BBC

Earl of Courtown Excerpts

Thursday 15th September 2016 Lords Chamber

[The Earl of Courtown (Con)]

My Lords, with the leave of the House I would like to repeat a Statement made by my right honourable friend the Secretary of State for Culture, Media and Sport. The Statement is as follows:

“Today I am laying before Parliament a draft of the royal charter for the continuance of the BBC, together with the accompanying draft framework agreement between the Government and the BBC. The latter sets out the detail behind the charter, including how the BBC will operate in the new charter period.

These drafts set out the policies contained in the White Paper, A BBC for the future: a broadcaster of distinction, which was published in May. This White Paper was the culmination of one of the largest public consultations ever. More than 190,000 members of the public, as well as industry stakeholders and experts, gave their views on how the Government could enable the BBC to continue to deliver world-class content and services over the next 11 years. The consultation served as a reminder that the BBC matters deeply to this country—as it does to people right across the world. Far from diminishing the BBC, our changes strengthen it.

I am very grateful to my predecessor, the right honourable Member for Maldon, for all his brilliant work on the BBC. My department has worked very closely with both the BBC and Ofcom, which has taken on the job of being the BBC’s first independent regulator, to develop and agree these draft documents. I am a huge fan of the BBC. At its best it is peerless. Our aim is to ensure that a strong, distinctive, independent BBC will continue to thrive for years to come, and also to improve the BBC where we can.

The new charter and agreement will enable a number of improvements. They enhance the distinctiveness of BBC content, and the BBC’s mission and public purposes have been reformed to reflect this requirement. The governance and regulation of the BBC will be also be reformed. The new BBC board will be responsible for governing the BBC, and Ofcom will take on the regulation of the BBC. The charter and agreement set out functions and obligations that the BBC and Ofcom must follow in order to deliver this.

The charter explicitly recognises the need for the BBC to be independent, particularly in editorial matters, and the BBC will appoint a majority of the members of the new board, with strict rules to ensure all appointments are made fairly and openly. The charter also provides financial stability for the BBC by making it clear that the licence fee will remain the key source of funding for the BBC for the next charter period.

Obligations for the BBC to consider both the negative and the positive market impacts of its activities are set out in the charter. Ofcom must always keep these in mind when reviewing new and changed services. The BBC is obliged to work closely with others and share its knowledge, research and expertise for the wider public benefit. The Government want a BBC that is as open and transparent as possible. The charter sets out new obligations in this regard, including publishing the salaries of those employees and talent who earn more than £150,000.

The BBC serves all nations and regions. It needs to be more reflective of the whole of the United Kingdom, and the new charter requires this through the mission and public purposes. This will be supported by specific board representation, including the appointment of nations’ members which, for the first time, will be agreed with the Administrations of Northern Ireland and Wales—as well as for Scotland, as is currently the case. Provision for the nations will be regulated by Ofcom through a new operating licence regime, which will include continuing the approach of production targets for making programmes outside London.

One of the BBC’s many responsibilities is to bring people together, supporting and encouraging greater cohesion, not least among the nations of the United Kingdom. We have made considerable progress since the publication of the White Paper and resolved a number of important areas with the BBC. This is allowing us to go further in the key areas of transparency, fairness and securing independence for the BBC.

In addition to the principle of a mix of public and BBC-made appointments—all made in line with best practice—I can confirm that the charter sets out that the BBC will appoint nine board members, including five non-executive directors, and that an additional five will be public appointments. This means that the BBC will appoint the majority of members to its new board. This ensures the independence of the BBC board and that each nation of the UK will have a voice. This will strengthen the BBC’s independence, from the position where all the BBC trustees were appointed by the Government.

The National Audit Office will become the BBC’s financial auditor. In addition, the charter will enhance the NAO’s role and access and allow it to conduct value-for-money studies on the BBC’s commercial subsidiaries. This money subsidises the licence fee, so the public has every right to expect value for money. And there will be greater transparency, with a full, fair and open competition for the post of chairman of the new BBC board. This is in line with the recommendation of the Commons Select Committee on Culture, Media and Sport. It is a significant new post, and transparency and fairness in making the appointment are vital, not least so that industry and the public have confidence. I am grateful to Rona Fairhead—who has decided not to be a candidate for this new post—for the work she has done as chair of the BBC Trust and in particular for her help in reforming the governance of the BBC.

