Speech given by Tony Hall, BBC director-general, at the Oxford Media Convention on Wednesday 26 February 2014.
Good morning. I had a rule at the Royal Opera House. Whoever you’re speaking to – on whatever subject – you start with the Art. So today, I’m going to start with what the BBC’s for: the programmes and the services.
I hope that gives you a flavour of the exhilaration I feel when I meet the extraordinary people who produce these amazing shows. They are what makes the BBC great.
Those shows are also the reason why so many people feel warmth towards the BBC – in bad times and good. Over the past 18 months, the concentration of so many people has been on the bad. So today I want to part those clouds, and bring light to what’s been going on beneath: to look at some very real – and I think unsung – achievements, and discuss how we will continue to build the BBC into a model media organisation of which this country can be even more proud.
Perhaps the most famous moment in Boswell’s Life Of Johnson is the description of their discussion of Bishop Berkeley.
“After we came out of the church,” wrote Boswell, “we stood talking for some time together of Bishop Berkeley’s ingenious sophistry to prove the nonexistence of matter, and that everything in the universe is merely ideal. I observed that though we are satisfied his doctrine is not true, it is impossible to refute it. I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it – ‘I refute it thus.’”
What I want to say today is very much in this tradition. It rests its arguments upon the solid ground of what the BBC is, what it has done, its practical value, its popularity and its creativity.
It sets this reality against abstract speculation and ideal schemes.
To those who assail the very idea of publicly funded broadcasting with an ingenious sophistry, I point to the great reality of the BBC, I point to all we love about it, and say “I refute it thus”.
To those who say that the licence fee undermines competition, I point to ITV, Sky, BT, Virgin Media, YouTube, Mail Online, Apple, Netflix and Amazon and say “I refute it thus”.
Now, because I want to set out a robust case for the BBC, there is a danger of making an argument that appears complacent or even arrogant.
So two things are important to say at the outset.
The first is that it is impossible to rest the case for the BBC on its value and achievements without also acknowledging that when you point to the BBC, you are pointing to an organisation that makes mistakes.
I don’t want anyone to think that my confidence in the case for the BBC leads me to ignore this. It is part of my mandate to reflect upon these mistakes and to deal with them.
Second, I am not arguing here for public service broadcasting at the expense of other forms of media and free expression.
Quite the contrary.
A central part of my argument is that the BBC is just one part of one of the strongest media sectors in the world. To my mind, Britain has the most vibrant and independent free press in the world. It has ITV and Channel 4. The giants of Sky and BT. One of the strongest independent production sectors anywhere. Talent that reaches around the globe.
This is not an accident. The existence of the BBC helps the entire sector, just as the BBC benefits in turn.
So it is without institutional arrogance or a sense of entitlement that I will seek today to make three points, each supporting my contention that the BBC’s case proceeds directly from its achievements.
First: I strongly believe the BBC is one of the finest broadcasting organisations in the world. It is also great value for money.
Second: that the BBC has done much to make itself more efficient. But it must never – and will never – cease looking for more efficiencies, and demonstrating that to our owners, the British public.
And third that it is the licence fee itself that allows us to do these things. The licence fee is not a compromise, least-bad option. It underpins the success of the BBC.
Let me start with the value of the BBC.
In every country in the world the BBC is known and admired. To many it has been a light in the darkness, a beacon of truth.
Yet as proud as we are of this, as certain as we are of its importance, we can also say something more prosaic.
The BBC is great value for money for the people who pay for it.
Anyone in this country who has a television, a radio, a computer, a smart device, has the best seats in the house for the Olympics, a front row ticket for the best concerts, a box at the theatre for the greatest drama.
They have a seat at the bar for the best comic acts, a backstage pass for the best gigs, a place at the fireside for the best anecdotes, a spot in the observatory to see the sky at night, a hide in the wild to watch nature pass by in amazing proximity.
They can be informed, entertained, educated – and, I would add, inspired.
And they can be proud that we do this so well here in Britain. Proud, yes, of what it is, but also quietly satisfied that all this is done at a reasonable cost.
Because no other public service is used quite the way the BBC is. Our service reaches 96% of the population in the UK every week. Every week.
And every day the BBC is actively chosen by the British public close to 150 million times. Every day, the average use of the BBC is over six hours per household. Each hour of that consumption costs each person in the household three pence. I challenge anyone to find better value for money than that for high-quality advertising-free content.
And this is a public service that keeps on getting better.
