Examination of witnesses (Questions 1
- 19)
THURSDAY 13 JULY 2000
SIR CHRISTOPHER
BLAND, DAME
PAULINE NEVILLE-JONES,
MR GREG
DYKE, MR
MARK THOMPSON
and MR JOHN
SMITH
Chairman
1. Sir Christopher, thank you very much for
coming with your colleagues this morning. We are particularly
pleased to welcome Mr Dyke in his first appearance before the
Committee as Director-General of the BBC. I think it is useful
to make clear that it was you who very generously invited the
Committee to have this session, in which we look at your Report
and Accounts as a part of what you believe is a useful form of
accountability. I say that because I would not, for a moment,
wish people to believe that somehow or another we were calling
you rather than, in a sense, that you were calling us. So I make
that clear. I welcome you. We are just a little sparse at the
moment and it is partly because two Members are away, but also
because of those of who were sitting into the early hours of this
morning, but we welcome your having offered to come here. If you
have an opening statement to make, Sir Christopher, obviously
we have studied the Report and Accounts very carefully, but we
would be delighted to hear it. May I add one thing. You have brought
a considerable team with you. I am sorry we did not have enough
chairs to begin with! Any or all of your colleagues will be very
welcome to answer any questions that are put.
(Sir Christopher Bland) Thank you, Mr Chairman. We
were advised that on the whole you preferred not to have opening
statements, so I will content myself with a very, very brief two-or
three-sentence summary of the past year. In financial terms, which
is important for the BBC, although not the most important way
of judging the success of the year, it was good. We came in on
budget. We achieved our commercial objectives. The overall stewardship
of public money is within the bounds and targets we set ourselves.
In programming terms, there were some highlights. We had a wonderful
autumn schedule. We have had a good Christmas schedule. We had
wonderful coverage of the Millennium celebrations. At the same
time, the Governors' view was—and it is a view that is shared
with management—that although there were highs, we need
to raise the overall level of the BBC's performance further in
order to fulfil our overriding public service objectives. So the
BBC did well, we believe, last year. We believe that the BBC can
and will do better.
2. Thank you very much, Sir Christopher. Could
I explain the reason why we have decided to dispense with opening
statements. This is because the pressure of questions is such
but, of course, we are grateful for what you have said. Could
I open the batting by asking you to clarify something. On page
15 of your report you say that: "The BBC has the capability
to reaffirm BBC 1 as its flagship public service network."
Indeed, I think that many people would so regard the BBC 1. That
being so, I wonder if you would care to give us any information
about what has so far surfaced only as unsubstantiated reports
in the press, namely, that there are plans to remove certain major
public service programmes from BBC 1 into BBC 2, which change
the nature of BBC 1.
(Sir Christopher Bland) Perhaps I could start off
and then hand over to Greg Dyke, and perhaps Mark Thompson can
come in, in response to the subsidiary question. This is a debate
which Mark's Banff speech, the discussion that Mark's Banff speech
initiated. It is a journey that has begun, that has not yet been
accompanied by firm proposals from the management of the BBC,
who are still examining all the options in order to deliver a
public service of BBC on both 1 and 2. That is, both ready for
the digital age and reflects the changes that are taking place
in digital homes, but at the same time is underpinned by the public
service responsibilities of the BBC. It is, in effect, a response
to what this Committee said a year ago. You said: "The BBC
needs a strategy to maintain the appeal of its core programming
over the next nine years when it will continue to be financed
primarily by the licence fee. There is a danger that in pursuing
a strategy to maintain the legitimacy of the licence fee, in ten
to 15 years time the BBC will lose sight of elements which many
see as integral to the licence fee justification right now."
That translates into the primacy of BBC 1 in terms of earning
public support for the BBC. If there is any clear correlation
between one of our services and the general public support for
the BBC, it is how BBC 1 does. That, in turn, can only be underpinned
by absolutely outstanding popular but distinctive programming
on BBC 1. Greg.
