Select Committee on Culture, Media and Sport Fourth Report



Government policy

32. OFCOM's regulation of UK broadcasting is to be divided into three "Tiers" (with the Internet unregulated in "tier zero"). The Government described the relationship between this system and the BBC as set out below.[33]

  • Tier 1 governs those matters that apply to all broadcasters including such matters as guidelines on the portrayal of sex and violence. OFCOM will develop overarching codes tied to the statutory principles, which will apply to all broadcasters including the BBC. The BBC Governors will be responsible for developing more detailed guidelines building on the overarching codes and applying the standards to BBC services.

Tiers 2 and 3 will apply to public service broadcasters alone.

  • Tier 2 provides for regulation by OFCOM of quantifiable elements for which quotas or targets can be set. These will cover the UK quota for independent production, and quotas or targets for regional production and output, original production, and the requirement for news/current affairs to be broadcast in peak time. The same system of quotas will apply to all. The White Paper says specifically that OFCOM will be responsible in future for both agreeing and monitoring the BBC's compliance with the regional production targets, and that there will be a requirement on the BBC for the first time to provide news and current affairs in peak time.

  • Tier 3 relates to the qualitative obligations on all public service broadcasters, including the BBC. A system of self­regulation will operate. All the public service broadcasters, including the BBC, will continue to be required to provide a mixed, and high quality, range of programmes. They will also be required to develop statements of programme policy and self­regulatory mechanisms. These statements will be updated annually. OFCOM will report periodically on the key cross industry issues of public service broadcasting and the commercial broadcasters will be expected to undertake formal procedures to respond to OFCOM's observations. OFCOM will have restricted powers to resume more detailed controls if there is a major failure by the commercial broadcasters. The equivalent powers in respect of the BBC will remain with the Secretary of State for Culture, Media and Sport—and with Parliament through the periodic Charter review process—although the Government wrote that "The BBC's Board of Governors will naturally want to consider observations made by OFCOM in drawing up the BBC's annual statement."[34]

33. The Government and the BBC argue that the proposed changes to the regulation of broadcasting will, in effect, bring the way the free-to-air broadcasters are treated closer together.[35] Many aspects of the BBC are already regulated by bodies that will be subsumed into OFCOM. The BBC's portrayal of sex and violence is subject to the Broadcasting Standards Commission. Its commercial channels and services (UK Gold etc.) are regulated by the Independent Television Commission and the European Commission. The implementation of the independent production quota is regulated by the Office of Fair Trading, as are all its fair trading requirements. All of these functions will transfer to the new OFCOM (although it is uncertain precisely how the BBC's fair trading arrangements will be regulated in future). Under Government proposals the degree of third-party regulation of the BBC will increase, with "Tier 1" and "Tier 2" requirements likely to be more stringent than under the current regime.

34. On the other hand the BBC, alone amongst free-to-air broadcasters, will not be subject to OFCOM regulation with regard to:

  • impartiality requirements, which will remain with the Board of Governors being regarded as indivisible from the Governors' role of ensuring the BBC's editorial independence;

  • "backstop" powers, in relation to the Governors' regulatory performance, which remain with Ministers and Parliament—the DCMS wrote that the "BBC Governors must ... demonstrate that they are regulating the BBC effectively. In the run­up to the Charter Review in 2006, they must show not only that the BBC continues to reach the vast majority of the audience, but that it also fulfils its public service remit";[36] and

  • the provision of new services which remain subject to the approval of the Secretary of State for Culture, Media and Sport.

OFCOM and the BBC

35. The balance of evidence submitted to us, including from the current regulators, was in favour of the BBC being regulated entirely by OFCOM. This was argued on the grounds that it made little sense for a significant part of the broadcasting market to be outside the purview of the broadcasting regulator.[37] In addition Mr Tim Gardam, of Channel 4, argued that bringing the BBC into the fold would benefit public service broadcasting as a whole because it would set BBC output as the standard for the broadcasting industry.[38]

36. ITV Network, in concert with ITV Digital, pointed to BBC decisions which, taken in isolation, it alleged to have had damaging effects on the rest of the public service broadcasting ecology. These included: moving the evening news and Panorama, broadcasting more EastEnders and "the abandonment ... of a serious arts programming strand". ITV stressed the advantage of a single regulatory body overseeing the whole of the broadcasting sector. Mr Tony Stoller, Chief Executive of the Radio Authority, told us that "I am entirely clear that the BBC Governors should be regarded as the governors, rather than the regulators, of the BBC."[39] He went on to say that regulating the BBC was a role for OFCOM.

