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Select Committee on Culture, Media and Sport Third Report

III. THE ROLE OF THE BBC

The BBC as a public sector broadcaster

14. The Davies Panel was set up with a tight remit to examine the funding of the BBC.[47] Mr Chris Smith acknowledged that, when the Review was established, the Government had not fully appreciated the degree to which the question of funding was "intimately bound up" with the issue of BBC public service provision.[48] He accepted that the BBC's role had to be considered before the question of funding.[49] Accordingly, he welcomed the fact that the Davies Review had "strayed well beyond its remit".[50] Like the Davies Panel, we have found that funding is inseparable from wider issues. It is essential to consider what the BBC is to do and why before considering how much money it needs to do it. The original brief for the Davies Review which placed the emphasis too narrowly upon funding made the Panel's task harder and has made our task harder.

15. The Davies Panel decided that a new definition of the role of public service broadcasting would not be possible given their deadline for publication.[51] In what Mr Davies termed one of the "most flippant" comments in the Review, the Panel stated: "We decided that we may not be able to offer a tight new definition of public service broadcasting, but we nevertheless each felt we knew it when we saw it".[52] The Davies Panel went on to observe rightly that "while the BBC is a public sector broadcaster, this does not mean that everything it does is public service broadcasting".[53] As the Review noted, "Too often, the BBC in effect behaves as if public service broadcasting is everything the BBC chooses to put out".[54]

16. Much that is recognised as public service broadcasting is produced not by the BBC, but by other broadcasters. Channel 4 is a public sector broadcaster with a particular public service remit. ITV, with regulatory obligations imposed by the ITC, claims that much of its own output is public service television.[55] Similar claims were made in evidence by BSkyB in respect of Sky News and other services,[56] and by GWR Group plc in respect of Classic FM.[57] According to Artsworld Channels Limited, "It is no longer reasonable to believe that the BBC represents publicly-funded virtue and the private sector commercially-funded vice".[58]

17. Our present examination is of the BBC and its broadcasting rather than of public service broadcasting per se. The BBC has a distinct role. That role is not the one which the BBC sometimes seems to assign to itself of becoming involved in almost all activities in broadcasting and then claiming that such activities are by definition a public service because undertaken by the BBC. But nor is it the Heineken role which some commercial operators like to envisage the BBC undertaking: of becoming a broadcaster which simply touches the parts which other operators cannot reach. A useful definition of the BBC's distinctive role was provided by Mr Chris Smith when he told this Committee: "I do not necessarily believe that the BBC should do everything. What I do believe is that the BBC should be seeking to reach everyone."[59] The role of the BBC has to be determined not by reference to the vague and elusive concept of public service broadcasting, but through specific consideration of its place as a public sector broadcaster.

The BBC's role and the market

18. The fact that the BBC is a publicly-funded, public sector broadcaster means that its role in rapidly changing markets requires particular consideration. The Davies Panel made much of the concept of market failure as a touchstone for defining public service broadcasting.[60] However, a recurring critique of the Davies Review was that it did not analyse the markets whose failure it is said to be the duty of the BBC to correct.[61]

19. In the case of television, it was suggested that the market was changing very rapidly and that the digital market was quite distinct from the analogue market in its characteristics.[62] There is a proliferation of new participants and potential new participants in this market, many of them loss-making ventures relying on risk capital.[63] A number of those seeking to establish new channels are in niche markets traditionally associated with public service broadcasting.[64] Proposed new BBC activities have a fundamental impact on this market.

