Deputy Speaker.

Before speaking about BBC licences, may I comment on the remarks made by my hon. Friend the Member for Derby, North (Mr. Whitehead) towards the end of his speech? Although I agree with much that he said, I disagree fundamentally with him on the question of local community television. It would be wrong for the Government to give in to the demands from the companies which run the community stations for a revision of licences.

My hon. Friend has not declared his interest as a member of the Post Office Engineering Union. I was not saying that the Government should give in to the demands made by the companies. I was saying that the Government should find a way to allow experiments to continue.

When I watched the spokesman for Greenwich Television in a television programme I found it disturbing that pressure was being put on the Government to introduce pay-TV and to increase the commercialisation of that station.

After declaring an interest as an Assistant Secretary of the Post Office Engineering Union, I would ask the Government to consider the alternative of experimenting in the area of public service local community television. That is the basis upon which local community television should operate. The less commercialism there is in broadcasting the better. I would much prefer community television to start from a public service rather than a commercial base. I should like the Home Office to talk to the BBC about the possibility of an experiment in community television for Milton Keynes or any area in which there is already a Post Office cable to provide technical facilities for such an experiment because I take the point made by my hon. Friend the Member for Derby, North that the Annan Committee has to review community television experience.

The present experiments are false because we have always known that there was no intention by those engaged in them to continue them without changing substantially the nature of the services. That is why I hope that the Home Office will continue to take the stand it has taken.

Turning to the main question of the BBC licence, we must face the fact that the BBC is in severe financial difficulties. There has been no increase in the licence fee since 1971. The licence fee was then fixed for a four-year period and that period is coming to an end. Therefore, the BBC is entitled to look urgently for an increase in income. We appreciate that the increase in the cost of colour television licence has helped, but, although last year the BBC roughly broke even, it now faces a deficit of £20 million. The effect of that deficit will be traumatic on the structure of the BBC.

As my hon. Friend the Member for Derby, North suggested, my interest is predominantly with local radio. I feel that the consequences for local radio will be severe if the BBC has to carry a substantial deficit.

I strongly disagree with the hon. Member for Berwick-upon-Tweed (Mr. Beith), who sought mildly to deprecate the introduction of local radio.

It is true that for those of us in the towns rather than for people in the country local radio has proved to be very beneficial. I believe it is one of the most interesting features of broadcasting at present and has done a great deal. Surely the Liberal spokesman on broadcasting should welcome local broadcasting rather than deride it.

Local radio is beneficial when the system is comprehensive, but when one area has two radio stations and another area has none at all, that can hardly be said to be satisfactory.

I agree with the sentiment behind that intervention. One of the worst features of the financial crisis is that there can be no possibility of an extension of BBC local radio or the likelihood of the BBC implementing the recommendations. of the Crawford Committee. I support the extension of local radio to the country as well as to the towns.

The BBC's income must be increased. I appreciate that some hon. Members, and, indeed, people outside the House, argue that first there should be substantial economies. We have to face that situation. It is unfortunate that publicity has been given to the cost of dresses used in lavish BBC productions. We must not under-estimate the effect of that publicity on public opinion. The hon. Member for Berwick-upon-Tweed mentioned Tony Blackburn's contract, and again that will have an effect when it comes to seeking an increase in the licence fee.

My hon. Friend mentions Jimmy Hill. Personally, I prefer Jimmy Hill to Tony Blackburn. I think these matters raise a question in people's minds. There is cause for concern on this score, but I believe that the argument about salaries paid to the top people is marginal in comparison to the total question. Even if a strong line were taken, the financial crisis would still remain.

General salaries in the BBC are not lavish. I understand that even after the 20 per cent. settlement in August, which rightly because they had not been consulted upset the Government, BBC pay is still not lavish for the generality of staff. Indeed, that 20 per cent. settlement was a patching-up operation after a period in which the public sector had been badly treated in pay terms. The BBC says that 97 per cent. of outside contributors are paid less than £2,000 a year from the BBC. Therefore, we must get the salary question in context. I am certain that there should not be savings by sackings or by dispensing with live artists.

