Critics think it's time for a reckoning at the BBC - but there's a problem...
|
Version 0 of 1. Although it’s scheduled for debate, there won’t be enough time on Friday for MPs to argue the pros and cons of Peter Bone’s private members’ bill proposing to privatise the BBC. Not that the rebellious Conservative MP for Wellingborough and Rushden is too bothered: there should be time to debate another of his proposals for the statute books, the abolition of wind-farm subsidies. But Mr Bone’s views on the Beeb are instructive – he wants licence-fee payers to be given shares – and capture the growing sense that Parliament wants to turn the state-funded broadcaster into an enterprising commercial buccaneer. On Monday, the BBC Director general, Tony Hall, acknowledged the mood against the £145.50 charge, noting the funding method must be “updated to reflect changing times”. This admission comes after a Commons Culture, Media and Sport Select Committee report concluded that the TV licence is becoming “harder to sustain given the changes in communication”. We’re not far away, the committee claimed, from the licence fee being replaced by an alternative levy, such as a compulsory charge on every household. This would mean that the BBC would reap funds from those claiming not to have a television or only watch programmes on-demand, reflecting internet-driven changes in viewing habits. Make no mistake, though, the reality is that plenty of MPs, not just mischief-makers like Mr Bone, want to see the BBC completely commercialised and sold to the private sector. They think the £3.7bn accumulated in licence fees, or whatever replaces it, is an excessive burden on taxpayers and unfairly skews the market against commercial broadcasters. Other income, like that from the BBC Worldwide arm selling the Corporation’s shows overseas, came to around £1.3bn in 2013-14, down by a little more than £100m on the previous 12 months. The National Audit Office is currently investigating how the BBC plans to make £700m a year in cost reductions by 2017 and the risks of doing so, such as the potential for producing poorer programmes. There is still £400m left to cut. The select committee found that the Beeb had already made cumulative savings of £1.1bn since 2007 and praised the broadcaster for “the relatively small impact… on audiences’ appreciation and on reach of its services”. But it warned that the “likely opportunities for further productivity gains must be diminishing”. Setting the BBC free to weather the unrelenting forces of the market at a time when broadcasters are not enjoying great advertising rates, and forcing it to adapt to the whims of what would then be their customers rather than bankrollers, might seem appealing. Privatisation could compel it to develop the adventurous commercial spirit and nous that would secure both success and its long-term existence. This would be a Thatcherite experiment that the Iron Lady herself dared not risk. Tory bible The Spectator argued in September 2013 that “a reckoning is long overdue”. Commenting on the article, Redrose82 seethed: “The one thing I hold against Margaret Thatcher is that she failed to privatise this cosy home of overpaid socialists.” But Jackal Advisory’s Simon Kew, who once acted as a conduit between the Pensions Regulator and 10 Downing Street, points out a massive black hole in this idea. The Beeb’s pension deficit stood at more than £1.5bn at 31 March last year and the corporation is currently in a four-year plan to pump £740m into the scheme. The deficit-reduction payment represents a large chunk of the £566m of costs that are considered beyond the BBC’s control, which also includes expenses related to collecting the licence fee. “If you’ve got a guaranteed £3.7bn coming in when you’re sitting on a £1.5bn pension scheme deficit it’s not nice, but it is manageable,” explains Mr Kew. “If you remove that licence-fee income, even if you get about half back in advertising, you would be running a massive deficit. You would effectively have a pension scheme running a broadcaster.” This echoes the joke made at British Airways’ expense years ago, that it was a pension fund with a small sideline in air travel. BA boss Willie Walsh sorted out the problem with a clever £1.3bn insurance-style deal with Rothesay Life in 2010 when the deficit threatened to wreck the group’s merger with Iberia. Mr Kew admits his point is a touch simplistic. For example, should the licence fee ever be withdrawn, he can envisage “parachute payments” from government, similar to how money is handed to football clubs facing a substantial loss of income when they are relegated from the Premiership. But, he thinks the problem would be sufficiently acute that the strength of the covenant – the faith the trustees have in an employer’s ability to meet its legal obligation of funding the scheme now and in the future – would be “seriously under question”. Mr Kew argues the Pensions Regulator would be concerned, but “not half as much” as the Pension Protection Fund. The PPF provides compensation for members of schemes that become insolvent and the BBC scheme would, logically, be a fresh risk. The BBC has plenty of critics who would doubtlessly take pleasure in watching the broadcaster struggle, maybe even fail, as a privatised entity. But everyone else should note that Auntie is not fit for privatisation and, possibly, never will be. Twitter: @mleftly |