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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 598-iii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
Tuesday 22 June 2004 LORD BURNS MR DAVID SCOTT, MR JOHN NEWBIGIN, PROFESSOR ELAN CLOSS STEPHENS, and MR HUW JONES Evidence heard in Public Questions 132 - 177
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 22 June 2004 Members present Sir Gerald Kaufman, in the Chair Chris Bryant Mr Frank Doran Michael Fabricant Mr Adrian Flook Alan Keen Rosemary McKenna Derek Wyatt ________________ Witness: Lord Burns, a Member of the House of Lords, Independent Adviser to the DCMS; Chairman, Abbey National plc, examined. Chairman: Lord Burns, we would like to welcome you today and say what a pleasure it is to have you back before the Committee. Q132 Derek Wyatt: I wonder if you might explain how long your inquiry is going to take, who is now on the panel, what sort of inquiry it is going to be and whether you are going to issue a formal report? Lord Burns: My role is to act as an independent adviser to the Secretary of State. It is not to conduct an inquiry. I have had some experience of conducting inquiries in the past and this role is quite different. I see myself as part of the process of giving confidence that the charter review will be carried out in a transparent and objective way. I work with officials in DCMS. I go to meetings with the Secretary of State and officials. I have been engaged in the drafting of the consultation document. Now that the panel has been appointed, I will be engaged in a series of seminars and processes to try to tease out some of the issues that come out of that consultation. The end result of the work is the Green Paper that the government is proposing to produce at around about the turn of the year. The work that I am now engaged in is to try to assist that process of producing the Green Paper. It is the Green Paper that is the primary output of what we will be doing. Our present plans are to conduct a series of seminars and processes that will try to tease out those arguments, to try and ensure that all of the points that are made are heard; where there are differences, to try to subject them to some scrutiny and to test the evidence for some of the views as part of the process of feeding into the Green Paper. What we have not yet decided is as to whether there will be some kind of accompanying document that will be the output of that seminar series, which may go alongside the Green Paper as some of the background arguments and debates that have taken place. Q133 Derek Wyatt: That is very helpful. Thank you very much. Can I ask whether the panel will also be visiting such places as MIT laboratories in Dublin or BT in Ipswich just to look at what the technology can deliver? Lord Burns: The panel have not yet met. We have just appointed them. I have spoken to each of them separately. Our focus at this stage is on designing the process and the seminar series that we are proposing to have at the end of July, feeding through to the end of the year. We will of course discuss whether there are other things that we should be doing, such as some of the things that you mention, and perhaps attending some other sessions and talking to other groups of people who may have a part to play in this. Q134 Chairman: You are already on record as saying that what you are looking at is not simply what should happen after 2006 but the position as it would be if there were another ten year charter. That, if I may say so, is exactly the right position from which to begin. Derek Wyatt talks about the MIT media lab in Dublin. We went there yesterday. What was demonstrated there was a series of technologies, both communicative and interactive, which are ready or almost ready and which transform the nature of communication, including the kind of communication that might be expected from the BBC. One of the things that certainly concerns me - and it was put in very cogent terms by Adrian Flook, a colleague of ours on the Committee - is that unless the BBC embraces and uses this technology to justify its existence well into this century it will relapse into being no more than a social service for those who cannot afford any wider use of the technology. I would be very interested to know your reaction to that together with a recommendation to you to spend a few hours there because it really does open one's eyes. Lord Burns: I need no encouragement to visit these types of establishments. Indeed, most of the time, I am trying to resist my own pressure to go and see them as I have a fascination with them myself. We have had a lot of discussions with people who are very close to the technology and I have attended more than one discussion trying to tease out some of these longer term issues, as to where the technology may be going, the nature of the platforms, whether they will be single platforms, whether there will be a whole variety of ways in which this type of content will be delivered. I certainly will look at the suggestion that you make. As far as the BBC's role is concerned, I have a lot of sympathy with the point you made. Historically, it has played a very important role in the development of these technologies, right the way through from radio to television. We have seen the role that it has played in the development of the internet. My impression is that they are well aware of the importance of that technology and the part that they have to play in it. I notice, reading some of your evidence from earlier sessions, the point was also made that sometimes this takes you more rapidly into some areas than might in the