BBC & Channel 4’s contribution to the UK economy

Channel 4 recently published a study by Ernst and Young of the Gross Value Added (GVA) to the UK economy [pdf]  from their activity.

This report focuses on the contribution to the Nations and Regions of the UK and concludes that Channel 4 contributed £992m to the UK economy in 2019, including £274m to the regional economy. It lists the other benefits that the UK receives from C4 activity, particularly its support for a production ecosystem in Glasgow, its moves to Leeds, its support for Black, Asian, and minority ethnic talent, its contribution to training and development, and its projection of UK culture and values to the world.

In 2011, when the initial wave of cuts from the incoming Conservative government was beginning to bite (at the start of the BBC’s euphemistic “Delivering Quality First” programme) Bectu and its sister unions in the Federation of Entertainment Unions commissioned Landman Economics to write a similar report on the BBC, the Federation of Entertainment Unions commissioned Landman Economics to write a similar report on the BBC.

Both reports show that investment in BBC and Channel 4 is a remarkably efficient way of priming the British economy. The money bounces around a lot of valuable sectors before finally going offshore and into shareholders’ pockets.

As the Landman report put it, in 2011….

“Given that the licence fee freeze is equivalent to a real terms funding cut of 16%, the BBC/Deloitte estimates suggest that the DQF cuts can be expected to reduce the GVA produced by the BBC by approximately £1.1 billion by 2016/17, relative to a situation in which the licence fee increased by CPI inflation for six years (taking it up to around £169 per year). This estimate is the gross impact rather than the net impact of DQF. The net impact on economic output will be less than £1.1 billion because it takes into account the increase in household real incomes as the licence fee falls in real terms over the next six years, but will still be positive because the multiplier effects of BBC spending are substantially larger than the multiplier effects of increased household net incomes.

However, the overall economic effects of the licence fee settlement are likely to be even larger, because of the additional £345m of funding obligations which the BBC has agreed to take over from the government by 2014-15 (including paying for the World and BBC Monitoring, and additional funding for broadband roll-out to local areas and local TV and online content) Adding in these additional obligations means an effective cut of almost 25 percent in funding available for existing BBC activities, which would imply GVA losses of
around £1.7 billion in total.”

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