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BBC cuts 'put UK's creative industry at risk'

21 December 2011

Cuts proposed at the BBC – which will result in the loss of 2,000 jobs – will have a huge adverse impact on the UK's creative industries sector, research commissioned by the NUJ reveals.

The analysis, carried out by Howard Reed, director of the Landman Economics consultancy, shows the cuts outlined in the BBC's Delivering Quality First (DQF), its management plan for 2012 to 2017, are likely to reduce UK economic output by between £1.1 and £1.7 billion per year at 2011 prices.

The introduction of DQF followed the licence fee settlement agreed with the Government in October 2010, which sees the fee frozen until 2017 and the BBC assuming new funding responsibilities, including paying for the World Service and S4C – an extra £340 million expenditure.

Howard Reed's research concluded there was a strong case for re-negotiating the licence fee deal and people would be prepared to pay extra for a quality service.

The report, The BBC's Delivering Quality First proposals: an assessment of the economic and social impact, and the potential for revisiting the licence fee settlement, says:

"It is clear that the BBC cuts will have a huge adverse impact on the UK's creative industries sector, just at the time when the country is relying on world-leading sectors such as this to spearhead economic recovery from the most serious economic crisis for 70 years.
"Economically, cutting the BBC by this much, at this time, looks like a dangerous and wrongheaded strategy."

The report also found the pattern of cuts to TV and radio services places the BBC's ability to meet its wider social objectives in doubt, in particular:

  • the budgets of smaller channels, such as BBC Three and BBC Four, which account for much of the wide diversity of the BBC's output, are being cut by more than average.
  • older people are likely to be disproportionately affected by the planned cuts to BBC local radio services.
  • Currently, households outside London and the South of England are less likely to say the BBC offers good value for money. The pattern of cuts to regional radio services is likely to exacerbate these regional imbalances.

The report says:

"There is a clear danger that the harshness of the licence fee settlement will make it difficult for the BBC to adopt new technologies… in the way it did with Freeview in the 2000s, because it will lack the resources to invest in them."

The BBC is less likely to train workers to use new technologies, compounding the skill shortages in the broadcast engineering sector already found in recent research by Creative Skillset, the industry body that supports skills and training for people and businesses.

The cuts are a result of a licence fee deal, carried out by Mark Thompson, the director general, and the government behind closed doors in October, 2010. He agreed to freeze the licence fee at £145.50 for six years and, at the same time, take on a long list of extra commitments, including the World Service and S4C, amounting to an extra £340 million expenditure.

Howard Reed looked at the recent polling evidence of people’s willingness to pay extra on the licence fee and believes there is a solution to the BBC’s situation. He said:

"My analysis concludes that an alternative settlement where (for example) the BBC licence fee rose in line with inflation for the next six years, rather than being frozen in nominal terms, would have been viable, based on the headline polling evidence. In short, there is a clear case for revising the terms of the current BBC funding settlement."

Michelle Stanistreet, NUJ general secretary, said:

"This report shows the cuts to the BBC are not only putting the corporation's future as a quality broadcaster in danger. The repercussions to the UK's wider creative industries sector will also be adversely affected.
"Equally worrying is Howard Reed's analysis, which shows the cuts will put in doubt the BBC's ability to meet its wider social objectives laid out in its charter. The report also makes a compelling case for re-opening the licence fee deal."

The report forms part of the NUJ's submission to the consultation on DQF.

The Landman Economics report uses estimates from recently published research by Deloitte (updated by the BBC in 2011) on the BBC's Gross Value Added – that is, the value generated for the UK economy as a result of the BBC's economic activities. This includes the BBC's roles as an employer and in-house producer of content, as a commissioner of programmes and other services, and as the major provider of training services in the TV and radio production sector.

Tags: , bbc, creative industries, landman economics, broadcasting, radio, television, cuts, new media, delivering quality first, bbc licence fee