(Mr Dyke) I think we would say to start with and I
would make it very clear, that what has been written in some newspapers,
the idea that we are going to have a BBC 1 that is devoid of news,
current affairs, factual programming, is just simply not true.
There are no discussions or proposals or plans for that. What
we are doing is looking again at all our services. I think the
point that you made last year was probably the right one. There
was a real danger that if you concentrated too far ahead, you
did not concentrate enough on what is still by far the most popular
service which is the BBC. Therefore, we are putting in a considerable
amount of time to thinking what is BBC over the next five years.
Mark's speech was talking about a journey. We have to think also,
while we are doing that, that at some stage we are going to move
into a position of analogue switch-off. By that time there will
be five, possibly six, BBC channels in every home. Therefore,
you have to look at what is, at that stage, the right portfolio
of channels. Therefore, we are dealing with what is the short
term now and where we are going to be. As Mark pointed out in
his speech in Banff, quite clearly this is the beginning of a
journey.
(Mr Thompson) I would say the passage that you referred
to in the Annual Report also talks about a period last autumn
on BBC of great creative strength. It mentions programmes like
Warriors, the Peter Kosminsky drama set in Bosnia; Walking
with Dinosaurs; Mrs Gaskell's adaptation of Wives and Daughters;
Paul Abbott's drama Clocking Off; All the King's Men;
Castaway 2000 and many other very good programmes. I would
say that one of my personal ambitions is that BBC 1 should play
at that level more often and more consistently. That if we can
bring that kind of creative ambition and range into the BBC 1
schedule, then it will regain even more support from the public.
So it is true of all of us that we see BBC 1 not just as the BBC's
most popular television channel, but genuinely as a channel which
is and must remain committed to real ambition and range and real
public service.
3. That is all very well. You fairly point out
the context in which that phrase was used. Nevertheless, the phrase
was used and in reading this report I alighted upon it because
it seemed to me to be a very important statement. Many people
believe that just as Radio 4 is the heart of the BBC on radio,
so BBC 1 is the heart of the BBC on TV, without in any way detracting
from the qualities or the merits of BBC 2. Whatever the context,
you do say very clearly on page 15 that: "The BBC has the
capability to reaffirm BBC 1 as its flagship public service network."
Those are your words. Now it will be useful to the Committee,
and useful to those who are going to be following the proceedings
of the Committee, if you can say clearly whether or not you have
plans to remove Panorama, Question Time and Songs
of Praise from BBC 1 and put them on BBC 2.
(Sir Christopher Bland) At this stage we have no plans.
We have a range of options. The sequence of events will be for
these to be discussed at the Executive Committee. For these to
be presented to the Board of Governors. The Board of Governors
regard their role, particularly in relation to the over-arching
responsibility of the BBC, and BBC 1 in particular, to respect
the licence payers' interests, and to make sure the public service
objectives are fulfilled. So the Board of Governors' role in this
process is particularly important. At the stage, at which outline
plans are approved by the Board of Governors, then we will make
these plans public and initiate a public debate and discussion
about any proposed changes to the BBC 1 and BBC 2 schedule. So
there are no plans to move, at this stage, any specific programmes
anywhere other than planning assumptions.
Mr Fraser
4. Mr Dyke has mentioned that you have to have
the right portfolio of channels. One of those channels is News
24. There is clear evidence that the channel is not delivering
on its promises and is extremely poor value for money. Would you
like to comment on that.
(Mr Dyke) I do not think there is a lot of evidence
for that. News 24, as the Chairman said recently, what he regrets
is that we did not do it earlier rather than later. News 24 is
a valuable service. It is the way that people are going to receive
news in the future. It is interesting that ITN have now decided
to follow the same route. There will now be three domestic 24-hour
news services: Sky, BBC and ITN. We think it is a valuable service.
We think there were some mistakes made at the beginning in terms
of the presentation, but it has improved considerably. I have
to say that people write to us quite regularly, who like to watch
it regularly, and find it an extremely good news service.
