Examination of Witnesses (Questions 60
WEDNESDAY 3 FEBRUARY 1999
MR E CLAY,
M ARTHUR, CMG,
MR M BYFORD,
MR A HIND
and MR J SMITH
60. May I stop you there and ask you, if
you had the choice, would it have been preferable to the Foreign
Office not to go in the direction which has been taken by the
(Sir John Kerr) I was ambassador in Washington
at the time.
61. As the Chairman said earlier: that is
(Sir John Kerr) The experts tell me that great
efficiencies arise from having a proper value on assets used elsewhere
in the organisation or provided elsewhere in the organisation.
I believe that must be true but Mr Byford is the greater expert.
62. I notice from the report that the World
Service now have the right to commission programmes outside the
BBC. Under the new commissioning culture which now exists in broadcasting,
would it not have been preferable to you and the World Service
to become more independent rather than less independent?
(Mr Byford) No. I am certain myself that the restructuring
is for the benefit of the World Service. Why? It enables our English
news supply to come from the world's largest news gatherer, BBC
News. In our general programming we also have a supply from the
largest production base in Europe within the BBC. Yet, as you
say as well, we do have the ability to get programming from other
suppliers too, from independent programme makers for our general
programming. We can commission too and the freedom for commissioning
the programmes lies with the commissioner and that is the BBC
World Service. The commissioners have the goal of serving audiences
in the most effective manner with programming supplied from their
preferred suppliers. In news it is true to say that our preferred
supplier is BBC News, but all the evidence we have tracked over
time since that restructuring has been that the quality of the
programming has benefited and our efficiency programmes are on
63. Have you commissioned outside the BBC
(Mr Byford) Yes; in our general programming, yes.
We have within our own organisation a commitment to an informal
target for independent programme making and we do.
64. I understand the need for full answers
but I would ask you to be as brief as you can because we have
to get through quite a lot. These are very complex arrangements.
We not only have the financial memorandum and the broadcasting
agreement which we had previously, but now we have protocols with
all the directorates. The report states quite clearly that the
trading agreements are very long and very complex. Can you reassure
this Committee that accountability still exists under this complex
(Sir John Kerr) Yes. And I say so subject to two
caveats, but I say so with fair confidence because it is the view
of the NAO as well, that the arrangements which have been devised
should work and provide that assurance. Caveat one: we shall need
to monitor them as they work over time. Caveat two: we should
like to see the NAO also monitoring them over time and I am very
glad that the NAO seems willing to do so.
65. In the recent past we have had a combination
of both efficiency savingstwo different typesand
restructuring within the World Service. Can you reassure us that
both cost and quality of programming has been kept up to the standards
we would expect?
(Mr Byford) Yes. Both streams of the efficiency
savings programme are on track and quality thresholds are being
protected. Within restructuring we recogniseand it is emphasised
in the NAO reportthat there are some restructuring charges
obviously but they are more than outweighed by the efficiency
savings benefits coming from it.
66. May I press you a little on that? If
you look at the efficiency savings which are reported, it was
partly improved efficiencywhatever that means, and I would
ask you in your answer to give us a description of what that entailsbut
it was also partly about reduced activity. You made a five per
cent further saving in 1997-98 with further savings in the current
financial year yet in that year of 1997-98 you did have some difficulty
meeting those requirements. That raised a question in my mind.
If you had difficulty in the first year of those savings will
there be increased difficulties even though the savings required
are reducing over time. If you are having difficulties will that
have an effect on quality and output of the World Service?
(Mr Byford) I have assured the Committee this
afternoon that we shall track that over time as well. I am confident
that it will not. As highlighted in the NAO report, some shortfall
was predicted within production and resources and in Production
the savings target was actually delivered. We are on track with
the efficiency savings programme. With the restructuring you earlier
asked about, the end expectation is of a £5 million cost,
more than matched by a £20 million restructuring dividend
over the five years.
67. Let me come on to that. In 1997-98 you
did meet your restructuring costs from the savings which you achieve.
In the years from 1998 onwards you still have £3.1 million
to achieve. You talk about £20 million overall savings but
can you reassure us that you will be able to fund those restructuring
costs over the five-year period?
