Quangonomics

TUESDAY, MARCH 02, 2010

Quangonomics

Two for the price of one - that's BBC value

According to the BBC - no, don't laugh - its activities "generate over two pounds of economic value for every pound of the licence fee". So for the trifling sum of £3.5bn pa, we get at least £7.7bn of economic value every single year. It's a miracle of value-adding superefficiency.

WTF?

Well, it works like this. The BBC pays Deloitte - pays them an unknown sum out ofour friggin' telly tax - and Deloitte produces a thick report that says the BBC generates at least £7.7bn pa of economic value. And to prove it, here's their picture (click on it to enlarge):

OK, so how on earth have Deloitte come up with such wildly implausible numbers? 

We don't know. Despite the BBC claiming to have published Deloitte's report alongside their much discussed strategic review today, we have been unable to find it anywhere.

But judging from the BBC's summary, the argument seems to be that because they employ a lot of highly paid people, and because they buy a lot of programmes from independent production companies, that somehow constitutes value added. They also seem to think that those production companies would disappear if the BBC didn't exist and therefore wouldn't be able to sell their products to anyone else either. 

This is known as quangonomics - a line of thinking that can be applied to any quango you care to name. For example, BOM's old friend the Chip Marketing Council - a tax-funded quango costing us £6.5m pa - can claim that it not only creates value by spending £6.5m pa on staff and advertising companies, but it creates even more value by keeping chip shops in business. 

But at the risk of insulting your intelligence, let's keep in mind a couple of rather unfortunate facts. 

First, taxes destroy at least as much value as the public spending they finance (and there are strong theoretical and empirical reasons for thinking they actually destroy more value).

Second, nobody can possibly know whether the chip shops would disappear without the Chip Marketing Council's support. And if they did disappear, that would be telling us that the quango had been propping up an industry bloated beyond the public's true appetite - its staff and premises would be more valuably employed elsewhere.

No, there may be all kinds of reasons why we should retain the tax-funded BBC, but economic value added is not one of them. We will never discover its real economic value unless we privatise it.

And talking of privatising the BBC (now, be fair - we've kept off this old favourite for months), did everyone see Michael Gove on Newsnight last night? 

Grilled by Labour's Kirsty Wark on the Ashcroft affair, he did a brilliant job. Instead of simply soaking up Newsnight's usual anti-Tory punishment, he asked Wark calmly but very firmly why it was she and the rest of the BBC's interviewers didn't give Labour and LibDem politicians the same hard time over their non-dom donors? Wark didn't like it at all, and attempted to end the interview. But Gove carried on and made the point. Other senior Tories should follow his lead.

As we've said before, assuming Cam wins, there really do have to be consequences for the BBC. Over the years we've been writing BOM, it has become increasingly obvious they are a major roadblock to reform. It is ludicrous to spend £3.5bn pa of our taxes on a quango that is dedicated to the promotion and protection of Big Government. 

If not full privatisation, it needs shrinking drastically. Today's sacrificial offerings of the Asian Network and 6 Music don't even scratch the surface.

PS Just for a further chuckle, you might want to note how today's BBC report describes its number one priority: "The best journalism in the world. Informing civic and democratic life at home and abroad—through independent, impartial and accurate news, current affairs and information." And thereally disturbing thing is that they still believe they're delivering that.