BBC Charter

Lord Stevenson of Balmacara Excerpts

Wednesday 12th October 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for honouring his commitment, I think made on his first outing at the Dispatch Box—he is a brave man—to secure an opportunity for us to debate the draft royal charter and agreement on the BBC. It is a debate, which as he said, signals at least the beginning of the end of the process, which commenced immediately after the last election. I am also very grateful to him for putting on record his, and by implication the Government’s, support for the BBC. We have waited a long time to hear a Minister endorse the corporation in such terms as the world’s finest broadcaster. It is. As others have said, it is the envy of the world and we should cherish it.

This has been an excellent debate with a very distinguished cast list. It builds on the tradition established in your Lordships’ House of a cross-party consensus about the BBC, and a steely determination to ensure that the BBC continues to inform, educate and entertain; and to survive and thrive in the long term.

Many of those who have spoken have raised issues about matters that have caught their eye in the papers before us. I will not deal with all of them, and if time presses when the Minister comes to respond, I should be grateful if he could undertake to write to all those who have participated on issues relating to, for example, the World Service, training and skills, diversity, children’s programming, the impact of competitive outsourcing, regional production, Caversham, support of new technological areas, minority language programmes and local radio. It cannot be said that we have not given him a hard time—we have, but he is up to it, and I am sure that he will respond in the fullest possible way.

Given that whatever is signed and sealed by the Privy Council this autumn will be the charter, which will take the BBC into its second century, the key question that we need to have answered this evening is whether these draft charter and agreement papers strengthen or weaken the BBC over the next 11 years. We also need to examine what lessons can be learned for the future. We on this side have five main concerns in relation to the Government’s proposals, covering independence, distinctiveness, transparency, regulation and process, all of which have been picked up already, and I shall not therefore go into them in great detail.

On independence, like many noble Lords, we are concerned that the Secretary of State will still retain a significant role in the appointment of the chair of the new BBC board as well as the four members representing the nations. Indeed, as we picked up on today, she has the casting vote, or at least the veto, on the English member, so she has a double whammy. Although the charter says that the appointment of the chair can be made only following a “fair and open competition” and after a reappointment hearing by the Select Committee, there are shortcomings in the existing public appointments process. We believe that there are still grounds for concern in the light of the Government’s response to the Grimstone review of public appointments —for example, in the wide scope given to Ministers to intervene before and during any appointment process. It is vital that an appointment as important as the new BBC chair is carried out to the highest standards so that the country can be confident that the successful candidate was selected purely on merit and not as a result of personal and political connections with the Government of the day.

On distinctiveness, I was a little amused, I think, to discover that the Minister took six minutes to mention the dreaded D-word. I do not know whether that was psychological or deliberate, but it was certainly interesting. We have discussed it at length, and everybody who has spoken has been concerned about it. We argued against the inclusion of such a term in the White Paper proposals when we had that chance but, like others, we broadly accept the current approach to distinctiveness as a way in which to analyse some of the issues arising from the new regulatory structure. However, like others, we wish to make sure that it is restricted to services and not to individual items of content. That was mentioned by the Minister and picked up on particularly by my noble friend Lord Alli, who raised the question of whether it might impact on scheduling. This is a really important issue and we need to have answers before the draft agreement and charter are sealed. We are concerned about this innocuous term—perhaps we should not be. The problem is that it could help the BBC not to rest on its laurels, as others have said, so that it constantly tries to inform, educate and entertain in new ways, but that has been turned into a veiled threat that it should not be popular. It will be a disaster if the rules concerning distinctiveness in the new charter and agreement have the effect of fostering a defensive mentality within the BBC that is not conducive to innovation and creativity.

As the Minister said, on transparency the BBC is a huge operation. It has an impact on many aspects of our lives, not just through its public purposes and commercial activities. It supports our creative industries; it carries out training, although we hear that that is already under pressure, and maybe needs further support from Ofcom; and it supports diversity and regional engagement. It is our biggest funder of the arts and culture in the country and, if noble Lords will forgive the metaphor, if it catches a cold, the whole creative economy gets flu.

It is, as the Minister said, important that its funding arrangements are put on a transparent basis, and the White Paper recognised that the last two licence fee settlements were carried out behind closed doors and without effective parliamentary scrutiny—or, indeed, any scrutiny. However, the draft charter and agreement failed to include any specific provisions as to how best to ensure a more transparent process. The Government have rejected the sensible proposal that the level of the licence fee should be set by an independent body akin to the Low Pay Commission, yet there is a wide consensus that having a clear, fair process for setting the level of the licence fee is in the public interest. We welcome the provision in the draft charter that the BBC’s next funding settlement in 2022 will be for at least a five-year period, and the Government must consult the BBC and take account of the level of funding needed to deliver its mission and public purposes. But that is not enough. The draft charter already requires the Government to put terms of reference for a future charter review before Parliament—both Houses—and consult the public and hold debates in each House. Why should this level of democratic accountability not also be applied to the setting of the level of the licence fee? Like other noble Lords, we think that the requirement for disclosure of salaries above a low threshold is neither necessary nor sensible and should be withdrawn.

