---

BBC: Charter

My Lords, I thank the Minister for his succinct introduction. However, I want to single out for thanks the noble Lord, Lord Fowler, not only for his speech today—a model of clarity—but for the fact that he and his committee, in their three reports, have helped inform the House and the wider public about the issues arising from the charter review. It has certainly concentrated my and my colleagues’ minds on some of the issues that the committee has raised. They deserve thanks for their considerable work. When the White Paper was published earlier this year, we on these Benches welcomed quite a few of its aspects: the clear statement of purpose, including its worldwide role—and here I definitely agree with the noble Lord, Lord Fowler, on the role of the World Service; increased opportunities for independent television production through the window of creative competition; greater public scrutiny of BBC finances by the National Audit Office; continuation of funding by the licence fee; and a charter lasting 10 years to ensure long-term planning. Our support for some of the elements in the draft charter, now published, and in the agreement continues. I also made it clear when the White Paper was published that I am a strong supporter of the BBC, but not uncritical. When I audit my own viewing habits it is clear that they have a very strong BBC flavour. It is not only ““Strictly Come Dancing””; it is a whole range of drama, current affairs and news programmes. If all of us audited our own viewing, we would probably find pretty much the same. We believe, however, that the test of the new charter and the agreement must be whether it guarantees a strong, independent and securely funded BBC; that it is equipped to meet the challenges of the digital age; that it is strengthened in its independence from government; and also—and I think this is a new element and of particular importance in this day and age—that the BBC behaves in a fair and competitive way. Therefore, in several respects we are disappointed that the Government have not used the opportunity of the charter review to implement more fundamental changes to the face of public broadcasting in the United Kingdom. First, the Government have still failed to address defects in the regulation of the BBC. Governance is not being separated from regulation; the Government have simply proposed a transfer of regulatory responsibilities from the present board of governors to a new BBC Trust, with Ofcom having a number of peripheral functions. A truly independent regulator of the BBC is called for. We regret that the Government have not put in place a new and independent regulator tailored to regulate a public service broadcaster. The new arrangements will perpetuate the muddle between regulation and governance. I can do no better than repeat the comments of the noble Lord, Lord Burns:"““I do not like the idea of a minority of non-executive directors on a management board. I do not like the proposal that the Chairman of the Executive Board should be chosen by the trust. It seems to me that the body responsible for oversight should not be choosing the people it is going to oversee . . . I would have preferred a greater degree of separation so that they were clearly seen as distinct animals rather than being two animals within one organisation””." What happens when the non-executive members of the executive board disagree with the trust? Who does the director-general work for? Is he answerable to his executive board, the chairman or the chairman of the trust who has appointed him? Further, I agree with the Select Committee that appointment of the BBC chair and its members should be on the recommendation of an independent panel rather than on the advice of Government. Surely, this must be a cardinal aim of the charter review. It is common ground between all the parties that the future of the licence fee will need to be questioned, given the likely extent of technological change. At present the obvious course of action regarding funding is to continue with the licence fee in its current form until 2017. The Government have committed to not reviewing alternative funding mechanisms until around the end of digital switchover. We agree with that proposition. It is important that such a review is not conducted until after completion of the analogue switch-off, when the effects of that process will be clearer. As regards the level of the licence fee, due to be fixed, we are now told, in October, noble Lords on the Liberal Democrat Benches have made it clear that we do not believe that it is desirable for the licence fee payer to pay the costs of digital switchover. We agree with what the noble Lord, Lord Fowler, said on that. The costs of digital switchover should be borne out of general taxation. A further reason for the licence fee not to increase by more than inflation is to avoid subsidising the BBC for its activities in the digital market. There is concern among the BBC’s competitors that any excessive increase in the licence fee will be used to fund the BBC’s drive into the digital arena. No unfair advantage should be given to the BBC over its competitors. Nor should the licence fee subsidise regeneration in the regions. The move to Manchester must be made on its own merits. Many of us in this House have urged the Government to recognise the importance of using this review not just to secure a strong BBC but to ensure that healthy public service broadcasting competition to the BBC, especially from Channel 4, is maintained. If the licence fee is, however, to pay for switchover, it is vital that the BBC provides assistance—not just considers it, as the Government seem to imply—to Channel 4 with the capital costs of switchover and the allocation of some additional DTT capacity. It is as much in the BBC’s own interest to secure a healthy and vibrant public service broadcasting landscape as it is in Channel 4’s. Channel 4 is in a strong financial position at present, but as the pace of change in the industry increases, it is essential that we take this key opportunity to do what we can to underpin Channel 4’s long-term success. Generally, neither the public nor the BBC would be well served by lack of choice and effective competition if the BBC were the only broadcaster strong enough to invest in quality public service broadcast content. The risk of unfair advantage, however, is exacerbated by the way in which the licence fee is set. The Liberal Democrats agree with the conclusion of the Select Committee in its third and final report that the Government currently have too much unchecked power in setting the licence fee. Advised by the National Audit Office, Parliament must surely be able to scrutinise the formula agreed between Government and the BBC on the level to which the licence fee will rise. I hope that the Government will take on board the Select Committee’s comments. It is not too late and I hope that the Minister will give a nod in that direction. On competition and the public value test, we welcome the various mechanisms which are designed to ensure that fair competition is maintained while allowing the BBC to innovate. We welcome the concept of the public value test, the market impact assessment and the new ex ante codes. But despite those mechanisms, the charter and agreement set out that the trust itself will decide whether the BBC can embark on new licence fee funded services, launch new commercial services, significantly change existing services or, indeed, whether a service licence is already so broad that the new activity does not merit any scrutiny. Ofcom will have a purely advisory rather than regulatory role in this process in that it will provide market impact assessments to the trust, but the trust will make the final decisions on the public value test. The trust will be both judge and jury in deciding the competitive impact of the BBC on the wider market. The Government claim in the White Paper that that would not be the case, but clearly the trust is in the driving seat on this matter. It is hardly surprising that the BBC’s commercial competitors are concerned at the lack of independence of the decision-making body, especially when the definition of ““service licence”” can be so broad—online services, for example—that no public value test will be needed. As currently proposed, there is no independent oversight and no opportunity to appeal the trust’s decisions other than by judicial review. The Select Committee report recommends that if a market impact assessment indicates that the launch of a new BBC service will risk stifling a new market, the new service should not be launched. The Liberal Democrats agree. The trust should not be able to override any finding of adverse market impact in a public value test. The Select Committee also recommends a right of appeal to Ofcom on proposals which have been subjected to a public value test. Surely, this is a minimal measure that the Government should implement. That is also true of the ex ante codes. Is there not a need for a clear process for appeals to a truly independent authority? Should there not be a single, new independent regulator for all public service broadcasters; namely, a public service broadcasting commission? As regards the ex ante codes, all that is proposed is a complaints procedure. The window of creative competition for radio is one of the great disappointments in the charter and agreement. Why is this not provided for? The principle for radio is the same as for television. There is no reason why this should not apply to radio. The reasoning in the White Paper is extremely weak. All we shall be left with is a 10 per cent voluntary approach, exactly the same as we have at the moment. I urge Ministers to think again about that. I urge the Government to address all these concerns in the final version of the charter and agreement. The BBC and public broadcasting are in the best possible condition to tackle the challenges of the new media age but at the same time must not stifle competition and should encourage independent production. In conclusion, I wish the BBC, a precious national institution for more than 80 years, to continue with renewed vigour at the heart of the UK’s public broadcasting landscape. If the Government accepted the points that I, my party and the Select Committee are making, that position would be even stronger.