BBC Charter

Lord Ashton of Hyde Excerpts

Wednesday 12th October 2016 Lords Chamber

Asked by

[Lord Ashton of Hyde]

That this House takes note of the drafts of the BBC’s new charter and the agreement between the Secretary of State for Culture, Media and Sport and the Corporation.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, this debate marks the conclusion of the BBC charter review.

Over the last two years, this Government have listened very carefully to the views of industry and the public, including reading more than 190,000 consultation responses. Committees of both Houses gathered evidence and issued reports. Sir David Clementi chaired a review of the BBC’s governance and regulation for the Government, and David Perry QC conducted an independent review of the sanctions appropriate for TV licensing offences. The devolved Administrations and Parliaments also contributed in a number of ways. At this stage of the review I would like to place on record my and the Government’s gratitude to all those noble Lords who made time to talk to me, officials and other Ministers in recent weeks.

To sum up, this has been a remarkable process, achieved in a limited time. I am informed that there have been 17 official bits of business on the charter review just in the Chamber of this House since last June.

It comes as little surprise that the BBC should engender the largest consultation in government history, nor that at times the debate has got rather heated, because the BBC means a great deal to a great number of people. But the Government and the BBC agree that this extraordinary public debate has allowed us to get a good outcome. The noble Lord, Lord Hall, following the publication of the draft charter, remarked:

“There has been a passionate debate over the BBC’s future. Overall, we have the right outcome for the BBC and its role as a creative power for Britain. It lays the foundation for more great programmes and journalism”.

We agree with this, and that is what we wanted to achieve. The BBC is an extraordinary national treasure, loved by audiences across the UK and around the world. The Government are absolutely clear, and the charter and agreement illustrate this, that we fully support and endorse the BBC’s scale and scope and remit, which have served the BBC well and made it into what it is today. We now have a charter and agreement that will support a BBC which continues to make world-class content that UK audiences love, which remains an impartial provider of high-quality news, is independent, transparent and accountable, and benefits the rest of the UK creative sector.

I am also very pleased by similar views voiced in the recent debates in the devolved legislatures, held for the first time as part of this charter review. Most of that feedback has been very positive and by and large concludes that the charter strengthens the BBC and delivers for the devolved nations.

Since we set out our policy proposals in a White Paper in May, we have had collaborative discussions and negotiations with the BBC and Ofcom. Indeed, we continue to work closely with both to deal with minor and technical drafting matters and on the transitional arrangements. We now have a draft charter and framework agreement which provide details of those policy proposals and have the agreement of both the BBC and Ofcom.

Time is limited, and I know that noble Lords have plenty of helpful comments to make, so let me briefly set out a few of the key policies, in particular those where we have made significant progress since the White Paper in May. I start with independence, rightly a key concern of this House. The BBC will now appoint nine members of its new unitary board, compared with five appointed by the Government, with all BBC appointments following a robust and transparent process in line with public appointments best practice. We agree with the BBC that it should appoint the majority of board members overall, as well as an equal number of non-executive board members as those appointed by the Government. I am pleased that the BBC and the Government have been able to resolve this issue. The noble Lord, Lord Hall, has remarked that he is “glad” the Government “have reconsidered”.

I also recognise that there has been a lot of concern in this House about the mid-term review. The Government have listened carefully to this. Members of this House have been concerned that this could become a sword of Damocles hanging over the BBC and that it could become another charter review. We were always clear that we wanted the health check to be sensibly constrained to certain areas, so Article 57 of the charter makes it clear that the BBC’s scale and scope will not be in the scope of the mid-term review. Nor will the BBC’s next funding settlement coincide with the mid-term review, a concern which I know that the noble Lord, Lord Alli, and others have brought up on a number of occasions.

I turn now to regulation. The charter, and the agreement in particular, set out Ofcom’s new role as the BBC’s regulator. Ofcom will monitor and review how well the BBC is meeting its mission and public purposes, regulate editorial standards, hold the BBC to account over market impacts and public value and consider appeals from the industry after it has complained to the BBC. All this presents significant change. Clearly, Ofcom will need to fill in a lot more detail on how it will do this. It is right that this should be done in consultation with the industry. It will therefore consult on its new operating framework for the BBC next year.

