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British Broadcasting Corporation Licence Fee

Volume 983: debated on Friday 25 April 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and Question proposed, That this House do now adjourn. [ Mr. MacGregor.]

12.48 pm

I did not expect to be rising at this hour, nor, I expect, did the Minister of State, who is to reply. I say at the outset that although he is used to long speeches from me in Committee, I propose to speak at normal Adjournment debate length today, and I hope that we can all get away at a reasonable time.

The House meets today under the shadow of great events, and hearing the noise of distant thunder. The event will be interpreted around the world from the British viewpoint by the overseas ser- vices of the BBC, and their deeper complexities will be probed here for the internal British audience by the news and analysis programmes of the corporation.

Therefore, this is not an inappropriate moment to look at the consequences of the severe financial cuts which the BBC is facing as a result of the decisions that the Government took last week.

Ironically, these cuts are being made at a time when the BBC is still regarded around the world as a pre-eminent source of potency and influence, not simply within British society but as a British influence within world society. During the very week in which the Government took their decision, the American newspaper the Christian Science Monitor published a supplement on British life. It singled out the BBC as first of all our institutions to win worldwide respect and admiration.

Perhaps I am not the person that the corporation would choose to put its case today. In my time I have been a candid friend of the BBC, and that great and sometimes over-mighty organisation likes nothing less than a candid friend.

I remind the House of what the Annan committee said when it began its examination of the BBC—an examination which contained many criticisms but which, on the whole, was positive and favourable. It said:
" The BBC is arguably the single most important cultural organisation in the nation. It has over many years raised the level of taste and discrimination; such has been its success that austere critics attack the BBC for not raising it higher. We would wish to pay it the compliment of judging it by the very high standards which the BBC itself has set.... The BBC has been a great patron of the arts. More than any other single influence the BBC has transformed Britain from a Land ohne Musik to a great centre of music making; and the orchestras which the BBC supports have improved the quality of music in the regions.... Today the BBC, and not the West End, is the first goal of the dramatist and playwright; and some would add that it, rather than Fleet Street, is the centre of national journalism."
I plead guilty to being an austere critic and I shall continue to be so in the future, but I am seriously alarmed by the current crisis that the BBC faces.

I had sought on a number of occasions, as had my hon. Friend the Member for Grimsby (Mr. Mitchell), to get an Adjournment debate before the decision on the cuts was taken. We received many representations from the principal unions within the corporation and from many other people, particularly in the regions and the East Midlands, from which we both come. Many of my hon. Friends from Scotland and the North of England in particular have raised with us their serious concern about the extent of the present cuts.

The present crisis stems from the fact that the BBC, not for the first time, has gone to the Government of the day—and my own Government were equally, if not more, culpable in this matter—and asked for the licence fee to be based upon assessments of inflation and staff and other costs over the coming years. That request has not been met by the Government. The corporation went to the present Government this year to put the case for a licence fee of £40 or £41. It was given one of £34 which is supposed to last for the next two years, regardless of the level of inflation, because there is no indexing of the fee.

Even without the rate of inflation that we have—and most of us gloomily expect it to rise over the next year or so—and even without the pay levels which may be recommended to the BBC by the CAC this month, the £34 allocation would have been inadequate for the kind of service that the corporation currently is expected to provide. We are talking of something which costs the householder 9p a day. Had the BBC got its £41 fee, it would have cost the householder lip a day. In those simple terms it is a small enough sum, but in terms of a poll tax levied on the householder which is unpopular with Governments and disliked in the country, it is an issue which a Government intent upon financial retrenchment find it hard to accept. That has been the case with many Governments in the past.

The licence fee is something to which I became converted fairly late in life. I believe that it is the best way to finance the BBC. However, its great weakness, irrespective of who is in Government, is its inadequacy during a time of rapid inflation. Under our Government, when inflation went through the 10 per cent. and 20 per cent. barriers, the position was precisely the same, and this is the essence of the corporation's difficulty.

Simultaneously, the only competitor in our duopoly system is bloated with profits and replete with funds, and in many ways this is driving up the overall costs of programming and making it very difficult for the corporation, as long as it follows its present strategy, to compete effectively right across the board. These remarks and some others were made recently by the outgoing chairman of the BBC in what I suppose we must call his " Swann " song at the Royal Television Society. Sir Michael made the point that the commercial rival with a single channel was far better funded. He was reproved for that by the current chairman of the Independent Television Companies Association, who said that there were lean years ahead with lean profits and years of loss.

Simultaneously we had the announcement of a record month of revenue for the ITV system—£50 million, which is an increase of 48 per cent. over the same month last year, recorded in April for March 1980. That means that cost is no problem to ITV because it can pay, pay and pay again. There is an abundance of Danegeld there. The wage claims in ITV, the current level of salaries and the current level of film costs all have their effect within the broadcasting system as a whole. That has made things doubly difficult for the BBC.

I submit that this is probably the greatest crisis not only for the BBC but for British broadcasting in general, since the debate about " Broadcasting in the Seventies " and the statement put out by the BBC in 1969. The one difference between that crisis and this is that at the time of the previous one there was a major debate in the House and in another place on the implications for broadcasting. We had an intervention from the then Leader of the Opposition, the right hon. Member for Sidcup (Mr. Heath), who made a most powerful contribution. We have had no such debate, in either Government or Opposition time, during this crisis. I fear that this Adjournment debate is an insufficient substitute for the kind of deeply concerned parliamentary discussion that is now needed about these matters.

The scale of the revised cuts agreed by the BBC governors on Thursday of last week makes some concessions. Here and there things are restored as a result of public pressures, regional and cultural pressures and some pressures from Parliament. However, the central part of the package of £130 million of cuts and postponed expenditure remains.

