BBC Charter

Lord Foster of Bath Excerpts

Wednesday 12th October 2016 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, it has been a privilege to listen to the expert contributions to today’s debate. There is clearly wide support for the BBC and for the need to judge the draft charter and agreement in terms of whether or not they ensure a BBC that is independent, impartial, financially secure and popular. After all, that is what the vast majority of the 190,000 respondents to the Government’s survey said they wanted—not a BBC that had been cut down to size nor one that merely filled in the gaps left by the other broadcasters, but a BBC able to fulfil Lord Reith’s vision of an independent British broadcaster able to educate, inform and entertain, as well as a BBC that was well governed and appropriately but proportionately regulated.

Like other noble Lords, I warmly welcome the many positive changes that have been made since the White Paper and I congratulate all those, not least those in government and in the BBC, who have made them possible. However, strong cases have been made for further changes, not least to statutory underpinning, as proposed by my noble friend Lord Lester. I congratulate the Minister on his new post and I thank him for the meeting that some of my noble friends and I had with him recently, but I hope he is still in listening mode. We are, after all, discussing a draft set of documents, so I hope he will confirm that proposed changes, including those that have been raised in this debate, are not ruled out. I was somewhat concerned to hear him implying that only a few minor technical details remain to be sorted out. Frankly, there is little point in a debate in your Lordships’ House if from the outset it is to be ignored.

Given the shortage of time, I hope that your Lordships will understand that, rather than dwelling on the many positive aspects of the draft charter, I shall concentrate on those areas where we believe that further change is needed. For example, as my noble friend Lady Bonham-Carter said, there have been huge strides in the composition of and appointment to the new BBC unitary board, but we would still prefer to see all the non-executives independently appointed. Does the Minister not agree that it is somewhat hard to claim independence from government when the powerful chair of the BBC board and the chair of the equally powerful BBC regulator, Ofcom, will both be appointed by the Government?

Of course we welcome the assurance that there will be a more transparent process in setting the licence fee, but as many noble Lords, such as the noble Lord, Lord Best, said, far more is needed. Surely the Minister would agree that there needs at least to be public consultation on new licence fee proposals followed by debates in both Houses before decisions are made.

As many noble Lords said, proposals for the disclosure of presenters’ pay are certainly not in the long-term interests of licence fee payers. They are, as the noble Lord, Lord Birt, put it, mischief-making, even ludicrous, as the noble Lord, Lord Patten, put it, and inflationary, as the noble Lord, Lord Grade, called them. We were certainly disappointed to see the threshold drop from £450,000 to £150,000, and even more concerned to hear from the Minister that applying that disclosure level to other BBC personnel has not been ruled out. I hope that the Minister can update us on that point.

My noble friend Lady Benjamin raised the issue of the long-term future of the contestable fund. If the three-year pilot is successful and the fund continues, we hope that the Minister can at least assure us that the licence fee will not be top-sliced to pay for it.

On top-slicing, we, like so many others in your Lordships’ House, believe that it is entirely wrong to be transferring to the BBC responsibility for both policy and funding of free TV licences for the over-75s—a more than 25% cut in licence fee funding, putting much loved programmes and services at risk and placing the BBC in the very difficult position of having to become a social policymaker. Social policy should be made by government and funded by government through taxation and hence democratically accountable. Surely the Minister must accept that the BBC is not an arm of government and that this move undermines the independence of the BBC.

We are of course in greater agreement with the Government’s plans for the expanded role of the NAO, but with some caveats and requests for clarification. The BBC has argued that its commercial arms, which do not use licence fee revenue, should be judged like any other business on financial performance, not on value-for-money practices, which are intended for public bodies. I would certainly welcome the Minister’s comment on that.

I am very puzzled about the relationship between the NAO’s value-for-money examinations and editorial and creative judgments. On the one hand, paragraph 55(7) of the agreement is clear that editorial and creative judgments should not be part of such examinations. Indeed, the Comptroller and Auditor-General is not entitled to question the merits of such judgments. On the other hand, paragraph 55(8) allows for the Comptroller and Auditor-General to determine what editorial and creative exemption means in practice. It states:

“Where an issue about the meaning of editorial or creative judgement arises it shall be for the Comptroller and Auditor General to determine the meaning having consulted the BBC”.

Surely it does not make sense that the Comptroller and Auditor-General cannot deal with editorial and creative judgment but he alone can decide what is and what is not such a judgment. I hope that the Minister will agree at least to review that situation.

I shall make one final point about the NAO. The agreement is clear that the Comptroller and Auditor-General and the BBC are required to agree a memorandum of understanding on VFM examinations, yet nothing is said about what happens if the two cannot agree. Perhaps the Minister can tell us.

I turn finally to the expanded role of Ofcom as regulator, especially in respect of distinctiveness and competition. Of course the BBC should be distinctive. It already is, as many noble Lords have illustrated. But if demands for ever more distinctiveness are pressed too far, the BBC will move to become merely the provider of those things not done by other broadcasters —the market failure model so beloved by John Whittingdale. That would let other public service broadcasters off the hook, with the BBC being required to pick up the slack in less profitable genres which commercial PSBs drop, as we saw happen when Ofcom lowered commercial broadcaster requirements in 2003. Does the Minister agree that Ofcom has to be diligent in ensuring that all PSBs pull their weight?

Our other concern is that BBC long-term planning and the security of its partnership deals could be put at risk by having to deal with an onslaught of competition inquiries—death by a thousand reviews, as my noble friend Lord Clement-Jones has termed it. On Monday, Ofcom told a number of us that inquiries could be carried out in many different circumstances, from BBC proposals for major changes to no changes at the BBC but a change to the broadcasting ecology in which it operates. Of course, there will also be inquiries caused by complaints from rivals and others. I was heartened to hear Ofcom say that it will not be cavalier about initiating investigations and believes that a strong board will head off the likelihood of many being needed. But there is understandable uncertainty. Ofcom has still to consult on how it will carry out its new role. There is not even yet any definition of,

“adverse impacts on fair and effective competition”,

which forms the basis of any of its inquiries.

We have no idea how distinctiveness will eventually be interpreted and assessed. I share the view of many that, while the NAO cannot interfere in the BBC’s editorial and creative judgments, there is no explicit prohibition, as there should be, on Ofcom. My noble friend Lord Clement-Jones has set out our concerns that Ofcom’s powers to conduct competition reviews appear too open-ended and that the complaints system could give competitors a green light to flood Ofcom with complaints about competitive impact.

Given the understandable uncertainty, and for the avoidance of doubt, can the Minister confirm that no inquiry will be conducted unless there is a strong evidence base to justify it? Does he agree that Ofcom should investigate cases only where the changes in market conditions have taken place after Ofcom assumes full responsibility in 2017? Will the Government insist that, before Ofcom recommends any changes to BBC services following an inquiry, it must demonstrate that the competitive harm identified cannot be tackled except by changes within the BBC? For example, should not changes to BBC services be the last resort in cases where the market has changed around the BBC?

I look forward to the noble Lord’s answers and if he cannot give them all now, as has already been proposed, will we receive a letter covering all the points in the debate? The BBC is the best and most trusted broadcaster in the world. I hope that the points made in this debate will help to ensure that it remains so.