(c) crown copyright
Catalogue Reference:CAB/129/46
Image Reference:0035
JfHlS D O C U M E N T I S - T H E P R O P E R T Y O F H I S - B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T )
S E C R E T
CP.(51)
1 8 5
3RD JULY,
COPY"NO.
3/
1951
CABINET
REPORT OF BROADCASTING
COMMITTEE
PERCENTAGE OF NET LICENCE REVENUE
BE PAID TO THE B . B . C . M e m o r a n d u m b y the Chancellor of the
TO Exchequer I d i s a g r e e w i t h t h e p r o p o s a l m a d e b y t h e S e c r e t a r y of S t a t e for
C o m m o n w e a l t h Relations and the P o s t m a s t e r - G e n e r a l (C,P.(51) 183,
p a r a g r a p h s 11 - 15) t h a t t h e B . B . C . s h o u l d c o n t i n u e f o r a f u r t h e r t h r e e
y e a r s to r e c e i v e 1 0 0 % of the net l i c e n c e r e v e n u e .
M y proposal is that
the p e r c e n t a g e should be reduced to 80.
2.
The i n c o m e available to the B . B . C . for financing its h o m e and
t e l e v i s i o n s e r v i c e s w a s r i s i n g s t e a d i l y before the w a r , and has r i s e n
strikingly s i n c e , a s the following figures s h o w : Year
Notes
P e r c e n t a g e of N e t
Licence Revenue
Amount paid
to B . B . C .
£m.
1939-40
7 5 4- s p e c i a l a d d i t i o n f o r
t e l e v i s i o n and foreign
languages broadcasts
3.7
1947-48
8 5
8,9
1948-49
8 5
9,2
1949-50
8 5
9.7
1950-51
1 0 0
12.6
1951-52
1 0 0
12.7
(i)
( i i )
F r o m 1940 to 1946 the B . B . C . r e c e i v e d an E x c h e q u e r
not related to licence revenue.
grant
T h e p o s t - w a r f i g u r e s , unlike the 1 9 3 9 - 4 0 figure, do not include
anything at all in r e s p e c t of the B . B . C . ' s o v e r s e a s s e r v i c e s :
t h e y a r e n o w quite s e p a r a t e l y financed, and the p r o b l e m n o w
at issue r e l a t e s only to h o m e broadcasting and television.
A l l o w i n g for this the difference b e t w e e n 1 9 3 9 - 4 0 and
1 9 5 1 - 5 2 i s of c o u r s e e v e n w i d e r than the table s h o w s .
3.
The increase
l i c e n c e s bought b y the
1946 (from 10s. to £1
partly to the increase
h a s b e e n due p a r t l y to the g r e a t e r n u m b e r of
public, partly to the i n c r e a s e in the l i c e n c e fee in
for sound only and £2 for sound and television), and
i n the p e r c e n t a g e a l l o w e d to the B . B . C .
4.
. Before 1935 the percentage w a s on a sliding scale which gave the
B . B . C . 90% on the first million l i c e n c e s and s m a l l e r p e r c e n t a g e s t h e r e ­
after, d o w n to 60% on l i c e n c e s in e x c e s s of t h r e e m i l l i o n .
In 1 9 3 5 ,
following o n the U l l s w a t e r R e p o r t , an o v e r a l l p e r c e n t a g e of 75% w a s
adopted.
T h e r e a f t e r , h o w e v e r , at the t i m e w h e n all industry w a s being
asked to m a k e a national defence contribution to r e a r m a m e n t , the B . B . C .
w a s s i m i l a r l y a p p e a l e d t o , a n d v o l u n t a r i l y s a c r i f i c e d p&rt o f i t s 7 5 % for a
few years.
Ignoring the contribution, the p e r c e n t a g e went up by s t a g e s
f r o m 7 5 % t o a b o u t 9 0 % in 1 9 3 9 ; t h i s , h o w e v e r , c o v e r e d o v e r s e a s b r o a d ­
casting, which w a s not then separately financed.
5.
In 1 9 4 6 w h e n t h e p e r c e n t a g e a g a i n c a m e u p f o r r e v i e w ( t h e l i c e n c e
fee having b e e n i n c r e a s e d , s o that the p e r c e n t a g e m e a n t a g r e a t deal m o r e
in c a s h , and o v e r s e a s b r o a d c a s t i n g having b e e n s e p a r a t e l y dealt with) the
B . B . C . a s k e d for 100% but w e r e given o n l y 8 5 % .