I served on the inquiry by the Select Committee on Nationalised Industries into the IBA, and it became apparent that it was most important that we should do all we could to foster talent in television and radio. It would be wrong at present to disperse talent, to make it more difficult for artists to work and stay in their professions. It would be deleterious to the long-term interests of broadcasting.

I do not want as a viewer to see constant repeats. The BBC, in defence of itself, is saying, as a virtue, that it used so many repeats on BBC 2 at Christmas. That is a confession of failure. I do not want to see repeats. I want to see fresh productions and not a canned public service broadcasting system. The increase in income is essential if quality and diversity of programmes is not to suffer. It is essential that there should be no reduction in the service. We want to have the highest quality public service television and radio.

It is most important that no advantage be handed to commercial interests at this time. This is particularly true of local radio, where the contrast between public service and commercial service is most marked. Ever since you, Mr. Deputy Speaker, and I served on the Standing Committee which considered the Sound Broadcasting Bill I have listened long and often as a penance to the London Broadcasting Company commercial service. Day by day it appals me. Such a standard should not be tolerated in our capital city. At weekends I listen to Radio Stoke, and the contrast is enormous. Radio Stoke provides a service of which we can be proud; LBC we should be ashamed of.

It would be to the detriment of broadcasting if stations like Radio Stoke had to go out of business, leaving the field to companies like LBC. We have to face the fact that the strength of our broadcasting system is in having a public service which can set standards. It would be disastrous if that public service had to be reduced substantially because of the unavailability of funds.

If we want the service, we have to pay for it, and quality broadcasting is much more expensive than broadcasting where standards are not properly considered. I remember Mr. Wilfred Proudfoot telling up that all he wanted was 40 records and a record player for a broadcasting station. He had done it, and he was successful. Broadcasting can be cheap in both senses of the word. It can be cheap, and cheap and nasty. I accept what the Federation of Broadcasting Unions has said, that quality broadcasting is of necessity going to be more expensive. We should meet that expense.

The BBC would obviously prefer an increase in the licence fee. I believe that this should not be granted. I am opposed to the licence system in itself. I declare an interest: I represent people who are involved in the detection of licence evasion. They would lose their jobs if the licence were abolished. The licence is a poll tax. It is regressive. Any increase at present would cause great hardship to many people. The House should think carefully before agreeing to increase it.

I am glad that the Deputy Chief Whip is present at this unearthly hour. I must tell him that it will be very difficult for the Government Whips if the Home Secretary should try to put through the House a substantial increase in the licence fee in present circumstances. I believe that Members on the Government side are utterly opposed to a substantial increase at present. The Government must know that they will face difficulties if they try to introduce a substantial increase.

I appreciate that by international standards our licence fee is low. In France the licence is half as much, in Belgium it is twice as much, and in Denmark it is three and a half times as much. My hon. Friend the Member for Derby, North gave the comparison with the fee in Eire. I understand that television is cheaper than daily papers. Even so, the licence fee should not be increased.

Before we make long-term decisions on the financing of broadcasting we should wait for the report of the Annan Committee. In the meantime the Exchequer should make a grant without strings to the BBC. There should not be a tax on sales, because the unemployment figures are bad. The short-time working figures are perhaps even worse. It would make the situation worse if an additional tax were to be placed on consumer goods.

The BBC would no doubt resist being granted a sum to tide it over until Annan has reported, on the ground that it might take away its independence. However, until Annan reports I think this should be the solution.

It is important that we defend our public service broadcasting sector. I am certain that we should keep it—for the time being—within its present structure.

6.34 a.m.