I remind the House of the severity of these cuts. First, we must remember that the BBC has transformed Britain into a great musical centre, yet it is axing live orchestras, including the Scottish Symphony Orchestra. A saving of £90 million is being achieved by deferring capital projects and developments. There will be a saving of £12 million in network television, with 405 posts lost. There is a saving of £4T million in network radio, including the slashing of the hours of production of one of those curious British institutions—Radio 3. There is to be a cut in local radio of £2 million. There will be cuts in news, engineering, personnel and in the regions, as well as the severe blow being felt in English regional television and radio. Residual regional radio broadcasting will cease, first of all in East Anglia, then in Southwest England and no doubt elsewhere later on.

That means that areas of broadcasting, which are not touched by others, which cannot be dealt with by the BBC's single competitor and for which there exists no other organisation capable or charged with the duty of producing, may cease altogether. The consequence of that is very serious. It means that the radio services which are produced only by the BBC, because only the BBC has a network service of any kind, are the ones that will be the most severely damaged. It means that in both regional radio and television there will be blows affecting the whole nature of the service provided, and, of course, there has also been the hammer blow to the orchestras.

The corporation has attempted, with some ingenuity, to a save a little of everything. It has spread itself very thinly over the years, and now the overall pattern of programmes remains but it is so thin that in many areas one can see through it. The difficulty with the programmes that remain is that in some areas, even with the savings and concessions that have been made, they simply underline the extent of the economies.

A possible answer, as some critics have remarked, is that the BBC should no longer try to do everything. That point has been made forcefully by critics such as Mr. Richard Last in The Daily Telegraph and by a number of other newspaper critics. It has been echoed from time to time within the corporation.

It was not a malevolent outside journalist, but Mr. Stephen Hearst, a distinguished radio executive, who said recently in an article in Encounter:
" We need to recognise that the BBC institutional interest and the public interest may not always be the same."
His article went on to quote the example of large sums of money being spent on sports coverage that duplicated the sports coverage of 1TV at a time when ITV could much better afford that coverage. If that is a fault, as I think it may be, and a fault that was pointed by the Annan committee, which made certain suggestions about the likely future development of BBC radio and television in times of high inflation, it is a fault of which hon. Members are also guilty. We have left the BBC in a position where it does not know, and has never had any guidance from or dialogue with Parliament about, what should be its role in these areas. It is asked to do everything. It believes that it should do everything.

In some cases, because of its comparative weakness and its growing financial weakness, it remains in areas for institutional as well as cultural or broadcasting reasons. That comes about because there has never been in the House of Commons an intelligible broadcasting debate. We tend to take seriously the protestations of the BBC and the fact that it is crying " Wolf " when it is partly being devoured by the wolf itself.

An example is local radio. The Annan committee suggested that local radio should go to a new authority—that this was an area in which the BBC simply could not afford to expand, as it is still attempting to expand, at the cost of some other services. As long as the corporation feels as vulnerable to the political process as it is, and because of the fact that the fixing of the licence, inadequate as it is, is now done by the Government, it will pay a disproportionate amount of attention to the views of local Members of Parliament because it feels that those Members of Parliament must be rallied behind it as a pressure group for a comprehensive service.

An executive of the BBC was quoted in a long article by Mr. Graham Taylor about local radio recently in the Sunday Telegraph. The article stated:
" Suppose, on the other hand, the BBC were to pull out of local radio. Soon, the argument goes, there would be 110 commercial stations all giving their MPs an easy ride and, before you knew where you were, the commercial boys would be complaining that Radio I was knocking spots off them—and you'd have a 1955-type Tory pressure group fighting to hand over Radio I to the commercial people. It is a view shared by some of the shrewdest minds at Television Centre who were once in favour of getting out of local radio altogether. 'It's the most primitive form of self-protection racket,' agreed one, ' but we simply can't leave that flank unprotected '."
I understand that view. That is the problem. As long as the corporation feels that it has to fight this extended territorial battle with inadequate resources, but has to protect the source of those resources due to its relationship with the Government and the ruling party of the day, there will be this dilemma. That is at the heart of the suggestions that I wish to make.

Other hon. Members may say that other questions arise from my comments that should be answered, not merely on the funding of the BBC. Those questions include whether local radio, as the BBC intends, should be absorbed into some kind of federal network, whether the musical services that it provides and the orchestras that it has subsidised for so many years should be a charge on the licence fee and upon the corporation, and similarly with education.

Another question is whether the pop services that are maintained and have very high listening figures are properly contained under the corporation's umbrella. I believe that they are contained under the corporation's umbrella for a good reason. As long as the BBC can claim to be a comprehensive national service, it knows that it can go to the Government with a strong case for a licence fee reflecting that range of interests. If it was ever dragooned into a position where it supplied only minority interests, it would be weakened in its argument about the licence. Yet the paradox is that it is precisely those minority interests that the BBC not only does better than anyone else and to the exclusion of everyone else but only the BBC can do. That is the difficulty of the present position.

Before asking what should be done about all these matters, I should like to comment on the great disparities in salaries and the resultant problem for costs. We are now awaiting the pronouncements of the Central Arbitration Committee about BBC salaries. The BBC has made an offer of 15 per cent. across the board. It should be realised that, in many areas, as a result of the last pay settlement in ITV, the gap is very great. It varies between 30 and 60 per cent. I have heard of some cases involving journalists where the gap is almost 80 per cent. A relatively inexperienced producer in ITV can earn £20,000, compared with half that amount at the BBC. The difference for secretaries is about 20 per cent., for technical operators nearly 30 per cent., for videotape editors nearly 20 per cent., for costume designers nearly 40 per cent., and for technical operating managers nearly 50 per cent. This means that the corporation finds it hard to keep staff. With the setting up, as we hope, of the fourth television service in a couple of years' time, following the legislation now going through the House, there will be another pull on talented and skilled personnel to leave the corporation.

One of the consequences of the high inflation that has damaged the BBC licence fee provision is that wage costs are rising much higher still and the pace is being set by an organisation with which the BBC cannot compete. That is ITV. As long as this position remains, and as long as ITV is able to pay, at all stages, higher prices for skilled personnel and to bring over from the BBC people whom it has had no share in training—it is BBC practice to bring up people from the start of their careers—the position of the BBC will be weakened.

