BBC Charter Review (Communications Committee Report)

Lord Foster of Bath Excerpts

Thursday 21st April 2016 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I, too, congratulate the noble Lord, Lord Best, and members of his committee on an excellent and wide-ranging report. I have long been a critical friend of the BBC, believing it to be the best broadcaster in the world and one of the best gifts of this nation to the world. The committee’s report talks in similar terms, describing the BBC as,

“one of this nation’s most treasured institutions...

the keystone of British broadcasting”,

and,

“respected across the world”.

The report talks of the BBC playing,

“a central role in the wider creative industries”.

It is vital that, as the Government finalise their deliberations on a new charter, nothing is done that will undermine the BBC’s ability to continue to merit such accolades, and nothing should be done to undermine the independence and impartiality of the BBC.

The noble Lord, Lord Puttnam, said that this should be the top priority and I entirely agree with him. The noble Lord, Lord Fowler, with a distinguished track record in these areas, talked powerfully about the need to develop mechanisms to reduce government interference in the BBC. When he speaks later, I understand that my noble friend Lord Lester will talk about how he believes statutory underpinning can help, and I look forward to hearing his contribution.

The committee report makes clear—and I entirely agree—that maintaining independence and impartiality will be aided by a new charter which lasts for at least 10 years. On Tuesday, in your Lordships’ House, I noted that the Minister referred to the value of a royal charter lasting for,

“a good period of time”.—[Official Report, 19/4/16; col. 540.]

I hope that she will accept the committee’s recommendation for a minimum 10-year period, since that will not only help to protect independence and impartiality but provide security in terms of planning and investment for the BBC and, as the report points out, stability for the wider creative industries that relate to the BBC.

Of course, that security and stability would be undermined if the charter period is set for a good period of time, but includes a mid-term review whose scope allows for the unpicking of bits of the charter itself. I hope that we can receive reassurances that that will not be the case.

The report makes one other important recommendation on the length of the charter. It suggests that the next charter should be for 11 years, not 10 years, to decouple the charter review process from the general election cycle and allow full consultation and dialogue. That is an extremely sensible proposal, and I look forward to hearing the Minister’s thoughts on it.

The committee, as we have heard, consciously did not cover the issue of governance of the BBC. Its decision, in the words of the report, to “eschew” governance was well-founded, given the subsequent announcement of the Clementi review. Sir David Clementi’s review proposed the most radical overhaul of the BBC’s governance in its lifetime, ensuring that regulation of the BBC fully passes to an external regulator in Ofcom while governance is transferred to a new unitary board with executive and non-executive directors. I opposed the establishment of the BBC Trust—a fruitless venture, as the noble Lord, Lord Fowler, called it. I thought it was entirely wrong to set up a body that sought to be both a flag-waver for the BBC and a regulator of the BBC. These two roles are incompatible. Sir David’s proposal for an external regulator and a unitary board resolves this conflict, and I welcome it.

However, like others who have already spoken, I do not believe that the independence of the BBC will be achieved if the non-executive members of the proposed board are government appointees. The Secretary of State at DCMS said recently that he did not think that the Government’s appointment of BBC non-executives to the board would undermine independence, and pointed out that all 12 of the current members of the BBC Trust were appointed by the Government. I think that he is wrong. 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 in how the BBC manages news.

Giving these important powers to government appointees will understandably lead to accusations that we are creating a state broadcaster, not a public service broadcaster. A bizarre situation could arise in which decisions around how the BBC is reporting government policy or the action of Ministers is being decided by people appointed by the same Government or by the same Minister. That simply cannot be acceptable. Channel 4 has a similar board to the one proposed for the BBC, and its non-executives are all appointed by Ofcom, not by the Government. I believe that the BBC non-executives should also be appointed by an independent body, whether that be Ofcom or some other independent group.

While the report eschews governance, it has a great deal to say about the scale and scope of the BBC. There has been much talk about the BBC becoming a “market failure only” broadcaster, filling in the gaps left by other broadcasters, and of the BBC becoming significantly more distinctive. I hope that, in their deliberations on this issue, the Government will not be influenced by the recent Oliver & Ohlbaum/Oxera report on the BBC’s market impact and use it to justify going down this route. That is because I believe that the report is flawed. For example, contrary to all of the evidence such as Ofcom tracking data, it claims that BBC 1 has become less distinctive.

The Oliver & Ohlbaum/Oxera report also ignores the wider public value benefits and wider economic benefits to UK plc. The report authors merely looked at what revenue benefits there would be to commercial broadcasting competitors of making the BBC less popular, and the revenue benefits that they came up with would be small. The £155 million they quote is just one-quarter of last year’s increase in TV advertising revenue and one-sixth of ITV’s pre-tax profits. Following this route—according to research by Reuters, PwC and Enders Analysis—would have an overall negative impact on the wider UK media sector, let alone on UK plc, for a very small benefit to the BBC’s direct competitors. So I entirely reject the market failure only approach and I am delighted that the committee came to the same conclusion.

As we heard from the noble Lord, Lord Best, the committee said that,

“we have not heard a convincing case for a significant reduction in the scale or scope of the BBC”.

The committee goes on to conclude that:

“The BBC should not be restricted to remedying gaps for which the market does not provide. The BBC must continue to be a universal broadcaster providing content which does not simply inform, and educate but also entertains”.

In terms of “inform, educate and entertain”—the Reithian principles—I entirely support the committee’s views that they should be the basis of the BBC’s mission and given greater prominence.

But if the scale and scope of the BBC is to be maintained, it needs to receive the appropriate income to achieve that. That means that there should be no further top-slicing of the licence fee income and no additional constraints on the BBC’s commercial activities. During the coalition Government, I strongly opposed the Conservative proposals to take money from the licence fee to fund free TV licences for the over-75s. I argued that government policies should be funded by the Government. I was pleased that my right honourable friend Nick Clegg vetoed the proposal and it did not take place. It is extremely disappointing that the current Government have now gone ahead to the detriment of the BBC.

Proposals for further top-slicing or new contestable funding should be rejected. Such proposals would mean less money for the BBC to spend on its services, would create additional bureaucracy and transaction costs, would risk transferring resources away from advertising-free services and from programmes that are guaranteed high reach and impact, and would risk poor quality programming. Two-thirds of BBC content spend is already contested, and that figure is set to increase. There is therefore no case for a separate “contestable” fund top-sliced from the licence fee, nor is there any case for requiring the BBC to sell off either BBC Worldwide or its stake in UKTV. Both would deprive licence fee payers of the financial and other benefits they currently receive, including funding for high-quality programming.

The BBC is undoubtedly the best broadcaster in the world, so I hope that in their charter negotiations the Government will do nothing to damage that reputation. Heeding the recommendations of this excellent Select Committee report should form an important component of their deliberations, so that we achieve Reith and not revolution.