5. Can you remind us how much has been spent
on News 24 since it started?
(Mr Dyke) It is costing us, in total costing terms,
about £52, 53 million a year.
6. I have got a total of around £140 million
since it started two and a half years ago. You would agree with
that?
(Sir Christopher Bland) That sounds about right. We
will check those figures and come back to you, if we may. That
sounds about right.
7. What value do you equate to that when approximately
0.1 per cent of UK television viewers watch it?
(Sir Christopher Bland) First of all, it is available
mainly in digital homes and there our share is 0.3 per cent. Our
reach is 7 per cent. That compares with Sky's much more long established
11 per cent share and 0.5 per cent. We believe we are closing
the gap. Actually, it reaches 6.1 million viewers a week. We believe
it is a good service. If we were motivated only by the short term,
then you would be right. It does not look currently good value
for money. But the long-term strategic importance of 24-hour news
we believe, and ITN believe, and BSkyB believe, and frankly every
broadcaster of substance in the news business in the world believes,
is the way increasingly people will access their news. For the
BBC not to recognise that and make this strategic decision we
think would be a serious mistake. A year ago you expressed an
understanding of that strategic view but a reservation about the
short-term value for money. That will persist until the time will
come when the wisdom of that decision will be self-evident.
8. As we draw near to a general election, I
am sure we would all agree that the importance of News 24 in the
BBC's portfolio will grow. You must therefore have made an estimate
of the amount of money you are going to put into the News 24 to
bring it up to speed, and fulfil the promises and the obligations
you set out at the very beginning to see it through to the general
election. What sort of figure are you talking about?
(Mr Dyke) We do not intend to increase the budget
of News 24 from what it is now. What is interesting is that I
looked fairly recently at what happens if we close down News 24.
What would it save us? The marginal cost of News 24 is somewhere
around £35 million, whereas a lot of the costs of the 50
million are actually costs of the news gathering operation around
the world. We are now the largest news gathering organisation
in the world. It makes sense to me to have a channel in which
you can utilise as much of that as possible. The channel was changed
last year and relaunched and if you look at its coverage of things
like the Paddington rail crash I thought that was excellent. I
sat and watched it all. We are quite happy with the quality and
range of News 24.
9. But you say the budget is not going to increase
so that on a pro rata basis what you are actually going to do
is that you are going to spend another 50 million on it within
this next year?
(Mr Dyke) Yes.
10. What guarantees can you give us that there
is going to be a better take-up of News 24 to justify that extra
money?
(Mr Dyke) We will be doing a common service at breakfast
in autumn with BBC 1, so that will save a little bit of money.
We will put that back into the news operation. The take-up will
grow as digital television grows.
11. How will you measure that? You must have
set something in place to be able to say, "Right, at that
point we would like X figure or Y figure," or is it just
suck it and see?
(Sir Christopher Bland) As Greg was saying, it is
partly dependent on the take-up of digital. That is pretty hard
to forecast. It is also dependent on how good and how popular
the service becomes. But we would plainly like it to improve.
May I just revert to your earlier question about additional money
for the general election. It is worth pointing out that although
the News 24 budget will not increase, the BBC's overall news budget
will be increased for the general election coverage and part of
that will be reflected in our coverage on News 24.
(Mr Thompson) I would want to say on that point, it
is quite an interesting example of one of the advantages of News
24. We will obviously have to invest significantly in news gathering
during the election campaign and indeed the run-up to the election
itself. That money would be incurred anyway to provide television
news at 1, 6 and 9 and so forth. However, we can use that resource
and that news gathering investment on News 24 as well. Indeed,
it means to those who want it, that we can provide extended coverage
of the election. So press conferences, for example, we can cover
at length and live, and other aspects of the election coverage.
To that extent, to those who want to follow the election more
closely, News 24 will provide a better service.