The noble Lord, Lord Hall, said that he wanted the BBC’s feet held to the fire regarding its distinctiveness. Ofcom will be doing this in future. I know that there has been considerable concern about how exactly this would be done, and whether it would be a vehicle for government interference. It will be no such thing. As Schedule 2 of the agreement makes clear, Ofcom will need to set regulatory requirements for the BBC in this respect, and it goes on to list a number of ways in which Ofcom could do this; for example, around genre, quality and audiences served. But ultimately, these are decisions for Ofcom to take. However, let me be clear—and this has been the crux of the debate so far: the agreement is clear in Schedule 2 that the BBC’s output and services, taken as a whole, need to be distinctive. This is not a way for the Government or anyone else, be it the regulator or industry, to pass judgment or complain about the distinctiveness of individual programmes. I hope that this important point will give noble Lords some reassurance.

We also set out that more can be done to make the BBC more transparent and accountable, given the considerable public funding that it receives. We have therefore listened to the Culture, Media and Sport Committee’s recommendation to lower the threshold above which the salaries of individuals have to be published. The new charter sets it at £150,000, which is close to the Prime Minister’s salary and in line with the wider public sector. We have discussed the role of the National Audit Office further with the BBC. We are assured that the NAO has the right experience in acting in specialised organisations such as the security services as well as highly commercial environments such as Network Rail, and we will therefore extend its remit to conduct value-for-money studies to the BBC’s commercial subsidiaries, which generate vital funding for the BBC public service television budget.

Another major theme has been the concern that the BBC should better reflect and represent each of the home nations. We agree. At a high level, among other requirements, the charter provides for a strengthened public purpose, emphasising the role the BBC plays in the creative economy across the UK’s nations and regions. There is also a new requirement to fully reflect the diverse nature of the UK and strengthened requirements around minority language provision. Further, appointments of nations’ members on the unitary board will now need the agreement of the devolved government Minister and of the Secretary of State for the England member. The charter also obliges the BBC to appear before committees and lay their annual reports and accounts in the devolved legislatures for the first time.

As I have said, we have come to the right outcome after a good process. The Government now look forward to hearing the views of both Houses before the charter is considered by the Privy Council and then given Royal Assent. These changes will secure the future of the BBC, strengthen it, and give it an unprecedented degree of independence. The world’s finest broadcaster deserves nothing less. I beg to move.

--- Later in debate ---

[Lord Ashton of Hyde]

My Lords, this has been a very useful and informed debate. I thank all noble Lords who spoke today and who have stayed so late.

The debate today has shown how far we have come, and I am grateful to all those who acknowledged the positive progress we have made over the last few months. However, some issues clearly remain and I hope to address as many of these as I have time for. I will follow the suggestion of many noble Lords in that I will write to all noble Lords who have participated in the debate on the issues that I have not addressed. I missed the penultimate point on the list of the noble Lord, Lord Stevenson, but I will read Hansard.

In answer to the noble Baroness, Lady Bonham-Carter, and the noble Lords, Lord Lester, Lord Foster, and others, we will of course continue to listen. I hope to give an example of that later. I will not guarantee that there will be any major fundamental changes—that is slightly beyond my remit—but we are listening. Perhaps I was a bit presumptuous in saying that we had come to the end of the process. It is better to say that we are perhaps at the beginning of the end of the process.

I start with an easy point—distinctiveness. This was always going to be a large part of the debate and has been raised by many noble Lords. Despite the scare stories that the Government would start to interfere in individual programming and scheduling decisions, the charter and agreement give the Government no such role. The documents are very clear that scheduling decisions are for the board.

Many noble Lords asked what we mean by distinctiveness. I agree that this is not straightforward. However, I also agree with those noble Lords who talk about its importance, including the director-general. Page 32 of the Government’s White Paper sought to define distinctiveness, which centres around the range of genres, the quality of the BBC’s programmes and its risk-taking innovations. This will be consulted on further by Ofcom, which will, of course, have to make the final judgment.

