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BBC Royal Charter

My Lords, in the 1992 election campaign after a particularly fierce altercation with the BBC, I also remember John Major rounding on me and saying, ““You won’t be able to hold me back for ever on this””—a remark that I did not take as a declaration of undying devotion to the corporation. On the other side, we had Harold Wilson saying that if the BBC did not mend its ways, the government would see that it did. Coming very much up to date in the events surrounding the inquiry of the noble and learned Lord, Lord Hutton, the former chairman of the BBC, Gavyn Davies, said in evidence to us that he believed the newspaper reports to be correct when they were saying that,"““the Government would change the governance of the BBC . . . and change the funding of the BBC””" as a result of the BBC’s actions. I do not want to argue about whether he was right or wrong; I simply assert that the chairman of the BBC believed that to be the case. Frankly, we can take it that all governments want to influence the BBC, which is not greatly different from wanting to influence the press. But there is perhaps one difference. Governments do not own the press, and you might say that they do not own the BBC either. But they do control the levers of power over the BBC. Governments determine the terms of the Royal Charter and, even more importantly, the more detailed agreement between the Secretary of State and the BBC. Government appoint those who are responsible for the running of the BBC, and government set the level of the licence fee without any outside, open and   independent verification. Taken together, that amounts not so much to influence but to the potential for real power, and that power comes from the fact that the BBC is established by Royal Charter. I am not sure that every parliamentarian, let alone the public, knows what that means in practice. After a Green Paper and a White Paper, we expect a Bill, which will be scrutinised by both Houses of Parliament before becoming an Act. That is simply not the case with the BBC. The Government decide. Provided that the BBC and the Government—in practice, the Secretary of State and the chairman—agree, it is a done deal. The Secretary of State was quite frank when she gave evidence to us. She defended the charter process on the basis that it had always been done that way and said that her paper was a mixture of proposals for discussion and decisions that had already been taken—a mixture of Green Paper and White Paper. To use her description, it was a pistachio ripple—a particularly nasty ice cream which is neither one thing nor another. That sums up one of our main areas of disagreement—the proposals on the governance of the BBC. Those show not only our disagreement on the detail but also the inability of anyone to do anything about it. Again, in précis, the Government want a BBC trust with a non-executive chairman to take over from the governors and then a management board beneath that, which also, oddly, will have non-executives sitting on it and could be chaired by another non-executive chairman. There are few, if any, examples of non-executives sitting on management boards in outside industry. Indeed, it is difficult to see how non-executives would have the time or availability to sit on an executive board, which, almost by definition, meets more frequently than the main board. But that is the proposal. That is what the Government want to do. What the Government do not want is any increased outside regulation of BBC activities. Our proposals, on the other hand, are for a BBC board headed by the chairman of the BBC; a management committee headed by the director-general but without non-executives; and an increased role for Ofcom in the area of content regulation and competition. I could argue this at length; suffice it to say that our reservations on the Government’s proposals are echoed by a whole range of outside bodies, committees and individuals. Sadly, this is not a matter for discussion. The proposals on governance have been criticised but they are the white part of the pistachio ripple. The decision is taken. It is for reasons such as this that we propose an important change regarding the BBC. The committee felt strongly that the process for agreeing the BBC’s constitution should be open, transparent and not in the hands of one political party. For that reason, we recommended that the BBC’s mandate and structure should be defined in statute and not by Royal Charter. The passage of any Act through Parliament is more democratic, more independent and more transparent. It provides for all-party involvement and protects the BBC from the pressures exerted by one political party. The House of Commons is the only forum that can claim to represent all licence fee payers. Certainly we do not want continual interference and change, but we do want increased accountability to the licence fee payer. We should remember that the Culture, Media and Sport Select Committee of the House of Commons came to exactly the same conclusion. So the committees of both Houses are saying the same thing here. Accountability to the licence fee payer is fundamental. For let us remember that we are dealing with a corporation with an annual income of £3 billion provided by the public—and provided predominantly through the licence fee. That is a vast sum and, as a result, we looked at the basis of the licence fee. We recognise that it is a regressive charge but we came to the conclusion—here we agree with the Government—that the licence fee is the best, or certainly the least worst, way of funding the BBC. To do so through general taxation would place even more power in the hands of government. Changing to advertising would obviously change the whole character of the BBC and that is not supported in the public surveys. But the licence fee system also imposes conditions on the BBC. We believe that the process whereby the fee is decided should be as open as possible and we certainly believe that the BBC should achieve the very maximum of value for the money received. The public already pay £126.50 a year. The BBC has now proposed to the Government that this should be increased by RPI plus 2.3 per cent, or even RPI plus 2.8 per cent. Even on the basis of RPI plus 2.3 per cent, that would mean a licence