The fundamental reforms set out in the draft charter will take time to implement, given the complexity of the changes, the need for a smooth transition and the importance of consulting on some elements of the new regulatory structures. There will be a short period of transition before the BBC board and Ofcom take on their new governance and regulatory roles on 3 April next year. The BBC will continue to operate under current arrangements during this transitional period. Further details about the transition will be confirmed in the coming months as we work closely with the BBC and Ofcom to ensure all elements of transition are managed as smoothly as possible, including the process by which the new BBC board will be established.

Members of both Houses will now have a chance to consider the proposals in detail. To aid them in that endeavour, I have today deposited a series of information sheets in the Libraries of both Houses. I have also sent the draft documents to the devolved Administrations in order that the devolved legislatures can debate them over the coming weeks. My DCMS ministerial colleagues and I look forward to parliamentary debates on the draft charter and agreement in due course. Following these debates, the Government will present the charter to the Privy Council, in order that the new charter is in place by the end of the year.

The BBC is one of this country’s greatest achievements and greatest treasures. These reforms ensure that it will continue to be cherished at home and abroad for many years to come. I commend this statement to the House”.

My Lords, that concludes the statement.

--- Later in debate ---

[Lord Foster of Bath (LD)]

My Lords, I, too, thank the Minister for repeating the Statement. I certainly believe that the BBC is the best broadcaster in the world and one of the greatest gifts that we have given to the world, and on these Benches we will base our judgment of the draft charter and agreement on whether they protect the independence, impartiality and popularity of the BBC.

The Government did not get off to a very good start by requiring the BBC to fund free licences for the over-75s. That move has meant a huge cut to the BBC’s income but is also wrong in principle. Government policy should be paid for by the Government through general taxation, not by top-slicing the licence fee.

However, there is much to be welcomed in the draft charter, from the increased emphasis on diversity—which I hope we will see as much behind the camera as in front of the camera—to the scrapping of the BBC Trust, which had the incompatible tasks of being both a flag-waver for the BBC and a regulator of it. Like the noble Lord, Lord Stevenson, I believe that the proposed new unitary board, with Ofcom as regulator, is a far better approach. But while acknowledging that improvements have been made since the White Paper, we believe that all non-executives on this board should be independently appointed, as is the case, for example, with judicial appointments.

The current trust is far less powerful than the proposed unitary board, which will set the BBC’s editorial direction, make key decisions on programmes and even have a say on how the BBC manages news. What defence can the Minister offer to the argument that giving these important powers to, among others, government appointees will understandably lead to the accusation that we are creating a state broadcaster and not a public service broadcaster?

We welcome the 11-year charter period, giving time for the BBC to plan and make investment decisions, but this confidence is potentially eroded by the proposal—not mentioned in today’s Statement—for a mid-term review. Immediately after the next election, this review will take place and the licence fee will be renegotiated. Uncertainty about the outcome of this review and the new licence fee settlement will undermine the benefits of an 11-year charter period. Notwithstanding the assurance that we have had in recent days that the mid-term review will be light touch, what assurances can the Minister give that it will not be used to unpick parts of the charter itself? The mid-term review will also coincide with the end of the three-year trial period for the contestable fund. If the trial is successful and the contestable fund is extended, can the Minister give an absolute assurance that the licence fee will not be top-sliced to pay for it?

However, I believe that the biggest threat to the independence of the BBC comes from uncertainty surrounding government plans to require the BBC to be distinctive. The White Paper said that,

“the BBC should be substantially different to other providers across each and every service, both in prime time and overall, and on television, radio and online”.

While Ofcom is to judge this, the White Paper said that:

“The government will provide guidance to the regulator on content requirements and performance metrics”.

This looks like very direct government interference into the editorial decisions of the BBC—interference that could curtail the BBC’s creative freedom to be popular. Surely that is in conflict with the Government’s stated aim to ensure an independent BBC.

The issue of competition is also a real concern, with the BBC believing that the requirement to name all those earning more than £150,000 will undermine its ability to attract and keep the best talent. Why does the Minister believe that the BBC is wrong?

Finally, I hope that we will have the opportunity not only to consider, as was said in the Statement, the details of the White Paper but to vote on its contents.

[The Earl of Courtown]

My Lords, I thank both noble Lords for their comments on the draft BBC charter and I will deal with the points as they were made.

The noble Lord, Lord Stevenson, started with a question on distinctiveness. As the noble Lord is aware, this has been a key focus of the charter review process, and the noble Lord, Lord Foster, mentioned this as well. It is something that the BBC has fully recognised and embraced during this process. The BBC’s director-general has been a particular driving force on this issue, and he has highlighted that he wants to see a system that,

“firmly holds our feet to the fire on distinctiveness”.

