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Session 1999-2000
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Delegated Legislation Committee Debates


First Standing Committee on Delegated Legislation

Wednesday 19 July 2000

[Mr Andrew Welsh in the Chair]


4.30 pm

The Minister for Tourism, Film and Broadcasting (Janet Anderson): I beg to move

    That the Committee has considered the amendment (Cm 4797), dated 3 July 2000, to the agreement (Cm 3152), dated 25 January 1996, between the Secretary of State for Culture Media and Sport and the British Broadcasting Corporation.

The Government are introducing free television licences for everyone aged 75 or over from 1 November this year. The cost of that concession will be met from public funds, via payments by the Department of Social Security to the BBC. This amendment to the agreement will lay down a clear basis for those payments. The amendment will insert a new clause 10A into the agreement. That will provide for the payment by the Secretary of State for Social Security to the BBC, out of moneys provided by Parliament, of a sum, or sums, equivalent to that which recipients of free licences would have paid for their licences but for their entitlement to the concession; and

    (b) a sum or sums in respect of the administrative costs incurred by the Corporation in issuing free licences, calculated on such basis as may be agreed between the Secretary of State for Social Security and the BBC.

Members of the Committee will, I am sure, also wish to know that those payments will be subject to proper controls and accountability. The Department of Social Security will account to Parliament for the provision of funds made available to the BBC in its annual appropriate account.

The Permanent Secretary of the Department of Social Security, as the principal accounting officer, is accountable to Parliament for the propriety and regularity of the Department's expenditure. She is accordingly responsible for ensuring that the conditions attached to the transfer of funds conform with the terms of the vote; monitoring the BBC's compliance with those conditions; ensuring that the financial and management controls applied by the DSS and the BBC are appropriate and satisfactory; and ensuring the probity of the scheme into which departmental provision is channelled.

The BBC is responsible for the oversight and administration of the scheme and will account for the use of the funds received from the DSS in its annual accounts. The Director-General of the BBC will be the corporation's accounting officer for the purposes of the administration of free television licences for the over-75s. The BBC's external auditors will, as part of their annual audit, provide assurances that the grant provision has been applied by the BBC only to the extent and for the purposes intended by Parliament. To support the audit opinion, the BBC will provide a letter of assurance to the DSS on the regularity and propriety of expenditure.

The arrangements for the transfer of funds to the BBC, including accounting and audit arrangements, will be covered by a memorandum of understanding between the DSS and the BBC. The Government intend to place a copy of that memorandum in the Library. Concerns have been expressed that direct payments by the Government to the BBC could compromise the BBC's independence. We believe that such concerns are unfounded in this case. The amount payable by the DSS to the BBC will not be at the whim of the DSS, but will depend on the number of free licences issued and the costs of administering the free licence scheme. The DSS will effectively take over payment of the licence fee from individuals aged 75 or over, so payments from the DSS will make up part of the BBC's licence fee revenue. However, that provides no opportunity for the Government to influence or attempt to influence the BBC.

Mr. Desmond Swayne (New Forest, West): What is the estimate of the administrative costs that the BBC will charge? The amendment gives no idea of the cost. Have we any ballpark figures?

The Chairman: Before the Minister responds, I inform hon. Members that if they wish to remove their jackets, I am happy for them to do so.

Janet Anderson: I assure the hon. Member for New Forest, West (Mr. Swayne) that the figure is on the record and has been mentioned more than once on the Floor of the House. The estimated provision for the administrative costs for 2000-01 is £24.3 million, which includes £3.3 million of carry-over relating to set-up costs from 1999-2000. If administrative costs prove higher than estimated, the DSS and the BBC will need to obtain the Treasury's agreement that further funding is required. I hope that that reassures the hon. Gentleman.

I invite the Committee to support the amendment to the agreement.

4.36 pm

Mr. John Greenway (Ryedale): I do not want to detain the Committee a moment longer than necessary on such a warm and busy day, but the amendment raises several important questions that we must ask. In fairness, the Minister has already touched on some of them. We are happy to consider the amendment Upstairs in Committee, although that means that we cannot debate it when it goes Downstairs for approval on the Floor of the House. I am sure that the Minister understands that that increases our responsibility to ask pertinent questions in Committee.

It is a joy to see so many hon. Friends present, as well as honourable acquaintances from the Labour party. However, I am astounded that the Liberal Democrats are not represented, especially because the hon. Member appointed to the Committee has a record of asking questions about public expenditure. I have made the point in Committee before, but it makes a mockery of the system when the Conservatives are allowed four members of the Committee and four Conservatives turn up, including one who is not a Committee member, yet the Liberal Democrats are allowed two members and cannot be bothered to send even one.

We understand why the Government need the amendment and why the House must approve it before the recess. The more one examines the amendment, the more one understands the Government's problem. The amendment is further evidence that the idea of the free television licence for older pensioners had not been properly thought through before the Chancellor of the Exchequer made his surprise announcement last November. It is ever more obvious that it would have been better to have increased the pensions of people over 75 to allow them to buy their television licences themselves. Such an arrangement would have given pensioners dignity rather than handouts and would have left more money to spend on pensioners instead of on administration and bureaucracy. The amendment makes arrangements to cover those costs.

