V. ACCOUNTABILITY AND REGULATION
The importance of accountability and regulation
106. The Davies Panel was established to examine
BBC funding, but found itself inextricably drawn towards issues
of accountability and regulation, as have we. The Review made
a number of proposals for reform.[349]
The Davies Panel stressed the linkage between its funding proposals
and recommendations on accountability.[350]
Mr Davies argued that the reforms should be seen as a "quid
pro quo" for extra funding.[351]
The Commercial Radio Companies Association questioned the logic
behind the notion that extra accountability is linked to extra
money: "Just on behalf of the licence payers, we should quite
like to know in some detail where the first £2 billion went".[352]
The BBC and the National Audit Office
107. Responding to a submission by Mr David Davis,
Chairman of the Committee of Public Accounts, the Davies Panel
recommended that there should be National Audit Office (NAO) scrutiny
of certain aspects of the BBC's activities.[353]
The NAO already examines the BBC World Service and has undertaken
studies on the collection of the licence fee.[354]
The Davies Panel made three recommendations to extend this work:
first, the NAO should review BBC compliance with fair trading
policy within twelve months; second, the NAO should examine, on
the same timetable, the transparency of the BBC's financial reporting
culminating in its Annual Report and Accounts; third, the Government
should amend the Royal Charter to give the NAO inspection rights
to carry out periodic financial audits of the BBC's accounts and
its fair trading arrangements.[355]
108. The BBC had "absolutely no objection"
to the first two of these proposals.[356]
The BBC was, however, concerned that the proposed "periodic
financial audits" might duplicate the work of its own auditors
and, more importantly, threaten the independence of the BBC by
concentrating on programming issues that are "inappropriate
for review by the NAO and the Public Accounts Committee".[357]
109. Independence of BBC programming from Government
and from the political process is an integral characteristic of
the BBC. We would not support a measure which we believed would
threaten that independence. However, the Davies Panel specifically
recommended that the NAO's periodic inspections "should focus
only on administrative efficiency and on proper financial management
and accounting and not question policy objectives and programming
issues and matters of editorial or artistic judgement".[358]
The Government is satisfied that the proposals would not require
"any amendment to either the Charter or Agreement" and
understands that the National Audit Office has the legal competence
to carry out the studies.[359]
As Mr David Davis pointed out, the NAO already examines the BBC
World Service and the Arts Council without questioning matters
of editorial or artistic judgement.[360]
The BBC has actively solicited scrutiny by the Culture, Media
and Sport Committee.[361]
The Committee of Public Accounts has a long and distinguished
record of not considering the merits or formulation of policy.
We strongly support the proposals of the Davies Review concerning
the National Audit Office and consider that they should all be
implemented with immediate effect.
Regulation and governance of the BBC
110. The Davies Review was established to concentrate
on the BBC's funding. The Government did not consider that the
time was right for an extensive review of the BBC's purpose and
governance which "would more appropriately be carried out
in 2003-04, when the issue of Charter renewal was approached".[362]
A recurring theme in evidence to this inquiry has been that decisions
on funding in the near to medium-term are inseparable from a fundamental
review of the BBC's role and remit which therefore could not wait
until 2003-04.[363]
It was further suggested that the BBC's future role, and consultation
upon it, had to be integrated with the forthcoming consultation
on the regulation of broadcasting which is intended to lead to
major broadcasting legislation early in the next Parliament.[364]
111. The Secretary of State thought that, although
he would be "embarking on consultation in relation to overall
broadcasting regulation", "a vision of what the BBC
is in business for" and "what menu of services the BBC
ought to be aiming to provide in a digital age" could be
"sketched out now with reasonable confidence".[365]
Nevertheless, he went on to accept the close relationship between
questions about the BBC and questions about the wider regulation
of broadcasting.[366]
He stated that "some alternative means of governance of the
BBC, or some alternative means of regulation of the BBC"
was an issue to be examined. Any proposals might "be something
that could usefully be considered alongside many of the other
regulatory issues in broadcasting as we develop our consultation
over the next year".[367]
We welcome this remark. The BBC's role and governance in coming
years are highly contentious and inseparable from other broadcasting
regulatory matters. They should be integral to the forthcoming
review of broadcasting regulation. We recommend that the Secretary
of State for Culture, Media and Sport should make an explicit
statement that the BBC's future is a central subject matter of
consultation prior to legislation early in the next Parliament
and will not be hived off into a separate Charter Review in 2003-04.
112. The Davies Panel described the position of the
Governors as "problematic". They are both responsible
for regulating the BBC and have come to be regarded often as very
much part of the management of the BBC.[368]
This has fostered the notion that, while other broadcasters are
tightly regulated, "the BBC is whatever it wants to be".[369]
The Davies Panel had a sense that the present system of accountability
and governance "is neither satisfactory nor defensible".[370]
We agree.
113. In a previous Report we recommended that a single
Communications Regulation Commission be established with oversight
of all broadcasters, including the BBC.[371]
The case for independent regulation of the BBC was made by some
in evidence. According to Mr Peter Rogers, Chief Executive of
the ITC, BBC self-regulation "is simply out of sync with
modern concepts of accountability and openness".[372]
Others also saw a strong case for independent regulation, including
Lord Gordon of Strathblane.[373]
The BBC's self-regulatory position separate from the rest of
broadcasting is no longer sustainable. The case for a single regulator
of the market as a whole which we made last year has been reinforced
by the rapid development of the market. We reiterate our recommendation
that regulation of the broadcast content and commercial activities
of the BBC should be the duty of a Communications Regulation Commission.[374]
114. We view such a development as altogether preferable
to the proposal of the Davies Panel for a review of new BBC services
in a few years' time. It is presumably envisaged by the Panel
that such reviews would be conducted by the Secretary of State
for Culture, Media and Sport in the same way in which he currently
grants approval for new services.[375]
The proposal to grant to a politician a general power of review
of individual BBC services seems to us to jeopardise the independence
of the BBC and to tend towards direct Ministerial control of broadcasting.
Consultation on new and existing services should be the responsibility
of the independent regulator.
349 Q
33. Back
350 Davies
Review, p 8. Back
351 Evidence,
p 2; QQ 1, 55. Back
352 Q
126. Back
353 Davies
Review, pp 198-199. Back
354 BBC
World Service: New Financial Arrangements,
Report by the Comptroller and Auditor General, December 1998,
HC (1998-99) 26; HC (1989-90) 193. Back
355 Davies
Review, pp 108, 147, 149. Back
356 BBC
Response, p 33; Q 278. Back
357 BBC
Response, pp 34, 39-40; QQ
278, 298. Back
358 Davies
Review, p 149. Back
359 Evidence,
p 168. Back
360 Davies
Review, p 199. Back
361 HC
(1997-98) 1090, para 3. Back
362 Evidence,
p 167. Back
363 QQ
146, 324; Evidence, pp 48, 149. Back
364 QQ
197, 327, 608; Evidence, pp 88, 90, 229, 251-252; HC Deb, 29 October
1999, col 1215. Back
365 Q
684. Back
366 Q
688. Back
367 Q
691. Back
368 Davies
Review, p 146. Back
369 Q
109. Back
370 Davies
Review, p 148. Back
371 HC
(1997-98) 520-I, para 158. Back
372 Q
214. Back
373 QQ
69, 115, 614, 615; Evidence, pp 17, 160. Back
374 HC
(1997-98) 520-I, para 158. Back
375 Davies
Review, pp 102-103, 140. Back
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