end be justified because this is a very uncertain world where people have to make judgments. They have to try out certain technologies. Some work; some are delayed; some get overtaken by other methods of doing things before they become established. I think everyone agrees that we are going through a period of enormous change in this area with this enormous array of ways of delivering media content, in its broadest terms. Q135 Derek Wyatt: Three or four years ago, most of us would have found defining broadband difficult and certainly would never have heard of wide via wireless. These seem to be the competing technologies now and may well be in the next four or five years. It seems to me that the television people disregard the technology completely so far in the evidence we have seen, because they want the BBC to have ten years so they can have ten years of their own life and not have to worry about the competing technologies. From the technologists, we hear that at least four gigabyte delivery on broadband will be universal within four years in the United Kingdom and if that is so there is a different mechanism entirely for the entertainment platform to every piece, wherever you are, the business, the home, the school or wherever. Therefore, do you think it is even possible to commit to a ten year licence this time round or do you think it would be more appropriate to wait for the switch off of analogue and have a second review, because it seems to me you have two competing things there. You have new technology that can deliver an entirely different way of receiving television and you also have the government's demands to want to move from analogue to digital and the BBC is in the middle of that debate. Lord Burns: There is an enormous amount going on in terms of change. You do not have to go back very far to a period when some of the things that are in common use today were not available. I have a lot of these devices myself. I have a wireless network at home. One of the things that strikes me about all of this though is that there is a huge range of things taking place simultaneously. It is not as if there is any convergence on a particular way of doing things. At the moment, what we are seeing is more ways of doing things rather than things centring on one particular direction. I suspect that that is going to continue for a while, but certainly it means that these are things which the BBC have to take into account. I think we should wait to see their evidence with respect to charter review. As you know, we have had everyone else's evidence in but because of the various changes that have been taking place within the BBC we have not yet had their evidence. Before making any comment upon what their thinking is at this stage, I would like to see the evidence that they put forward. As far as the ten year licence is concerned, I see the argument about the rapid change in technology. Digital switch over is going to be a very important event. We do not at this stage know quite when it will happen. All experience suggests also that it will take a little while to settle down before we can begin to see what the impact of it has been upon people's viewing patterns and the way that they are working with the technology. I am slightly reluctant to go down the line that says we will have digital switch over and this comes at the very moment at which we should then have another big investigation, because I think we probably want to see some more evidence emerge as to how that is beginning to impact before you can make some of those judgments. I am also enormously aware now of the extent to which the BBC is in a constant state of review. This process of charter review is taking place quite some time before the new charter comes into place. There is simultaneously going on a series of reviews which go back to commitments that have been made about having the right kind of reviews of some of the new services. I have some hesitation about plunging into a short charter period this time and finding ourselves back in review almost as soon as the new charter emerges. Taking all of those things into account, my personal view at this point is that I would be hesitant about making it any shorter than ten years, but that decision is not for me. That is an issue for the Secretary of State. I am quite reluctant to come to the view that the switch over will take place cleanly and on a particular date and we will then know what the implications of that are for the BBC. I think we will probably need a period of experience from which we can draw evidence to see what the implications are for the BBC's role in that multichannel world. Q136 Derek Wyatt: If you look at viewing habits, it seems to us loosely that at under 25 people are watching less; under 15, very much less and therefore, as you get a generation going through the system, by the time you get to 2017 it could well be that the BBC is watched by less than 15 per cent because that viewing population moves up and gets bigger and bigger. The next generation does not watch as much. Therefore, it is the most important review we have probably ever had because if we cannot predict the next three or four years in technology we certainly cannot anticipate the viewing audiences, but they are in decline not just at the BBC but at ITV, and they are in terminal decline. Do you think there is a point at which the politics of the licence fee become important when people say, "Though I love the BBC, I only want to watch this bit. I do not really want the whole spectrum any more." Therefore, it becomes difficult to maintain the whole purpose. Lord Burns: I agree that the