BBC Governance and Regulation: Communications Committee Report

Baroness Garden of Frognal Excerpts

Thursday 1st March 2012 Lords Chamber

[Baroness Garden of Frognal]

My Lords, I thank my noble friend Lord Inglewood for securing this debate—albeit somewhat delayed—and for setting out so clearly his committee’s report on the governance and regulation of the BBC. We have been truly privileged in the course of this debate to hear from highly distinguished speakers with wide-ranging expertise, including a former and current chair of the BBC Trust and a former director-general.

I add my congratulations to CBeebies and CBBC on their 10th anniversary—although, like my noble friend Lady Fookes I have more fond memories of Larry the Lamb and, indeed, Muffin the Mule—where are they now? I also add congratulations to the BBC World Service on its 80th birthday this week and confirm our support for the invaluable work which it undertakes internationally, support that we have heard from all around the House this evening.

In response to the noble Lord, Lord Stevenson, and others, at the outset I would like to reiterate the key point that the Government are fully committed to an independent BBC that forms the cornerstone of public service broadcasting in this country. Nothing this Government do will undermine that. The Government will ensure that the BBC remains a national asset of fundamental importance and that it will continue to bring great benefits to our country’s culture, to its democracy and to its creative industries.

Secondly, it is important to put on the record that the BBC’s governance and regulation will be fully assessed at the next charter review. Although we have not yet determined the exact remit or the timing of the next charter review, everything that follows should be viewed in that context. I do not want to pre-empt or undermine the charter review by trying to provide answers today to some of the questions that noble Lords have raised.

It is fair to say that reservations have been expressed in the past about whether the trust model is as effective as it can be. Its primary role is to champion the cause of licence-fee payers and, as the right reverend Prelate has said, to be the guardian of standards. But it has not always been clear to observers whether its primary role might not be to represent the BBC as an institution. It was very encouraging, therefore, that in building on the work of his predecessors the noble Lord, Lord Patten, recognised governance and regulation as an issue that had to be addressed as a matter of priority on taking up his appointment as chair of the trust. The governance review published by the trust last summer was welcome and we would encourage the trust to monitor the effectiveness of its recommendations. The trust should and does seek continuous improvement in the operation of the BBC’s governance system, within the current charter framework.

In relation to salaries at the BBC, the BBC’s executive pay strategy, published last summer, is also encouraging. We were pleased to hear the noble Lord, Lord Patten, announce that the freeze on bonuses for the most senior executives will continue, and his assertion that the public service BBC needs to distance itself in this way from the market. This realistic approach is welcomed. The BBC holds a privileged position and is not simply another broadcaster operating in the market.

The BBC often comes under criticism for a lack of impartiality in its content, particularly in relation to news and current affairs, and matters of impartiality have been raised by noble Lords this evening. This gives rise to the calls for the Government to intervene, but this would not be right. The editorial independence of the BBC is sacrosanct and the Government have no intention of undermining that. Any regulation of the BBC must be at arm’s length from government and give everyone confidence that the way the BBC operates is impartial.

There are also calls for the BBC to be regulated by an external regulator, such as Ofcom. Many noble Lords addressed this matter, including my noble friend Lord Fowler. My noble friend Lord Inglewood raised the attraction of Ofcom having the same regulatory powers over the BBC as it has over other broadcasters, particularly on matters of impartiality and accuracy. There could be difficulties for Ofcom in devoting itself fully to upholding the public interest in BBC services and programmes, in defending the independence of the BBC itself and in satisfying the need for direct accountability to licence-fee payers, so the Government are not seeking to make changes at this stage. The appropriate time would be to consider this within the next BBC charter review. It is a long-standing principle, dating from the earliest days of the BBC, that it has responsibility for impartiality in its output. The noble Lord, Lord Hall, illustrated that. The need to provide impartial services has been central to the BBC’s development and activities. The principles of due impartiality and accuracy remain at the heart of the BBC’s editorial independence, and on that basis regulation has remained with the BBC.