There were concerns that the provisions would give the BBC’s competitors a hook on which to challenge individual BBC programmes on the basis that they might not be distinctive. I already set out earlier that the agreement makes it clear that the BBC’s services and output, and services taken as a whole, need to be distinctive. While Ofcom may receive such representations from the BBC’s competitors, it is clear from the agreement what the Government’s intent is here, and they will treat those complaints accordingly. So for the record, let me reiterate: we do not want these provisions to give anyone the right to judge individual programmes, nor do we see the charter as allowing this to happen. We give Ofcom a role to set broad metrics about how to measure distinctiveness, and these include considerations around the BBC’s genre mix, including genre mix at different times of day, and target audiences. But again, these are high-level requirements which will allow Ofcom to develop a sensible, evidence-based and dispassionate approach to considering the distinctiveness of the BBC, a measure on which the BBC itself is keen to improve.

The noble Viscount, Lord Colville, spoke in the gap and talked about the director-general, competition and moving to studios by the end of the charter period, making the BBC 100% competitive. The director-general himself has set out that he believes in greater competition as regards programme-making. He believes that BBC Studios, a new commercial production subsidiary, will unleash and invigorate the full creative potential of BBC productions. So in response to the noble Viscount, we do not believe that the BBC itself shares his concerns.

Another controversial point is the over-75s deal mentioned—disparagingly, I must say—by many noble Lords, who raised the issue of last year’s budget deal around that concession. I remind noble Lords that, as has been mentioned, the licence fee is classed as a tax, despite my noble friend Lord Inglewood’s disapproval of this, and that as such, the elected Government retain ultimate control over it. I can understand that a number of noble Lords might wish that that were different, but it is the system that we have been relying on successfully for decades. I cannot agree with the noble Lord, Lord Lester, that a public and parliamentary consultation is therefore appropriate. That track record remains unbroken, even by last summer’s deal. Far from the disastrous consequences that were decried in the media, the BBC Director-General, the noble Lord, Lord Hall, said:

“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC”.

We made various concessions such as that on the iPlayer loophole, making sure that all those watching BBC content will pay for the BBC in the future.

The noble Lord, Lord Birt, and the noble Baroness, Lady Bonham-Carter, called the agreement that the Government reached with the BBC in 2015 a “raid” on the BBC. However, I point out to noble Lords that the measures in this charter, which ensure that the licence fee-setting process will happen every five years, is a certainty that the BBC has not had in previous charters, and which my noble friend Lord Inglewood should approve of.

A lot of discussion was had, quite rightly, on the effectiveness and the role of Ofcom and whether it has the ability to regulate the BBC. It is a widely respected and experienced regulator and is able, in the words of some noble Lords, to “call a spade a spade”. There is no doubt that the regulation of the BBC is a big task for Ofcom to take on. However, the subject matter is not new to Ofcom, and nor will it come as a surprise that it has been preparing for it for many months. It already has a good overview of the BBC’s business and the issues it faces. Under the current regulatory arrangement, Ofcom already conducts market impact assessments on the BBC’s new services—a sensitive area, where Ofcom has provided valuable services. At the end of the long debate we decided that Ofcom would be best placed to regulate the BBC, and I agree.

Of course, Ofcom will clearly have to stand the test of time and prove itself, which is why the mid-term review will look at the BBC’s governance and regulation. A reasonable amount of time will have passed by then to allow us to return to the issue and consider this question. On the view expressed by the noble Lord, Lord Stevenson, I repeat that this is not looking at the scope and purposes of the BBC, nor at the financial settlement. It is a health check on the governance and regulation of the BBC.

The noble Lord, Lord Stevenson, was concerned that we might possibly have been too prescriptive in what we were telling Ofcom to do. However, we think that it will have the ability to do its job. It is a change for Ofcom, and it is therefore right that we have set out to provide clarity and granularity regarding Ofcom’s role, through the charter and agreement, wherever we can. There are a number of benefits to that. The concerns of Ofcom and the BBC, which have been involved in the negotiation, have been listened to and there is a sensible balance between the two.