20. It was complained, for example, that the BBC's proposed "dedicated television arts channel" would undermine a privately-financed arts channel which is about to be launched by a commercial digital television provider.[65] Similarly, the BBC proposes two new television and Internet services for children.[66] Seven children's channels are already competing for digital viewers and there are likely to be more in the future.[67] Sir Christopher Bland's attempt to draw a sharp contrast between the proportion of domestic, originated content on the BBC's proposed channels and that on other channels was disputed by other providers or potential providers.[68] The BBC proposes a leading role for itself in the development of "a digital curriculum for schools".[69] Mr Greg Dyke, the BBC's Director-General-designate, felt that there was "a gap" in the market in terms of the provision of software for schools.[70] Granada Media argued that the BBC's plans jeopardise the launch of a new digital interactive television channel aimed at GCSE students developed in cooperation with the Department for Education and Employment.[71]

21. The radio market is and will remain fundamentally different in character from that of television. Although digital radio requires very considerable investment, digital audio broadcasting will not have the same transforming effect on the number of participants in the market as digital television.[72] The BBC is set to remain the dominant player in this market. Mr Kelvin MacKenzie compared the BBC's dominant position with that of Microsoft, arguing that the BBC damaged existing commercial stations and prevented new ones appearing.[73] He questioned the need for a public sector broadcaster and, in particular, proposed the privatisation of Radios One, Two and Five Live.[74] The Commercial Radio Companies Association criticised Radio One for becoming more populist and being "back on our ground again".[75] Mr Chris Smith left us in no doubt that privatisation of BBC radio stations was not on his agenda. He believed that each station had a distinctive public service role.[76] This view was, of course, shared by the BBC itself and Sir Christopher Bland reacted with scepticism to Mr MacKenzie's complaints about the competition offered to Talk Radio by Radio Five Live, a station originated by the BBC before Mr MacKenzie chose to enter the market.[77]

22. The BBC was for 33 years the sole provider of broadcast entertainment and information and therefore achieved a special place as a result of the role allocated to the Corporation and the way it fulfilled that role. Even after commercial services were introduced, the BBC provided an alternative and set standards of quality which were important in establishing a paradigm for commercial services. However, broadcasting is now in an entirely different era. There are a multiplicity of operators offering a dazzling and sometimes bewildering array of services. The question in the eyes of the BBC's competitors is whether it is appropriate and fair for the BBC, funded by an impregnable tax and able to cross-promote on a large scale, to provide services which compete with private provision from a position of commercial advantage.

The new BBC vision

23. Plans for the BBC's role in the digital world emerged during 1996. In that year, a Broadcasting Act was introduced which gave the BBC a part to play in digital television. A BBC strategy was established based not on being an operator of digital transmission platforms, but on being a content provider for all platforms.[78] In the same year, a five-year funding settlement was put in place with the specific purpose of funding the BBC's digital development. The formula provided for the licence fee to rise broadly in line with inflation over the five year period from 1997 to 2002, but with increases concentrated in the initial years to fund the BBC's new digital commitment.[79] Linked to this funding settlement was the then Government's decision to permit the BBC to keep the proceeds from the forced sell-off of Home Services Transmission, a sale which realised £244 million.[80]

24. This financial dispensation was described by Sir Christopher Bland, Chairman of the BBC, in February 1997 as "satisfactory": "we got somewhat less than we asked for, but we do now have a financial framework in which we can plan for five years ahead".[81] The Director-General, later in the same year, was even more effusive, stating that the five-year formula "gives the BBC its first real increase for over a decade, bringing £180 million of additional revenue over the next five years. This settlement was an historic breakthrough."[82] Together, the proceeds from the transmission sale and the five-year settlement provided what Sir John Birt termed "a firm financial basis on which to plan for the future".[83]

25. In evidence to the Davies Panel, the BBC endeavoured to set out what the Review termed "an ambitious vision which would substantially increase its service provision on both analogue and digital platforms in the remainder of the present Charter up to 2006".[84] The BBC considered that implementation of its vision for its services would increase its annual spending on programmes by about £1,250 million a year by 2006. Of this total, £550 million would be devoted to existing services, with such expenditure to be divided between £250 million to provide for "superinflation" of rights and talent costs and £300 million for "genuine enhancements to core analogue services". The remaining £700 million per year by 2006 would be spent on new services. Specific proposals were presented to the Panel for expenditure of £300 million per annum on new services by 2006. The Panel, remarkably uninquisitively, concluded that the remaining, completely speculative figure of £400 million per annum on new services was intended to be spent in a manner to be determined at a later date.[85]

