³ÉÈËÂÛ̳

³ÉÈËÂÛ̳ Director-General

The ³ÉÈËÂÛ̳ and the new Settlement – speech to the Voice of the Listener and Viewer (VLV)

Check against delivery

This is the first opportunity I've had to talk about the licence fee settlement and I can't think of a more appropriate place or body to speak to and to listen to than the Voice of the Listener and Viewer.

Our experience is that the VLV has for many years been a critical but passionate supporter of Public Service Broadcasting at its best. It is because of that underlying support for PSB that the VLV stands out, and I'm very grateful for the opportunity to talk to you today.

Whether nice or nasty or something in between, there's no doubt that last month's licence fee settlement came as a surprise to most people. The truth is, if you'd asked me at the time of the MacTaggart lecture 'what were the odds of us agreeing a new licence fee settlement before Christmas?', I'd have answered 'which Christmas – 2011 or 2012?'

Setting the ³ÉÈËÂÛ̳'s funding usually seems to involve months or even years of research, analysis and debate – not to mention gainful employment for an army of commentators and consultants. But on this occasion, the first time that people realised that a settlement was in the offing was when it was announced.

That's left a number of important questions for both the supporters and the opponents of the ³ÉÈËÂÛ̳:

• First, did the Government and the ³ÉÈËÂÛ̳ really understand what they were getting into, what the real implications of the deal were – or was it just done too quickly for that?
• Next, is the settlement just too tough? Will those 16% of savings between 2013 and 2017 mean a reduction in the quality and range of the ³ÉÈËÂÛ̳ services?
• Third, and a question our critics are asking, did the Government miss a golden opportunity to rein in the ³ÉÈËÂÛ̳? Did they let the Corporation off the hook?
• Finally, and most important of all, does the deal undermine the independence of the ³ÉÈËÂÛ̳? Should the ³ÉÈËÂÛ̳ ever have been part of the Comprehensive Spending Review in the first place? And should the ³ÉÈËÂÛ̳ and the licence fee payer be picking up the tab for the ³ÉÈËÂÛ̳ World Service and S4C?

This evening, I want to offer you my answers to each of these questions and also to begin to sketch out what I believe the agenda for the ³ÉÈËÂÛ̳ should be between now and the end of the Charter period.

It's also important that the ³ÉÈËÂÛ̳ contributes to important public sessions like these where we hear and listen to your views about the settlement.

Too quick?

So to begin, was it all just too quick? I can't speak for the Government, but I can tell you that for both the ³ÉÈËÂÛ̳ and the ³ÉÈËÂÛ̳ Trust that we did have enough time and information to understand the creative, financial and political implications of what we were entering into.

As you know, this year we conducted a major strategic review of the ³ÉÈËÂÛ̳ which we called Putting Quality First, the final conclusions of which the ³ÉÈËÂÛ̳ Trust are publishing in a few weeks time.

The review identified the ³ÉÈËÂÛ̳'s five core editorial priorities for the rest of the Charter – to deliver the best journalism in the world; outstanding content for children; great original UK drama and comedy; excellence in the field of knowledge, music and the arts; events that bring communities and the nation together.

It also gave us a set of clear themes with which to make choices about resources and services.

For instance, after a long period of expansion in the number of services, Putting Quality First calls for the ³ÉÈËÂÛ̳ to 'do fewer things better'. Putting more of the public's money into areas that punch through and which they think are valuable.

Equally important – the review involved extensive research with audiences about their attitude to many aspects of the ³ÉÈËÂÛ̳, including value for money and the licence fee.

Alongside all this work we'd also developed a sophisticated model of the economics of the ³ÉÈËÂÛ̳ through which we could test different hypotheses and scenarios.

So in short – we were prepared. The result was that in the nine sometimes rather long days and nights in which we were in discussions with HM Government, we had a game-plan and we knew how much it would cost to deliver it. The idea of reaching a comprehensive funding settlement was ours and we entered the negotiations with confidence and I believe with the public's priorities and preferences front of mind.