[Lord Lester of Herne Hill]

My Lords, the late Lord Campbell of Alloway once rebuked me for making a serious point after the dinner hour. I am very sorry to make an intervention at a quarter to 11 pm, but am I right in understanding what the Minister said—that any new funding settlement will not be the subject of public consultation or parliamentary approval, and that there will be no binding safeguards against undue interference with the BBC and its editorial independence in the charter or the agreement? Is that correct, or have I misunderstood?

[Lord Ashton of Hyde]

The noble Lord is correct in saying that I have given no undertakings about how the process will take place in five years’ time. I said that we had certainty for five years, which is a new thing. However, it is not for me to say what the Government will do in five years’ time, although I know that the noble Lord would like me to do so. Measures in the agreement set out that the BBC will provide evidence to the Secretary of State, but at the moment there are no guarantees that there will be a vote in Parliament on the funding settlement. There may well be a discussion about it but I cannot give a guarantee today that there will be a binding vote.

[Lord Birt]

The Minister has proved himself to be a very generous listener. I hope he will accept that there has been something close to a consensus right across the House—with views expressed very elegantly by the noble Lords, Lord Inglewood, Lord Best, and many others—that it is a question not just of the licence fee but of the Government intervening and requiring the BBC to spend money on things that it might not have chosen to, and doing so, as we know, in circumstances of secrecy. I think that the mood in the House is that these processes should be open and transparent, that there should be public consultation and that Parliament should have a chance to discuss them. The problem here—let us again call a spade a spade—is not the DCMS but the young turks at the Treasury who want to retain their power to do this. They have exercised their power any number of times and they want to continue to do so. Will the Minister agree to take back the mood of the House and seriously consider introducing proper process into this strand of the charter?

[Lord Ashton of Hyde]

I think I said right at the beginning that I was in listening mode. Speaking as a former Treasury Whip, I use that expression. I certainly understand the strong views on this point expressed by the noble Lord and many others. I am not going to give a guarantee from the Dispatch Box tonight that this process will change, but I can guarantee that I will take back what has been said to the Secretary of State. I have already said that I will write to noble Lords, although I did not say that that would necessarily be before the next debate. I cannot do more than say that I am listening and that I will take back the views of the House.

Quite a lot of mention was made of training. We agree that the BBC plays an important role in skills and training. I do not think it is appropriate for Ofcom to regulate what the BBC does on training—in contrast to what it does regulate, which is the BBC’s output or its effect on the wider market. I am confident that the BBC will continue to make an important and valued contribution in this area.

There has been a lot of talk about salary transparency and the decision to drop the threshold from £450,000 to £150,000. Many spoke passionately and somewhat disparagingly about that. We have been clear that we believe that licence fee payers deserve transparency in this context. It is, after all, public money. Indeed, a number of those affected, including the noble Lord, Lord Berkeley, agree that increased transparency over salaries will not drive talent away. On the other hand, we have listened to some of the issues relating to BBC Studios, which will be competitive. There are concerns about whether the new salary transparency requirements will cover BBC Studios. We have thought very carefully about the concerns that both the BBC and a number of noble Lords have had about this outstanding question. I can today confirm that full, named salary disclosure will not be applied to BBC Studios in future.

[Lord Berkeley of Knighton]

I am very sorry to interrupt, but I must make one small correction. It is absolutely true that I did say that at one point. However, I was very convinced by what I heard from the noble Lords, Lord Grade and Lord Patten, and from my noble friend Lord Birt. Therefore, I would slightly retract from the position that I took. I think there is a danger that this disclosure could create an uneven playing field. I am sorry to disappoint the Minister in that small respect.

[Lord Ashton of Hyde]

I have noted the noble Lord’s lack of agreement with me and will take it on board.

As I was saying, named salary disclosure will not be applied to BBC Studios in future. It will not be benefiting from taxpayer funding. It needs to operate on a fully commercial basis to be successful, so we agree with the BBC that to require full, named transparency would undermine BBC Studios’ ability to compete effectively in the market. However, we expect BBC Studios not only to conform to best practice standards across the industry around pay and transparency but to lead the way.