26. When the report of the Davies Review was published, little more was clear about the costs and content of the BBC's vision for its future. The costings for some new services provided to the Panel were not published in detail in the Review on the grounds of what the Panel accepted to be "necessary commercial confidentiality".[86] The apparent desire of a publicly-funded broadcaster to seek further public funding for services without being willing to disclose to the public the costs and nature of those services concerned some witnesses.[87]

27. On 2 November 1999 the BBC published a statement of its vision and the funding needed to meet that vision.[88] This was apparently "more detailed" than the document put to the Davies Panel.[89] Mr Davies said that the Panel "would have welcomed more detail on the specific items that they [the BBC] were asking for".[90] In our view, the Davies Panel was remarkably tolerant, not to say trusting, in considering a case for additional BBC funding on the basis of sparse information about what new services the BBC proposed to provide.

28. Sir Christopher Bland accepted that additional information for the Panel would have been desirable in principle, but said that the BBC's plans were being developed in the course of the year;[91] though at the same time the BBC was able to alight upon a remarkably precise sum of money. Nevertheless, the timing of the release of information by the BBC limited the information on the costs of the BBC's vision available to the Davies Panel, to those participating in the public consultation on the Review's proposals and to those submitting evidence to this Committee by the original target date of 1 November 1999.

29. Moreover, the new document produced by the BBC does not amount to a fully-costed vision. As we noted earlier, the Davies Panel was told that the BBC wanted £550 million per annum by 2006 to devote to "existing services" and £700 million per annum by 2006 for "new services".[92] The November 1999 BBC document outlines desired additional expenditure of £730 million by 2006-07.[93] This figure includes expenditure proposals for BBC One and BBC Two as well as proposals for new services.[94] The document does not explain how the request of £730 million is divided between expenditure on existing services and expenditure on new services. Because the November 1999 figure of £730 million includes expenditure on BBC One and BBC Two, it cannot logically be the same as the request made to the Davies Panel for £700 million on new services. Either some of the BBC's request for funding to the Review still remains to be spelt out or the request has changed between the BBC's submission of evidence to the Davies Panel and its November 1999 publication in ways which have not been explained. There is nothing resembling an overall corporate plan setting out the division of costs on particular services as a basis for public consideration of the price tag for the BBC's new vision.

BBC Online

30. BBC Online is the BBC's non-commercial web-site. It has blazed a trail in terms of the approach of British broadcasters towards the Internet. The web-site has matched expectations of a new BBC service and has had enormous success, with an audience growing at a rapid rate.[95] It is an exemplar of what many expect of the BBC. In 1997-98 and 1998-99 the BBC spent £18.7 million and £23 million respectively of licence fee payers' money on BBC Online.[96] In the current financial year it plans to spend £26 million from the same source.[97] The BBC thought that, in future years, "very significant extra investment" would be needed in BBC Online.[98]

31. The Davies Panel considered whether BBC Online should be developed as a commercial service given its current distinctiveness from the BBC's main broadcasting services, the site's apparent success and likely attraction for advertisers, the substantial proportion of visitors to the site from overseas and the current very high valuations of Internet companies.[99] However, the Panel rejected the option because it expected BBC Online to become a core part of the BBC's public service in the next few years as the BBC's domestic audience increasingly accessed BBC output via the web-site.[100] As Mr Davies put it in evidence to us, "we would not want to have transformed the BBC into an advertising service by mistake".[101] The Panel did, however, recommend that separately branded non-UK web-sites should be run on a commercial basis.[102]