Twenty years ago, the BBC received nearly 40% of all the revenues in broadcasting. Now the figure is around a quarter – 25% – a much smaller part of the media market.
Twenty years ago, the licence fee was over £147 in today’s money – now it’s a bit lower.
But look what you get. Twenty years ago, we had two TV stations, five national radio stations, and local and Nations radio. Now we deliver four times more television channels, twice as many national radio stations, impressive web services and the iPlayer.
But I don’t want us to stop there. I want us to give audiences more. How can we better fulfil our mission to educate? Can we tailor our services better for each individual – in the way we’re planning for iPlayer? Can we increase people’s appreciation of the time they spend with us?
And what more can we do to support the UK’s amazing creative sector? How can we share the cultural and economic benefits of the BBC with others? To my mind, it’s all about partnerships. Look at what we’re doing with Arts Council England and The Space – that’s a brilliant example of this. But I want us to go much, much further.
Arguing that the BBC is great value and serves the function it was set up for may be contentious.
But only in a policy seminar. Or perhaps in a newspaper column.
For most people, most of the time, the BBC just is. It just is valuable, it just is a part of their lives.
It’s why viewers are willing to pay for the BBC. They actually pay around £12 a month. On our most recent surveys people, on average, are willing to pay between £15 and £20 a month.
This track record is not a coincidence and should not be a surprise. Because the BBC’s Charter reflects the lessons of public service reform of the last 30 years.
When reformers talk of how to reorganise public services the same principal features come up again and again.
The organisation should have clear objectives. It should focus on service to the public. It should be able to measure the satisfaction it gives users. It should be run by professionals drawn from all walks of life. It should not allow politicians to interfere with its daily running while remaining publicly accountable. It should be open to competition from a vigorous private sector.
In other words, the reformers are describing something very like the BBC.
The BBC is not a standard public service. In ethos we’re less like the City and more like John Lewis. It is our job to hold the powerful to account on behalf of the public. So, unlike in other services, our operational and editorial independence must be complete.
But the BBC proves that reform of public service works.
Part of this story about value for money – what makes it possible – is a constant emphasis on efficiency.
Twenty years ago, when I was Director of BBC News, the BBC introduced Producer Choice – a radical shake-up in the way we did business and one that made an enormous impact on the efficiency of the organisation. It was painful, it was difficult – but it was necessary, and the staff delivered.
Coming back into the BBC last year, I asked to be briefed on the efficiency story of the BBC over the last decade.
I was impressed by what I was told.
Between 2008 and 2013 the BBC delivered savings at an average rate of 3.7% every year. The plans I inherited seek another 20% annual savings by 2016/17 – that’s an extra 4%, on average, we have to find every year.
Percentages only tell a small part of the story. So let me give you some concrete examples.
Through clever procurement, we have reduced the cost of our big contracts. We are spending £17m less every year on managing our buildings and security. The new contract to collect the licence fee will cost 42% less per year than the previous one – saving tens of millions a year. We’re spending £10m less a year by leaving Television Centre.
We are spending much less on running the BBC itself.
For example, in 2006 we employed 635 people in the BBC’s core finance team. By 2016 we plan to employ around 280.
We’ve made the most of our commercial income from BBC Worldwide, with returns to the BBC for investment in programmes reaching over £150m last year.
Most of our money is spent making programmes and services. And we are doing that more cost-effectively, too.
We took out an entire layer of management in radio production – 20 executive producers. The cost to make an hour of our continuing dramas like EastEnders has fallen by a fifth. We’ve reduced our spending on talent and done longer-term and better deals with programme suppliers. Since 2007, our like-for-like programme prices in television have been reducing or holding flat year-on-year.
By moving BBC Sport from TV Centre in London to Salford, we saved more than £2m per year from the cost of our football programmes.
We’ve also adjusted some of our services to save money.
The list includes things like sharing of news bulletins between radio stations. Stopping the mid-morning and 3pm news bulletins on television. Stopping all new daytime programming on BBC Two. Sharing an evening programme on local radio. Sharing Formula One with Sky. Merging some overseas bureaux and using our global news reporters more on our UK services. Reducing the number of Red Button video streams on satellite.
Spending less on programmes from overseas. No longer having separate programmes from Scotland, Wales and Northern Ireland on Radio One. Fewer lunchtime concerts on Radio 3.
Doing all this has been tough and an amazing achievement for the staff who work for us and I want to say thank you. For example, I met with the Asian Network last week: they took out a third of their budget, and created a more ambitious service which is proving really popular with audiences.