I welcome the opportunity to participate in the debate, even though it is taking place as dawn is breaking, because what has been said here this morning will perhaps have awakened the Government—I mean the Government as a whole, not the Minister—from their somewhat complacent and somnolent approach to the crisis facing the BBC thanks to the financial difficulties which have been so ably outlined by hon. Members opposite.

The financial crisis facing the BBC is very real. The hon. Member for Newcastle-under-Lyme (Mr. Golding) used the word "traumatic". I take leave to doubt whether the trauma will be quite as much felt by the public at large as it certainly may be felt by those working within the BBC. Nevertheless, hon. Members on both sides will agree that there is a crisis situation which needs to be debated.

However, I felt as I listened to hon. Members opposite that this debate was taking place as a plea for special treatment for the BBC and perhaps not enough in the context of the national economic situation. The hon. Member for Derby, North (Mr. Whitehead) made some references to inflation, but he did not seem to accept that inflation, which is the great leveller for us all, should necessarily level down the BBC at the same rate.

I said that even if the BBC received the sort of licence fee increase it wanted it would imply a reduction in the services and not an expansion or even their full maintenance at the present rate.

I am glad to hear that the hon. Gentleman does not argue for expansion of the BBC, but the BBC must accept its share of the national economic problems.

I should like to make some constructive suggestions for the economies which the BBC could still usefully make, and for new ways and methods of paying for broadcasting. Let me first make some suggestions for economies which the BBC might make. Much could be done to share facilities with the IBA. The sharing of cameras on outside broadcasting units with the IBA at sporting and ceremonial occasions would be a useful economy. In recent memory, the investiture of the Prince of Wales at Caernarvon was covered by 30 cameras from the BBC and 30 cameras from the commercial companies. Surely they could have used the same cameras and had separate commentators. I understand that many suggestions about sharing cameras have been made by the IBA to the BBC, but the BBC has always spurned such approaches. It should swallow its pride and make economies in this respect.

Extravagances in salaries and payments and contracts to broadcasters could be avoided. We must see no more extravagant 20 per cent. wage rises of the sort which rightly provoked last summer furious accusations by the Secretary of State for Employment about a breach of the social contract. Their generosity surprised even some of the BBC employees, I think. With a communications background, largely in Fleet Street, I am worried that the built-in extravagance of the Fleet Street union structure could be creeping into broadcasting. One of the big problems of Fleet Street is that over the years some of the unions have established extraordinarily generous salaries—linotype operators on the Financial Times earning £200 a week, members of the National Graphical Association earning £97 a week. The way in which some of the unions in broadcasting, particularly the ACTT, are moving is introducing the same built-in extravagance to the salary structure of the BBC and the broadcasting companies.

Economies could be made in programme spending. There was a reference earlier to expenditure on dresses. These small indications of excessive spending have a serious impact on public psychological confidence in the way in which economies are being made in the BBC. The BBC must be vigilant to ensure that it does not throw away money on programmes which are offensive to the majority of listeners and viewers. For example, three weeks ago Nationwide screened a long item publicising the forthcoming book attacking the monarchy written by the hon. Member for Fife, Central (Mr. Hamilton). To give the maximum publicity to the hon. Member's notorious views on the Royal Family the BBC dispatched film units to portray him at Balmoral, Windsor and four other locations around London. That extravagance is helpful to the sales of the hon. Member's books but it is deplorable in a public broadcasting service whose duty it is to uphold respect and preserve the monarchy and other admirable institutions of our national life.

The BBC has a duty not to waste money on programmes the contents of which are repugnant to the majority of British people. This programme concerning the hon. Member's anti-monarchy propaganda must have cost the BBC several hundred pounds. Nationwide will screen another instalment of this costly programme next Monday. It is no use the BBC holding out the begging bowl in one hand while doing gold-plated hatchet jobs on the monarchy with the other, because the BBC will lose sympathy for the case it argues.

