How one tiny bureaucratic change came to haunt the BBC
As a new book examines the BBC’s uncertain future, Raymond Snoddy – who authored a chapter lifting the lid on the government’s deals with the Corporation – explains what he learned.
The present depth of the current financial and structural crisis affecting the BBC can, in part, be traced back to an obscure change in definition of just a few words by a government agency nearly a decade ago.
In an important change that was barely noticed at the time outside the corridors of Whitehall: the Office of National Statistics decided that the BBC licence fee was a tax rather than a service charge, as it was previously designated.
It would be understandable to say “so what?”. How can such an obscure change in definition be of interest to anyone?
There was an underlying rationale in trying to clarify debate with the EU about whether the BBC fee was a state aid and, as a service charge, an interference in free markets which could have turned out to be illegal.
Decide it is a tax – for governments impose taxes; that is what they do.
So good news for the BBC – with a swish of the definitional wand the licence fee is a tax and not a service charge and therefore there is no question that it is perfectly proper and legal.
If anyone noted the long-range consequences of such an apparently tiny bureaucratic change at the BBC then they didn’t say too much about it in public.
What it has done is provide the legal underpinning for what is turning out to be 10 years of government dipping into the licence fee to pay for a whole range of activities, some of which have little directly to do with BBC broadcasting – the supposed purpose of the licence fee.
[advert position=”left”]
The euphemism that has been often used is top-slicing – essentially using the licence fee as a sort of media mulch cow for any project the government wanted to fund – everything from broadband development to local television infrastructure and now most notoriously, up to £750 million a year to provide free licence fees for the over 75s.
Leave aside the fact that some, but not all, of the over 75s are among the most well off group in the land, free fees were introduced by the then Chancellor Gordon Brown in 2001 without any consultation or discussion and with nothing whatever to do with the licence fee.
That was fair enough. The unilateral decision was paid for out of the social services budget, not the licence fee.
Diane Coyle, an economist and a former senior member of the BBC Trust, believes the original decision by the Office of National Statistics, which opened the door to the raft of top-slicing measures, was a misjudgement.
A tax is something that applies, or should apply, equally to all. People can decide not to watch television and still get all the BBC’s radio services without charge.
Coyle believes that the current attempt to impose the over 75s charge on the BBC is “profoundly unconstitutional.”
Coyle adds that she is “amazed that Parliament hasn’t made more of a fuss about a welfare policy being outsourced.”
In a slightly different approach Michelle Stanistreet, general secretary of the NUJ, has been looking into the grounds for a judicial review into the government’s decision on the premise that it discriminates against the majority of the population who are not over 75.
When lawyers advising the current BBC Trust looked at the issue they found – rightly or wrongly – that the government had the right to impose the charge on the BBC licence fee, presumably because of the 2006 decision by the ONS.
Sir Michael Lyons, the former chairman of the BBC Trust who saw off the initial threat of imposing the free licence bill on the BBC, with the help of threats of mass resignations from the majority of the Trustees, is angry about what has happened now.
Sir Michael believes then and now that if the government wants to get rid of the free licence fees it should have the courage to take the action itself rather than trying to shift the charge to the BBC.
The former Trust chairman believes it is also a complete breach of faith for the government to accept the savings imposed on the BBC in 2010 in exchange for not imposing the free licence fee charge on the Corporation and then come back and do the very same thing five years later.
It is the cumulative, negative, effect on the BBC of the two “deals” five years apart that most worries Sir Michael. Lord Tony Hall, the current BBC director general, has insisted that the current five year deal is broadly neutral – a view that has been contested.
In particular the BBC not only has to take on responsibility for the free licence fee charges – even though the introduction is now phased – it still faces the “purpose and scope” review with an uncertain outcome that could lead to a considerably smaller BBC in future.
The current BBC Trust did not consider resigning – or even hint at resigning – in the face of the current crisis.
What would Sir Michael have done if he had been chairing the BBC Trust in 2015?
“I think I would have had to resign because they were simply coming back for something that they had already done a deal on. I am sure I would have resigned,” says Sir Michael, who accepts that in his case the government might have been perfectly happy to accept his resignation.
The irony of course is that little point of principle appears to be involved in the government’s mind in the strange case of the free licence fees for the over 75s and who should pay for them.
The government simply wanted to offload the cost onto somebody else and the BBC was the obvious target, while at the same time being able to deliver on the manifesto commitment that the promise would stay in place during the lifetime of this Parliament.
The cynicism shows through in the government’s willingness to offload total responsibility for the concession onto the BBC at the end of the current Parliament.
The BBC could then decide to abolish or means test the concession – but of course it would be the Corporation not the government which would attract the resulting public anger.
Debate: The Future of the BBC, 1 October, 7pm – 8.30pm. Tickets – £20. Click here to register your interest – Please provide your full name, company and job title.
—
The BBC Today: Future Uncertain, will be published by Abramis on September 5.