What should happen now? My suggestion, which I commend to the Government without the slightest belief that it will be embraced by the Minister, is that the Government should have set, and should still set, in the light of inflation this year, the £40 licence fee rather than the £34 licence fee. The corporation is being made the catspaw of the present public expenditure squeeze, when it is not a recipient of public expenditure. It is a recipient of the charge for the service that it provides. That charge is not set by it. It can make representations, but no more. The charge is set by the Government of the day. Yet, as I hope I have made clear, the BBC has to face other assessments, calculated on the level of inflation and the level of competition that affect its own coste. The CAC salary awards are a case in point. If, even now, in some amazing moment of enlightenment, the Government were to agree to a £40 licence fee, it would be only a temporary assuaging of the problem.

I am calling for various actions by the Government. The first is for the Government to examine, possibly by a study in the Home Office, some new methods of allocating the licence fee and new methods of paying it. I confess freely that the Annan committee failed to deal adequately with this matter, partly because a number of us, including our chairman, were obsessed with the weaknesses of the University Grants Committee. By new methods of allocating the licence, I mean the establishment of some kind of buffer body that would make recommendations both to the Government and to the corporation about what should be the level of licence fee over a given period of two years.

The figure imposed by the Treasury on the corporation no longer represents, and did not do so under the Labour Government, a realistic assessment of what the BBC naturally needs. A number of proposals have been trailed about new ways of paying, some of them by Sir Michael Swann recently. I have never been able to understand why the licence fee could not be paid on a quarterly basis with electricity bills.

Electricity bills now go into almost every house. By definition, one must have electricity before one can run a television set. Therefore, one would need only to have some sort of exemption claim which allowed the householder to produce evidence that he did not have and did not use a television set. That would be no more cumbrous than the amazing way in which the scrutiny vans now go round, at very great cost to the corporation and at great expense to the Post Office, trying to check up on who has paid the licence fee and who has not. Many millions of pounds are lost either in evasion or in the cost of detection.

I suggest to the Government that we really ought to look again at whether the licence fee, one and indivisible, is the only form of revenue that the corporation should have. I am well aware that some people in the BBC have been calling for forms of pay television—a sort of box office service that they could also run. I am dubious about that. I do not think that pay television is something into which the BBC should wander. But I believe that there is a case for having a separate licence fee for the radio services.

It looks now as though, in the determination to preserve a little of everything, the revenue simply will not be enough to provide the kinds of services that my hon. Friends and I would wish to see right across the board. That means that we might ask for a secondary charge, a subsidiary charge, for radio. Some of us on the Annan committee suggested two separate corporations, a radio corporation and a television corporation, so that radio could get the priority it deserved within the overall planning of the BBC. Even if that is not possible—and neither the previous Government nor this one accepted that recommendation—a subsidiary charge for the radio services, given the peril in which they are now placed, is a question that the Government should consider and look at very seriously.

I suggest, further, that we ought now, at long last, in these times of financial stringency, to acknowledge other responsibilities for orchestras, for some regional programmes, for some kinds of very local radio and for regional programmes. Whether or not it is correct that the BBC has maintained so many orchestras for so long and at such great expense, plainly that situation will not continue now. Historically, it developed because of the deliberate policy of Sir John Reith. The BBC built up a great system of orchestras because that was the best way in the 1920s and 1930s for it, as a radio corporation, to produce its own music.

The situation is very difficult now, and over a period of time it has been quite hard to slot the radio orchestras into radio programming, let alone into television programming, and yet the radio orchestras represent a great body of cultural talent which is now to be dispersed and scrapped. There is a case for putting the charge of maintaining orchestras which will be used by the BBC partly at least upon the Arts Council, and similarly for putting the charge for some of the educational programmes, from which the BBC now seems to be in retreat—one thinks, for example, of the cuts in the budget in Scotland—upon the Department of Education and Science, in precisely the same way as the DES pays for the Open University programmes.

The Minister will say that that would mean an increase in taxation and that the Government are committed to a decrease in taxation. I suggest to him one way in which the Treasury revenues could be increased by a larger amount than this additional form of subsidy would require. That would be by looking at the basis of the television levy.

We heard recently—and something has just come from the Public Accounts Committee to this effect—about the amount of levy revenue that has been lost over the years by the Government and the taxpayer as a result of some of the companies being allowed to get away with a depreciation allowance for their equipment. I am still waiting to hear from the Minister what was the exact sum involved, but it would pay for quite a few orchestras for quite a few years.

For the last six years the levy has been charged upon profits and not upon turnover. Ten or 12 years ago I was in favour of that. I did not realise at the time how easy it would be to fiddle the system. When I look at it now, I have a certain sympathy for what Sir Michael Swann said at the Royal Television Society the other day. He said, in effect, " If we spend £6 million on a programme, that is £6 million of the licence fee. There is no other way in which we can do it. But if ITV decides to spend £6 million extra to smash us out of the ground in one of these competitive arenas, £5 million of that will be remitted in licence levy, so that the taxpayer will have paid £5 million and the company will have paid the other £1 million."

That surely cannot be a fair means of conpetition when the corporation is in such financial straits as it is and the companies are as flush with cash as they are. I suggest to the Minister that as there is some merit—as I believe there is—in the idea of financial support coming from the Exchequer in various forms for cultural activities such as the orchestras, perhaps through the medium of the Arts Council, the money could be recouped by a change in the basis of the levy.

We shall hear next year, of course, as we have heard this year, from the bosses of ITV that hard times are coming, particularly with the setting up of the fourth television channel. But, as I have already suggested, that fourth channel will bring additional problems for the BBC as well as for ITV. It will mean an additional drain on BBC personnel. It will mean an additional drop in the number of people who watch BBC programmes, so that for the BBC also there is a problem here.

Looking at the system as a whole, I do not believe that those who follow us in this place, and who look back on our broadcasting services over the last few years, will believe that it was right for us to go through the 1980s with a broadcasting system neatly divided into two halves, one overburdened with money and the other overburdened with debt, and where the latter service, the corporation, was the one which traditionally in this country set the high standards—even if in some respects now the ITV system has caught up or perhaps even passed it.