The expensive error of judgment by Nationwide, which could have been made by many producers, illustrates a much wider point on spending on television as a whole. The BBC television programmes cost some £90 millions out of the BBC's total expenditure of £140 millions. There is a general feeling, exemplified in a leading article in The Times of 28th November 1974, that this side of the BBC is overpaid, over-staffed and subject to rather loose disciplines of cost control.

Remarkable value for money is given by the external overseas broadcasting service of the BBC, which is run on a shoestring budget from Bush House. However, it is fair to argue that greater economies can still be made in the BBC television service.

It is unfortunate that the subject of the licence fee should be brought into the political arena. Nevertheless, in the short term I believe that this nettle must be grasped and that there is no soft option that can be taken. The Federation of Broadcasting Unions has put forward the idea that there should be a short-term once-and-for-all Government grant. I believe that such a solution is unaccept-

able. Why not impose a short-term onceand-for-all rise in the licence fee while considering long-term solutions to the problem of BBC financing? Government grants are unacceptable because of the fears about the threat to freedom which might be involved. We would do better to set a household rate for radio and television, payable on a quarterly basis, along the lines of the water rate or other domestic rates. This would avoid the great loss now caused by licence dodgers. People could contract out of the household rate if they could genuinely argue that they did not have a radio or television set. The number of people prepared to sign a form stating that they had no radio or television sets would be smaller than the number of those who did not pay their television licence fees. Such a household rate could be indexed, which would ensure that proposed increases were not constantly subject to a political decision by the Government.

That method is preferable to the continuation of the licensing system, which incurs much unpopularity when the rate is increased. It is preferable to the solution suggested by the frightful document "People and the Media", which proposed that a public broadcasting commission should be created to administer radio and television finance on the same lines as the University Grants Committee administers university finance. I noticed with approval that Sir Michael Swann, opposing the idea, said that the University Grants Committee was responsible for the steady erosion of independence in the universities. The BBC, quite rightly, is hostile to the idea of direct Government grants or finance. Sir Michael Swann said:
"Our fear is that direct Government finance would slowly, perhaps almost imperceptibly, but very surely, erode our independence".
The independence of the BBC certainly is worth fighting for.

If there is not to be a rise in the licence fee, the effects on the BBC will be drastic. With a deficit already of some £20 million by the end of March, no one can be anything but upset at the possible cuts which will have to be faced. Sir Michael Swann has spoken of massive cuts coming next year unless there is a rise in the licence fee, although I doubt whether those cuts would seem so massive from the point of view of those who watch television as opposed to those who make programmes or work in television.

Cuts are occurring everywhere in our national life as a result of the present economic situation, whether on a high, civilised pleasure plane of life, such as dining out, going to the theatre and buying books, or on an every-day level. People face real cuts in their standard of living. In common with many other hon. Members, at weekend surgeries in my constituency I hear heart-rending stories of people on small fixed incomes living in retirement who have had to give up their cars or have had to give up meat on certain days of the week because of the high price of food, and so on.

The fact of our national situation is that the cruel state of inflation cuts back all our standards. We are all reduced by the present crisis. Should broadcasting be exempt? I think not. It would be symbolic of the present age of austerity that the BBC, too, should be frugal.

Cuts in transmission time might bring home to people how serious is the present economic situation. The credibility gap over the three-day working week arose when the Government of the day, having cut back television time because, they said, the power crisis was so serious, immediately extended it again simply because there was a General Election about to take place.

If we are trying to communicate to the nation that people have to rein in their demands for increased wages and salaries and all share in the tragedy of inflation, a cut in transmission time will bring home to them faster than anything else the fact that the economic situation is one in which everyone shares.

In the long term we should look for new methods of financing. In the short term, if the BBC can persuade the Government that it has done everything that it can to create the kinds of economies that I have discussed, perhaps it should have a short-term rise in the licence fee. But there is no soft option, and probably there will have to be cuts. The BBC should also share the suffering that the nation is enduring because of the present inflationary situation.