(Mr Byford) Yes. The first call on those savings
is obviously to be able to fund the restructuring programme which
we have endured and predict. We are also confident that by tracking
the efficiency savings we will be meeting the dividend which we
68. It says in the report an estimate of
£200,000 in management time was spent in the first year on
the restructuring. Can you tell us what it was in the second year?
Can you reassure us that the time taken up by management on restructuring
did not impact on the other duties they are supposed to undertake
on behalf of the World Service?
(Mr Byford) My understanding is, as it says in
the report, that the arrangements were in place from the following
year and therefore there was no additional expense in management
69. Did the £200,000 not adversely
impact on the service provided in that year?
(Mr Byford) No. Obviously there was a great deal
of work which needed to be carried out to get ourselves in a position
to be able to have the trading protocols in place, the structures
in place, for it to be effective. That was the management time
reflected there. Once in place, no further burden.
70. May I turn to newscasting because this
seems to be one of the most complex areas and it is certainly
one of the largest areas of expenditure? The report describes
what happened in the first year. We are now told that automation
will take over. It does seem to me in reading the report, and
I am not at all an expert in this area, I have no experience,
but these areas are so complex that even the introduction of automation
is not automatically going to make it transparent and above board.
I just wondered how you can reassure us that in this very complex
area there will be no further disputes, no lack of transparency
and no continuing difficulties and frictions between the BBC and
the World Service.
(Mr Byford) I am absolutely certain that I can
commit to the fact that we will be able to explain how the savings
have been realised. We will want to reap the benefits of new technology.
That is one of the reasons why the restructuring is in place,
because over the whole of BBC News activities, including the World
Service, we can ensure that we are using the best technology in
order to deliver the best programming. That is what we shall do.
71. May I take you on to the question which
I suspect is on everyone's lips? You have told us that you are
able to make the savings without impact on the quality of the
service. You have told us that you have been able to carry out
the restructuring. Can you then confirm to us that the need for
any cuts in the direct services of the World Service is not under
consideration within the department?
(Mr Byford) I can confirm to you that the overall
strategy for the BBC World Service is to strengthen it over the
long term, to use the investment from the comprehensive spending
review settlement with those efficiency savings but the World
Service is in a dynamic situation. The marketplace around it is
changing rapidly, new technology opportunities are facing us rapidly
and the World Service is not an organisation which must stand
still so there will be change.
72. Would I interpret that answer as suggesting
that the new technology aspects of the World Service are likely
to take a larger and larger proportion of your funding and that
therefore you will have to look carefully at those services which
you currently fund within the World Service?
(Mr Byford) We always look carefully at the services
we provide to ensure that they are effective and providing value
for money. At the same time we also have to be looking at the
new opportunities, which the new technologies you emphasise offer
us. Our delivery mechanisms will still be a dominant short wave
but complemented increasingly by FM and the Internet over time.
That is our goal.
(Sir John Kerr) From the point of view of the
Foreign Office, it is very important that vernacular services
should continue. There are 43 now and there were 37 ten years
ago. We are anxious that more should open. With our encouragement
in the last five years the BBC now have a service to Kazakhstan
and Kyrgyzstan in these two languages, Khazak and Kyrgyz. They
have a service in Macedonian, starting in 1995. They have a service
in Albanian starting in 1996. They are now broadcasting, at our
request, more hours a week in Serbian. We have started to talk
to them about whether they should be operating in Bosnian. For
us this is actually really important. There always was a Croat
service. On the other hand I do not think that we can pile languages
up. I went to Finland in September. The Finnish service had closed
at the end of 1997. I talked to people from the President downwards
and it was quite difficult to find people who had noticed that
the Finnish service had closed. There was clearly a big audience
in Finland for the BBC, but it had not actually been listening
to the BBC in Finnish, it had been listening to the BBC in English.
As far as we are concerned, we will want to go on pressing Mr
Byford to produce more vernacular services aimed at particular
hotspots like the Balkans now, or opportunity spots like the Caspian
and the republics of the former Soviet Union, down in central
Asia. We will not want to be saying to him that he need always
keep open all the services he has, particularly in sophisticated
markets where opinion formers, the people we really want to hit,
are actually listening less to the vernacular than to the English
service or would do if he had lots of FM frequencies and lots
73. Are you satisfied that there is a set
of measurable objectives which the World Service is working to,
against which the Foreign Office can assess your performance?