We have to do something to make sure that the finance that is generated by broadcasting helps to pay for the whole of broadcasting. I hope that I have made some suggestions to that end.

1.17 pm

I am most grateful to you, Mr. Deputy Speaker, for calling me and to my hon. Friend the Member for Derby, North (Mr. Whitehead) for this special guest appearance on his show. It is indeed a pleasure—given the fact that he and I have diverged in our opinions on the Open Broadcasting Authority—for me to agree so wholeheartedly with every word that he said and with the sentiments that he expressed so eloquently about the corporation and the disaster looming over it because of the cuts.

The tragedy is that a subject so vital, which affects the lives of everybody in this country, directly or indirectly, has to be raised in this fashion at this time, to this tumultuous audience, by Back Benchers when the Government have not given time to discuss what amounts to the consequences of their own dirty work. The licence fee that they have fixed is now forcing quite disproportionate and savage economies on the BBC, and those economies will produce irreversible damage to that organisation and to cultural life in this country.

An orchestra, once cut, does not get restored and does not re-emerge fully armed from the head of some other organisation. A specialised unit which is cut back takes a long time to build up again to full strength. The cuts in the news coverage of an increasingly complex, tortuous and difficult world leave us all the poorer and less adequately informed to face the times that lie ahead.

The cuts in training that are being made mean a deterioration in the quality of the service in future years, and a deterioration in that concern for excellence which has always characterised the BBC. They also mean a decline in a field in which ITV has never borne its share of responsibility—given the very rich finances of ITV—for training for the industry as a whole. Most importantly, the lowering of morale that is the consequence of these cuts and the Government's disregard of the needs of the corporation in fixing this inadequate licence fee mean that the drift to ITV which has been going on is in danger of becoming a mass exodus, and one which must undermine the efforts of the corporation by taking away people of quality at all levels and in all sections of the organisation. That will be an accumulative danger in the years ahead.

The BBC is kept under this tight restraint by the licence fee, but ITV will continue to be profitable just as it has been in the past. The prognostications of gloom are due to the fact that the new contract bids must be put in. This is obviously an attempt to warn off competitors for the bids rather than realistic assessment of the economic situation. ITV will continue to be profitable and to force the pace. The Government believe in a selective incomes policy. They select the strong to give way to and the weak to clobber. ITV will be in a position to force the salary pace, and the BBC will lag even further behind under this kind of constraint.

The cuts, which are necessary as a result of the failure to increase the licence fee to the realistic level that inflation would impose, are wrong generally. The cuts which are going on in Government and local government service are also wrong. However, they are disproportionately harmful when applied to a cultural media organisation, because the skills involved are transferable. People will leave because the cuts operate crudely and viciously in such organisations. They cause harm to an indefinable aspect of our lives—to our cultural and educational processes. They make us all intellectually the poorer.

It is tempting for me, having worked in independent television and never having felt easy with the kind of elitist, almost Reithian, role of the BBC, to join in a chorus of criticism at this juncture. When my hon. Friend was speaking, I felt that the fact that he singled me out of the crowd around him to address his remarks to meant that he was aware of this dichotomy in my mind between populism and Reithianism. But it would be wrong for someone like me to join in the atmosphere of witch hunt which is unleashed by cuts.

Cuts turn section against section in an organisation and in society at large. They turn interest against interest as each struggles to avert the weight of cuts from itself and to divert them to someone else.

Radio 1 says " We have the audience. Let Radio 3. which appeals to a minority, take the weight of the cuts." News tries to pass them on to culture. The regions say that London is over-manned, that the Television Centre has too much money spent on it and that they, the regions, need the money. The producers turn against the administrators. Minority programmes say that too much is spent on big sports deals, the Eurovision slush contest or the mammoth spectaculars.

That is the kind of atmosphere that cuts breed. They create a climate in which everybody tries to shift the impact of cuts on to other sections and in which people tend to work out old grudges. People outside the corporation say that the corporation is over-manned, that they do not like this kind of programme or that money should be spent on that kind of programme rather than on the alternatives. All these old wounds and sores are reopened. The whole unity and coherence of the organisation is undermined by this internalising process of bitterness that cuts create.

However, there is no point in this kind of argument. The BBC has many roles and functions. One of those roles is to provide good, popular television or pop radio for those who want it. The corporation also has to provide minority programmes—culture and education—which appeal to minority groups who have no alternative. To cut such programmes now with no alternative means of support is a crime.

Without such support, the orchestras will cease to exist. There might be an argument for saying that the orchestras should be transferred to some other body. But, until that body comes forward and the other organisation is provided, it is a crime to slash them in the way that they are being slashed.

Minority appeal programmes, popular programmes and culture come under the BBC's rubric of public service and it is indispensable. I want to avoid the argument of sector against sector, which is the product of cuts, and I hope that the corporation will also avoid it.

I want to consider briefly a preoccupation of mine—the impact on the regions. Obviously to a non-London Member regional services will be of prime concern. Although some of the weight of the cuts has been taken away from the regions, the cuts that have been made are still substantial: a cut of £2 million in local radio involving the loss of 72 posts and a cut in English regional television of £2·2 million involving the loss of 90 posts.

Our society has always had a desperate need to decentralise—to break the focus on London which is a characteristic of our national life. I am referring not to career patterns but to many other aspects of our national life. We need to break that stranglehold, to decentralise and to give the regions a flourishing, competing medium as a stimulus to local life, politics and interest. That comes from the media presence and competition between the media. We need to shift the focus away from London.

The BBC has always moved too slowly in the direction of reflecting life in the regions. London is of far less importance to people in the regions than the role that it plays in the BBC. We need local focal points which are centres in their own right. We need independent concentration of the media on local needs and information, not as offshoots of some empire centred on London as though they were district commissioners in remote parts of India.