32. The continued public service development of BBC Online is the subject of several, inter-related criticisms from the commercial Internet sector. The British Internet Publishers' Alliance expressed concern that the theoretical separation of BBC Online from the BBC's commercial web-site—beeb.com—has failed in practice.[103] The separation is "completely disingenuous when you actually look at the web-sites and realise that everything is just a click away and that the promotion of a commercial service is juxtaposed against the promotion of the public service".[104] The Alliance and others stressed that a great deal of activity on the Internet was more akin to publishing than broadcasting. In the former area, the BBC was competing directly in a field well-served by commercial publishers.[105] In publishing, it was argued, there was no need for public intervention as a result of market failure, because there was already a thriving market.[106] Rather, the BBC was securing a dominant market position which was crowding out potential competitors and could be a cause of market failure.[107] For example, the commercial web-site developed for "Top Gear" on beeb.com was claimed to be a deterrent to private investment in motoring web-sites.[108]

33. We found the evidence from the British Internet Publishers' Alliance stronger in its analysis of the problem than in proposing solutions. It was content to see the BBC develop BBC Online as a method of public service broadcasting, but, by implication, the Alliance wished to see the BBC banished from commercial exploitation via the Internet.[109] The Alliance did not believe that the BBC should be permitted to develop advertising on any of its services, even those intended for overseas markets.[110] The Broadcasting, Entertainment, Cinematograph and Theatre Union (BECTU) opposed advertising on the main BBC web-site for two reasons: first, BBC Worldwide, if it assumed responsibility for BBC Online, would be required to pay a commercial price for broadcast content; second, advertising would slow down access to broadcast content—because of the need to down-load advertising material at the same time—and thus push up the associated telephone charge.[111] The Secretary of State commended BBC Online as a high quality service which he saw as being "part of the very heart of the BBC's public service responsibilities".[112] He thought it was right this "core news and current affairs service provision" was funded by licence fee payers.[113]

34. Others favoured commercial development of BBC Online. Lord Gordon of Strathblane thought that the Panel's arguments against advertising on BBC Online were "not sound": the web-site was sufficiently distinct from broadcasting to be open to commercial development.[114] The ITC also saw no fundamental reason why the service should not be supported by advertising.[115] Mr Tony Ball, Chief Executive of BSkyB, had no objection to BBC broadcasting content on the Internet being publicly-funded, but thought that other parts of BBC Online were not distinct from commercial services: "If it was all in the commercial arm of the BBC, it would be much clearer to understand and also to support".[116]

35. The Secretary of State stated that he did not rule out the possibility of permitting advertising on BBC Online, but thought that European Commission rules would make it very difficult to operate BBC Online as a hybrid service with both licence fee funding and advertising.[117] Sir John Birt believed that advertising on a licence fee-funded service would be "ruled unlawful".[118] If BBC Online became a fully commercial site it would be obliged to pay a commercial rate under fair trading rules for its broadcasting content. In consequence, the BBC stated that advertising revenue "could not begin to fund the BBC's activities Online".[119] It would require a vast external investment which would call into question whether it was a BBC site at all.[120]

36. While averse to the general commercial development of BBC Online, the Secretary of State said that "it does sadden me sometimes that the services of BBC Online are used so extensively by people abroad".[121] The BBC is seeking to respond to the Davies Panel recommendation to provide a commercial version of BBC Online for overseas users.[122] Mr Chris Smith said that he was considering how this dividing line between users could be drawn effectively and awaited with interest the outcome of the BBC's own consideration of the matter.[123] In addition to particular consideration of commercial sites for the overseas market, the BBC is also said to be reconsidering the whole dividing line between its commercial and non-commercial provision. The BBC acknowledged that, in the past, there may have been "some overlap" between its commercial and public service sites.[124] BECTU told us that the BBC was still changing the balance between the sites.[125] Mr Chris Smith also noted that the BBC was considering "a whole variety of options between these two services".[126]