(Sir John Kerr) Yes, there are. But I am not satisfied
that they will be good enough in future, with resource accounting
and budgeting coming in. May I ask Mr Arthur to explain the key
performance indicators exercise and how we intend to refine what
74. Before he does, may I ask whether for
instance in opening up in Albania, Macedonia, Kazhakhstan in central
Asia, etcetera and closing down your Finnish and French service
and all this, you have key targets for coverage and penetration
in the marketplace? Do you have qualitative ideas of whether people
think what they are hearing is useful? Do you have these sort
(Mr Arthur) Across the board we are trying to
have a much more contractual relationship with the BBC as part
of the way they use the grant-in-aid. As part of that, in the
context of resource accounting and budgeting, we need to have
much tighter setting of targets for what it is we want them to
achieve with the money we are supplying. This last few months
part of the process of dialogue with the BBC, which has been a
very intensive one, has been to establish a precise series of
performance targets and indicators which we can jointly measure
to see whether they are achieving what it is we want them to achieve.
75. As basic indicators you would presumably
include coverage and frequency and penetration, number of listeners
and whether they think it is worth listening to.
(Mr Arthur) Absolutely: hours of coverage, volume
of coverage, elite targeting, the type of people we want to get
through to, all those are part of the tasking which is now being
put in place with the BBC.
76. You are moving forward to measurable
targets. In terms of actual objectives, you mention in passing
that there is movement from the Finnish and French service to
focus on Albania and the Balkans. Obviously historically the World
Service has provided objective neutral news to areas in strife.
Is that essentially what you see your role as doing? What in essence
is the point in your view of the World Service. What is driving
(Sir John Kerr) That is one of its crucial roles.
It is clearly very, very important that it should be seen as authoritative,
as objective, as independent. For us, getting something which
is not seen as propaganda into areas like the Balkans at the moment
is very important because in such areas the local media will not
tell the majority of people, in other places a minority of the
people, what is going on.
77. So I have this right: the objective
really is to penetrate into areas which are in political turmoil
in many instances, where people do not trust their local media
to provide objective news. It is not for instance to get a good
brand share of the United States.
(Sir John Kerr) That is a particular Foreign Office
objective. It is not the only Foreign Office objective. For example,
in western Europe it is very important to us to influence the
debate in countries like Italy, France, Germany, about the direction
and development of European policy. We should like them to have
an objective statement of British views, an objective British
reporting of European Union meetings, carried by the BBC World
Service. I singled out the Balkans and Caspian, not because they
are the only examples.
78. Would you agree with me that there is
enormous value for the British brand in the world in terms of
the authority and independence of the voice of the World Service?
However, you have said we also have a function for it in promoting
the policies of Britain, which is slightly different, is it not?
(Sir John Kerr) I did not quite say that. It would
not be right for him to promote the policies of the Government
but it would be right for him to report what people in Britain
say about the policies of the Government, the policies of the
opposition and what the British are saying in the debate.
(Mr Byford) May I say as well that it was emphasised
at the start and it has always been emphasised about the World
Service and must continue, that editorial independence of the
World Service is critical. We have clear aims for the World Service,
which is to be the best known and most respected broadcaster in
the world. That means being able to provide an authoritative,
trusted, high quality information service across the world. We
also want it to be a reference point. That is what the branding
says and that means a global hub of communication, the ability
for the world to communicate with itself. Clearly it is also a
vehicle to promote the English language, learning, the best of
British culture, the best of British talent, in a sense therefore
in cultural diplomacy terms to be able to be leader for Britain.
That is our goal. We are a world broadcaster but we recognise
the world is a world of differences.
79. Would you say then that the value of
the World Service in terms of ensuring the word of Britain is
trusted, etcetera, etcetera, is that there is a big rub off on
our export trade and people trusting British products and this
sort of thing? Is that something which the Foreign Office bears
(Mr Byford) There is obviously a political, cultural
and economic benefit. I would hope the political benefit is that
the democratic values which we all support and enjoy in British
society are there in the World Service as well of openness and