Over the past decade, things have improved with the growth of local radio and the developments that have taken place in regional television. But they have not improved far or fast enough. That fragile process, which is important to the regions, will be reversed by these cuts.

For instance, Radio Humberside has an important role in an area which is isolated and divided by the Humber. Radio Humberside will suffer a cut of about an hour a day and a cut of about 10 per cent. in its already very small staff of 34 to carry out its obligations to a huge area. The programme allowance, which pays the freelancers, the programme costs and the coverage, is to be cut by one-fifth.

My fear is that the commendable effort that is now going on to make Radio Humberside a two-centre station will be endangered. Radio Humberside, because it is in an area with different focal points, should be a two-centre station—one in Grimsby and one in Hull—providing programmes and coverage from Grimsby for Grimsby. If it is to have any impact on local life and interests, it must serve the area in that fashion. The progress which is being made by setting up a studio in Grimsby will now be undermined—possibly even reversed—by the imperatives of economy which these cuts are forcing on local radio.

Local radio public service broadcasting has a very important role in the locality. If it is important at the centre, it is important in the regions and the localities as well. BBC local radio, even when it competes with commercial radio, provides a different kind of service for a different kind of audience, and the competition itself is important.

Therefore, it is no use arguing that BBC local radio can be phased out and commerical stations can take it over, because the two are very different animals. If one changes the nature of finance, one changes the nature of the beast. I want to keep the kind of service that BBC local radio is providing. It is an increasingly important service in our area, isolated as it is. We should expand it and not cut it back in this fashion.

Similarly with regional television, where the Grimsby area is served from Leeds. We now have the benefit of some 90 half-hour opt-outs per week. These are indispensable if one is to be able to serve local interests and to reflect local life. People want that on television, as well as the news and the latest entertainment and plays from London. They want to see something of their locality on television. We now have only 90 half-hour opt-outs. In itself this is not enough. It is not enough to build up a flourishing nucleus of talent and ability to cover the region. That is to be cut back.

The original proposal was to cut these programmes back to 50 by about 40 half-hour opt-outs. Now, in deference to the kind of pressure which Members of Parliament, among others, and local interest groups have been bringing on the BBC, 20 of those half-hour programmes are to be restored. In other words, it is to be cut back to 70 from 90. But the staff cuts envisaged in the cut of 40 programmes have not been restored; so overstretched resources, already struggling, will become even more overstretched to carry out the obligation, even the partially restored obligation, which the BBC has to the regions.

This is a betrayal of the BBC's responsibility to serve those regions. It is not the BBC's fault. It is a betrayal forced upon it by the licence fee, which stops the BBC from doing what it wants to do, I think, and what it certainly should do. It should shift the emphasis towards the regions and provide in the regional centres competition for regional ITV companies which are based there and another regional focus for news and current affairs, entertainment and local information—again, a programme which can bring about a substantial change in the national life of the country, which has for too long been focused on the great wen and which has now been cut back and reversed by these cuts.

This is going on in the regions with local radio stations all over the country. It must have a disastrous effect on morale in the organisation as a whole and a quite disproportionate effect on morale in regions which have already been outposts where some of the people working regard themselves as exiles from the mainstream in London. What will be the effect upon their morale of this kind of cut in their programme effort and programme capability?

Above all this hangs the further fear that this will not be the end of the cuts story and that, because of the rate of inflation and the financial situation in which the BBC finds itself, there will be more cuts, so morale will be disastrously affected by the situation.

Our central preoccupation must be how to stop the effect of all this on the BBC. One suggestion, which is a temporary bridging suggestion, to avoid the full impact of these savage cuts is that the BBC should be allowed to borrow to continue to carry out many of the services which are now being cut. This could be helped by an announcement that the licence fee will be increased to keep pace with inflation, to the level at which inflation should put it, and an increase which will fill in the disastrous gap which is now occurring retrospectively.

Now that this situation has arisen, it is important that we should seize the opportunity, as my hon. Friend suggested, to decide exactly what to do about the question of the licence fee, a question which has for too long been postponed and which has undermined efforts to decide what the size and shape of the BBC's finances should be.

The BBC has always seen the licence fee as a sort of constitutional guarantee of independence—as a rock on which the BBC can build an independent existence. However, when inflation is getting worse and the costs in the media are increasing at a disproportionately rapid rate, the licence fee becomes not a guarantee of independence but a leash that is held ever tighter until it can strangle—as it is strangling now—the organisation whose independence it is meant to guarantee.

Governments do not want to face the unpopularity of a hefty increase in the licence fee, because they know the chorus of protests that would be generated by such an increase. I have to blame also the previous Labour Government, because they did not increase the fee to the level to which it should have risen. I am sure that the Minister of State will not play party politics by making that sort of reply. We concede that the previous increase was inadequate.

The licence fee is inadequate and regressive, falls heavily on pensioners and the poor and is becoming too heavy a burden. The arguments used by the BBC in an attempt at popularisation, namely, that the service costs 9p a day, are true enough, but that is not how the licence fee is paid. It is paid in a yearly lump, which is much more painful than 9p a day. Anyway, many people say that for 9p a day they are getting programmes that they do not want and they would pay 9p a day to have them taken elsewhere. That sort of approach by the BBC will not persuade people.

Because of the inability of Governments to increase the fee in proportion to the rate of inflation, and because of the inadequacy of the fee as a means of finance—it is regressive and a particular burden on the poor—we need to provide a form of index-linked finance to take the whole business out of the political arena and reduce the dependence into which the BBC has been forced.

The cuts are only one aspect of the dependence that has been forced on a so-called independent organisation which has to appeal desperately to the Government for an increase in revenue. Some members of the Government are not reluctant to shoot off their mouths at every opportunity and criticise and attack the BBC publicly in a most humiliating and wrong way.

The BBC's dependence, through the licence fee, and that sort of climate in the Government will produce the swishing sound of horns being drawn in and an increasingly cautious atmosphere in news and current affairs coverage which will be harmful to an independent organisation.

