Memorandum submitted by the Department
for Culture, Media and Sport
The BBC Charter Review is a wide-ranging and
open process, encompassing full industry and public consultation
and research. We published our principal consultation document—The
Review of the BBC's Royal Charter—on 11 December 2003, supported
by a summary leaflet and a translation for children and young
people, kindly provided by the Children's Rights Alliance. We
have supported the consultation with meetings with industry and
the public around the country, including two events specifically
for children.
Interest has been high from the industry and
public alike, with around 5,500 responses to the consultation
received to date. Consultation closed on 31 March and we are currently
analysing the substantial public response. To support and complement
the public consultation, we are carrying out a major programme
of qualitative, deliberative and quantitative survey research.
In addition, because Ofcom's review of public service television
forms an important part of the evidence base for Charter review,
the research carried out to support that study will also contribute.
We intend to feed back the results of public
consultation and research by publishing them in full, supported
by a summary paper to be published in the summer.
Over the course of the summer Lord Burns—my
independent adviser on Charter review—will be fostering
further debate of the key issues and helping us marshal the evidence
towards options to be set out in a Green paper, scheduled for
publication around the turn of the year.
Charter review is still at a relatively early
stage and, save in one respect—that the review will reaffirm
the strength and independence of the BBC—Ministers have
drawn no conclusions about any aspect of the BBC's role, structure
and function. The Government is therefore not yet able to give
definitive answers to the Committee's questions, and this is reflected
in the responses set out below (however there will be many opportunities—including
in Parliament—to put the Government's conclusions to the
test):
— Given expected growth in digital
TV and likely developments in the internet and other new media,
what scope and remit should the BBC have?
This is a key area for Charter review and is
reflected in the first and second sections of our main consultation
document, "The Review of the BBC's Royal Charter". New
technologies are being introduced at an ever-increasing rate,
and the Review is taking place amidst a large increase in the
uptake of digital television, radio, and DVD technology, and at
a time when increasing numbers of people are finding their way
on to the internet, aided by increasingly affordable broadband
availability.
The BBC itself is playing an important role
in helping to drive the take up of digital TV, through the provision
of specific digital services and its participation in Freeview.
All of the PSBs have a crucial role to play in bringing switchover
about: none more so than the BBC, and Charter Review will need
to reflect that. We have also asked a Consumer Experts Group,
chaired by Alan Williams of the Consumers Association, to review
the availability and affordability criteria set down in 1999 in
the light of the rapid take up of digital and the limitations
constraints of DTT reception. We expect to receive their report
shortly and will publish this in due course.
We are currently working with all stakeholders
on the detailed plans for switchover, though progress will depend
on how markets respond and on sustained consumer demand for digital
services. The prospects are favourable, with over 50% of households
having converted at least one set to digital, and research carried
out by DTI indicating that only 5% of the population would never
switch. The DTI published further research (by Scientific Generics)
on 30 March setting out the reasons for this attitude, and we
will need to look at the impacts of switchover on all consumers
before actual detailed plans or timetables can be announced. At
the moment, however, we estimate that that switchover could begin
as early as 2006, and could be completed by 2010.
— In the context of scope and remit,
how should the BBC be funded?
Again, this is a key area for Charter review,
and one covered by "The Review of the BBC's Royal Charter".
Options for the future funding of the BBC include continuation
of the licence fee, direct funding through taxation or grant,
and by way of the introduction of some form of advertising or
sponsorship. The consultation document explores these in more
detail. I have made it clear that the licence fee will continue
in the absence of a better alternative, but the review will involve
a reassessment of established models—for example those considered
by the Davies review—as well as new proposals that might
arise from consultation.
The Review is about deciding the right shape
of the BBC for the digital age. In that the outcome of the Review
will be a strong BBC, independent of Government, attuned to the
digital age, and more able to provide services appropriate to
the changing environment, I am confident that it will emerge from
the Review stronger and better able to relate to the other organisations
with which it has to work.
— How should the BBC be governed and/or
regulated and what role should be played by the Office of Communications?
The BBC Governors have retained their core responsibilities,
including upholding and protecting the Corporation's political
and editorial independence. But, the BBC is now subject to new
external requirements monitored and enforced by Ofcom. The BBC
is, for the most part, subject to Ofcom standards, targets and
quotas on the same basis as all other public service broadcasters.
And Ofcom will be able to fine the BBC if it breaches them.
There remain some differences in regulation
between the BBC and others, reflecting the differences in the
way they are established and the extent of their public service
obligations, but the central aim is to create a more level playing
field for all public service broadcasters. Under the Communications
Act settlement, the regulation of requirements relating to issues
of accuracy and impartiality remain exclusively with the Board
of Governors, because this is so closely bound up with their overriding
role of ensuring the BBC's editorial independence.
Ofcom already plays a role in the regulation
of the BBC. The future arrangements for the Corporation's governance
and regulation—including the maintenance of accuracy and
impartiality—are central issues in Charter review, and it
would be premature to draw conclusions at this very early stage.
Charter review will also look at the fundamental question of whether
the Royal Charter, and supporting Agreement, remain the best foundation
for the BBC for the next 10 years.
In considering all these issues, the Government
will obviously take account of Lord Hutton's conclusions insofar
as they are relevant, although the Charter Review is of course
a quite separate and considerably wider process.
— In a changing communications environment,
does a 10-year Royal Charter and Agreement with the Secretary
of State, together, provide the most appropriate regime for the
BBC?
Again, we ask this question specifically in
"The Review of the BBC's Royal Charter".
The BBC's Agreement with the Secretary of State
was amended at the same time as the Communications Act came in
to force at the end of 2003. One of the provisions aimed to improve
BBC accountability to Parliament for the value for money of the
BBC's licence fee expenditure. The provision involves a requirement
on the BBC's Audit Committee to commission value for money reviews
from the NAO and other suitable organisations that will then be
laid before Parliament. In addition to this, of course, the Select
Committee has the opportunity to scrutinise the BBC's Annual Report,
all of which has contributed towards improving BBC financial accountability
without any risk to its editorial independence.
The BBC still needs to seek my approval for
new public services. However, Ofcom will now have an important
role in the approval process. I have made clear that I will formally
consult ofcom on any new BBC service proposals and on the reviews
of existing BBC services.
April 2004
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