In 1 9 5 0 f o r t h e f i r s t time 100% was granted.
It h a s n o t , t h e r e f o r e , g o t a n y l o n g t r a d i t i o n behind it. 6.
I c a n n o t a c c e p t the s u g g e s t i o n i n p a r a g r a p h 11 of t h e m e m o r a n d u m
b y the S e c r e t a r y of S t a t e a n d the P o s t m a s t e r - G e n e r a l that w h a t w a s s a i d in
1946 is r e l e v a n t to the p r e s e n t situation: the financial c l i m a t e today is
v e r y d i f f e r e n t f r o m that of 1 9 4 6 .
Still l e s s do I a c c e p t p a r a g r a p h 15 of
the p a p e r .
I cannot a g r e e that there i s any d e c i s i v e a r g u m e n t of principle
in f a v o u r of l e a v i n g a n y f o r m of e n t e r t a i n m e n t , h o w e v e r u s e f u l , untaxed at
the p r e s e n t t i m e .
P a r t i c u l a r l y w h e n t h e r e is a p r o s p e c t of jailing r e v e n u e
f r o m c i n e m a s , it should be c l e a r l y u n d e r s t o o d that the G o v e r n m e n t m a y
quite legitimately tax radio and television entertainment a l s o .
7.
T h e S e c r e t a r y of S t a t e a n d t h e P o s t m a s t e r - G e n e r a l a r g u e t h e i r
c a s e m a i n l y on the B . B . C . ' s capital n e e d s : and their paper a d m i t s no
p o s s i b i l i t y of e c o n o m y b y the B . B . C . in its c u r r e n t expenditure.
We a r e
entitled to e x p e c t s o m e e c o n o m y f r o m the B . B . C . a s f r o m e v e r y o n e e l s e .
8.
A s r e g a r d s c a p i t a l e x p e n d i t u r e , the i n c r e a s e to. 100% w a s c l a i m e d
and granted in 1950 m a i n l y on the ground that the B . B . C . had a h e a v y
capital p r o g r a m m e in p r o s p e c t , w h i c h could only be financed f r o m current
r e v e n u e s (or f r o m m o n e y put to r e s e r v e out of the r e v e n u e of p r e v i o u s
years).
In t h e e v e n t , h o w e v e r , t h e c a p i t a l p r o g r a m m e h a s n o t m a d e a s
rapid p r o g r e s s a s w a s h o p e d f o r , and it is c l e a r l y u n l i k e l y that a r r e a r s
can be o v e r t a k e n in the n e a r future,.
T h e effect is that the B . B . C . has
a c c u m u l a t e d a v e r y c o n s i d e r a b l e r e s e r v e : the a m o u n t n o w stands at
£4.46 millions.
9.
In 1 9 5 0 - 5 1 t h e C o r p o r a t i o n ^ i n c o m e w a s £ 1 3 . 3 m i l l i o n s a n d
expenditure £ 1 2 . 2 millions.
In t h e a b s e n c e o f a n y e a r l y p r o s p e c t of a
h i g h e r r a t e of capital d e v e l o p m e n t , and in f a c e of the v e r y l a r g e r e s e r v e
a l r e a d y in h a n d , it s e e m s t o m e w r o n g t o c o n t i n u e a b a s i s o f p a y m e n t
which r e s u l t s in a big s u r p l u s year b y y e a r and w h i c h is likely to i n c r e a s e
the p r e s s u r e f r o m the B . B . C . to spend m o r e on d e v e l o p m e n t .
10.
I have s e e n no supporting evidence for the
p a r a g r a p h 14 of the m e m o r a n d u m by the S e c r e t a r y
wealth Relations and the P o s t m a s t e r - G e n e r a l , and
upon a n u m b e r of s o m e w h a t arbitrary a s s u m p t i o n s
figures quoted in
of State for C o m m o n ­
I gather they depend
about the future.
187 My own calculation is that if the B . B . C . r e c e i v e d 80% of net l i c e n c e
revenue f r o m 1st January next the r e s u l t would be s o m e w h a t a s f o l l o w s : ­
1951-52
£m.
B a l a n c e in hand 1952-53
£m.
1953-54
£m.