fee in 2013 of £150.50 in—I emphasise—today’s prices. Making allowance for the estimated increase in the RPI, the figure would be £181.50. We should be frank. That scale of increase is too high and should be reduced. We see no reason why increases should automatically be on the basis of RPI plus. We see two areas where reductions in costs can be achieved. The first is in the hands of the Government. The Government are proposing that the costs of digital switchover, over the next few years, should be borne by the licence fee payer. They are also making the BBC responsible for giving special help to those who may be unable to afford the personal cost of digital switchover. We do not deny that there will be costs from the switchover, but believe that these costs should be borne by the general taxpayer. The case for helping the vulnerable should come from the budget of the Department for Work and Pensions. In a sense, that case in unanswerable. The Government will also be gaining receipts from the sale of the analogue spectrum. We may be going from analogue to digital, but that does not mean that analogue will be worthless. The frequencies are a potentially valuable asset, which can be used for mobile and cordless phones, for example. Estimates of value vary, but most are in the range of between £1 billion and £2 billion. As it stands, the Treasury take the receipts and licence fee payer bears the costs. The BBC itself needs to make stronger efforts to contain costs, however. A prime example is the proposed move of the sports and children’s programmes to Manchester. We support that move. It is an imaginative thing to do. Frankly, however, we find it incredible that the move will cost an extra £50 million a year, with a payback in 25 years. The BBC does itself no favours in putting forward figures of that kind. Work is now taking place to review and reduce them, but it points to a major defect as far as the licence fee payer is concerned. There is no outside, independent, open check of the figures being put forward. The National Audit Office, which already does such valuable work—not least in relation to the World Service—should have its role expanded, so that it can do the value-for-money audits it chooses to, and check on the components on the BBC’s bid for licence free increases. It should look at the costs, and at any increase in income that might come from an increase in the total number of licence fee payers. In passing, I hope that, at long last, the Government might make some decision on decriminalising the non-payment of the licence fee, an issue which has now dragged on for year after year. The BBC is protective of its autonomy, and I understand why that should be the case. Equally, however, it has to take into account how public expectations have changed. As in other areas of life, the public expect, for example, their complaints to be dealt with fairly, and for it to be demonstrated that they have been dealt with fairly. In this regard, the present position is utterly confused. If a member of the public is offended by a programme—or even the prospect of a programme—he or she can complain to either Ofcom or the BBC. Thus there were many complaints about ““Jerry Springer the Opera””—so many that I even switched it on myself to look. Frankly, it was a very tedious piece of television, but please do not write to me on that point. In contrast, complaints on accuracy and impartiality are dealt with by the BBC alone. We propose that complaints should first go to the BBC, but those who are dissatisfied can appeal to Ofcom, just as Ofcom operates now for commercial broadcasters. I do not regard that as unnecessary interference in the affairs of the BBC, but simply as ensuring an independent check for the public who finance the corporation. As I said at the beginning, the committee came to this inquiry as admirers of the BBC. I can well believe that, having listened to what I have said, one reaction inside the corporation might be ““If these are our friends, save us from our enemies””. That, I think, would be a mistake. This committee wants to see a strong BBC, independent of government. But we also want to see a BBC which is accountable to, and serves, the public who finance it. Our report is about getting that balance right. I have sought to summarise some, but only some, of our proposals. Even given the very hard work that the committee put in—it has worked extremely hard—there were areas that we were unable to cover before we had to publish our report. I was grateful, therefore, to the House for agreeing to extend our timetable—indeed, the life of our Select Committee—until spring next year. That will enable us to publish a second report on issues such as the BBC’s proposed move to Manchester, the World Service and broadcasting of sport and religion, each one an important subject in itself. Finally, the media—broadcasting, press and the new media—are vastly important. The standards and ownership of the media potentially affect all our lives. It is right that owners, broadcasters and journalists should be put under scrutiny in the same way that the best of the media put politics, business and the rest under scrutiny. This House is particularly well qualified to carry out that task. It has the experience. There are men and women here who are uniquely qualified and, inevitably, there is rather more experience here than in the other place. This House also has independence. We are not seeking the support of a particular media organisation for our cause. We do not woo the press, the BBC, or anybody else. In the main, I think, we are not seeking quick headlines. That independence could be put to good use in the public interest. There is a strong case for having a permanent Select Committee of this House examining media affairs. There is an opportunity for us to take a step forward here. I hope that opportunity will not be missed. That, of course, is a matter not for the Government but for this House to decide. I simply hope that the work of our Select Committee is of sufficient standard to show what can be done and that it will add to the case for the kind of permanent committee that I am advocating. I beg to move. Moved, That this House takes note of the First Report of the Select Committee on the Review of the BBC’s Royal Charter (First Report, HL Paper 50).—(Lord Fowler.)