For all those reasons, we have to consider an alternative to the licence fee. Everyone has his own alternative. Some will suggest that there should be commercials on Radio 1 and will ask in what sense it is distinct from commercial radio anyway. The BBC would answer that such a move would be the thin end of the wedge.

We must seize the opportunity to open up the whole argument and to work out a method of finance that will guarantee the independence of the BBC and an increase in its income proportionate to the increase in inflation and the BBC's costs, so that it can continue to provide the services that we have a right to expect.

I am attracted to the idea of some sort of buffer organisation that could assess the needs of the BBC and assess impartially whether it is fulfilling those needs and whether there are economies to be made. The present standard of economies is totally inadequate. What happens with savage and sudden cuts such as these is that bureaucracy—which might well be too large and dominant—protests itself. It becomes more important because it is the machinery through which the cuts are carried out. It safeguards its own position. More bureaucracy in administration, decision-making and procedures is needed just to make the cuts.

The present climate will not produce healthy cuts. We need a buffer organisation which can see what are the responsibilities of the BBC, the extent to which it is able to carry them out, the extent of the increase necessary to enable it to carry them out and whether it carries them out efficiently.

I am attracted by the idea of a buffer organisation—perhaps like the University Grants Committee—which is independent of Government imperatives. If Members' salaries are to be fixed by a committee making independent recommendations, what is sauce for the goose is sauce for a flock of ganders. That is particularly important in an organisation such as the BBC. We need an organisation which will determine the priorities and allocate to the BBC the finance necessary to carry out its obligations to the public.

Above all, it is important to take this decision and act quickly to give an increase in the licence fee to counter the current cuts, which will be so disastrous to culture, news, education and information programmes in this country. The cuts affect the quality of our television programmes which are part of the total quality of our lives. That decision is needed particularly to offset the effects of these cuts on the regions—on places such as Grimsby—and on the majority of people who live outside London and who regard the regions outside London as the most important part of the world.

This is a problem for Britain, and I hope that the Minister of State will assuage some of our doubts and speak for Britain.

1.43 pm

I apologise to the House for not having been here for all of the Adjournment debate. I am aware of the content of my hon. Friend's original proposition. I wonder whether I might add a request to the Minister for further information about the future of the BBC radio orchestras in the regions. This matter has attracted a good deal of attention in the regions and it is one on which numerous representations have been made to many hon. Members, not only by those directly involved but by listeners who are concerned that these orchestras are to be disbanded.

There is considerable feeling in the greater Birmingham area, and in the West Midlands generally, about the fate of the BBC Radio Orchestra in the Midlands for which many people hold a brief. I think that it would be helpful to those of us in the regions who are concerned about these facilities if the Minister were to say whether he has had any further thoughts on this problem and whether he has been able to respond to the representations that have been made to the Home Office.

The Minister will be aware that a large number of hon. Members have signed an early-day motion, which I was able to promote, seeking a reversal of the Government's decision on the general funding to the BBC, which in turn affects the orchestras. It would be helpful if the Minister could give us further information on this subject.

1.44 pm

I begin by joining the hon. Member for Derby, North (Mr. Whitehead) in expressing appreciation of the invaluable role played by the BBC in our national life. The hon. Gentleman spoke, he said, as a candid friend. I do not know what epithets or nouns I should apply to myself, but I associate myself with the hon. Gentleman's expressions of appreciation and regard. I noticed with great interest that the hon. Gentleman expressed his support for the licence fee system as a basic method of financing the BBC. though towards the end of his speech he made suggestions for supplementing that system.

The hon. Member for Grimsby (Mr. Mitchell) was perhaps less enthusiastic for amending the operation of that system. None the less, even he made suggestions for amending the operation of that system. He did not advocate the substitution of another system for it.

It is important in a debate of this kind to clear the ground in this way because what can be done in the context of the licensing system is obviously the key factor in the consideration of the financing of the BBC. Obviously other voices, not represented in this debate, have come out against the licensing system and suggested alternative methods.

The Government's view, supported in this respect by the Annan committee, is that those other methods do not provide a desirable alternative basic system of financing the BBC. In that regard, I note the interesting observations which were made by Sir Michael Swann in a lecture which has already been referred to by the hon. Member for Derby, North. When talking about the licensing system, he said:
" The licence fee system is also the best, perhaps indeed the only system, that makes true public service broadcasting possible. The pull of Advertising, in whatever form and however constrained, must inevitably be away from minority tastes and towards the great majorities. So also must Pay TV. And direct Government financing, as one can see all over the world, only leads to increasingly baleful Government interference."
Therefore, at least we start on common ground so far as the system is concerned.

Both the hon. Member for Derby, North and the hon. Member for Grimsby, compared with the hon. Member for Birmingham, Ladywood (Mr. Sever), who intervened on a specific point, suggested some kind of filter or buffer which would determine the level of the licence fee and remove from the Government the difficult task which Governments, of whatever party, have had to bear. I do not find that, at any rate at first flush, a feasible alternative.

The hon. Member for Grimsby prayed in aid the example of the University Grants Committee. That committee may decide how much each university should get or how money should be allocated for particular purposes, but it does not decide the level of expenditure on university education itself. It is a machinery for distributing money, not one for de- ciding the total share of our national resources which should go in a particular direction.

Although one should never keep one's mind closed to fresh ways of considering the proper means of assessing the needs of the BBC and looking at how the organisation can operate on a financial basis for the future, at the end of the day, whatever consultative machinery may be set up or considered, I do not believe that the Government of the day can escape the task, within a licence fee system, of deciding what the licence fee should be. Once one accepts, as the hon. Members who have spoken do, that the licence fee ought to stay, I do not think that a Government can shirk the responsibility of fixing the licence fee.

A suggestion has been made, echoed by Sir Michael Swann, that it is wrong to regard the licence fee as analogous to taxation or to regard the BBC's expenditure as analogous to public expenditure. In a sense, I can see the force of that argument, but I do not agree with it in toto. It has been suggested that the BBC is receiving a fee for services rendered and that it is a charge, not a tax. However, I am not sure that such a concept is entirely compatible with a system which demands that anyone watching television must pay a licence fee. It is a criminal offence to watch television without paying that fee. Such a mandatory requirement might not be a tax in the strictest sense of the word, but the analogy to taxation is at least as close as that to charging.