1954-55
£m.
4.4
4.8
3.7
3.0
12.0
10.6
ii.o
11.3
1.0
1.0
1.0
1.0
17.4
16.4
15.7
15.3
9.9
10.8
11.4
12.1
1.7
1.9
1.3
1.2
1.0
(estd.)
(b)
12. 6
12. 7
12. 7
4. 8
3.7
3.0
Income
Licence income
(100% to 31.12. 51,
80% from 1 . 1 . 5 2 . )
Other receipts (publications etc.) say
Total
Expenditure
Current expenditure
(a)
Capital
Income
Tax
Total
Balance carried
forward
(b)
(b) 13,3
2.0
( a )
This table a s s u m e s that current expenditure will be as f o r e c a s t by
the B . B . C . itself in e v i d e n c e g i v e n to the B e v e r i d g e C o m m i t t e e .
It m a y b e a r g u e d t h a t r i s i n g c o s t s w o u l d i n c r e a s e t h e s e f o r e ­
c a s t s if t h e y w e r e t o b e r e v i s e d n o w , but the r a t e o f i n c r e a s e
a l r e a d y a l l o w e d for in the f i g u r e s l o o k s s o c o n s i d e r a b l e that it
ought to c o v e r that. - T h e f i g u r e f o r e c a s t f o r 1 9 5 0 - 5 1 w a s in
fact v e r y c l o s e to the event, in spite of i n c r e a s e d c o s t s since the
forecast was prepared.
( b )
The figures quoted for the first t h r e e y e a r s of the n e w Charter
p e r i o d o m i t the effect of i n c o m e t a x .
If e x p e n d i t u r e e x c e e d e d
current r e v e n u e to the extent shown, i n c o m e tax credit would be
d u e , w h i c h w o u l d h a v e t h e e f f e c t o f s l o w i n g d o w n t h e d e p l e t i o n of
r e s e r v e s by r o u g h l y 50%, so that the r e s e r v e s in hand at the end
of the p e r i o d w o u l d p r o b a b l y b e o v e r £ 3 m i l l i o n s i n s t e a d of
. £2 millions as shown.
11.
I do not a g r e e , therefore, that on the 80% b a s i s the p r e s e n t r e s e r v e
would a p p r o a c h vanishing point in the p e r i o d w e a r e c o n s i d e r i n g .
I con­
sider that there is e v e r y likelihood that an appreciable r e s e r v e would
remain.
j
12.
T h e point at i s s u e , h o w e v e r , is not a m e r e difference of
opinion about the c o r r e c t w a y of making calculations.
I cannot accept
the implication that the r e s t r i c t i o n of capital i n v e s t m e n t is a v e r y
t e m p o r a r y p h e n o m e n o n a n d that l a r g e u n d e r t a k i n g s like the B . B . C . s h o u l d
t h e r e f o r e a c c u m u l a t e l a r g e r and l a r g e r r e s e r v e s in o r d e r t o c a t c h up on
all their postponed capital development as rapidly as possible when
investment control is relaxed.
If I w e r e t o a c c e p t t h a t a r g u m e n t a s a
general one, the p r e s s u r e to relax the control would soon be irresistible.
13.
In a n y c a s e , it w o u l d b e p e r f e c t l y s i m p l e t o p r o v i d e f o r a n y
sudden u p s u r g e in the B , B . C , ' s capital expenditure s o m e y e a r s h e n c e ,
without i n c r e a s i n g l i c e n c e , f e e s , b y giving p o w e r s u n d e r the n e w C h a r t e r
(as r e c o m m e n d e d by the B e v e r i d g e C o m m i t t e e ) for a higher borrowing
limit than the p r e s e n t £1 m i l l i o n .
I have not p r e s s e d the point, but I
d o u b t w h e t h e r t h e S e c r e t a r y of S t a t e a n d t h e P o s t m a s t e r - G e n e r a l a r e
w i s e to r e j e c t this r e c o m m e n d a t i o n (paragraph 27 of the draft White
Paper).
14.
F o r all these r e a s o n s I propose that for the first three y e a r s
(at l e a s t ) o f the n e w C h a r t e r the B . B . C . s h o u l d r e c e i v e o n l y 8 0 % o f n e t
licence revenue.
H.G.
Treasury Chambers,
3RD JULY,
1951.
S.W.1,