My right hon. Friend the Chancellor of the Exchequer will be making his Budget statement on Wednesday, but following news reports on Sunday, I would like to take the opportunity now to confirm details of the agreement that we have reached with the BBC. Under the agreement, the BBC will take on the cost of providing free television licences for those households with over-75s, and that will be phased in from 2018-19, with the BBC taking on the full costs from 2020-21. Having inherited a challenging fiscal position, the Government are pleased that the BBC has agreed to play its part in contributing to reductions in spending, like much of the rest of the public sector, while at the same time further reducing its overall reliance on taxpayers.
As part of these new arrangements, the Government will ensure that the BBC can adapt to a changing media landscape. The Government will therefore bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV. In addition, the Government will reduce the broadband ring fence to £80 million in 2017-18, to £20 million in 2018-19, to £10 million in 2019-20 and to zero in 2020-21. The Government will consider carefully the case for decriminalisation in the light of the Perry report and the need for the BBC to be funded appropriately. No decision will be taken in advance of charter renewal.
The Government anticipate that the licence fee will rise in line with the consumer prices index over the next charter review period, subject to the conclusions of the charter review on the purposes and scope of the BBC, and the BBC demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector. The commitment made in the Conservative manifesto that all households with an over-75-year-old will be eligible for a free TV licence will be honoured throughout the Parliament. As requested by the BBC, it will take responsibility for this policy from thereon.
Charter review will provide an opportunity to consider wider issues relating to the purposes and scope of the BBC. We look forward to using it to engage on the full range of issues with the public, industry and the House. I will be making an announcement about the process for the review in due course.
What an utter shambles! It is not even the Chancellor who comes to give the Budget any more; elements are briefed to the Sunday newspapers, and then the Chancellor goes on the BBC to tell the BBC and the nation what will be in his Budget three days later. There was a time when Chancellors were forced to resign because elements of their Budget were leaked. Now, we get every single element of the Budget briefed deliberately, and he has the chutzpah to pretend that it is a proper process.
I am absolutely certain, however, that the Secretary of State agrees with me. Does he not agree that the process for charter renewal and agreeing the financial settlement for the BBC
“must be open and transparent, licence fee payers must be consulted and Parliament should have an opportunity to debate…significant changes to funding responsibilities.”?
Does he not agree that:
“No future licence fee negotiations must be conducted in the way of the 2010 settlement”?
I ask that not because they are my words, but because those are the words he wrote only a year ago, when he was the Chair of the Culture, Media and Sport Committee. I am sure he will agree that this is no way to run a whelk stall, let alone the world’s most respected broadcaster.
Of course, at a time of straitened national finances, every public body must make savings, including the BBC, but the BBC is the cornerstone of the creative industries in this country and viewers and listeners want a strong BBC that makes programmes that inform, educate and entertain. There is a proper way of dealing with the BBC: a Green Paper, an oral statement to Parliament and an open consultation process. We should agree what the BBC is for and then how to fund it before introducing a new charter. Instead, we have exactly what the Chancellor did in 2010, which the Secretary of State condemned last year—another backroom deal. As I said before, former Chancellors have resigned in such circumstances and yet the Secretary of State still comes here with this shabby little deal.
Let me ask some specific questions. When will the full charter renewal process be brought to this House? When will the Secretary of State publish the Perry report, which he mentioned, on the decriminalisation of non-payment of the licence fee? Obviously, that is another £250 million that might be missing from the BBC’s budget. Under the new agreement announced by the Secretary of State, will the BBC have the power to end concessionary licences for those over 74? By how much do the Government intend to cut the BBC’s overall income? By £650 million, £850 million or £1 billion? How many jobs does he expect to go in an industry that is one of the few in the world in which we excel? Will the licence fee remain for the full 10 years? Will the BBC be allowed to charge for the use of the iPlayer and will those who already have a licence be required to pay extra to use it? Incidentally, when was the Secretary of States told about this new policy? Late last night, half an hour ago or just before he came to the Chamber, or has he been involved all the way?