We would encourage the BBC to build on the conclusions of the noble Lord, Lord Patten, about the BBC’s complaints system in his governance review. Certainly, the new chart has won plaudits from all around the House for outlining just how complex the complaints procedure can be. If the BBC wants the existing allocation of regulatory responsibilities to remain, it has a strong incentive to make sure that the existing system can command confidence. The Government maintain that a royal charter remains the most appropriate mechanism of establishing the BBC, as this provides the necessary level of independence from government and Parliament. My noble friend asked about the legal structure of the BBC and whether this should be reviewed before the next charter and agreement. The Government consider that the appropriate time for such a fundamental matter is the next BBC charter review, when the issue can be looked at in the wider context of an examination of the BBC’s constitution, role and functions. The Government have no plans to undertake an analysis of the matter before then.

As noble Lords will be aware, and as the noble Lord, Lord Stevenson, reminded us, the Government have a review of the communications sector in the pipeline. While the role of the BBC cannot be completely excluded from any review of the public service broadcasting landscape, we have made it clear that the communications review is not a review of the BBC—that will be for the BBC charter review—but of course any relevant issues arising from the communications review will be taken into account in the charter review.

My noble friend and others asked about the licence fee settlement. The noble Lords, Lord Birt and Lord Gordon, were among those who raised that issue. The BBC has undertaken considerable work in taking on the funding responsibilities arising from the licence fee settlement, and in response to the point made by the noble Lord, Lord Birt, about lack of consultation on the licence fee settlement, the pace of the licence fee negotiating and the spending review meant that there was not time to consult widely all interested parties. That reflected the Government’s need to deal with the desperate state of the national finances.

The noble Lord, Lord Gordon, raised a point about the new funding responsibilities, which are of course related to its public purposes. He raised the question of technological changes allowing the evasion of the licence fee. The Government are certainly aware of changing viewing habits in relation to technological developments, and we shall need to keep that matter under review.

The BBC has supported the Government in developing the local TV initiative. In December 2011 the Government published their final policy position on local TV and announced the first 20 locations that are expected to get local TV licences. We expect to see those rolling out soon.

An amended BBC agreement was laid in Parliament in February 2011 to facilitate the transfer of funding of the World Service to the BBC. In September 2011 a further amended BBC agreement was laid in Parliament to formalise the BBC’s new funding responsibilities in relation to S4C, the World Service, BBC Monitoring, local TV and broadband. Various noble Lords have brought up their concerns about this extended remit for BBC funding. The partnership with S4C will reform its governance and facilitate the BBC’s funding of it, but the partnership arrangements are subject to a public consultation by the Government that is open until 4 May.

The BBC is currently in discussion with government officials, including those from Broadband Delivery UK, about the arrangements for its funding of broadband. The amended BBC agreement of September 2011 provided for the National Audit Office to have full access to the BBC’s accounts to ensure greater transparency. The NAO, as has been mentioned in the debate, now has discretion over which areas of BBC expenditure should be subject to value-for-money studies and when. This met a commitment in the coalition programme and was a very positive move. In response to the point about this from the noble Lord, Lord Lipsey, it is right that the NAO should report to the BBC Trust, given that the trust has responsibility for value for money in the BBC.

My noble friend Lady Benjamin asked whether the Government will consider tax credits for animation. My noble friend’s point is noted. Tax credits are of course a matter for the Treasury to consider, but I will ensure that her support is relayed.

There was a point that was made from all around the House. My noble friend Lord Fowler, the noble Lord, Lord Bragg, and my noble friend Lady Fookes—in fact, nearly all noble Lords—expressed disquiet at the thought that the Communications Committee might possibly be discontinued. It is above my remit to give assurances on that, but I assure noble Lords that the strong messages that have come from all sides of the House today will be relayed to the relevant quarters on that point.

I thank all noble Lords who have contributed their considerable expertise to this debate. I hope that I have answered the questions that were put to the Government; if not, I aim to reply in writing. The contributions from around the House have been illuminating, stimulating and productive. I thank my noble friend and his committee for their report and for highlighting matters of governance and regulation, which are vital elements in maintaining the role and function of the BBC. I say again that the Government are fully committed to an independent BBC that forms the cornerstone of public service broadcasting in this country. The BBC is a source of immense pride to the UK and the Government will play their part in ensuring that it maintains its position as the world’s most respected broadcaster.