That is exactly what the White Paper proposals seek to deliver. The noble Lord, Lord Hall, has issued a statement this morning saying that the draft charter,

“will deliver the strong and creative BBC the public believes in”.

He went on to say:

“Overall, we have the right outcome for the BBC”.

The noble Lord, Lord Foster, mentioned the licence fee—as did the noble Lord, Lord Stevenson, I think—and much of this was aligned towards the over-75s. The issue with the over-75s is a deal that was done with the BBC. It gives the BBC a flat cash settlement until 2021 and gives the BBC certainty on this issue.

Both noble Lords mentioned the BBC’s mission and purposes and the Reithian principles, all of which have been debated at great length in this House. The noble Lord, Lord Stevenson, also mentioned Parliamentary Questions, debates and committee reports, all of which the Government have taken note of. The BBC is clear that the core of its mission to inform, educate and entertain should endure. This has been repeated by my noble friends Lady Neville-Rolfe and Lord Ashton of Hyde. However, the next charter provides the opportunity to explain more fully what we expect from the BBC. This is why its new mission is to act in the public interest, serving all audiences with impartial, high-quality and distinctive media content and services that inform, educate and entertain. The new public purposes emphasise the key factors that are central to the mission of the BBC. The importance of the BBC’s international role is strengthened through the introduction of a stand-alone purpose about reflecting the UK, its culture and values to the world.

Both noble Lords asked questions about independence. Again, I think the Government have gone many miles on this journey from the White Paper to where we are today. I reiterate where we are. The board will have 14 members. The Government will appoint five non-executive members—the chair and four members for each of the nations. There will be no deputy chair; instead, a senior independent director will be appointed from the non-executive members. All government appointments will follow a robust and transparent public appointments process. The BBC will appoint five non-executive members and four executive members. The BBC has the majority on the board. This is all to do with transparency and independence.

I think that covers the questions asked by the two noble Lords, but I will have a look at them and, if there is anything more I can add, I will do so in writing.

[Lord Sherbourne of Didsbury (Con)]

My Lords, there will be a very broad welcome for the Government’s decision to have a majority of the new BBC board as independent, not government-appointed, members. However, I urge my noble friend to take note of two points. First, in addition to them being independent, I hope that the criteria for deciding who might be appropriate will take into account an understanding of the very rapidly changing world of television in the future, which will be the world in which the BBC has to operate. Secondly, I again urge that there would be real advantage in terms of enhancing the independence of board members if they were appointed for one term only, so they would not feel the need to curry favour to ensure a renewal of their appointment.

[The Earl of Courtown]

My Lords, the draft charter allows the independent non-executive directors to have two terms of four years each. No doubt the department will listen carefully to what my noble friend has said.

[Baroness Deech (CB)]

Does the Minister appreciate the anxiety of some Members that we are dependent on the Government to find a few minutes or an hour or two to allow this House to discuss the royal charter, given that it is no longer an appropriate method of governing something as important as the BBC? It is patently not a guarantee of the independence of the BBC. On the contrary, it is simply a deal between the Culture Secretary and the director-general. It is high time for a statute. There is no need to fear that this House or the other House would interfere more in the BBC or be more oppressive in terms of its independence than is the case under the royal charter. Further, does the Minister agree that Ofcom is not the right body to deal with important political and impartiality complaints as it is full of former BBC employees and is very heavily dependent on government appointments? Will he assure the House that there will be a new method for appointing Ofcom members that will assure their independence and expertise? At the moment, Ofcom is not the right body; my own preference would be for an ombudsman.

[The Earl of Courtown]

The noble Baroness, Lady Deech, will know that I responded to a Question on this exact subject some time ago. The noble Baroness also mentioned the charter and obviously feels that we should change our position on using it. But the Government feel that the charter is the right way forward. It has served us well. The charter review has heard from this House and, as I said earlier, the Government have listened to many Questions, debates and Select Committee reports on this. As I said earlier, there will be opportunities for further scrutiny of the charter and the framework agreement, and there will be a debate in this House in October. The noble Lord, Lord Foster, asked whether there would be an opportunity for a vote; that is up to the usual channels. The BBC is under royal charter for a reason: its independence. This is fundamental to the BBC’s work and it has consistently argued that it wants a robust charter review on a predictable timetable. It would not be in the best interests of the BBC if carefully negotiated positions could be undone. On Ofcom, this was advised both by committees and by the Clementi review, and we feel that Ofcom is the best regulator to use.