The Minister knows that throughout the process, going right back to our approval of the original statutory instrument that gave rise to the licence fee and during consideration of the primary legislation that supports the scheme, we have consistently pressed for details of the cost of administering the free licence scheme and of the proper monitoring of the administrative arrangements. In response to an intervention by my hon. Friend the Member for New Forest, West, the Minister said that the costs in the current financial year would be around £24.3 million—which is on top of the £344 million estimate of the cost of providing free licences. Even on those figures, the order effectively approves the mechanism by which some £378 million of public money will be spent.

I hope that the Minister will, if not today in the future, ensure that we are kept fully informed of the up-to-date estimates available to her Department on whether the arrangements in the order reflect the sums that were initially anticipated. I had hoped that we would see a copy of the memorandum of understanding, to which the Minister referred, ahead of approving the order, but I am glad that she has agreed to place a copy in the Library. I shall be grateful if the Minister will confirm when she expects that memorandum to be available.

Our concerns that the cost of the arrangement have not been properly worked out were intensified by a written answer given to my hon. Friend the Member for East Surrey (Mr. Ainsworth) by the Secretary of State less than two weeks ago. My hon. Friend asked—this is pertinent to the order—the cost to the public purse of printing expenses and of postage of communications publicising the availability of free television licences for people aged 75 and over. I suspect, Mr. Welsh, that you, like me, received one at your constituency and at your London home. Every household has had one. The Secretary of State's reply simply confirmed that the BBC was responsible for administering the scheme and had advised that the information was not readily available and could be obtained only at disproportionate cost. If the Government do not know what it costs to publicise the scheme, how can they verify the BBC's bill for doing the work of publicising it? If they have not even put in place a mechanism for monitoring the cost of publicising it, how can anyone be confident that they will properly supervise the running of the scheme—grateful as we are for the Minister's earlier explanation of how that will be done?

More to the point, if the BBC does not know what it is spending on publicising the scheme, how on earth can anyone have a shred of confidence that the BBC's administration of the scheme will be both efficient and competent? The Secretary of State's answer shows a lack of financial control within the BBC and his Department. Exposed to the most routine parliamentary written question, accountability for the whole arrangement has fallen at the first fence—no one can even tell us the cost of a leaflet to every household about the scheme. The whole process lacks transparency and everything in the order supports that view. Notwithstanding the Minr's sincere explanation—I in no way wish to be churlish—Parliament is being asked to accept that the BBC will present evidence on the number of free TV licences issued, to which the Social Security Secretary then agrees.

Will the Minister tell us more about the procedures that will guarantee the accuracy of the BBC's claims? What checks will the Secretary of State for Social Security and his officials carry out on the BBC's evidence and the demands for payment?

According to paragraph 10A.2(b), the Secretary of State for Social Security and the BBC will decide among themselves about payments in respect of administrative costs. How will they be calculated and agreed? We are, in effect, being asked to take most of the approach on trust. I am sure that the Minister appreciates that we need some confirmation from her about the Government's proposed procedure for informing Parliament of the administrative costs that will be incurred, and for which the public purse has to pay. I appreciate that she may not be able to do so fully today, although the matter has been running for some time and other mechanisms are available. If we do not have such a confirmation, the Public Accounts Committee will have a field day.

Arguably, the most worrying feature of the arrangement, which is set out in paragraph 10A.3, is the requirement that a senior civil servant—the Minister referred to a Permanent Secretary—will decide what is to be paid. His decision will be final and conclusive in the absence of significant error. It is significant that that will be done not by a Minister or a Committee but by a senior civil servant.

The Minister should explain the way in which the mechanisms will be scrutinised vis-a-vis value for money and efficiency. The scheme appears to be a cosy agreement, if not a blank cheque. Who will scrutinise the efficiency of the BBC operation? The Minister knows that the BBC is not renowned for being a low-cost operator. If it was running a tight ship, the new Director-General of the BBC, Greg Dyke, would not be sacking so many executives. We are told that that is such an important exercise that his bonus will be based on the number of heads that roll.

The Secretary of State demanded greater transparency in the BBC's accounts. We agree. The way in which the BBC spends more than £2 billion of public money, which is raised through the licence fee, should be opened up to more detailed scrutiny, which should help to secure greater efficiency and accountability. However, it must be obvious to Committee members that the agreement takes us in the opposite direction. The BBC is under renewed pressure to become more transparent and increasingly accountable in its financial affairs, but Parliament is being asked to approve an almost clandestine deal, which is being forced on Ministers by the expediency of having to deliver the promise of a free television licence. The whole exercise demonstrates the folly of adopting a policy that requires such a significant part of the BBC's income to be paid by the Government directly through the Department of Social Security to the BBC. There is no obvious way to tell how much money is changing hands or the extent to which, over time, the process will undermine the BBC's independence.

4.48 pm


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