Execu3ve Summary
Reforming the BBC The BBC is still a highly regarded public institution in the UK. A recent poll found that 76% of respondents felt the BBC was a UK institution “to be proud of”, while 62% said the BBC was “trustworthy” (which puts the BBC well ahead of many other UK institutions). However, 60% of those polled agreed the BBC was “dumbing down”, while only 56% thought it provided value for money (the poll was conducted in the wake of the debate over senior BBC executive and talent pay).1 A Policy Exchange poll on tax and spending in September 2009 backed this up, showing that 67% of people would support a decrease in funding for the BBC.2 Despite the increasingly fragmented nature of the market, the BBC still occupies an incredibly privileged and important position. It accounts for 34% of all TV viewing in the UK (compared to 40% 10 years ago), and 54% of all radio listening in the UK (similar to 10 years ago). Across its services it reaches a staggering 90% of people in every week. The BBC website, www.bbc.co.uk, is the UK’s leading web content site and accounts for about 30% of online news consumption in the UK, similar to the combined share of all UK national newspaper sites. There is an elaborate and superficially open process to ensure the BBC maximises public value from the licence fee while minimising any unnecessarily negative market impact. But the public value test framework is not really working. There are four main reasons for this. 1. A lack of contestability The processes of licence fee setting every 3 to 7 years and the system of on-going public value testing of all existing and new services involve little actual contestability. BBC management come up with a broad plan – in the case of the licence fee settlement – or specific proposed services – in the case of the public value tests – and this is either accepted, accepted with amendments or rejected by the BBC Trust. At no stage are non BBC providers allowed to make proposals as to what they could do with similar levels of funding, nor are rival BBC departmental proposals truly assessed against each other by the Trust for their comparative impact on public value. The main input from industry rivals to the BBC funding processes is on the commercial market impact of the proposals. While this is a necessary part of the process it actually focuses the whole approval process on negative market impact not on maximising public value from any given level of licence fee. 2. Regulatory capture There has been a general recognition in UK regulation over the last 20 years that single body or sub-sector regulators are less effective than more generic regulators. Separate energy regulators were replaced with a general body – Ofgem – while separate broadcasting and telecom regulators were replaced with Ofcom. Most recently, the government has proposed Postcom’s role in holding the mail services to account be subsumed into Ofcom. This consolidation of regulators may be driven in part by a need to save money, but it is also a recognition that where regulators end up regulating just one organisation or one sub-sector of a converged market, they end up being ineffectual. Such a body either ends up at loggerheads with the institution they are regulating, or
1 Comres Poll for BBC Newsnight, 26th November 2009. For polling on Trust of different UK institutions see Ipsos Mori annual trust survey, which often puts the BBC near the top of the most trusted UK institutions.
2 Yougov poll for Policy Exchange, September 2009, see http://www.policyexchange.org.uk/
policyexchange.org.uk
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