6.48 a.m.

With the leave of the House, I rise again to reply briefly to this debate.

The purpose of the contributions which have made, though I am not sure how far the hon. Member for Thanet, East (Mr. Aitken) will dissociate himself from this remark, is to urge upon the Government some decision which will relieve the difficult economic circumstances in which the BBC finds itself. Contrasting ideas have been put forward, but the central matter for consideration is the application of the BBC for an increase in the licence fee.

It is for the Government to determine what should be the level of licensing, though it is for the BBC to determine what it does with the money which is made available. There should be no blurring of the distinction between the two. The Government have consistently said that it is not for us to determine how the BBC spends its money, but when it applies for a substantial increase its own behaviour over costs affects the atmosphere in which a decision is made. My hon. Friends were right to point out that in certain respects over the last few months the BBC may have made a decision difficult. Nevertheless, we hope to be able to announce a decision as soon as possible.

My hon. Friend the Member for Derby North (Mr. Whitehead) suggested that the Government had been dilatory. When the present fee was established in July 1971, the BBC gave assurances that it would be able to manage until 1975, subject, of course, to inflation. It was only last July that the BBC approached my right hon. Friend about an increase, but it was always intended that a decision would not be made until the early part of this year, so there has been no delay in responding by the Government.

We have to consider carefully what are the justifiable claims for the increase. My right hon. Friend has been having discussion with the BBC about possible economies that it would make. Recent economies in December amounted to £1 million and there are proposals for another similar amount. But these are not large in relation to the BBC's total expenditure. The central issue still is whether the BBC can meet its existing commitments or will have to cut them still further. There are three alternatives: first, no increase at all or practically none, with savage cuts; second, the full increase; third, a compromise which would entail some economies of scale. The Government are considering which course to pursue.

One suggestion is not to increase the fee, which would have regressive effects, especially upon pensioners, in a time of rising inflation, but to make a direct Government grant to cover the BBC's deficit. The BBC is hostile to that idea, for reasons that it has often stated—that any precedent of direct Government financing would lead to the possibility of greater political interference in its decision-making. Whether we as politicians would agree that that was inevitable, whether it would not be possible to find some intermediary stage, as with the universities, is a matter for discussion. Indeed, it is certainly a matter for the kind of consideration which the Annan Committee could give to just such a proposal.

It is really this that would deter the Government from making any contribution at this stage. The issue of principle is one of very considerable importance, which ought to be considered at some length before any precedent is set, and we would defer such a decision until consideration of the Annan Committee's proposals.

How carefully have the Government weighed, on the one hand, the BBC hostility to a grant and, on the other hand, the hostility not only of pensioners but of my hon. Friends on the Government side of the House to an increase in the licence fee?

I always take with the greatest care any of my hon. Friend's threats and military advice about the reaction of my hon. Friends. I know of his extensive sources of information about their reactions. Of course we pay attention to what the reaction would be, in the House as outside it, to any increase in the licence fee. I am not committing the Government in any way to what would be their reaction to that point. But it would be difficult, for the reasons I have given, to go along with my hon. Friend's suggestion that the only way in which the matter should be dealt with is by a direct Government subvention, quite apart from all the considerations of the present stringency in relation to public expenditure. It would be a strange thing if at a time when we are cutting public expenditure over a wide range of programmes we were to make such a contribution to the BBC on quite a substantial scale, even if it were only a once-for-all grant. Therefore, I do not wish to leave my hon. Friend with any feeling that that is a way in which we could approach the matter.

I cannot at this stage go further. I hope that it will be possible in a short time to be able to make some announcement. We have the matter very much in mind. But for the moment all I can say is that I shall bring to my right hon. Friend's attention all that has been said in the three speeches we have heard in this debate—although the contribution of the hon. Member for Thanet, East was really directed to Sir Charles Curran, who no doubt will read it with great interest, and perhaps profit.