Last week the government made its long-awaited statement on the BBC Licence Fee. This funding is a crucial issue for the public broadcaster as the Licence Fee represents around 75% of its income and it had asked for an increase last year in its presentation to the House of Commons select committee. The announcement completes the Charter Review process that included last year’s White Paper.
One of the key funding issues is the switch to digital broadcasting. The costs involved are estimated at around £800 million, with £600 million needed to help vulnerable viewers obtain the necessary receiving equipment and £200 million for a publicity campaign.
The licence fee issue reached boiling point earlier this month in the lead up to the announcement. A government leak in December suggested the BBC would receive less than it asked for, which led to BBC and media speculation, and supporters like Voice of the Listener and Viewer (VLV) lobbying parliament.
The announcement was finally made by Tessa Jowell last Thursday in a statement to parliament. She described it as an “unprecedented exercise in public involvement” before going on to outline the terms: “The settlement will be for six years, with annual increases in the licence fee of 3% for the first two years and 2% in years three, four and five. There will be an increase in the sixth year (2012-13) of up to 2%, depending on a further review nearer the time”.
Despite the increase the BBC were not completely overjoyed. It had asked for RPI (Retail Price Index Inflation) + 1.8% and £600m to fund the targeted help scheme, and say that the Government offered it the equivalent of RPI – 1.5% and £600m to fund the targeted help scheme.
So what does the announcement mean?
Firstly, it means you’ll have to put your hand in your pocket. As expected there will definitely be an increase in the TV Licence fee for the public. Tessa Jowell’s announcement included the news that “The price of a colour TV licence will rise from its current level of £131.50 to £135.50 from 1 April this year, reaching £151.50 in 2012”. Although viewers will be spending more than the current 36p a day, both the BBC and VLV claim most viewers would be willing to pay a modestly higher BBC licence fee for quality services and programmes.
It is the first time the licence fee has not been tied to the inflation rate and unions threatened strike action. “Alarm bells” rang for Equity, who have said this puts the BBC at risk of underfunding, and potentially compromises its ability to produce world-class drama and entertainment.
After the announcement last Thursday Mark Thompson, the BBC’s Director-General, expressed “real disappointment” but admitted it was “a privilege to receive” and allowed certainty in planning to create the best possible content and services for all audiences, while “no commercial rival enjoyed that certainty of funding”. Press releases from the BBC claimed “the BBC could argue the benefits extra funding would bring to the wider creative industries as well as audiences”, but that the decision was out of their hands.
Jowell’s announcement said that “Investment in high quality content, the driver of creative industry and what audiences value most of all, will remain high”, but not everyone agrees.
The settlement means the BBC still receives a guaranteed income of more than £20 billion over the next six years. But it leaves a gap of around £2 billion that Thompson describes as “not a gap many organisations can swallow comfortably”. The risks to content creation are obvious and the BBC is set to look at investments, as well as reviewing how it produces content and creates value. It is anticipated that more pressure may be placed on its commercial division, BBC Worldwide, to bring in more income.
Voice of the Listener & Viewer which represents citizen and consumer interest in broadcasting, fears that the settlement will not enable the BBC to maintain the quality of its programmes and services.
The Guardian reported that the NUJ said that the licence-fee deal “threatens to emasculate the BBC” as it reduces the capacity of the BBC to lead the way into the digital future. Meanwhile, Chief Executive of ITN said it ensured the BBC will be one of the world’s richest media companies for years to come.
The fee settlement was the final stage in lengthy negotiations that included the abolition of the board of governors and instigation of the BBC Trust. The settlement is not purely financial: It also means that key departments including Children’s, Sport, New Media and Learning will go regional and move to Salford in the North West of England, which is widely considered a win for the region.
So where to from here?
Germany is the only country that beats the UK in terms of per capita spending on public service broadcasting, so the BBC are not suffering as much as some. However, the announcement means that choices will have to be made, inevitably resulting in changes and stricter budgets.
The BBC writes that “The Executive are reviewing our priorities and will make recommendations to the Trust. As with everything we do, we’ll be focussing on maximising public value”.
There is also the much debated issue of the other public broadcaster’s switchover costs to digital: Channel 4 has never had access to the licence fee before, but has said it will need assistance. It was agreed last April that the BBC would contribute towards this.
Stay tuned…