Of course more time would have allowed more detailed discussions and more debate. But I'm sceptical, I have to say, that it would have led to a better or fairer agreement. The ³ÉÈËÂÛ̳ wasn't granted any special favours – nor should it have been. As I said in my MacTaggart this August, the ³ÉÈËÂÛ̳ has to accept the same economic realities as every other public institution.

But neither was the ³ÉÈËÂÛ̳ in any way singled out for special punishment. The 16% savings we are asked to find are in line with other so-called 'favoured' cultural institutions. Many parts of the public sector are facing cuts of 30%, 50% or more. And the settlement gives the ³ÉÈËÂÛ̳ certainty about its funding from today to 31 December 2016, more than six years away. That certainty is itself precious, and more or less unique in an industry which, wherever you look in the world, is facing enormous threats.

That is why we recommended – and the ³ÉÈËÂÛ̳ Trust approved – the final settlement. We believed it was in the best interests of the British public as well as of the ³ÉÈËÂÛ̳.

Too tough?

So to answer the question 'was it too tough, given the ³ÉÈËÂÛ̳ has already made more than £1.3 billion of savings since the new Charter began in 2007?' And more pertinent to many of you here tonight, 'will those 16% savings damage the quality or the range of our output?'.

Of course, it will be difficult to deliver. We believe that advances in productivity will not yield all of the saving and that the balance will have to come from what the technocrats call 'allocative efficiencies' and what most of the public rather reasonably think of as 'cuts'.

In fact, done in the right way and with a clear strategy, it is possible to spend less but spend it better and end up delivering more value to the public.

A few years ago, we reduced the spend and the hours of origination of factual programmes on ³ÉÈËÂÛ̳ Television. Behind the scenes at the ³ÉÈËÂÛ̳, we shifted commissioning towards more ambitious, larger-scale, more distinctive projects. This year's science programmes, from Brian Cox's wonderful series on the solar system to ³ÉÈËÂÛ̳ One's Bang Goes The Theory, are an example of that. So too our recent Opera season across TV and radio.

Overall the evidence suggests that the impact and perceived value of our factual offering has actually gone up.

Now that's a difficult trick to pull off once and, of course, it can't be repeated time and again without eroding quality, so we have to weigh up any structural changes in funding very carefully. But we've already started identifying and making some of the necessary savings.

We've already made considerable progress in cutting top talent costs and the numbers and cost of the ³ÉÈËÂÛ̳'s senior managers. We're reducing the size of our Executive Board and reorganising all of the support parts of the ³ÉÈËÂÛ̳ to meet another of the goals of Putting Quality First which is to get the costs of running the ³ÉÈËÂÛ̳ below 10%, so that more than 90% can go into content and the distribution of that content to our audiences.

On the production side, we have two state-of-the-art digital broadcast centres in Salford and the new Broadcasting House coming on stream – they too will help us hit the target.

I've heard it said that this licence fee settlement will reduce the incentives on the ³ÉÈËÂÛ̳ to reform itself. I think that's rubbish. I believe it should and will lead to an acceleration of what is already a far-reaching process of reform inside the ³ÉÈËÂÛ̳. Since 2004 we have lost more than 7,000 jobs and made around £1.7 billion savings.

Expect also to see the emphasis on partnership, which we announced two years ago, to embed even further in the ³ÉÈËÂÛ̳ – whether that means YouView with a joint venture which includes all the UK PSBs, or the collaboration with Neil MacGregor that led to A History Of The World In 100 Objects.

Under the settlement, the savings plus the added income which comes from new households paying the licence fee is intended to enable the ³ÉÈËÂÛ̳ to cover rising costs for existing services and to take on a number of new responsibilities.

By far the biggest of those new responsibilities is the funding through the licence fee of the ³ÉÈËÂÛ̳ World Service – a very precious and strategically important service in its own right.

We've been thinking about this possibility for some time because we believed it might offer the World Service greater financial security than it has previously enjoyed.

With combined funding, integrated management and co-siting with the rest of News in the new Broadcasting House and around the world, we believe this move could strengthen both the World Service and ³ÉÈËÂÛ̳ News, which delivers news and current affairs to our audiences here at home.

