Examination of witnesses (Questions 20
- 39)
THURSDAY 13 JULY 2000
SIR CHRISTOPHER
BLAND, DAME
PAULINE NEVILLE-JONES,
MR GREG
DYKE, MR
MARK THOMPSON
and MR JOHN
SMITH
20. This is on-going at the moment?
(Mr Dyke) It is exactly that discussion.
21. You were very honest when you appeared before
us before you took up the job. You said it was going to be difficult.
You were then criticised in some of the newspapers next day for
admitting that it was expensive and it was going to be difficult.
You mentioned Match of the Day a second ago. After ITV
had outbid you for Match of the Day you criticised quite
publicly the amount they had spent on purchasing the rights to
Match of the Day. Now if you were still personally working
in the commercial sector I could perhaps understand that, but
given you are not in the commercial sector and working effectively
in a non-commercial organisation, was not the level of what they
chose to pay for Match of the Day really up to them?
(Sir Christopher Bland) Absolutely. An occasional
reversion to type!
(Mr Dyke) I agree with you. What they paid is entirely
up to them. What I was saying was that it was an auction but,
of course, there it was not enough bid because they were far ahead.
But to have won Match of the Day we would have had to have
bid £67 million for something which, at the moment, we were
paying £20 million for, for the rights for the next season.
What I was saying was that there was no way that the BBC, in our
judgment—the judgment I had with the whole executive of
the BBC and the Chairman and the Governors—that this was
well beyond what we should pay for those rights.
22. But the problem is that it is going to get
worse, it is probably not going to get better, or do you see it
being reined back to the sort of prices which were being paid?
(Mr Dyke) Your guess is as good as mine. Seriously,
I do not think we know. A long time ago I bought all these same
rights, the Premier League rights, football rights—
23. So it was your fault in the first place!
(Mr Dyke) —for £1 million and I was criticised
for spending too much.
24. You pushed the price up!
(Mr Dyke) Some rights have gone for £400 million
a year so who knows? One hopes that it is getting to the top.
25. Just one final thing. I would say that it
would be interesting to know, given that you are still considering
how to deliver this priority, how in due course you think you
are going to go about delivering that priority; how you are going
to go about it.
(Mr Dyke) We will happily do that. Part of the thinking
is that the BBC is the national broadcaster, the public service
broadcaster, and we should be doing what we can, which is covering
the national football teams and the national cricket teams, if
we can get them right. It seems to me that it is about the nation.
We will come back to you on that if that would help.
26. My only question, reverting to the discussion
we were having earlier about the BBC's role and the role of BBC
1, just spreading it out a little more, the whole issue of news
coverage. Clearly, at the moment, the independent broadcasters
are all looking, as you are as well, to make representations to
the Government's review. The issue of regulation comes up again
and again and again. The issue of the fact that, for instance,
ITV is in dispute with the ITC over ITN—something that this
Committee has had plenty to say about—but if you, as the
BBC, say you are going to move your news from 9 to 10 o'clock,
really there is no-one who can stop you doing that. You are your
own regulator. Do you understand the fact that some of the independent
broadcasters are quite aggrieved that they have a system of regulation
which you do not?
(Sir Christopher Bland) I understand that the independent
broadcasters wish to constrain the BBC. It is not absolutely clear
that they have a regulator who can tell them when they should
relay the news. That is still to be decided. But they have different
responsibilities to the BBC. They have a sole responsibility to
shareholders within the law and the Broadcasting Act and their
contract and the rules of the ITC, but in the end their primary
responsibility—I held it as Chairman of London Weekend in
the past—is to shareholders. In those terms it makes perfect
sense to move the News at 10. Now the BBC does not have
that responsibility. It has a far more important and a wider public
service responsibility. I think a good example is the change in
Parliamentary coverage that the BBC introduced on Radio 4. That
made perfect sense, looked at narrowly in terms of Radio 4's overall
listeners and balance. We approved it. Where it did not make sense
was in what happened to the audience of Parliamentary coverage
as a result of those moves. As a result of that, and also the
strong representations from both Houses, we changed back again.
I think that was right. It was not done for audience share or
reach reasons. It was done because the BBC has a public service
responsibility and I think rightly we recognised that we had made
a mistake and we had changed our minds. I am sorry we did it in
the first place, it was a mistake, but we changed our minds. Now
that was driven by the public service and the Charter responsibilities
of the BBC. That responsibility, I think, can only rest within
the top of the organisation of the BBC. The responsibility for
discharging Charter objectives must remain the responsibility
of whatever group of people, (called the Board of Governors at
the moment), heads up the BBC. It is not divisible. You cannot
share that responsibility with anybody else. You have to do it.