[Lord Lea of Crondall (Lab)]

My Lords, I am sure that, in general, this side of the House will always be in favour of transparency on salaries in every sector of the economy; we have advocated that. But can the Minister advise further about the rationale of demanding salary publicity for people in one sector of the broadcasting industry? I call it publicity because is not the idea to somehow spotlight the BBC salaries in some way for some purpose or another? Is it to whip up some sort of resentment about these salaries? Is it not true that, on the level playing field of the private sector, it is a total illusion that the public, who may pay the salaries of the BBC, do not pay the salaries of people who work in advertising agencies. Is this not an illusion about how our economy works and will it not prove untenable in the medium term to have this requirement without a similar requirement for the rest of the broadcasting industry?

[The Earl of Courtown]

My Lords, I was glad to hear that the noble Lord, Lord Lea of Crondall, welcomes transparency. But the fact is that we are talking about the licence fee holders’ money. They demand transparency, and one of the great points about the charter review is to have more transparency. It is quite fair that the threshold, which was set at £150,000, is in line with that for BBC executives and the Civil Service, and is just above the PM’s salary. I am not sure whether the noble Lord is aware, but this will be done in bands, and initially the band for salaries will be £50,000 before it goes to the actual salary. I cannot agree with the noble Lord; transparency demands that we are open for everybody to see.

[Lord Berkeley of Knighton (CB)]

My Lords, I declare an interest as a contributor to the BBC; however, the happy news is that I can assure your Lordships that I will not be entering the ranks of the plus-£150,000, and nor will anybody I know on Radio 3. On a serious point, and addressing the noble Lord who spoke last, I have no objection to people knowing what I am paid by the BBC. We can read about the Minister’s salary and those of other Members of Parliament, so it is not unreasonable.

The Minister mentioned the excellence of the BBC and I will take this moment to invite him to congratulate Radio 3 as it celebrates the 70th anniversary of the Third Programme. No other institution does more for serious music in this country than Radio 3. It commissions new work and takes music out among young composers and the young generation of artists. I am sorry if for a moment I blow this trumpet—but, after all, a birthday is a good moment to do it. It does a quite extraordinary job and we should all realise that it is the envy of the world. In other countries people in the musical world will say, “Do you realise how lucky you are to have this extraordinary institution?”. So I would like to take this opportunity to say happy birthday and I invite the Minister to do the same.

[The Earl of Courtown]

The noble Lord will be very glad to know that I will not sing it. However, he is quite right in what he said, and I do wish Radio 3 a happy birthday. It is such an important station and I have listened to it for many years. It has turned me towards listening to a little more classical music than I did in the past. I was also glad to hear what the noble Lord had to say about matters relating to the transparency of salaries paid at the BBC.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I hesitate to disagree with the noble Lord, Lord Berkeley, or indeed with the Minister. But, as far as I am aware, there is not a competitive market for the services of Members of your Lordships’ House. Nor is there a competitive market in a number of other areas where this kind of transparency is commonplace. The fact is that the BBC is part of one market for the services of the talent that is being sought. The Minister referred in his opening remarks to the widespread consultation that had gone on with the public about the BBC. As far as I am aware, there was no great call in that consultation for this particular kind of transparency and there was a very high degree of support for the value for money that the BBC represents. In those circumstances, frankly, the only beneficiaries of this particular kind of transparency will be the BBC’s competitive rivals, who will not have to provide the same kind of information themselves. Will the Minister tell the House what the thinking behind this is, if it is not just to clip the BBC’s wings?

[The Earl of Courtown]

The noble Baroness makes an interesting point, but the fact is that to follow through on the transparency that runs all the way through the charter review, it was important that we arrive at this point and have transparency around individuals earning more than this amount. I disagree with her slightly about public bodies being competitive. I know that in a former life as a contractor, we had to compete on price for jobs against people in the public sector. We knew their costs but it was not a very easy game, I must admit. I understand the noble Baroness’s view, but our view is different.

[Lord Tugendhat (Con)]

My Lords, I will first revert to the question raised by my noble friend Lord Sherbourne. The question of renewal is a very important one because everybody has seen in the public sector that when appointments are coming up for renewal, the appointees sometimes become a little more flexible and a little more willing to listen to those who will be doing the appointing. I think that two terms of four years is excessive. It would be much better to consider one term of five years. That would help to ensure a greater degree of independence. Does the Minister agree that transparency is a very important principle where public money is concerned? When we talk about the licence holder, that is public money. If the BBC goes down this route, there will be pressures on others to follow—and that is very important. The question of transparency is spreading across British life; we see it more and more in business, as well as in the public service. I commend the Government for this action.

