Revealed: newly-released files in the National Archives show how Margaret Thatcher’s Cabinet rejected privatising Channel Four.

In July 2016 the British National Archives  released official files from 1986-1988 when Margaret Thatcher was Prime Minister. Amidst the hundreds of pages of Cabinet documents I found  CAB 130/ 1345-1348 and 130/1357 -1358 which are the papers of the Cabinet Committee considering the future of broadcasting in the run-up to what became the Broadcasting Act of 1990. My personal interest is that I was Editor of Channel Four News from 1983-1986 and Deputy Editor of ITN from 1986-1989. I am currently a non-executive director of Channel Four but I write here in a personal capacity. 

Cabinet papers from the 1980s just released into the National Archives show that when it comes to Governments and broadcasting policy what goes around certainly comes around. Two major policy issues of 2016 -the possible privatisation of Channel Four and the potential role of subscription on the BBC -were just as controversial in 1987 and 1988 as they are now.
A Cabinet committee,‘the Ministerial Group on Broadcasting Matters’, was chaired by Margaret Thatcher and among the the principal protagonists were William Whitelaw, Douglas Hurd,Nigel Lawson and Lord (David) Young. They made the decisions that led to the Broadcasting Act of 1990, a process best known for what it did to the ITV companies who, according to the committee’s papers, were ‘a commercial cartel..exploiting their monopoly position on commercial television’. The ITV companies were made to bid for their licences in an auction and they also lost both the right to sell advertising on Channel Four and control of ITN.
The Act also created important new rights for independent producers partly because,the papers record; ‘restrictive practices and over-manning were widespread in both BBC and ITV productions’.
In the Cabinet Committee papers the focus on what was seen as broadcasters’ inefficiency created some early warnings for what lay ahead for the BBC many years later; ‘by our squeeze on BBC income through a form of indexation well below their traditional rate of cost increases we have set a clear agenda for the BBC to become more efficient and effective’.
Warnings too in 1987 that subscription might be seen as the answer to a BBC funding system which,it was assumed,would reach a sell-by date.
‘The BBC licence fee would become increasingly anachronistic as new services,financed by advertising or subscription,gained ground’.Therefore ‘the Home Secretary should inform the BBC that the Government proposed to authorise them to encrypt their services so that they could raise money through subscription and that in setting the licence fee from 1991 onwards the Government would take account of the other income which the BBC could reasonable be expected to raise’.
But it is what the committee’s papers say about the possible privatisation of Channel 4,then just five years old,that have the most resonance with a current,as yet unresolved,debate.
The starting point was a meeting in July 1987 at which ministers instructed their senior civil servants ‘to report on the modalities for privatising Channel 4 and the implications of that step’.
If that sounds vaguely familiar compare it with ‘Work should proceed to examine the options of extracting greater public value from the Channel 4 corporation, focusing on privatisation options in particular’, the sentence in a September 2015 document accidentally revealed to a photographer in Downing Street.The 1987-1988 Whitehall discussion about what to do about Channel Four went on for a year. The current process is at ten months and holding.
In 1987 the Home Office under Douglas Hurd was in charge of broadcasting and he and his team of civil servants wrote most of the papers put to the Ministerial Group.The minutes summarise what Hurd said and what the Prime Minister said before,as was custom and practice,the Ministers ‘took note,with approval,of the Prime Minister’s summing-up of the discussion’.Sadly we don’t get to see what other committee members said.
But the clear constant thread that runs through the papers is Douglas Hurd’s concern ‘that the [privatisation] proposal could harm the ability of Channel 4 to provide, as it is statutorily required to do, a service of distinctive character,catering for tastes and interests not served by ITV and encouraging innovation in the form and content of programmes. It is widely accepted both that Channel has discharged its remit with outstanding success and that the remit should continue’.
But something very odd happened. In September 1987 Hurd signed off a typed up policy paper to the Committee which set out non-privatisation options before surprisingly concluding:
‘I therefore invite colleagues ..
(b) to endorse the proposal that the contract to operate Channel 4 should be awarded by competitive tender subject to specific requirements about the nature of the programmes to be provided’.
It appeared that Hurd’s resistance to privatisation had collapsed in the final paragraph.But bizarrely in the official minute of the meeting that paragraph is crossed out in red ink and replaced with a hand-written non-privatisation alternative. Was it all some Whitehall clerical cock-up or a last minute policy flip-flop?
Hurd was sent away with new orders from his Prime Minister; ‘the Home Secretary should give further consideration to the scope for providing further safeguards against the risk of a privatised Channel 4 going downmarket. He should bring forward a further paper on the ITV system and Channel Four dealing with these issues’. If Douglas Hurd was worried about the risk of a downmarket Channel Four, Margaret Thatcher wanted him to find a way around that risk.
At one meeting the Ministerial Group agreed that the remit must be maintained and that Channel Four should sell its own advertising but crucially Margaret Thatcher summarised that Ministers were ‘not able to reach a view on securing these objectives while keeping pressure on Channel 4’s costs’. That old bugbear of economic inefficiency was still nagging away at the Prime Minister.
Officials were sent away to come up with recommendations and after a full eleven pages of analysis came to the conclusion that ‘It would be possible to re-constitute Channel 4 either within the public sector or as a private sector enterprise’.
Hurd was slowly,quietly, winning the war.By August 1988 -a full year after the debate began- the group of officials working behind the scenes offered up a draft sentence for the forthcoming White Paper. It was, in true Whitehall mandarin style, presented in square brackets so that it could be discarded if necessary.[‘The Government believes that Channel 4’s special role is best fulfilled by an organisation not under a duty to maximise returns to shareholders’].

On the 7th November 1988 Douglas Hurd told the Commons ‘The distinctive remit of Channel 4 will be retained and reinforced to sustain high quality programmes in the commercial sector’.There was no mention of privatisation.

 

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