For the next three years, the World Service will continue to be funded by the Government. The cuts it faces as part of the Government's Comprehensive Spending Review will mean a significant reduction in services as well as job losses. There is no getting away from this fact. But when the licence fee funding begins in 2014, it is our intention, subject to approval from the ³ÉÈËÂÛ̳ Trust, to increase investment in the World Service again and hold it at a higher level until the end of the Charter period.

Not tough enough?

For some, of course, the licence fee settlement was a nasty surprise, because they had hoped that a 2011 licence fee negotiation could be parlayed into a root-and-branch debate about what the ³ÉÈËÂÛ̳ should and shouldn't do and about whether the licence fee should exist at all. Indeed I'm told that one media company has had to shelve – no doubt only temporarily – a carefully worked out 12-month anti-³ÉÈËÂÛ̳ campaign.

I want to say this about the scale-and-scope review that never was. The review has already taken place. It took place when the ³ÉÈËÂÛ̳'s Charter came up for renewal in 2007 – as it does every 10 years. Those who wanted to reopen all the issues in 2011 did so not because there hasn't been a recent and very lengthy public debate about the ³ÉÈËÂÛ̳'s mission, but because they didn't like the conclusions it reached.

During Charters, the responsibility for setting scale and scope is delegated to the ³ÉÈËÂÛ̳'s governing body, the ³ÉÈËÂÛ̳ Trust. Do they act? As a matter of fact, yes they do – we are about to embark on a 25% reduction of the scale and scope of the ³ÉÈËÂÛ̳ website.

Reopening questions about scale and scope at whim or at the behest of particular interest groups is both unnecessary and unconstitutional. We have a fair and open system which for decades has allowed public and Parliament an opportunity at Charter Renewal to examine every aspect of the ³ÉÈËÂÛ̳ – funding, scope, future plans, market impact – all up for debate.

During the Charter the convention has been that the ³ÉÈËÂÛ̳ should then be allowed to implement the mission that has been agreed. Not have to constantly fight off further attempts to chip away at it.

Some of the ³ÉÈËÂÛ̳'s enemies would like to replace that system with a continuous and permanently open-ended debate about the ³ÉÈËÂÛ̳. To the extent that this prompt settlement has thwarted them in that ambition, I believe it's a good thing.

The settlement will help the ³ÉÈËÂÛ̳ concentrate on what matters most – which is delivering high quality programmes and services to the people who count, the British public.

The independence of the ³ÉÈËÂÛ̳

I want to turn next to the independence of the ³ÉÈËÂÛ̳ and to try to answer this question first: many of the ³ÉÈËÂÛ̳'s stronger supporters worry generally about the independence of the ³ÉÈËÂÛ̳ – are they right to do so?

Yes they are. Unlike in some other European countries, I don't believe the threat comes from malign political intent or even principally from the lobbying of hostile commercial media interests. Instead it's a story of unintended consequences.

Politicians and policy-makers of all parties thankfully understand the central importance of the editorial impartiality and creative independence of the ³ÉÈËÂÛ̳, Channel 4 and the other PSBs.

But the foundation of that editorial independence requires an appropriate level of institutional and financial independence as well.

There is an increasing danger that, as governments grapple with other serious policy and financial issues, this foundation of our independence is underplayed or even forgotten.

The risk is present across the political spectrum. In its White Paper Digital Britain, the last Government laid out a policy of top-slicing the licence fee to pay for public service content of many kinds from other broadcasters.

By breaking the bond between the public, the licence-payer and the ³ÉÈËÂÛ̳, this policy would I believe have seriously compromised the ³ÉÈËÂÛ̳'s independence.

The present coalition Government came very close, by some hours, to insisting that the ³ÉÈËÂÛ̳ should pick up the costs of a substantial social benefit – free licence fees for the over-75s.

In my view, this move would also have called into question both the legitimacy of the licence fee for the remaining payers and the financial security of the ³ÉÈËÂÛ̳. It too would have damaged the ³ÉÈËÂÛ̳'s independence. The ³ÉÈËÂÛ̳ is a public broadcaster, not an arm of the welfare state.