27. You are going to have to share it with someone
else to a degree. The Secretary of State has now taken on powers
if there is any material change to your output on BBC 1 or BBC
2. How is that going to pan out? Do you think moving the news
would constitute a material change in your output?
(Sir Christopher Bland) He has always had those powers.
They exist under the Charter agreement. They are made more explicit
by the criteria which are pretty close to our own. They are published
in our Annual Report and you will have seen them this year for
reviewing new services. Material change in services is not absolutely
clear; whether moving a programme on a single channel would constitute
that. We would only move a news programme if we thought the audience
for news would be greater rather than less as a result. I can
give you the Governors' absolute guarantee that we will not do
that unless we think our audience for news will be improved as
a result rather than lessened. It is interesting, as an aside,
to see what has happened between 6 and 7 o'clock, and that is
that our share during that news hour has increased at a time when
ITV's has decreased. We are head to head there but we put the
national and international news first and our regional Scots,
Welsh, Northern Ireland news second. We are now in that second
part. Achieving a higher audience share than ITV is achieving.
That is something that five or six years ago would have been very
difficult to forecast. So I think the primacy of news and the
importance of that audience to us, both to the management and
to the Board of Governors, cannot be overstated.
Chairman
28. So you are telling Mr Faber categorically
that were you to move the 9 o'clock news to 10 pm, the sole motive
for that would be to increase the audience for the news rather
than clear the schedules so that you could compete with Channel
3?
(Sir Christopher Bland) Yes. And we would extend that
assurance further. We would extend it to the 1 o'clock and 6 o'clock
as well.
Mrs Golding
29. Could I come back to the licence fee. The
question of this quarterly budget fee requiring people to pay
an extra £5 a year for being on it. I have made some enquiries
about it and, as I understand it, they actually are paying in
advance. You cannot just say, "I am not going to pay you
at the beginning of the year. I am going to pay you three months
in arrears and pay you quarterly." You cannot actually do
that. Is that not right?
(Mr Smith) No.
30. It is not right? Are you saying that people
can say in January, "I am not going to pay a licence fee
now but I will pay you in March"?
(Mr Smith) Maybe there is a misunderstanding about
the £5 premium. The reason for the £5 premium is that
the moment the licence begins to be enforced, from that moment
onward at the beginning of the month, under all the schemes apart
from this one the licence is due in advance, because the whole
licence period starts on that date and goes forward for the next
12 months. In the case of the quarterly budget payment scheme,
the licence begins on that same day but the first payment is not
due until three months after that. The second payment is six months
after that. That is in terms of the due date. You might be describing,
if I may, a situation where people are not paying on the due date.
31. No, I am not at all. What I am saying to
you, asking you, is: if I took out a television set in January
and said to you, "I am going to pay you quarterly,"
and the reason given for charging this extra money was that I
was paying in arrears, I would not in theory then have to pay
until March. That cannot be so.
(Mr Smith) That is how it works. The first payment
is due then, and then three months later, and six months and nine
months later. On average, during the year, the loss of cash flow
is six months lost, because we have had three months' money straight
away, and then three months, so six months later—
32. But the reason we have been given is because
you are paying in arrears. In fact, you are not paying in arrears.
(Mr Smith) At the very least, three payments are not
made on the first day.
33. You cannot do it that way. If you look at
the scheme you cannot do it that way. You have to have had a television
licence. You look at the scheme. In fact, what you say is quite
incorrect.
(Mr Smith) I may be misunderstanding the question.
But we are agreeing, are we not, that three of the payments are
after the licence has begun.
(Sir Christopher Bland) Put it another way, Chairman,
that if you do not seek to pay in arrears and you buy a television
set and it is the first time you have ever bought one, you should
pay £104 immediately. If you pay in arrears you do not pay
that £104 immediately, you pay it quarterly, and the £5
surcharge is because compared with somebody who has paid £104
on the day they buy the set, your payments are staggered over
the next four quarters.
34. In fact, if you look at the scheme, as far
as I have been told you cannot do that. You have to have a television
licence before you can pay quarterly and you have to have paid
it in advance. If you look at the scheme, the scheme is not what
you say it is, and it is no disadvantage to the BBC. You, at the
BBC, are doing very well out of that. If I could come back to
what you say in the report where you said: "It is critical
that those who do pay are not disadvantaged by those who do not
but we are acutely conscious of the difficulties faced by some
licence payers who are on low incomes." You really ought
to have another look at this scheme and not surcharge people who
are in this difficult situation. The scheme is not what you think
it is.