If there is a means of protecting the public finances while securing the BBC's future, we will wholeheartedly support it, but if this is just a smash-and-grab raid on the BBC and if it ends up undermining it, we will oppose the Secretary of State every step of the way.
I am slightly surprised that the hon. Gentleman seems to be so upset that I have taken the trouble to come and answer his question today in detail. The Government have in response to his question spelt out in some considerable detail precisely the terms of the agreement that we have reached with the BBC and I can tell him that I and the Chancellor have been involved in discussions throughout with the BBC to reach this agreement. We are all content that it delivers our objective of helping to reduce the deficit while giving the BBC some of the guarantees it needs about its future financing and the system by which the licence fee is raised. However, this does not pre-empt charter renewal and I can tell the hon. Gentleman that the charter renewal process will be open and transparent and will involve as many of those who wish to participate as possible. Before the summer recess, I will come to the House to give further details and will publish the Green Paper on which the charter renewal process will be based. At the same time, I hope to be in a position to publish the Perry report.
The hon. Gentleman appeared to ask a number of questions that were already answered in the course of my statement. I can tell him once again that the case for decriminalisation, which is considered in the Perry report, will be considered as part of the charter renewal process, as will the future scale and scope of the BBC. We anticipate that, in the period after that process, the licence fee will rise in line with CPI, as long as the charter renewal process does not result in any changes to the purposes and scope of the BBC. All those points were spelt out in my statement today. It is right that the charter renewal process should be open. No decisions have yet been taken and we will publish the details very soon.
Thanks to the support of the House, it is an honour to follow my right hon. Friend as Chair of the Committee. Does he share my view that the scope and funding of the BBC must be considered together, given that that has not always happened in the past? If that is the case, can he assure the House that that will form part of his plans over the next year?
I agree with my hon. Friend, and I should also like to take this opportunity to congratulate him on taking on the important position of Chairman of the Culture, Media and Sport Select Committee. I can absolutely confirm that the scale and scope of the BBC will lie at the heart of the charter renewal process, and that the level of the licence fee will be considered as part of that. He is right to suggest that what we decide about the scale and scope will determine how much money is needed. If it is concluded that more money is needed, we will consider any bid from the BBC at that time. The guarantee we have given is that the licence fee will rise in line with CPI over the next charter period, subject to the conclusion of the charter review. I have to say to my hon. Friend that that is exactly what I have just said in my statement.
We have been down this route before. In 2010, the coalition announced plans to require the BBC to fund licences for the over-75s, and the Government are now apparently chancing their arm again. The Secretary of State is on record as saying that it would be difficult to justify his mother not having to pay her licence fee. I can tell him how he could justify it. If it were not means-tested for his mum, it would be means-tested for mine, and my mum, like thousands of pensioners across the country, would simply be far to embarrassed to fill in a form to get a free television licence. I will introduce you to her sometime, Mr Speaker. Can I get clarity from the Secretary of State on whether he will require, or allow, the BBC to means-test television licences for the over-75s?
I repeat what I have just said in my statement, which is that there was a clear commitment in the Conservative manifesto that all households with an over-75-year-old will be eligible for a free television licence, and that commitment will be honoured throughout this Parliament. Following that, the BBC has requested to take on responsibility for that policy, but that will happen during the course of the next Parliament.
I welcome my right hon. Friend’s announcement, but will he confirm that in the bigger review he will pay special attention to how the BBC is currently competing, using tax-based subsidy, to undercut other media providers and drive them out of the market?
My right hon. Friend raises an important point. That point will certainly be considered during the course of the charter renewal, but it is the kind of issue that is best considered over a period, when we will have the opportunity to hear from all those affected by the activities of the BBC.
This Government have already forced the licence fee payer to fund broadband roll-out and the failed vanity project of local TV, and now they are making the BBC a branch office of the Department for Work and Pensions. Does the right hon. Gentleman not accept that this represents a significant assault on the BBC’s independence, and that it is to Parliament, not the Government, that the BBC is answerable? Just before the election, he published a report on the future of the BBC in which he said that it was of paramount importance that this House and the other place should be consulted fully on anything to do with charter renewal. He has broken that promise today, and I am extremely disappointed that he has done so.
