BBC Blogs - About the BBC - Response to the Institute of Economic Affairs critique of the licence fee

Reading Ryan Bourne's article I was reminded of Procrustes, in Greek mythology, and his habit of altering travellers' limbs so they would fit perfectly into his bed. The critique of the licence fee that is put forward makes the error of forcing the world to fit a particular narrative arc, and is long on assertion but short on evidence.

My argument was that the policy goals (of social value and universality, great programmes at an affordable price, creative sector investment and independence) are best met via the licence fee. Ryan’s starting-point seems to be that the market will deliver an optimal outcome and so there is no longer the need for a licence-fee funded BBC. One way of resolving this is to look at how the UK broadcasting system works in practice and at what the public want as consumers and citizens, and also test the article’s assertions with evidence.

1) Audiences don't want a negatively-defined BBC that only exists to fill gaps left by the market. Quite the reverse - they tell us they want a BBC that brings them breadth, depth and enjoyment across a wide range of genres (not just news, current affairs and children’s programmes that the article suggests). BBC One is a hugely distinctive service – more distinctive than 30 years ago with, for example, zero US imports and more drama, documentaries and news.

2) The crowding-out assumption misunderstands the competitive dynamics at play. Countries with well funded PSBs investing in quality, diverse content tend also to have strong commercial markets, and the UK is a prime example of this with ‘competition for quality’ between the BBC and commercial broadcasters. I've not seen any credible analysis that suggests the UK creative sector would be bigger - rather than substantially smaller – in a 'no BBC' or 'rump BBC' scenario.

3) The article dismisses the BBC’s role in providing 'shared experiences', just as the World Cup ends and the Commonwealth Games starts. BBC One's audience for the World Cup final peaked at 16.7 million; four times the size of ITV1’s audience for the same game, despite zero switching costs. Big, diverse audiences turn to the BBC at times of public interest, sadness and celebration – for example, 17.7 million at the 2010 general election, or 19.2 million for the Royal Wedding. I would argue that the value of access to a common stock of knowledge, information and cultural reference, as well as spaces to debate our differences, goes up, not down, in a 'more diverse age'. This is not to say that public value is the preserve of the BBC or publicly-funded organisations – but that a move to subscription would undermine the BBC’s role as a national public service broadcaster.

4) ‘‘Everybody believes the BBC is biased against them….’’ The BBC remains by far the most trusted source of news in the UK, with 58% of the public selecting it as the one source they trust the most and 50% as the most impartial source (among the plurality available) – with the latter being an important driver of the former.

5) The article replays the argument that the licence fee is made obsolete by new technology. The licence fee is already device-agnostic - you need one to consume live TV on PCs and tablets as well as on conventional TV sets. The licence fee has continuously adapted to technology change – first to cover TV, then colour TV and, most recently, live TV usage over the internet. The question of whether the licence fee should be modernised to cover on-demand BBC programmes (which it already pays for) is largely independent of the wider policy question of whether the BBC should move to a gated, commercial service.

6) I agree that survey results on the licence fee are sensitive to the questions asked. But the Whitehouse poll cited in the article actually shows more opposition to a subscription-funded BBC than support for it. And, as any pollster will tell you, it's the trend that matters and research carried out consistently over the past 10 years shows that public support for a subscription-funded BBC has fallen by over half and is the least favoured form of funding in all types households, including those with pay-TV.

7) The article’s support for contestable funding in broadcasting feels like a solution in search of a problem. As Ryan acknowledges, the BBC isn't a monopoly; it is subject to intense competition in a market where consumers can easily switch between providers. Around two-thirds of BBC activity is already part of some competitive process and we've just announced plans to go further to drive efficiency.

Overall, the fundamental gap in the critique is any real sense of how replacing the licence fee with subscription would make audiences, the creative sector and society, better off. There's an important difference between what is possible and what is desirable. Just because technology has now made it possible to fund the BBC’s TV services (but not radio) via subscription, doesn't mean it is in the public interest to do so. There are different ways of allocating services - it depends on their purpose or point. We've chosen, as a society, to keep some aspects of our lives in the public realm - available to all and serving all. The BBC is one such aspect due to the social, cultural and democratic benefits derived from broadcasting. This is not to say that the BBC is as important as the NHS but that it meets the same kind of public goals.

The BBC and PSB shouldn’t be seen as deviations from an idealised model but rather as central to the effective operation of this sector and to meeting people's interests as citizens and consumers.

James Heath is Director, Policy