We have also had reassurances from the BBC that it will respect the overall principle of pay transparency, which is clearly set out in the drafts. We expect that all those who have worked for the BBC this year and have earned more than £150,000 from the licence fee will be disclosed in the BBC’s 2016-17 annual report, even if some of those individuals will have moved into BBC Studios before the end of the current financial year. I hope that shows that, at least in some respects, we are taking on board points, even at this late stage.

The National Audit Office is part of an important change that was made. I start by saying that the provisions that deal with the NAO in the draft framework agreement result in an arrangement that has, in practice, changed very little from that under which the NAO currently conducts its work on the BBC. It has been conducting value-for-money studies on the BBC’s publicly funded operations for years, and the reports that have come out of this are welcome and have helped the BBC to improve.

All this work has been done in an environment where the NAO has been precluded from assessing the merits of the BBC’s editorial and creative decisions, and that remains the case, as the agreement makes very clear. The agreement clarifies that it is ultimately for the Comptroller and Auditor-General to define that boundary. This is so the BBC cannot claim that a number of issues are editorial in nature, thus taking them out of the scope of the NAO’s scrutiny. But, importantly, the NAO will also need to take responsibility for those decisions. I am sure the BBC will make it very clear publicly if it thinks the NAO has overstepped its powers. I do not accept that the NAO is a conduit for Parliament to lay its hands on sensitive BBC information. The Comptroller and Auditor-General is an officer of Parliament but he is fully independent.

The memorandum of understanding between the BBC and the NAO was mentioned, and the MoU between the Bank of England and the NAO was alluded to. We think the two organisations are perfectly capable of agreeing a memorandum of understanding, and that will include a dispute resolution mechanism. The statutory power of the NAO is a backup—a last resort—so that it continues to do the audit, but we expect the memorandum of understanding to be agreed between the two organisations. If there are any difficulties, my department and the Secretary of State herself, if necessary, will get involved to make sure that that happens.

[Lord Stevenson of Balmacara]

Could the Minister just repeat that? Is he saying that any disputes concerning the NAO exercising its statutory functions but against the will of the BBC, because it has a carve-out mechanism for editorial reasons, are going to be resolved by the Secretary of State?

[Lord Ashton of Hyde]

No, I did not say that. I said that the agreement says the memorandum of understanding should contain a dispute resolution mechanism. However, to take the position of the noble Lord, Lord Foster, what happens if that cannot be agreed? First, I am saying that if they cannot agree the memorandum of understanding, the DCMS and the Secretary of State herself if necessary will, if you like, bang heads together to make sure they can. But the noble Lord, Lord Foster, alluded to what happens if even that does not work. Then I am saying that the statutory basis on which the NAO goes in is what they will rely on. Having said that, it still cannot deal with editorial matters, but the problem is: what is an editorial matter?

[Lord Patten of Barnes]

Does that mean that, when the final decision is taken, the NAO’s Comptroller and Auditor-General will be the final arbiter—that the NAO will make the decision even if the Secretary of State sympathises hugely with the BBC?

[Lord Ashton of Hyde]

It is not a question of the Secretary of State sympathising or not on that. The only role I mentioned for the Secretary of State is making sure that the memorandum of understanding, which includes a dispute resolution mechanism, should be signed and agreed. But at the last resort, yes, the Comptroller and Auditor-General will be able to do his job using his statutory powers if the dispute resolution has not been agreed.

[Lord Birt]

Could the Minister help us understand how those statutory powers support that in the context of a royal charter? I simply do not understand it.

[Lord Ashton of Hyde]

As far as I understand it from the Bank of England Bill, the NAO is set up and has statutory powers to go in and do its job. The framework agreement and the charter specifically say that, notwithstanding the statutory powers of the NAO, it is not able to judge on editorial matters. At the last resort it can go in under its statutory powers. It is not allowed to opine on editorial matters, but the tricky thing is: what is an editorial matter? That is where we want the memorandum of understanding between the NAO and the BBC to be agreed. My attempted explanation was to cover just what happens if the memorandum of understanding is not agreed. That is where I said the DCMS and the Secretary of State would lend a hand to make sure it is.