There has also been the suggestion that the ³ÉÈËÂÛ̳ should take on the responsibility for broadcasting some of the material commissioned and generated by the Central Office of Information, in other words government advertising.

This too would be a fundamental and wholly unacceptable attack on the ³ÉÈËÂÛ̳ and one we'd fight tooth and nail.

The ³ÉÈËÂÛ̳ is an independent public broadcaster – not a state broadcaster or an arm of Government. That is why the British public trust it so much.

The ³ÉÈËÂÛ̳ and the ³ÉÈËÂÛ̳ Trust have strenuously resisted all of these proposals and – so far at least – none of them have came to pass.

Yet the threats are real. But rather than conceding ground in the face of these threats, the net result of this settlement is, if anything, to increase the ³ÉÈËÂÛ̳'s independence.

Six years of financial certainty and a guarantee that the Government will place no further duties on the ³ÉÈËÂÛ̳ or interfere in that period with the scale and scope of our services are themselves new and welcome supports to independence.

Over time I believe that the World Service will be seen by its audiences around the globe to be even more independent than it is today because it will be paid for directly by the British public rather than through the Exchequer.

Moreover, transferring both the World Service and ³ÉÈËÂÛ̳ Monitoring to licence fee funding means that, after decades in which parts of the ³ÉÈËÂÛ̳ have been in scope for Government spending reviews, the ³ÉÈËÂÛ̳ should never again have to get involved in a CSR.

The story of independence and S4C is complex – because we have to have regard to S4C's own proud tradition of independence as well as our own.

But we are not strangers to either S4C, or Welsh language broadcasting. We already make the news and current affairs core of S4C under the ³ÉÈËÂÛ̳ brand as well as some of the channel's other most popular programmes and we are passionately committed to S4C's future success.

Given the ³ÉÈËÂÛ̳'s role in broadcasting all of the UK's key indigenous languages across TV, radio and the web, I believe a deeper partnership with the ³ÉÈËÂÛ̳, including licence fee funding, makes sense – indeed is the surest way of making sure that the Welsh public, and the Welsh TV industry, can rely on this vital service.

It was the Government's idea, not ours, but we believe it could work. It is not, and must not be, a takeover but a proposal for a partnership.

The future

Let me conclude by talking about our future.

Over the past two decades, quite apart from the development of its own new services, the ³ÉÈËÂÛ̳ has taken on more and more additional public tasks. Digital television. Digital radio. Broadband. An increasing and central role in indigenous language broadcasting across the UK. Now the World Service, Monitoring, S4C.

Governments who have perhaps expected to come to the table with the ³ÉÈËÂÛ̳ aiming to reduce its scale and scope have often ended up increasing it.

The licence fee has been asked to fund a longer and longer list of new things. Are the items on the list consistent with the ³ÉÈËÂÛ̳'s mission and its values? Yes, I believe they are.

Can this process of accretion of additional responsibilities continue forever? No it can't. The ³ÉÈËÂÛ̳ and the licence fee have been stretched to help Britain cope with a complex transitional period in broadcasting and media in this country.

So far, I believe the process has yielded good results – analogue to digital television switchover, for instance, which the ³ÉÈËÂÛ̳ is leading, a vast project over millions of households, is happening smoothly and without drama.

But this licence fee settlement should mark a highwater point in this whole approach. This is acknowledged in the agreement that sets out clearly that there should be no further calls on the licence fee, no new commitments.

The British public want a strong and independent ³ÉÈËÂÛ̳. Perhaps the greatest single advantage of this autumn's licence fee settlement is that it gives us the security of funding that will allow us to serve the public with some of the best broadcasting in the world.

The path ahead of us is tough and steep. To meet our promise of Putting Quality First, we must use the opportunity of this settlement to transform the ³ÉÈËÂÛ̳ and focus it entirely on quality, on excellence and ambition.

A ³ÉÈËÂÛ̳ which achieves that will also I believe win the battle for independence in the long run.

Thank you.