37. BBC Online is a service that needs to be taken much further. We accept the argument that advertising on the site is incompatible with licence fee funding; a half-way house is not possible. We are sceptical about the BBC's attempts to maximise the commercial benefits of content accessed from abroad while arguing that content accessed from this country is a pristine public service. We need a clearer definition of the nature of a public service web-site. We also consider the division between commercial and non-commercial domestic web-sites unenforceable in practice. These are circles which cannot be squared. This Committee admires the launching of BBC Online and the quality of the services provided. BBC Online is the start of services which the BBC will increasingly be required to provide in future, but we consider that it will be stultified if it remains on its current basis. We recommend that BBC Online should be transferred to BBC Worldwide to enable it to expand its scope and service and take advantage of the commercial opportunities thereby created.

BBC Choice

38. BBC Choice will cost the licence fee payer £54.1 million in 1999-2000, its first full year of operation.[127] According to the BBC, "BBC Choice has the highest weekly reach of all new digital services and has a higher reach in digital homes than a number of more established channels such as Sky News and Sky Sports 2".[128] In Sky digital homes, BBC Choice has a 0.5 per cent audience share and a 20.3 per cent reach.[129]

39. The BBC told the Davies Panel of its ambition to turn BBC Choice into "a genuine third network for digital audiences, which would aim to serve a younger audience than BBC One and Two".[130] If full funding of the vision were not forthcoming, BBC Choice would, according to the BBC, "not be a genuine third network serving younger audiences ... but would be a catch-up service of the best on BBC One and Two each week".[131] The Panel offered no thoughts on which of these options it preferred, but Lord Gordon was concerned at the full-service vision:

"One of the things they [the BBC] had in mind was to turn BBC Choice into a genuine BBC3, a fully-fledged channel. Nobody had asked them to do that."[132]

40. The BBC's new vision statement refers to "increased investment in original drama and entertainment" and "a greater level of originated, factual programmes" on BBC Choice.[133] ITN observed that there is no enforceable definition of the public service function of BBC Choice and that there are no proposals for an independent public consultation on the channel's locus and remit.[134] The rationale for quality programming on BBC One and BBC Two is in part that they are operating in a very restricted market of channels with access to a universal audience. This rationale does not apply to BBC Choice. Originated programming for BBC Choice poses a simple, but fundamental question: why is such programming funded by the universal licence fee not available first on the BBC's universal channels? The licence fee payer has not been let in on the secret of BBC Choice's future remit and budget.

BBC Parliament

41. The BBC assumed responsibility for what is now BBC Parliament following the collapse of the previous Parliamentary Channel. We have previously welcomed the BBC's commitment to comprehensive parliamentary coverage on television in these circumstances.[135] Expenditure on BBC Parliament in 1999-2000 is expected to be £3.7 million.[136] The BBC has plans to extend the channel's coverage of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly.[137] Information on the audience reach and share does not appear to be available, possibly because the number of viewers is so statistically insignificant. Telewest did, however, tell us that complaints were received from consumers if the channel was not available among analogue cable services.[138] The service fits any definition of services to be provided by a public sector broadcaster, although the ITC still disputed whether it should have become a BBC service without full consultation to determine whether a commercial operator could be found.[139] This seems to us a disingenuous view, since it was open to any commercial operator to seek to acquire the service.

News 24

42. News 24 is the BBC's response to the development of continuous news channels by other providers. In the current financial year, the budget for News 24 is £53.9 million.[140] To put this figure in perspective, if the digital licence supplement proposed by the Davies Panel were to be introduced at its initial and highest rate of £23.88 a year, the gross annual receipts from the current 2.2 million digital subscribers would not cover the budget of News 24 for a year. In our previous Report on the BBC, we stated our expectation that the funding review would examine the scope for development of News 24 as a commercial channel.[141] The Davies Panel did not take up this suggestion, Mr Davies believing that the question of whether a particular service was delivering a public service was beyond his purview.[142]

