Funding S4C

I've just read through the Welsh Affairs Select Committee's report on S4C, available here, and have to say that I am pleasantly surprised at a number of things it says, particularly with regard to funding.

The present arrangement is that nearly all S4C's funding of about £100m a year comes directly from the DCMS based on a formula linked to inflation. The essence of the UK Government's proposal is that the bulk of S4C's funding should in future come from the television licence fee, with a much smaller proportion coming from the DCMS. By 2014-15, £76m would come from the TV licence fee and £7m from the DCMS, making £83m in total.

Now it is true that this deal was hastily cobbled together at the last minute in negotiations between the DCMS and BBC, without any consultation process involving other parties or indeed S4C itself. That was obviously not a good way of doing things and the report says so:

131.  On the evidence we received, it is apparent that the decision to fund S4C via the licence fee from 2013 onwards was made in haste. In a matter of hours a deal was struck between BBC executives and Ministers in London, without sufficient consultation with relevant parties. This is regrettable.

Yet as I said in previous posts, most notably here, I do not believe the decision to fund S4C primarily through the licence fee is a bad idea. In fact it is a good idea, because both S4C and the BBC are public service broadcasters funded by public money, and therefore providing the bulk of their funding from the same source will help ensure that both are treated equally.

But there are two key issues:

•  We cannot reasonably expect either S4C or the BBC to be immune from public spending cuts, but the two organizations should at least suffer equally. It is unfair for the cuts to S4C to be larger than the cuts to the BBC.

•  Any money that is allocated to S4C from the licence fee should be guaranteed, rather than first going to the BBC and only then forwarded to S4C at the discretion of the BBC.

The WASC report makes some welcome and encouraging comments on both these points. On the issue of making the cuts equal it says:

98.  Any reduction in S4C’s funding should be comparable to other public service broadcasters. We call on the DCMS to ensure that this is the case.

Now what does this mean in practical terms? In the BBC/DCMS agreement the BBC agreed to take on additional responsibilities that were equivalent to a reduction in income of 16%. However the funding cuts proposed for S4C amount to 24%. Therefore in order to ensure that both organizations receive comparable cuts, this shortfall needs to be addressed.

There are a number of ways of doing the maths, particularly when commercial activities are taken into account, but the shortfall is likely to be less than £10m. In terms of the DCMS budget of over £2bn and the BBC's budget of maybe £3.5bn this is peanuts, but it will be of vital importance to a body the size of S4C. The simplest and most effective way of doing this will be to increase the DCMS subvention.


On the issue of long-term funding, the WASC report is again encouraging:

100.  We recommend that the Government confirms the funding of S4C beyond 2014-15 as soon as possible. Without this certainty, S4C will not reasonably be able to develop its future strategy. Therefore, we believe that it is essential that there is a long term funding formula enacted in primary legislation.

S4C has been able to operate independently because its funding has been safeguarded in legislation. We can perhaps say that the previous inflation-linked funding formula was generous, but it is vitally important that it is replaced with another statutory formula, rather than simply left to the discretion of the BBC.

It's fair to say that the BBC has a pathological aversion to any mention of "top-slicing" the television licence fee, and this is dicussed in sections 101 to 105 of the report. But despite the BBC's objections, top-slicing has been applied to the TV licence fee before and there is no reason for it not to be applied in future, whether the BBC like it or not.

I suspect that the answer is to find a form of words which will allow the BBC to believe that the TV licence fee is not being top-sliced, while at the same time guaranteeing that S4C get a fair, objectively calculated proportion of the money from the licence fee in future years. This is the form of words used in the report:

105.  We recommend that the DCMS work with the BBC and S4C to determine how S4C’s funding can be guaranteed. We further recommend that S4C receive in full a portion of the Licence Fee which is at least equal to the amount set out by the DCMS in S4C’s funding review settlement.

To me, that sounds like top-slicing in all but name. The question now is how to write this into primary legislation.


Besides funding the other big issue is S4C's independence; and although the report discusses it, it is still far from clear how the operational model might work. But he who pays the piper calls the tune, so I think it is much more important to get the finance sorted first, so that no part of S4C's funding will be left to the discretion of the BBC. Once financial independence is guaranteed, operational and editorial independence will be that much easier to achieve.


Finally we need to remember that this is a report by a Select Committee, and the UK Government is not obliged to implement its recommendations. Nonetheless I hope that it will, for the report is quite unequivocal about S4C's cuts not being greater than the cuts to the BBC and the need for guaranteed future funding that is not dependent on the discretion of the BBC.

It is now up to those who can influence the Westminster government—in particular Tory and LibDem MPs—to ensure that these funding recommendations are implemented.

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