[Lord Lester of Herne Hill]

The Minister has my great sympathy as I listen to him. The fundamental problem I have is I do not understand how this charter and agreement will be enforced. I gave the example in my speech of the King Charles I clause—Clause 67 of the agreement. It is a power of unlimited censorship over the BBC. It is in an agreement, not in a statute. Could the Minister write to me and explain how the limits to that of proportionality, necessity and all the rest of it are to be enforced?

[Lord Ashton of Hyde]

Absolutely. I may be able to come to that, but if I do not I will certainly write to the noble Lord. I take his point.

The noble Baroness, Lady Liddell, and the noble Lord, Lord Williams, talked about the World Service. I agree with all noble Lords who spoke about that, saying that it is one of the most highly regarded offerings of the BBC. We acknowledge that. I can personally testify to that, having just come back from Myanmar, where it played a huge role during the time the generals were in charge. That is why we have protected funding for the World Service from the licence fee for the next five years and we have increased its funding even further by £34 million in 2016-17 and by £85 million for each of the three years thereafter. I will write to the noble Lord, Lord Williams, about the World Service in Korea.

BBC Monitoring is a Foreign Office responsibility and is co-ordinated by the Cabinet Office. An agreement between them and the BBC is expected very shortly.

I take on board the point made by many noble Lords about the statutory underpinning of the BBC. We do not agree with the noble Lord, Lord Lester, and other people on that. I will write to noble Lords about it. I have promised to listen; I do not hold out great hope that it will happen in this charter, but I recognise that it is an issue which has been raised around the House.

On the contestable pot mentioned by the noble Baroness, Lady Benjamin, we will consult in the autumn on precisely how the fund will work—I look forward to her full contribution to the consultation—to ensure that the fund can support under-served genres as effectively as possible. We will have to see at the end of the pilot exactly what we do.

I agree with the noble Baroness that diversity is one of the most important issues, which is why we have made it a new duty for the BBC. I do not think we can be much clearer about how much of a focus it should be. She may have seen in the newspapers a couple of days ago that Sharon White of Ofcom went public in saying how important she thought diversity was and that Ofcom intends to look at it.

There are a number of points to which I will not be able to respond—from the right reverend Prelate about accountability to licence fee payers, and from the noble Lord, Lord Lester, on Clause 67(4) and on his further point. On appointments, we think that we have moved quite a long way and are in considerably better shape than we were when all members of the trust were appointed by the Government. On independence, I think that there are things which the noble Lord, Lord Inglewood, will be happier about and the Government agree with him about the importance of that.

I need to come to a close because I am over time.

[Lord Clement-Jones]

I apologise to the Minister because I realise he is coming to the end, but there is one huge area that he has not dealt with. It is the whole issue of complaints on competition matters. Will he undertake to write to the House on that subject? After all, it is the death by a thousand reviews that I mentioned in my speech and that was echoed by my noble friend Lord Foster.

[Lord Ashton of Hyde]

I apologise for not mentioning that; I agree that it is a big issue. In short, we think that Ofcom is an experienced enough regulator to deal with that, but, as I have said several times, I will write to all noble Lords on all questions that I have not answered adequately, including those on the list of the noble Lord, Lord Stevenson.

I repeat my thanks to all noble Lords who have spoken tonight and who met us previously. I thank the devolved Assemblies and Parliaments, as well as the BBC negotiating team. I am particularly grateful to the officials who have got us here, including educating a new Lords Minister at short notice.

Whatever one thinks of the outcome, I think we will agree that this has been a genuine process of negotiation. While the White Paper established the principles that guided the outcomes of this charter review, the devil has been in the detail. Neither side has got exactly what it started with, but we should not undervalue what each side has achieved. Together, we have ensured that there will be a BBC fit for the future —one we will continue to be proud of. This charter and agreement will give it the tools to be exactly that. Now we must let it get on with the job.

Motion agreed.