43. We received a great deal of evidence on audience figures for News 24, particularly in relation to its main current commercial rival, Sky News.[143] The BBC maintains that "the salient fact" about News 24 is that it has a weekly audience of six million people.[144] The BBC also claimed that the service now out-performs Sky News in cable households.[145] The validity of these figures has been disputed. First, it has been questioned whether the audience for News 24 when it is simulcast overnight on BBC One and BBC Two can validly be deployed in a comparison of News 24 as a channel with Sky News.[146] Second, News 24, as a free service, is more widely available than Sky News on cable: the former reaches 96 per cent of cable homes, the latter only 76 per cent. Where the services compete head-to-head for viewers, Sky News consistently out-performs News 24.[147] On satellite digital television, Sky News has a 0.4 per cent audience share while News 24 has a 0.1 per cent audience share.[148] The BBC effectively conceded the superior market position of Sky News when Sir Christopher Bland said that "we will catch up with Sky News, but it will take a while".[149] BSkyB offered the further complaint that News 24, funded entirely by the licence, was being provided free to cable companies who deployed it in commercial competition with BSkyB.[150]

44. The BBC acknowledged that, if a simple equation was made involving the budget of News 24 and its audience, it did not "stack up".[151] They did not consider that a like-for-like comparison of the budgets of News 24 and Sky News could be made for the simple reason that it was not known whether the allocation of news-gathering and transmission costs between the two organisations was the same.[152] Sir John Birt thought that "News 24 will be a very, very important part of the BBC's future over ten years".[153] It was as a long-term investment that News 24 had to be judged.[154]

45. It should be obligatory for the BBC, when introducing new services, to determine whether they are cost-effective bearing in mind the cost and the outcome. Judged against this criterion, we find it difficult to discern the justification for News 24 in view of its huge cost and small audience. The BBC has failed totally to explain why the costs of News 24 are so high in the context either of other news broadcasters or in the context of its total news budget. The case for News 24 has not been established by the BBC.

Digital promotion

46. In the three-year period up to the end of March 2000, the BBC is spending £11.5 million on the promotion of digital services. In 1999-2000 alone, £6,395,000 will be spent on such promotion, although the figure is expected by the BBC to "plateau out".[155] As will be apparent from the evidence set out in the Annex to this Report, this figure of £11.5 million had to be dragged out of the BBC, all of whose senior executives, when questioned at a public evidence session, were in confusion among themselves about the meaning of expenditure figures on promotion which they themselves offered us. While we take their latest interpretation of their own figures on trust, we cannot, of course, rule out their coming up with yet another interpretation at some future stage. Whatever the actual sum of money turns out to be, the BBC tell us that this money has been spent on a range of activities, including paid-for-advertising, published material for consumers, a helpline and information on digital television for retailers.[156] Initial evidence on these endeavours was provided in response to a specific request from this Committee for information on "methods ... employed by the BBC to promote its digital channels"; but, in oral evidence, Sir Christopher Bland rejected the proposition that attracting free-to-air digital audiences was the purpose of the expenditure of £11.5 million: "The product of that expenditure is a wider awareness amongst the public of what digital offers over a number of years and that is a genuine public service. We are not there to sell digital television."[157] However, in the next breath, Sir John Birt was prepared to claim shared credit with BSkyB and Ondigital for the "national success story" of digital television in 2.2 million households.[158] The BBC's digital promotion is viewed by Sir John Birt as "a public benefit".[159]

47. While it is neither for this Committee nor for Parliament to make judgements about BBC programming, it is our responsibility to comment on general BBC expenditure. We are bewildered and bemused by the BBC's figures for expenditure on digital promotion: on how it is composed; what exactly it has been spent on; and on how it is justified even though the ex post facto justification is that the BBC is funding "a national success story" which consists almost entirely of subscribers who fund SkyDigital and Ondigital. This seems to be an obscure use of public money.