On the right hon. Gentleman’s first point, I have already announced that we will be phasing out the broadband ring-fence over a period. I seem to recall that it was his Government who financed the digital switchover from the licence fee. As I have said, the licence fee settlement is a matter that will be considered as part of the charter renewal process, as it will obviously be affected by any decision taken on the purposes and scope of the BBC as a result of the charter review. We have sought to give the BBC the assurances that it has requested, but that has not in any way pre-empted the decisions that may be reached as a result of the charter review.
My right hon. Friend will no doubt hear many protestations of poverty on behalf of the BBC today, but is he aware of the vast sums spent by the BBC on delivering Salford media city and the new Broadcasting House in London, and how this bipolar approach has effectively drained the rest of the country of investment, particularly the midlands?
I believe that the BBC’s investment in Salford was beneficial. It is important that the BBC demonstrates that it is serving all the regions and nations of the UK. Nevertheless, we will certainly consider the points my hon. Friend raises as part of the charter review.
I am very sympathetic to what the Secretary of State has said about removing the broadband ring fence and raising the licence fee by CPI, but would it not have been more sensible to end this foolish subsidy, rather than sticking with the Tory manifesto commitment and messing up the BBC’s finances? What exactly will the financial burden be on the BBC as a result of this decision?
I am interested to hear that the hon. Lady is calling for the removal of free television licences for the over-75s. However, the Conservative manifesto spelled out clearly that they would be preserved for the entirely of this Parliament, and I can tell her that this party does not break its manifesto pledges.
I am delighted that my right hon. Friend has been able to give the full details of the financing package, rather than the partial details we heard on Sunday. Does he agree that the BBC, with its many excellent world-class services, is one of the British institutions most admired around the world, and is he confident that that can remain the case under the financial settlement he has set out today?
When fully implemented, this will effectively be a cut of around 18% in the BBC’s disposable budget, based on the value of today’s licence fee, with liabilities increasing as a result of an ageing population. What guarantees can he give to S4C that its budget will not face a similar cut in future?
The BBC has a good record of achieving efficiency savings, and I am confident that that will continue over the coming years. Taking on the cost of providing free TV licences is being phased in and will not start until 2018. With regard to S4C, I think that it is reasonable to expect it to make the same kinds of efficiency savings that the Government are looking for the BBC to make.
My right hon. Friend has calmed down the atmosphere surrounding this, and we look forward to a deal that the BBC as well as this House can live with. It is important that the BBC should be able to go on exploiting and introducing new technology as well as keeping old services going. Is the age of 75 fixed forever? If it can be changed, will it be changed by proposals from the BBC or by this House?
Of the £942 million raised in the west midlands on the back of the licence fee, only about 8.5% is spent in the region. When the Secretary of State modernises the licence fee arrangements, will he include an obligation to have regional commissioners so that spending in the regions is more in keeping with the amount of money raised in the regions?
I am aware that this matter has recently been debated, and my hon. Friend the Minister for Culture and the Digital Economy responded at that time. The point that the hon. Lady raises will certainly form part of the charter review, and we will consider those options, and any others, at that time.
A compulsory licence fee might have been an appropriate way of funding the BBC back in the 1920s, but it is no longer justified in the 21st century. Does the Secretary of State agree that if the BBC’s output is as popular as everyone claims, people would be queuing up to buy a licence if it changed to a subscription model?
I want to congratulate the Secretary of State publicly on his appointment. We served together for 10 years on the Select Committee, during which time we looked at the BBC many times. In our last report, in a conclusion proposed by him as Chair, we said:
“It was wholly wrong that the 2010 licence fee settlement, which permitted the licence fee revenue to be used for new purposes, was not subject to any public or parliamentary consultation. We recommend that income from the licence fee…be used only for the purpose of broadcasting or the production of public service content on television, radio and online.”