12. But when a general election comes there
is, to a large extent, a set formula which is used both in broadcasting
and political terms. I am surprised that your analysis of what
you will require is not more detailed at this point. Why is that?
(Sir Christopher Bland) Analysis?
13. Timings. The cost and everything. I feel
that you are saying that you will not spend more money but there
is going to be a heightened interest, a requirement for News 24.
(Sir Christopher Bland) I am sorry, I did not make
myself clear, Chairman. We are not increasing News 24's budget
but we will be increasing—our news will increase, our news
budget overall, for the coverage of the general election, as we
always have in the past. That will be reflected in the coverage
on News 24 of the general election. I think if we get it right
that News 24's value to the country and in the public service
sense will be underlined, emphasised, heightened, during a general
election. It could be, with a bit of luck, and if we get it right
and digital homes continue to grow, it could be as powerful a
driver for people to watch News 24 as the Gulf War was to CNN.
(Mr Dyke) We put aside a figure. As you know, you
and we do not know when the general election is, so we have a
rolling figure but we increase our budgets between £10 and
12 million for the general election.
Mr Fraser: That is what I wanted to hear.
I thought I did not hear because I had a cold!
Chairman
14. When I call up the news menu on digital
TV, I get a whole array of things. I get Sky, I get BBC News 24,
CNN, CNBC, Bloomberg. I think there are others as well but certainly
I get all of those. The most enterprising strikes me as being
Sky—now we have Sky News Active, which gives a remarkable
availability of news—but what I am wanting to deal with
are the statistics that you put in the report and the statistics
that you used with Mr Fraser. In your report on page 45 you say
that BBC News 24 is now watched by more than 6 million people
every week on cable, on BBC 1 overnight, and on BBC 2 on Saturday
mornings, compared with 3.6 million for the only other UK around-the-clock
provider. That is a coy way of referring to Sky News. Those statistics
are arrived at by adding a whole series of things together, particularly
the availability on terrestrial TV on BBC 1 and BBC 2. Now we
had a letter from Mr Ray Gallagher Director of Public Affairs
of Sky Television. Let me make it clear that I have no more brief
for Sky than I do for any other broadcaster whatsoever, but he
has provided us with some statistics. He points out what I pointed
out, and what we pointed out last time we did a report, namely,
that to arrive at this figure, you add on the people who watch
it on terrestrial; but what Sky says—and I state the origin
because I think people watching these proceedings have the right
to know that these statistics come from a rival organisation to
yourselves—they say that Sky News' share of total UK television
viewing is 0.4 per cent compared with 0.1 per cent for BBC News
24, though perhaps I gather, Sir Christopher, you would now argue
that it is not 0.1 per cent but 0.3. In any case, that is still
less than 0.4 per cent. What I do not understand is how you can
claim 6 million people are viewing a channel whose viewership
overall, in the context of national viewing, can scarcely be recorded.
(Sir Christopher Bland) It can only scarcely be recorded
in the same way that Sky can scarcely be recorded. Let me just
repeat our figures, which are the four weeks up to 11 June: digital
homes only, Sky News, 0.5 per cent. Slightly higher than the 4
per cent. Our figure, News 24, 0.3 per cent. That is digital homes
only. With Sky doing better than us. Reach for the same period:
11 per cent, Sky News; 7 per cent, News 24. Again, in digital
homes only. But that, of course, is only part of the picture as
far as News 24 is concerned because News 24 is available overnight
on BBC 1, weekends between 8 and 9 am on BBC 2, and from the autumn
it will also be available at breakfast on BBC 1. That is a service
to viewers which quite a lot of them like and it is perfectly
legitimate, provided we distinguish between the two sets of figures
as I have just done for you, to say that our total viewing in
the United Kingdom has a reach of 6.1 million viewers per week.
There it is.
Mr Fraser
15. Just to change the subject on to the licence
fee, you set a target for evasion of 5.1 per cent for 1999-2000
which you did not reach. What analysis have you done to find out
why you did not get there? What is your target for the coming
year?