37. However, it is equally clear that the preference of the Secretary of State for Culture, Media and Sport, as stated recently to us and to the Parliamentary Media Group's annual conference, is for the BBC Chairman and Governors to remain responsible for the BBC's fulfilment of its Charter.[40] The existence of the Charter and the special nature of the funding of the BBC through the licence fee demand, so it is argued, that it remain accountable to Parliament directly. As we have pointed out above, in relation to OFCOM's accountability, this Committee is an instrument of the BBC's accountability to Parliament. Later this year, July 2002, we will, at the request of the BBC, be conducting specific scrutiny of the BBC's Report and Accounts for 2001-02 and looking at the BBC's accountability in the round.

38. The BBC has recently announced changes in its arrangements for supporting its Governors which it argues will create a sharper divide between the Board of Management and the Governors. These reforms were announced after the BBC had given evidence to the Committee in this inquiry. We were not surprised by the focus of the BBC's efforts because when members of the Committee suggested, in oral evidence, that there was little distinction between the Board of Management and the Governors, Mr Greg Dyke, Director-General, replied "There is clearly a distinction between what the Governors do and what the management do. It is pretty obvious: the management ... are professionals in a particular field and the Governors are there to represent the public interest."[41] However, the BBC Chairman, Mr Gavyn Davies, revealed subsequently that a clearer delineation of what Governors did, and what the executive did, had been the subject of internal study, the fruits of which were to be announced shortly.[42] We shall study the effects of these changes. We recommend that, in addition to the other reforms in train, the BBC Governors hold their meetings in public and that their openness and transparency be equivalent to the approach we have suggested for OFCOM.

39. It was suggested in evidence from National Consumer Council that the timing of the forthcoming Communications Bill (set to become law in 2003) and the BBC's Charter renewal (due in 2006) was fortuitous in that it would allow OFCOM to settle down. Thereafter there would be the formal opportunity to revisit the BBC's constitution in the light of the new regulator's performance. This at least was an argument of which Channel 4 could "conceive".[43] We intimated to the BBC our intention to engage in this debate in due course and this was welcomed by Mr Davies.[44]

New BBC services

40. As mentioned above, the approval of new BBC services remain with Government. Tessa Jowell, Secretary of State for Culture, Media and Sport, told us that OFCOM will have a role in advising Ministers on the approval of new BBC services.[45] These decisions are highly significant in relation to the wider broadcasting market and the investment plans of commercial broadcasters; clearly the presence, or threat, of licence-fee funded BBC services in an area of potential private sector investment, may be a deterrent to a commercial operator. Mr Tony Ball, Chief Executive of BSkyB, described the BBC as a monster genetically programmed to get bigger and bigger and suggested that public service broadcasting should be redefined to tackle this problem.[46] NTL wrote that public service broadcasting was "a policy 'time bomb' waiting to go off". The cable company complained that there could be no credible basis for the "must carry" obligation on cable operators if they were to be required to set aside capacity to "facilitate BBC 3's ratings clash with Sky One and E4".[47] NTL asserted that, with the ITC focused on traditional broadcast issues, there was effectively no "sector specific" competition regulator for broadcasting.[48]

41. In principle we are sympathetic to a more substantial role for OFCOM with regard to the approval of new BBC services as the Office is likely to be best placed to understand the market, both in terms of its failures, where remedial action by the BBC may be desirable, and areas of actual, or potential, over-supply. OFCOM is also likely to be best placed to assess the impact of any changes proposed to BBC services across the broadcasting and Internet sectors.

42. We are seriously dissatisfied with the present procedures for approving new BBC services. We therefore recommend that the approval of such services should be the subject of published statutory advice from OFCOM to Ministers.

33   Ev 226ff Back

34   Ev 227, paragraph 18 Back

35   Ev 226 and BBC press release, 26 February 2002 Back

36   Ev 227, paragraph 10 Back

37   Ev 117, Q 412, Ev 125 and 149 Back

38   Q79 Back

39   Q437 Back

40   Q 593 Back

41   Q 3 Back

42   Q 6 Back

43   Q 85 Back

44   Q 63 Back

45   Q 593 Back

46   Q 192 Back

47   Ev 92 Back

48   Ev 192 Back

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Prepared 1 May 2002