It is, therefore, fair to consider the licence fee in the context of the BBC's services as well as in that of the consequences of any increases for the national economy. As the House will know, last November my right hon. Friend the Home Secretary announced increases in the licence fees. The licence fee for colour televisions was increased from £25 to £34 and for monochrome televisions from £10 to £12. Those increases represent the largest cash increases in the history of licence fees. There has been an increase of 36 per cent. in the licence fee for colour televisions and 20 per cent. in the licence fee for monochrome sets. Those fees will provide more than £1,000 million for the BBC during the two-year period 1980–81 to 1981–82. It represents a sizable increase in the corporation's previous expenditure levels of £324 million in 1978–79 and £406 million in 1979–80. Those facts should be put clearly on the record.

In announcing the licence fee increases, my right hon. Friend made clear some important points, in particular that the increase was to last for at least two years. He pointed out that he had taken account of the BBC's need to pay off its deficit on current account. He took account also of the corporation's need to increase its capital expenditure and to increase its expenditure on Welsh language broadcasts by the autumn of 1982.

When considering this question, one is entitled to look at the record of the previous Labour Administration. No attempt has been made during the debate to defend their record. The right hon. Member for Leeds, South (Mr. Rees) allowed the BBC to have increased borrowing powers of up to £100 million. He allowed it to run into deficit as he did not wish to increase the licence fee by a greater figure. The Government have inherited that legacy. One must consider not only what the licence fee should be in an abstract sense but also the extent of the increase imposed when the licence fee is increased.

If the licence fee is kept lower than it might have been, it becomes that much more difficult to increase it, because any increase in relation to the needs of the BBC is proportionately higher than it would have been if the licence fee had been increased to a greater extent at an earlier period. That is the background against which we operate.

My right hon. Friend was satisfied that the increase that he announced in November 1979 was fair both to the BBC and to the licence payer. He remains so satisfied. I acknowledge that the increase was less than the BBC had wanted. The corporation put its case for its future expenditure plans fully to my right hon. Friend. Those plans were attractive but, like so many things that are attractive, they were expensive.

At constant prices, the plans involved an increase of about 25 per cent. in the five years starting 1979–80. Allowing for inflation, they would have involved a colour licence fee of about £41 over a two-year period. My right hon. Friend took the view that that was more than he could reasonably ask the licence fee payer to meet. However, the increase that he decided upon was the largest in the history of the fees.

It is fair to say that, at the time that the increase was made, I do not recall, nor does my right hon. Friend, a volume of protest to the effect that the fee was not being sufficiently increased. At the time of the increase I do not recall it being suggested that the fee was being allowed to rise to an inadequate extent. It is entirely reasonable to take into account the balance between the licence fee payer and the needs of the BBC.

It is necessary to consider the consequences of the increased fee. It is under standable and natural that much of the debate has been taken up by hon. Members giving their view of the cuts that the BBC has felt it necessary to impose as a result of the financial position in which it finds itself. It was only last week that the governors of the BBC announced their decisions about the economies that they propose to make. I must stress that it is entirely up to the governors and not up to the Government to decide what they will cut and how.

The Government are not and should not be responsible for making such decisions. The Government are responsible for the total sum that is available through fixing the licence fee, but they are not responsible for how the economies that the BBC has found necessary should be made. Therefore, the hon. Member for Ladywood will not be surprised when I say that the decisions of the governors were made only last week and I have nothing to add to what they have announced. However, I have some general comments.

The hon. Member for Grimsby referred to the cuts as operating crudely and viciously. He gave a description of the soul-searching comparisons and evaluations that were involved. That did not seem to be a description of cuts that were imposed crudely or viciously. It seemed to be a description of an organisation behaving in an extremely responsible way and doing something which all of us as individuals and many other organisations have to do from time to time, namely, carefully to consider priorities within a limited budget and to decide where and where not to cut.

I do not regard that as being a crude exercise. It does not follow that, if I were in the shoes of the governors of the corporation, I would come to exactly the same decisions and the same conclusions. I have not been through the exercise, so I cannot say whether I would, but the method by which it was conducted seems to me to be reasonable.

The Minister is betraying all the characteristics of a Jesuit. I said that the atmosphere of cuts turns group against group internally and produces that kind of argument. In trying to escape Government responsibility for what is now going on in the BBC, the Minister demonstrates an almost Jesuitical treatment of logic. Having decided the level of the licence fee for the period ahead and, therefore, the scale of the cuts necessary, do the Government accept no responsibility for the decimation of the orchestras, the weakening of services and the irredeemable and irreparable harm that is being done to the BBC?

I am sure that the hon. Gentleman knows a great deal more about Jesuits than I do, so I shall not try to follow that aspect of his intervention. As to responsibility, I could not have been clearer. I said that the Government accept responsibility for the total level of finance available to the BBC but that the precise determination as to how to spend the money within that total is a matter for the BBC. There is no mystery about it.

I was going on to examine the more philosophical point, if we can avoid religious analogies, raised by the hon. Member for Derby, North. He said that Parliament had no opportunity to give guidance to the BBC on how to spend the money. Whether there is a larger or a smaller increase in the licence fee, there is on any view a limited amount to be spent. It is inconceivable to expect there to be no constraints and no question of the allocation of priorities.

The hon. Gentleman suggested the role of Parliament in this. He also raised interesting questions as to the comprehensive nature of the service that is provided. How comprehensive should it be? He gave his thoughts on the advantages and the disadvantages of its being a comprehensive service. All those are legitimate points to be raised, and Par- liament may well wish to give, through individual Members of Parliament, its views on what it thinks most important. Members of Parliament have not hesitated to do so. What I would think very inadvisable is the desirability of the Government taking a view on the priorities that the BBC should operate.