It was difficult but they did it.
All in all, there is a long list of these kinds of changes. But part of the cleverness of the way the BBC has gone about it is that our audiences, by and large, have taken it in their stride. That’s the point. But I believe we haven’t done enough to explain this story to others.
Putting all this together, in the decade up until April 2015 we will have made a cumulative efficiency saving of around a third of our funding. This is a record which compares well with the rest of the public sector.
The great majority of those savings have been true productivity: doing more for less. Our service to the public has been getting better, not worse, with satisfaction ratings rising at the same time as the cash has come out. We have strong competitors, so we can’t just make the service worse and expect those who fund us to accept that.
So our public service ethos has not made efficiency savings unnecessary or unimportant – it has made them essential.
But as I said earlier, we cannot stop looking at how we spend our money – we have to ask ourselves constantly, can we do that better, more efficiently?
So where do we go next?
Our licence fee is not just flat but we are also having to absorb the costs of the World Service, S4C, and £150m per year for the rollout of broadband.
That’s why we have to implement the Delivering Quality First programme of savings and we’re only half way through that process. By the end of this financial year, we will have delivered about half of our target. We have three years of hard work to come before we reach £700m annual savings, which we need to make.
The plan was to keep the BBC more or less the same for 20% less. But when the new executive team and I looked at that, we decided the BBC couldn’t stay the same, in two important ways.
First of all, a BBC that stayed the same would be a BBC that had fallen behind its competitors and the expectations of our audiences. There’s so much change, so fast, in our world and we have to be able to invent the next iPlayer.
And second, there just wasn’t enough money for us to stay the same. Everyone at the BBC is proud that we got more nominations at the Golden Globes than any other broadcaster in the world. But that was on the old drama budget. If we followed the original plan, we would be cutting our television drama budget by tens of millions of pounds and I’m worried we would no longer be able to compete with the best in the world. That would have been bad not just for us, but for our audiences and for our creative industries. You could even say it would have been bad for Britain.
We decided we’d reached the point where salami-slicing would affect quality and distinctiveness. Rather than seek to preserve a less good version of our past, we decided to focus on what we do best: from drama to taking iPlayer into the next generation.
And we agreed we needed to find the money to do that.
So, we are in the final stages of a budget process to find an extra £100 million of savings. I will announce the outcome of those decisions in the next month. They will bring our total savings over the period to 23%.
At the same time, I want to make sure we’re spending what we’ve got well. So, over the next 12 months, we will have a fundamental look at every pound we spend. In a world of austerity, every pound counts. I’ve asked Anne Bulford, our Managing Director of Finance and Operations, to lead on this, working with the executive team, our non-executive directors, and everyone in the organisation. I want suggestions from inside and outside the BBC, so we can get the best ideas.
Our aim is to get as much money as possible on the radio, and on screen, whether a TV or a smartphone. Every organisation needs strong managers, accountants and effective back office support and we’re lucky to have some of the very best people in broadcasting working in these areas. But these costs need to be as low as possible whilst being as effective as possible. Our budget for the next three years will see us shift around 4% more of the licence fee into our content budget, but I want to benchmark us against others to see if we could go further.
I often hear some of our competitors saying that they could do things more cheaply. Well, if that’s their belief, I challenge them to take part in the widest industry comparison we’ve ever done, to see where the BBC could learn from them.
That will include looking at headcount. Do we have the right number of people at the right levels in the organisation? Do we have too many layers? If not, we will change them. Do we have pockets of duplication?
I want a simpler, clearer organisation. We’re cutting the number of BBC boards by over 60%. Further, I want every project to have clear leadership and accountability. And I want a culture where people can say when things are not working, as well as when they are. And where they’re listened to.
So can we be more efficient? I’m sure, year on year, we can.
But it must come out from the right places. So one final point on efficiency. A pledge really.
We will keep on being as efficient as we can. But I will not make efficiencies where they cannot be made.
Productivity means production as well as cost. Value for money means value – in other words, quality. Not even our fiercest critics would be happy if we said ‘well that programme may have been rubbish, but at least it was cheap’.
For years, we’ve been able to do as much, or more, with less. But now we have a flat licence fee, and hundreds of millions of pounds of new obligations to fund. And that may mean – will mean – tough choices about how we serve our audiences. The status quo is unlikely to be an option. But let me say again, efficiency must not be at the expense of quality.
Let me make one more point.
The Licence Fee
The value we give the British public is because of the licence fee and not despite it.
