‘Does good broadcasting require compulsion?’ The question the BBC won’t address

Don’t you miss Jeremy Paxman already? On Newsnight he would ask persistently the question that politicians were trying to obfuscate on, to try to obtain a straight answer. This clarity helped the viewer decide whether politicians were being honest in their reasoning or else just throwing out red herrings in order to hide the true story.

I got to thinking about how helpful this interview style would be when I read the BBC’s own Director of Policy James Heath’s response to my response to his original blog post on why the licence fee is the right method of funding for the BBC. Rather than focusing on the arguments that I had made as to why a licence fee – a compulsory charge applied to everyone who wants to watch any live television – was indefensible and unnecessary, Heath instead used his article to outline why the BBC itself was of value to us.

To paraphrase his arguments: people want the BBC to produce a broad variety of content… The BBC produces high-quality content and helps crowd-in high-quality content in the commercial sector… People love watching things on the BBC for the ‘shared experiences’… And people trust the BBC to provide impartial news.

Great! Hooray for the BBC. But note: Heath has not once explained here why any of this necessitates a compulsory licence fee, which in effect makes the BBC a television gatekeeper. In fact, if James and his colleagues truly believe all of the things above, they would of course have absolutely nothing to fear from moving away from the licence fee method of funding and towards subscription.

If people value a service which produces a broad variety of content, they will presumably be willing to pay for it. If people value the investments in programming and the high-quality output, they presumably will be willing to pay for it. If people see the BBC as the home of shared experiences, they will be willing to pay for it and all tune in. And if people value the impartiality of a news source, well, they’ll be willing to pay for it. So what’s there to worry about from a BBC perspective? Allowing people the choice will surely confirm what the BBC says it knows.

I think the BBC realises it’s not as simple as that. James points to surveys as evidential support for his positions, but asking people their opinion in a survey is often an unreliable way of determining what they really want – not least because people tend not to consider the ‘opportunity cost’ of certain actions (i.e. what else could I do with the licence-fee money were it not compulsory). In other words, revealed preferences, i.e. people’s spending habits, may well be very different from their stated preferences. Observing people’s decisions through how they are willing to spend their money allows organisations to shape themselves in order to provide the greatest value to those they are serving. That is why I believe that a subscription service would be much better for broadcast consumers than a compulsory licence fee.

Yet Heath does not engage in these arguments. His whole blog post is predicated on the idea that the BBC exists either as a universal coverage broadcaster funded through the compulsory licence fee, or it doesn’t exist at all. It would have been an effective rebuttal if my original article had called for the abolition of the BBC. But my article didn’t even offer an opinion on this – merely why the licence fee should not be the method of funding it.

In my article I stated that one genuine argument for the licence fee used to be that television signals were a public good. This therefore represented a market failure, necessitating government intervention and a funding arrangement which took account of these properties. Technological change means this is no longer the case – digital decoders and the ability to set log-ins make this argument invalid. Heath’s response is merely to say that the licence fee has survived this change, and therefore can ‘adapt’. But this misses the whole point, namely that the existence of the licence fee and the privileged position it provides the BBC has to be justified in some way given the changes in technology. That it happens to have survived the digital switchover and colour TV is about as useful an argument as saying it survived Brazil being humiliated by Germany in the World Cup. The question is not: could the licence fee operate? But: what on earth is the rationale for having a licence fee now?

Heath’s essential arguments instead boil down to a defence of the status quo. Yet there is no evident ‘market failure’ in broadcasting and hence all the arguments in favour of the licence fee from Heath are ‘soft’ arguments about ‘what people want’. But surely the best way of judging what people want is to see what they are willing to pay for. In opposing the solution of subscription, Heath and the BBC imply that what the BBC currently provides is not, in fact, what the British really want (which in the case of Directors being paid to write articles defending the funding mechanism, is almost certainly true!).

If Paxman were around to interview Heath, he’d surely ask this question: ‘Are you suggesting that the BBC cannot function properly unless those who do not want to watch its content are forced to pay for it anyway? Is that correct?’ I’d like to know the answer.

Head of Public Policy and Director, Paragon Initiative

Ryan Bourne is Head of Public Policy at the IEA and Director of The Paragon Initiative. Ryan was educated at Magdalene College, Cambridge where he achieved a double-first in Economics at undergraduate level and later an MPhil qualification. Prior to joining the IEA, Ryan worked for a year at the economic consultancy firm Frontier Economics on competition and public policy issues. After leaving Frontier in 2010, Ryan joined the Centre for Policy Studies think tank in Westminster, first as an Economics Researcher and subsequently as Head of Economic Research. There, he was responsible for writing, editing and commissioning economic reports across a broad range of areas, as well as organisation of economic-themed events and roundtables. Ryan appears regularly in the national media, including writing for The Times, the Daily Telegraph, ConservativeHome and Spectator Coffee House, and appearing on broadcast, including BBC News, Newsnight, Sky News, Jeff Randall Live, Reuters and LBC radio. He is currently a weekly columnist for CityAM.

4 thoughts on “‘Does good broadcasting require compulsion?’ The question the BBC won’t address”

  1. Posted 26/07/2014 at 04:53 | Permalink

    This whole market argument is nonsense..People who watch should only pay for it will lead to compromise in the content and the quality of BBC..the whole idea of state is to balance the situation..

  2. Posted 26/07/2014 at 12:28 | Permalink

    You too evade the question! You change from asking about the provision of “good” broadcasting to the provision of popular broadcasting. They are not necessarily the same thing. To see what popular broadcasting look like I’d suggest that you look at the situation in the US where “good” broadcasting is very rare. PBS is the the notable exception, but it depends primarily on the generosity of wealthy donors, and produces far less original content than does the BBC?

    I am a supporter of market-led solutions, and of smaller government, but it is important to know the limits of the market as well as its many strengths.

  3. Posted 26/07/2014 at 14:59 | Permalink

    @anonymous – let us put aside whether we believe the state should pursue this, that or the other objective and assume that the state should ensure some kind of institutional environment that promotes “good” broadcasting (if that can be defined in an objective sense). Firstly, there is no obvious reason why the “club” or subscription model would not lead to that unless somehow the spillover effects of “good” broadcasting were so great that there was some significant externality here.But let us assume that subscription does not bring about the objective. Then, given current technology, why not have the state (or a state body) subsidise “good” broadcasting through an arts council type body using money from all taxpayers. Then such funding would be open to everybody on a competitive basis. What is in dispute is whether those with a TV should pay a special TV tax to fund a specific institution to the tune of £7bn (including free spectrum)

  4. Posted 27/07/2014 at 20:34 | Permalink

    Philip makes a very good point. I simply do not understand why the left thinks that the current way of funding the BBC is defensible. Our tax system – and everyone agrees with this even if they advocate flat tax rates – levies taxes according to either income or spending, thus ensuring that the rich pay more in absolute terms. The BBC licence fee takes no account of either ability to pay, the amount you choose (or are prepared) to spend on TV viewing, or even whether you watch the BBC’s output. Quite simply, it penalises the poor.

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