Why, just five months on, does he no longer agree with himself? Why, so early on in his appointment, has he not stuck to his guns but rather allowed the Chancellor to call all the shots?
The hon. Gentleman and I agreed many times when we served together on the Committee, but I do not agree with him on this occasion. What I have announced does not conflict with what is in the Select Committee report. The licence fee settlement will be subject to debate and a widespread consultation. This is not a licence fee settlement. We have sought to give the BBC some confidence, when it comes to plan for the future, that if the charter review does not conclude that there should be changes in purposes and scope, it can look forward to a rise in line with inflation after that time. That does not rule out any option that we will consider during the process of charter review.
Given that the BBC gets in more income every time a new home is built, does the Secretary of State agree that it has been pretty well protected during the period of austerity that other parts of the public sector have faced? Does he also agree that if the BBC ever feels short-changed from sucking on the teat of the licence fee payer, it can always try its luck in the commercial sector and move to a subscription model?
My hon. Friend is absolutely right. While the BBC’s licence fee has been frozen since 2010, its income has nevertheless been rising year on year due to the growth in the number of households. That is not widely recognised but it should certainly be taken into account in these decisions.
I welcome the continued commitment to the concessionary licence fee for over-75s, which is a lifeline for many of the elderly. Millions of people in this country love the BBC, but millions also believe that it has sometimes got involved in too much frippery and has gone wide of what its basic remit should be. Will the Secretary of State make sure that these kinds of things are looked at during the discussions on the licence fee renewal?
I welcome my right hon. Friend’s announcement, and I would like him to work with the BBC to improve the position. The Northampton Chronicle and Echo and the Northampton Herald & Post are very good local newspapers. Does he agree that they, and many other local newspapers around the country, should not be put in jeopardy by an overweening BBC website and other BBC branches and units that have had a tendency, using taxpayer-subsidised licence fees and other sources, to have an effect on those local press organisations?
The Secretary of State has insisted that the Conservative party does not break its manifesto commitments, but it would appear that it is quite happy to get somebody else to pay for them. Given that the BBC is going to have a reduced income as a result of his announcement today, will he say how much that reduction will be and what discussions he has had with the Foreign Secretary about whether it will affect the World Service, which many of us care deeply about?
I have already given the House the figures for the reduction and the phasing in of the cost of maintaining the free licence fee for over-75s. The precise effect of that on the BBC’s income will also be affected by other factors, such as that mentioned by my hon. Friend the Member for Shipley (Philip Davies), namely the rising number of households that will be paying the licence fee. On the effect on the World Service, this does not come into effect until 2018 and the World Service is one of the BBC activities that we will consider during the course of the charter review.
It is clear that the BBC and its former employee, the shadow Secretary of State, the hon. Member for Rhondda (Chris Bryant), believe that the continued criminalisation of 150,000 of our citizens each year—70% of whom are women—is a price worth paying to protect the BBC’s income stream. What does the Secretary of State think about that?
I am, of course, aware of my hon. Friend’s views on this issue and it was partially as a result of his pressing that case that we commissioned the report by David Perry examining the consequences of decriminalisation. We will publish that report when we issue the Green Paper. It will form part of and inform the charter review process and we will take decisions in the light of that.
We should be proud of the BBC, which is respected and valued, not just in Britain, but across the world, for the quality of its output. What impact does the Secretary of State expect a £650 million bill—a fifth of the BBC’s budget—will have on the BBC’s ability to invest and to remain a world leader and a great advertisement for Britain across the world?
As the hon. Lady knows, my announcement today is the result of an agreement with the BBC. I am confident that the BBC will be able to continue to provide exactly the kind of world-class programming she has described within the new financial settlement.
The potential for changing the licence fee in the long term as the mechanism for funding the BBC is a matter that we will examine during the course of charter review. Personally, I am not particularly attracted to some options, such as advertising, but others will certainly be worth considering as a longer-term option for the future.