The BBC’s mission is to inform, educate and entertain. The licence fee means we must do this for all, not just for some.
Universal access and the licence fee support each other. Because nearly everyone in the country uses us every week, we are not asking people who do not use the service to pay for it.
I think this is one of the major reasons why people accept the fee, because the BBC is not merely of value to all – it is of value to them.
So it’s no surprise that the licence fee is the means of funding the BBC with the single most backing, and that it’s been rising.
Support for the licence fee is at 53% per cent – way ahead of subscription on 17% and advertising on 26%. It’s the top choice for funding the BBC across all ages, all socio-economic groups and whether you’re in a Freeview, Sky or Virgin household.
Another way of establishing the advantages of the licence fee is to consider the alternatives.
Under a subscription model, the BBC’s incentives would change. We would become an organisation motivated by maximising profit.
Our programming choices would change as a result. We’d make programming for those with the highest willingness to pay. Some audiences would become more important than others.
And as payment would cease to be universal, those paying would have to spend more to get the BBC.
Of course, there is always advertising.
Yet having no advertising is one of the characteristics that people most value about the BBC.
It’s not just the interruption that people dislike. Advertising would also narrow the range of content on the BBC. And by taking advertising money away from ITV and Channel 4 it would make public service broadcasting much worse across the board.
Some critics of the BBC who reluctantly accept this case for the licence fee, or at least see that others accept it, have started to make a different argument.
They say the licence fee is a dinosaur from a pre-digital age, doomed to inevitable extinction in an on-demand world where you don’t watch live TV.
The facts just don’t bear this out. Around 90% of all television viewing is still live. Well under 2% of households consume only on-demand TV content. And this number is growing only slowly.
Funding by licence fee therefore remains practical and sustainable.
Yet one of the advantages of the licence fee is that it’s flexible and has adapted over the years. It started as a radio licence. Then TV. Then colour TV. And then the relatively simple change to the regulations in 2004 to cover the consumption of live TV on new devices such as computers. When it’s adapted itself so well over the decades, why would you suddenly give it up?
When and how best to take the next step is, of course, a matter for the Government. Our view is that there is room for modernisation so that the fee applies to the consumption of BBC TV programmes, whether live on BBC One or on-demand via BBC iPlayer.
Others have taken a different line on the licence fee. Instead of saying that the licence fee is so bad that no one should have it, they have begun to suggest that the licence fee is so good that everyone should have it.
They say the licence fee should be competed for and allocated to a range of providers.
What purpose would this serve?
Would it make the BBC more responsive and accountable? We are not a monopoly supplier of Public Service Broadcasting. We are subject to intense competition in a market where consumers can easily switch between providers.
Would contestable funding mean more choice for audiences? Audiences have never had a greater, richer amount of media choice.
Is it necessary to sustain plurality? ITV has just agreed new 10-year licences with its national and regional news commitments intact, despite no public money. Channel 4 has announced a record level of investment in original UK content.
Is it a good use of scarce resources? There’s a clear risk of public funding substituting for activity that would have happened anyway.
Contestable funding feels like a solution in search of a problem. In the anxiety to privatise the BBC, this proposal suggests nationalising the rest of the sector.
But, most importantly, the fragmentation of the licence fee risks de-stabilising a broadcasting model that works. A model that is based on competition for quality – but not funding – between public and private broadcasters.
Top-slicing means just that – less and less funding for content and services that we know people love. And by weakening the BBC, you also weaken the competitive intensity that underpins the success of UK broadcasting.
What I like about the quotation from Boswell with which I started is that it plays to that essential British characteristic – pragmatism. We have a creative sector in this country that is world-beating. The BBC is an essential part of that. We have an organisation that is the greatest cultural force in this country – with an impact way beyond these isles. And it’s British: owned by the British people. Google is more than double the size of the whole UK broadcasting market. Apple seven times bigger.
Today, I believe the BBC’s cultural influence still matches theirs. I want that to be true at the end of this charter and into the next. I want the BBC to remain a world-class broadcaster – and that means we’ve got to be the best run. That’s why we need to keep on modernising. And that’s why we need to keep on making the most of every pound we get. Looking after licence fee payers’ money as if it was our own. Because we are the BBC, not a PLC.
The BBC is a great British invention – but we will only preserve it by doing what the BBC has always done: innovate, change, find new ways of doing things. Providing a quality service for everyone, whoever they are, wherever they are. But always, always, staying true to its values – to inform, educate, entertain – and I hope, inspire.
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