[The Earl of Courtown]

I thank my noble friend Lord Tugendhat for his question. As he said, life is changing. Twenty years ago there was no transparency in all sorts of areas—there was no transparency on matters relating to your Lordships’ House. But the world is now becoming more open and we have to accept that. I also have no doubt that the department will listen carefully to my noble friend’s comments about the term for non-executive directors.

[Lord Elystan-Morgan (CB)]

My Lords, the Minister will no doubt recollect that many noble Lords with a Wales connection have over the years raised the position of the Welsh language channel, S4C. On almost each occasion, encouraging words have been spoken from the Dispatch Box with regard to that particular matter. Has such a provision been included in the draft charter? If that is not the case, will the matter be swiftly remitted?

[The Earl of Courtown]

My Lords, the noble Lord refers to S4C and, in essence, minority languages as well. The Government are committed to maintaining minority language broadcasting. S4C’s independence is highlighted in the framework agreement. The BBC has also confirmed that S4C will receive £74.5 million of licence fee funding per year between 2017-18 and 2021-22. The Government have also committed to a review of S4C in 2017 covering its remit, funding and governance. Further details, including the review process, will be announced in due course.

[Lord Gordon of Strathblane (Lab)]

My Lords, I am comparatively relaxed about the publication of salaries, unlike quite a lot of my colleagues. However, one thing could turn out to be counterproductive. There is at least anecdotal evidence that what has driven up executive pay in the private sector has been the publication of what competitors are paying. After all, because of the consultants who advise people—and indeed are encouraged by the Government to advise people on salaries—nobody wants to be in the bottom quartile. Mathematically, if nobody opts to be in the bottom quartile, salaries will go up—and historically they have gone up.

It is also fair to say that, a public company such as ITV, for example, has to publish its salaries. They are in the shareholders’ report. I am in favour of extending transparency and making publication compulsory.

[Lord Gordon of Strathblane]

I gather that I was being unduly courteous in giving way. The time for a proper debate on this will be in October, and I welcome the offer of such a date.

I have a final point on Radio 3. I share the general congratulations to Radio 3, but it is worth while remembering that Lord Reith disapproved of Radio 3 because he wanted classical music to permeate all programming, not be isolated on a single channel.

[The Earl of Courtown]

Well, my Lords, the noble Lord, Lord Gordon, has educated me about Radio 3. The point he made about transparency and competitiveness is noted. There is not a great deal more on the subject that I can add at the moment, but the importance of these matters about radio and such like are noted.

[Lord Lexden (Con)]

Will my noble friend explain how the new arrangements will strengthen and enhance the World Service at the BBC, to which many of us attach great importance, particularly at a time of acute international instability? Will he also comment on the proposal for a mid-term review of the new charter, which was a point raised by the noble Lord, Lord Foster?

[The Earl of Courtown]

As I think I said to the noble Lord, Lord Foster, perhaps not very clearly, the mid-term review will be a health check. The whole point of this health check is to make sure that everything put into it is working correctly.

On the World Service, as my noble friend will know, it is one of the BBC’s most distinctive services, which is hugely valued by audiences. Its reach and reputation help to project the United Kingdom’s cultural and democratic values to more than 246 million people worldwide. It is a vital part of the UK’s soft power influence. We are protecting the funding for the World Service at £254 million a year for the next five years and providing additional funding at £34 million in 2016-17 and £85 million a year for the following three years. We are continuing the approach of the current charter in ensuring the independence of the World Service.

[Lord Maxton (Lab)]

I am delighted that in October we will have a debate on the review and the royal charter, but will we be able to amend it? Will we be able to vote on it? In particular, will those people along the Corridor, who after all are the only people elected to represent the licence payers of this country, be able to vote and amend the charter as it is at present proposed? I will give the noble Earl the answer before he does: it is no, we will not be able to amend it because it is a royal charter rather than a statute, but it ought to be a royal statute or nothing. On the point about salaries, why does the Freedom of Information Act, which has been one of the biggest drivers behind making this whole area more open, not cover the publicly-funded BBC as well?

[The Earl of Courtown]

I cannot answer the last question put by the noble Lord, Lord Maxton, concerning FOI requests for other bodies, but the point is interesting and has been well made. I would not say that the noble Lord has seen my brief as far as the charter review is concerned. For a start, what happens down at the other end of the Corridor is very much a matter for another place, but as I have said, we in this House will have a debate in October and it will be up to the usual channels to decide how the Motion is put.