(Sir Christopher Bland) I will ask John Smith to respond
to both those questions. You are right. We did not reach a demanding
target but we are encouraged by the fact that licence fee evasion
in the year was 5.4 per cent, the lowest ever level that it has
been, down from 5.9 over the year. So it is moving in the right
direction. We have set those demanding targets in relation to
our contract and the performance levels and payment levels with
our sub-contractors.
(Mr Smith) They are very important statistics. The
total cost of evasion and collection taken together, because the
two things are a cost on the BBC and both equally important, has
fallen from 16 per cent when we took over responsibility for it
in the early 1990s, to its current 10.4 per cent. We have said
before in this Committee, and we continue to, that we will get
to a figure of 9 per cent combined cost of collection and evasion
as fast as we can. In terms of your specific question about what
factors caused us not to get down lower to what we intended, our
answer is that there are a complicated range of things which we
have researched very thoroughly, including the environmental factors
during the uncertainty about what kind of licence fee we might
be having, possibly a digital licence, what the level of the licence
was going to be, concessions for different communities. All those
things contribute to an uncertain climate when we are trying to
reduce the evasion rate. As the Chairman said, I am pleased to
say that the actual evasion rate is the lowest it has been on
record at 5.4 per cent. Indeed, since the year has ended it has
continued to come down. We are very optimistic that we will be
able to meet our general target to get to 9 per cent combined
collection and evasion as soon as possible.
16. That was one question. My final is going
to be: why, therefore, do you surcharge people who pay quarterly?
Not all your expenditure goes out in one lump. Joining in with
that, would it be a loss of revenue for the BBC because of the
application of the free licence fee for the over-75s?
(Mr Smith) The question about the quarterly £5
premium. Let me be clear. It only applies to that one scheme,
the quarterly payment scheme only, because that scheme, unlike
the many other schemes which have been introduced over the years
since the early 1990s, is one where all the payments are in arrears.
The general principle of the licence is that payment is made up
front, at the start of the licensing period. The purpose behind
that premium, which is in the legislation of the £5 premium,
is to compensate the BBC for loss of interest, the cash flow effect,
which has occurred as a result of the payments being made in arrears
rather than advance. That is the reason for that. With all the
other easy payment schemes, of which there are several, that does
not apply, because some payments are made in advance and some
payments are made in arrears.
17. And loss of revenue, the second part of
my question.
(Mr Smith) Over-75s, we are in regular dialogue with
the DSS. Arrangements are being put in place for the over-75s
and we are expecting to be fully compensated for the loss of revenue
and collection.
18. So you see no problem?
(Mr Smith) It is a change of administration. It is
early days for a new scheme which has only just been introduced.
There are always things that need to be done in a new scheme.
But in terms of the financial impact this will be fully recompensed.
Mr Faber
19. I wanted to ask a couple of questions about
sports coverage. You will not be surprised to hear that. First
of all, may I say that the new Sport Online on the website is
absolutely excellent and really first class. I wish you luck with
that. You say in your Annual Report that one of your priorities
is to develop an effective policy for sports coverage at an affordable
cost. How are you going to judge whether you are successful or
not? Whether you have achieved that priority?
(Mr Dyke) As you know, a great deal of sports coverage
is about rights fees. The BBC started from a position where historically
it had significant rights. As you know, pay television, the coming
of analogue, the complexity of the competitive sector, the more
popular sports became, it made that competition more difficult.
The BBC has lost some rights over the years. This year we lost
the rights to the Match of the Day but regained rights
to cover the FA Cup and to cover it in quite an exciting way with
two live matches at the FA Cup weekend and the FA Cup final. We
are ourselves going through exactly that same question at the
moment. In this sort of world, this sort of competition, what
should be the BBC's sport policy over the next five years? That
is part of the process we are going through at the moment as part
of our whole service. It will take some time to come back with
a proposal to the Governors but we are trying to look at that
and say—
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