The overall BBC vision and the BBC's case for additional funding

48. At the heart of the BBC's case for new services and additional funding and the Davies Panel's partial support for this case is the proposition that the BBC's provision of high quality digital services is essential to digital take-up, particularly in attracting a near universal audience to digital television before analogue switch-off.[160] However, the BBC's current new digital channels have singularly failed to attract a significant audience for free-to-air digital television. Following installation of a Sky dish for a single capital outlay of £100, it is possible to receive free-to-air digital television without any further charge. However, by 11 November 1999, a total of only 5,333 people had chosen to do so.[161] In addition, the BBC estimates that 20,000 integrated digital television receivers have been sold.[162] Therefore, even if it is assumed that all purchasers of integrated digital television receivers are not subscribers to any pay digital service, the total number of free-to-air only digital households is barely one per cent of all digital households.

49. We have referred already to such information as is available about audience figures for the BBC's new digital services. Sir John Birt told us that research on the audience for digital services was not as robust or reliable as that for analogue viewing.[163] Nevertheless, the BBC has brought forward a whole array of audience figures for its digital services, some of which are barely comprehensible. It is impossible to assess in a meaningful way the audience for new BBC digital services beyond that created by commercial providers. In the absence of reliable information, we found the testimony of those commercial providers convincing. Mr Stuart Prebble of Ondigital told us that "to date there is very little interest in the free-to-air services".[164] Other multi-channel operators testified to the lack of appeal of free-to-air services alone.[165]

50. The BBC's case that it will move from a peripheral provider of new digital services to the central driver of consumption is unproven and highly contentious. ITV state that "When [BBC] Worldwide launched its commercial UK TV channels the BBC made a similar claim that it would drive the take-up of pay television. This has not been the case."[166] The BBC has no track record of initiating services in a multi-channel market that capture large new audiences. The Davies Panel noted that "some of the BBC's digital offerings have been distinctly threadbare".[167] Scottish Screen noted of BBC digital services:

"There is a lack of a bright new idea, like FilmFour, that adds to the range of choice. So far in the digital world the BBC seems to have achieved a double miss: less attractive terrestrial channels and middle-of-the-road digital channels."[168]

The notion that the BBC is uniquely positioned to attract a new mass audience to digital television is a hunch and a hunch which flies in the face of the evidence of the development of the digital market so far.

51. The Davies Panel did not believe full-funding of the BBC's vision was appropriate, but did accept the case for further funding to provide the BBC with "revenue buoyancy" based on the concept of "sufficiency without excess".[169] The Panel proposed measures designed to provide the BBC with additional external revenue of around £150-200 million a year between 2002 and 2006.[170]

52. The Davies Panel stated that "we were not happy to pre-fund services which had not yet been fully identified and specified".[171] Yet it appears to us that this is precisely what the Panel proposes should be done: to provide revenue buoyancy to enable the BBC to develop or establish digital services which remain to be fully identified and specified. The BBC has been a follower rather than a leader in the provision of digital channels. There are no grounds for accepting that this position will be reversed in future. The BBC has shown a disinclination to view its budget as a guide to the scope of its digital provision, preferring instead to advance an enormously ambitious vision. The BBC's claims for additional expenditure on new services are sketchy at best. The BBC has, in our view, singularly failed to make the case for a much expanded role in the digital era and consequently for additional external funding.

47 Davies Review, pp 152-153, 158; Eighth Report of the Culture, Media and Sport Committee: Report and Accounts of the BBC for 1997-98: Memorandum by the Department for Culture, Media and Sport, Cm 4258, February 1999, paras 4-5. Back

48 Q 673. Back

49 QQ 669, 688. Back

50 Q 673. Back

51 Davies Review, p 10. Back

52 Q 40; Davies Review, p 10. Back

53 Ibid. Back

54 Davies Review, p 139. Back

55 QQ 356-357. Back

56 QQ 470-472. Back

57 Evidence, p 225. Back

58 Evidence, p 266. Back