Therefore, the answer to the point made in a less philosophical and more polemical way by the hon. Member for Grimsby is that of course the Government are responsible for the total. We are talking about money provided at the citizens' expense. We have no money of our own. In whichever direction the Government move, whether they are being generous or mean, does the House think that they should go on to say " This is what you are having, and this is how you should spend it. We shall protect the orchestras and the regions, and so on" or, at the other end of the scale, " We insist on something else being cut, with money being spent on something else "? Once we say that the Government should not only set the financial ceiling by prescribing the licence fee but should descend to the arena and make decisions of that kind, we are destroying the independence of the BBC, and I do not believe that any responsible person would wish that to be done.

What is the BBC doing? It has made it clear that, of the £130 million, the bulk of the cuts—£90 million—involves deferring hoped-for improvements and planned increases in expenditure. A total of £40 million of the cuts is needed partly to finance £14 million of new developments which the corporation regards as essential and partly to finance increases in labour costs.

The governors have not suggested that they are unable to carry out their obligations under the charter. They have set out their priorities for the future and have set the cuts, particularly in the regions, in the context of sizable levels of expansion in recent years. The governors have also indicated that they accept that the corporation cannot be isolated from the realities of the economic situation.

The picture which has been presented, for understandable and sincere motives, is grossly exaggerated if what the country is asked to believe is that the broad nature of the service provided by the BBC is to be truncated to a substantial extent. That is not the case. I pray in aid what Sir Michael Swann said in his lecture because it is relevant to the cuts. He said that the cuts amount in practice to
"around 10 per cent., or £130 million, spread over the next two years from now."
He also said:
" To be fair to the Government, this is more or less in line with what they are trying to achieve elsewhere in the public sector. And to be truthful, quite a lot of the £130 million, in fact £90 million, will be found by deferring or abandoning planned new developments."
I do not suggest that Sir Michael or the governors want to do that welcome, enjoy or find it anything other than a painful exercise. However, he has said that what they were asked to do was more or less in line with what the Government were trying to achieve elsewhere in the public sector. That is the key to the debate. I do not accept that the Government have behaved unfairly to the BBC when one compares the role of the BBC in our national life with all the other important things on which public money is properly spent.

One aspect of the debate is the comparison with the independent television system. I acknowledge that the independent television system is not facing the same financial strictures as the BBC. However, to use emotive language and say that it is bloated with profits reflects an attitude towards profits which I do not share. I do not disguise that.

Not all the income of the independent television companies is spent on programmes. Some is profit, but the companies pay on profit substantial sums to the Government in levy and corporation tax. As my right hon. Friend told the House on Second Reading of the Broadcasting Bill, he and the Chancellor of the Exchequer are reviewing the independent television levy. I am not in a position today to announce the outcome of that review. I do not believe, whatever the levy might be, that it is right to hypothecate that levy for any particular purpose. I certainly do not believe that it would be appropriate to take a proportion of that levy and hand it to the BBC. That is not the purpose of the levy, nor a proper approach.

The hon. Gentleman referred to methods of payment. I was interested in his remarks, but he will, or course, be aware of the television licence saving stamp, which provides a flexible method of saving to pay for the licence fee. He put forward the suggestion of paying the licence fee together with the electricity bill, and in that context he referred to the vans that detect whether people have televisions. I do not think that such a suggestion would make unnecessary that kind of detective operation, because presumably, even if a person paid for his television licence together with his electricity bill, he would still have to pay only if he had a television. If he did not have a television, he would not have to pay. It would still be necessary to check whether people who said that they did not have televisions had televisions.

In most households, certainly in mine but perhaps not the Minister's, someone comes to the house to read the meter.

In my household he usually cannot get in because I am not there. In that respect I may differ from the hon. Gentleman.

The Electricity Council is totally opposed to this proposal, and it is not right for the Government to tell the electricity industry that it must undertake this task if it is not in favour of it. Therefore, although I accept the spirit in which the hon. Gentleman put forward this proposal, I do not think that we can move in that direction at the moment.

The hon. Gentleman also referred to the question of separate radio licences. The cost of the reintroduction of a radio-only licence would be such that fees would have to be very high in order to obtain any real income. I do not believe that the concern that the BBC is showing for radio is so low that it is proper to intervene and have a separate expensive licence in order to ensure that radio is adequately looked after by the BBC.

The hon. Gentleman suggested that orchestra charges should be met by the Arts Council and that the educational expenditure covered by the BBC should be met by the Department of Education and Science. After making those suggestions, in the very next breath he correctly anticipated my response. I do not believe that by shuffling around the costs in that sort of way we would be achieving anything of reality. Either the total level of spending remains the same, or it goes up or down. If the burden is shifted in that way to publicly financed bodies, such as the Arts Council or the Department of Education and Science, there is no escaping the fact that that would amount to a direct increase in public expenditure.

The Minister is doing me an injustice. Even in the monetarist's haven, costs can be increased if receipts are increased. I said that with that measure of additional public support in the context of the change in the basis of the levy, an increase in receipts would be expected.

I do not think that there is any difference between us. The hon. Gentleman has suggested that the BBC should get the same licence fee but that it should not have to meet out of that the costs of these particular expenditures because they should be met out of DES or Arts Council money. The only way to do that, unless the Arts Council is to save money elsewhere, is to increase expenditure on the Arts Council or the DES. There is no escaping that, and that means an increase in public spending. The circle cannot be squared.

No one faces with relish the prospect of the BBC or any other valued public organisation having financial difficulties, but I am afraid that in that the BBC is not unique. As a nation, we are all having to learn how to live within our means. I believe that my right hon. Friend the Home Secretary, in setting the licence fee at the level at which he set it last November, was, as Sir Michael Swann conceded, operating in a manner towards the BBC which was in no sense discriminatory or unfair. This fitted in with the national needs and was reasonable in the balance that had to be drawn between the needs of the BBC and the limitations on the pockets of the licence payer.

Question put and agreed to.

Adjourned accordingly at fifteen minutes past Two o'clock.