(Sir Christopher Bland) Could I undertake to come
back to Mrs Golding on this issue. It is an arcane area. We have
been at odds on this issue before. I would like to clarify it,
not only for your benefit and the benefit of your Committee, but
also to reassure ourselves that what we think is the position
is absolutely correct. We are absolutely clear about this, there
should be no element of profit to the BBC in encouraging people
to pay quarterly. We should only seek to recover any additional
costs associated with people using alternative methods of payment
and cost only. So if Mrs Golding is right—
(Mr Smith) May I make one point on this question.
As the Chairman has said, we will find further information on
it. It is not our intention or desire to profit out of any of
these schemes. The comments which are made in the Annual Report,
to which Mrs Golding refers, about our acute consciousness of
people who are at the poor end of the spectrum and find it very
difficult to pay the licence fee, we seek to address and hope
we have done so under the various other easy payment schemes which
exist. There is the cash easy entry scheme, which we know has
gone down very well with the poorer end of society and we have
550,000 people on it. And the monthly cash plan, which is being
rolled out shortly and is being trialed in nine major cities,
we have 68,000 on that. We are looking at all sorts of other possible
ways that people might pay. Of course, there is always the television
licence stamp saving scheme, which has been there for many years.
There are very large numbers of people using it still.
Chairman
35. Could I raise another matter which you might
regard as arcane, which I promised a constituent to raise. You
had a rule which has now changed, (I think you were right to change
it), if people had two homes and were only watching television
in one home, the fact that they had television sets in two homes
nevertheless allowed them only to have one licence. You stopped
that and I think you were right to stop that. But I have a constituent
who tells me she has one television set and she has a holiday
home, and when she goes away at the weekend she puts the television
set in her car and then hooks it up again when she gets to her
cottage. Yet she has got to pay two licences on one set. She says
that is not fair.
(Sir Christopher Bland) Chairman, this is, I have
to say, a new problem for us. Could we look at it.
Mrs Golding
36. I was very pleased to hear Mr Smith say
he did not want to profit from any of these schemes but, in fact,
you do profit from these schemes. It says in your report that
this cash, which is the additional balance, is a very large balance
that you have from last year, and that together with the deposits
from the TV licence savings stamp scheme, means that the cash
balance of £423 million was invested in money markets at
the end of the year and contributed to £23 million in interest
earned; so you are actually benefiting from the deposits from
the TV licence savings stamp scheme. You cannot have it both ways.
You either benefit or you do not.
(Mr Smith) Crucially, the savings stamps scheme, which
is very, very beneficial for large numbers of people, is a very
expensive scheme to run because each transaction, when anybody
goes into the Post Office to get a stamp, costs. That is probably
the most expensive scheme we have.
37. That is not what you originally said, but
still—The other question was: why do you need such a large
cash balance when you have an assured income?
(Mr Smith) You recall the history of that. It was
not so many years ago, in the early 1990s, when the BBC had a
very uncertain future, and did not have certainty in terms of
the level of licence fee. There was a financial crisis in the
very early 1990s and it got very close to its borrowing ceiling
which is £200 million in the Charter, as we all know. Contrast
the situation where we are now where the cash balance is very
well and healthy. The balance sheet looks good. We regularly meet
our financial promises. We meet our financial targets. It is a
healthy position to be in. Now your point is: why do we need a
cash balance? We do not manage our finances on the basis of just
one year. What we do is to manage our finances on the basis of
a five-year period, or in the case of the current licence fee
settlement up to 2006-07. Over that period we are going to be
investing very substantial amounts in our existing services, as
has already been outlined, and in our digital services, and that
cash balance will get us started.
38. In the report it says that your spending
has risen by 17.6 per cent but you have a very healthy cash balance.
It has actually risen by £25 million. Even though you spend
a lot of money it is still rising.
(Sir Christopher Bland) It is worth pointing out that
at the beginning of this financial year, which is under discussion,
we were looking at a decrease in real terms in the licence fee
both this year and next, so it was perfectly sensible to have
powerful cash balances during the year because we knew on the
old assumptions before the licence fee settlement was announced,
that we would go cash negative in this year and the next. So it
was prudent housekeeping by the Director of Finance and prudent
by the BBC as a whole.
Mrs Golding: I do not mind prudent housekeeping.
What I object to is surcharging people who are already poor, so
that you can have very healthy cash balances.
Ms Ward
39. You will not be surprised to hear that I
would like to return to BBC News 24. I want to establish the credibility
of the comments that you make in the report. You make it absolutely
clear that News 24 is the most watched United Kingdom news channel.
There is, I understand, a distinction between a channel and between
the programmes output under the name of that channel. So on the
basis of the channel you are not the most watched because you
do not have as high an audience share as Sky. On the basis of
the channel plus the output programmes put out on BBC 1 and BBC
2, you have a greater audience. Is that essentially what you are
saying?
(Sir Christopher Bland) Yes, that is where the 6.1
million reach comes from.
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