Companies such as Tinopolis in my constituency are part of a very important Welsh-language broadcasting industry. Worryingly, the Secretary of State has told us that he would anticipate the BBC cutting its contribution to S4C funding. What guarantee can he give about direct Government funding to S4C and does he anticipate cuts to an industry that has already suffered enormous cuts and has a long lead-in time for good-quality programmes?
The Secretary of State may remember when I sat on his Select Committee and had a go at the former chief of the BBC Trust, Michael Lyons, about some of the eye-watering salaries it paid to top executives and so-called top talent, including the £6 million it was paying Jonathan Ross. I have read recently that it will be paying Chris Evans millions just so that he can present “Top Gear”. Is it not absolutely right that the BBC should get a grip on some of these salaries and that it should play its role in ensuring some restraint in the coming years?
As I am sure my hon. Friend will agree, it is not for the Government to set individual salaries for employees of the BBC, but I have sympathy with his views. The BBC has already made quite a lot of progress in this area. Some of the salaries that my hon. Friend describes as eye-watering are no longer being paid, but obviously the BBC will need to cut its cloth to live within its financial means.
With BBC productions such as “Happy Valley”, “Remember Me” and “Peaky Blinders” having been filmed in my beautiful part of west Yorkshire, will the Secretary of State encourage the BBC to continue investing in regional production?
I congratulate my hon. Friend on his election to the Select Committee. I am sure that he will take advantage of his position there to make those points. I absolutely agree that the BBC has a duty to serve all the nations and regions of this country, both in the content that it broadcasts and through where that content is made.
I do not know whether the amplification was wrong when the shadow Secretary of State asked the urgent question, but it seemed extremely loud and almost like a rant, which is not like him at all. However, he made a very important point about this information appearing in the media before the Budget. I am sure that the Chancellor is as concerned about that as the Secretary of State, so I wonder whether the Secretary of State has initiated a leak inquiry.
I cannot enlighten my hon. Friend as to how the information came before the newspaper. However, as a result of that happening, we thought it only right to come to the House at the earliest opportunity to respond in detail to the urgent question tabled by the hon. Member for Rhondda (Chris Bryant).
Like many people in the House, I fully respect the BBC’s broadcasting values, but does my right hon. Friend agree that it is time for a full review of its online ambitions to ensure that the national media, particularly national newspapers, are not disadvantaged?
Speaking as a former long-term inmate of the BBC, I wonder whether the Secretary of State agrees that the most important thing is to ensure that the licence fee is fit for purpose in the 21st century and, in particular, to close down the iPlayer loophole. We must encourage the BBC to continue to make efficiency savings because, as I saw for myself, great swathes of middle management could be cut tomorrow and “EastEnders” would still start at half past 7.
I agree with my hon. Friend on both points. On the iPlayer loophole, the original conception of the licence fee was that those who enjoyed watching television should pay a licence fee from which the BBC would be funded. Of course, at that time, the opportunity to view catch-up television did not exist, but I think those who created the licence fee would have thought that it should apply equally to those watching catch-up and those watching live TV. It is merely to reassert that principle that the Government have agreed to change the law so that catch-up TV is treated in exactly the same way as live TV in respect of the requirement to pay the licence fee.
The future of the licence fee and specifically the decriminalisation aspect, which relates to the enforcement point, have been examined in detail by David Perry. I do not want to anticipate the publication of his report, but that will feed into the charter review, as will the other aspects that my hon. Friend has raised.
Given that most people get most of their broadcast news from the BBC, in the next two years BBC News will face one of its greatest ever challenges in having to remain impartial over whether this country should decide to leave the European Union or not. How will the Secretary of State satisfy himself that the BBC is adhering to its trust principles to inform and educate without appearing to be on one side of the argument or the other?
The BBC is of course subject to a requirement to maintain impartiality and objectivity, as are all broadcasters. I agree that the importance of maintaining that principle is, if anything, even greater for the BBC. My hon. Friend will be aware that the BBC Trust currently considers complaints about impartiality and fairness, but the BBC’s governance arrangements will be one of the issues that we will look at during the charter review.