On regulation, the BBC will in fact face two regulators: the NAO and Ofcom. We agree broadly with this approach but, as always, the devil is in the detail. It is, in this case, somewhat undercooked in some areas of the draft agreement that we have before us. The points made about the NAO have been well made by others and I will not go over them. It is, I am sure, unacceptable —as the noble Lord, Lord Grade, said—to have the NAO, or the Comptroller and Auditor-General, to be judge and jury in the same case. This needs to be sorted, and sorted quickly. There is a parallel, which has been mentioned, with the Bank of England, whose independence is secured by a set of arrangements which might well be copied across for the BBC.

Schedule 2 of the agreement requires Ofcom to set regulatory conditions to secure BBC output and services, and it gives specific, detailed guidance about what it must consider for the BBC’s TV, radio and online services. But as others, including the noble Lord, Lord Clement-Jones, have said, these clauses follow an old-fashioned approach to content regulation that would introduce a prescriptive and inflexible regulatory framework, which is surely not what is required to achieve the BBC’s editorial independence and creativity. Imposing quotas should be a response to evidence of failure to deliver the obligations of the charter, not the starting point. This needs to be redrafted. I suggest to the Minister that the principal aim should be to ensure that Ofcom, as an independent regulator, has the freedom to determine how best to regulate the BBC to secure agreed policy goals.

On the mid-term review, the Government have been at pains to stress—I am sure that they are sincere about this—that this should be a light-touch exercise, not involving the mission, public purposes or funding. It would, however, be helpful if the Minister could stress again, beyond peradventure, that this review is a diagnostic aid, not a pass/fail test.

Finally, on process, the Government pay lip service to the idea of a people’s BBC; Ministers often repeat the mantra that the corporation remains accountable to the licence fee payers. However, neither the charter nor the agreement set out any mechanism for this accountability to be delivered in practice. Previous charters specified that the BBC Trust, or previously the BBC’s governors, had accountability to the licence fee payer as one of its responsibilities. Why has this been dropped? The public consultation research by the Save Our BBC organisation unequivocally concluded that licence fee payers fully expect the BBC to continue to be accountable to them as major stakeholders. In this day and age, and as technical and communications methods develop apace, the ways in which this can be achieved increase and improve rapidly. I wonder whether our Communications Committee might like to look at this issue in the near future, perhaps also combining it with some of the other big issues that have been raised today. Those include whether the time has finally come to give the charter statutory underpinning, which I would support; the role of Parliament in the charter review process; and the future of the licence fee after 2027, including the possibility of introducing a more progressive funding mechanism.

The BBC is the cornerstone of the creative industries in this country and the creative industries are the powerhouse of our future prosperity. They represent one in 11 jobs, they bring in £76 billion a year, they enhance our reputation overseas, they are intrinsic to our whole added-value economy and they have seen growth year on year well ahead of the rest of the economy. As has been said, Brexit really sharpens the need for us to ensure that these industries are supported. The truth is that the British creative industries cohere as a balanced ecology with the BBC at its heart. No sensible person would take an axe to the tallest tree in the middle of a forest and not expect to do serious harm to the whole of that forest. Why is it so difficult for Ministers to grasp that the existence of a strong and confident BBC does not harm the wider industry? It fosters and creates a competition for quality and we should support that.

The history of broadcasting in this country is rightly praised for what it has achieved: bringing on-stream, over time, both state-funded and commercial services, which compete for audiences but not for funding. As we approach the centenary of the BBC, we should reflect on and be proud of the fact that, for nearly 100 years, people from different traditions and political backgrounds have worked together to ensure that the BBC informs, educates and entertains, that it is independent, and that it survives and thrives into its second centenary. That remarkable feat of political engagement—evidenced again this evening—is in itself surely worth celebrating.

I look forward to the Minister’s response. He has been listening hard and I am sure he will acknowledge that we have made some very sensible suggestions. He said that this was the end of the process, but is it really? After he has reflected on this debate, it would be good if he would write to us if any of the points we have made today have struck home and he is minded to move on them, because that would show the power that is available here which he should be using. In any case, it would be nice to know, before the other place has a chance to debate this, that we got in first.

--- Later in debate ---

[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?