politics of the licence fee mean that if numbers of people using the BBC decline very sharply, that does raise issues that are not there today. At the moment, my interpretation of what people say to us is that there really is very widespread support for the licence fee as a method of funding the BBC. As you move forward, clearly the options in relation to subscription become that much greater technically. The argument that says the number of people using the BBC was to fall very sharply may be strengthened. On the other hand, what we do not know yet is to what extent the reach remains the same, to what extent people do use it but then maybe use it in smaller amounts, compared to the extent to which they do not use it at all. Secondly, my suspicion is - and it is no more than a suspicion at this stage - that the early adopters of the multichannel world, apart from those of us who are obsessed with sport and have it entirely for the benefit of the sport, were probably those people who have been using the BBC least of all to begin with. They are the people who have bought the alternative technology because they want a greater variety than they are being offered through the BBC. You say it will be 2017 but the debate on the next licence period will begin in 2012/13. By then, we will have had some experience of the digital switch over and what is happening to what is still quite a lot of people where we have not yet seen the extent to which their habits are being changed by that technology. I think it is a good question. It is something that we have to address, but I do not think I am yet in the position that Mr Wyatt is at, where it points very sharply towards a major disjunction in people's use of the BBC or to the licence fee as being a mechanism that will see us through this next ten years. Q137 Chairman: Derek said that people love the BBC. There is no doubt that what you might generically call the liberal middle classes in this country do love the BBC. On the tube train that I came in on today, there was a young man standing there, listening to his music on his headphones. He does not love the BBC. My guess is the BBC means nothing to him except as a possible source of some of the things he wants to see. He might well have watched the match on the BBC last night, simply because that was the channel on which he could see the match. What increasingly concerns me is that, while, despite my own personal feelings about it, I do not believe that the licence is a huge issue, most people including young people as they become householders will simply pay it as one of the things you have to pay as part of life, like the council tax or whatever it might be. I have a feeling that unless the BBC transforms itself to meet this era, the BBC is not going to remain something that means a lot to a very large number of people. That being so, it will be unable any more to justify its very special place as a recipient of a Royal Charter and a recipient of a regressive, hypothecated tax. Lord Burns: The evidence that we have received in terms of the consultation that we have done so far, and indeed some of the research which DCMS has been doing, still does point to the fact that most people like the BBC and quite a lot of people like it a lot. There are concerns and worries about derivative formats and too much copycat type programming and some concerns that the relative quality may not be what it was. My interpretation of this so far - and it may be that some of the responses we have in have been self-selecting, which you would expect at this stage - is that I do not sense that the worries and concerns that people have about the BBC are leading them to turn away from the important role that people seem to feel it plays in their lives. Ten years down the line when we have been through many of the changes that Mr Wyatt has been talking about, depending very much on what the competition does and how the BBC itself responds to this, we may then have moved into a position where perceptions are significantly different. I am also conscious with an awful lot of this technology and these predictions that some things move a lot faster than one expects. Some things move a great deal less rapidly than one expects. Even in ten years' time, there will be an enormous number of people who will still be around and who will be consuming these services, who will have spent a lifetime with the BBC and who are very conscious of it. Given the enormous spectrum of ages that we have, it is not clear to me that that is going to shift dramatically unless something happens which I cannot quite foresee at this point. Q138 Chairman: I read the news coverage today in The Daily Telegraph in which they interviewed lots of people who had gone to Portugal for the match last night. As it happened, one of them was a constituent of mine who was there but who will be back in England on Sunday for the match against Portugal. What he said was very interesting. He said, "I am going to go down the pub to watch it." He was a mature student. He has a television set at home, as almost everybody has. This idea that John Birt used to have of a family sitting on a sofa in the living room, sharing an experience has gone, has it not? The BBC, if it is to survive, has to adjust itself to this new social environment. Lord Burns: I observe what you observe in the case particularly of big sporting events, which is that people see them as shared experiences and they by and large wish to watch them with someone else. Last night, I had some members of my family who came round to watch the game. In the match against France, I went to someone else's house who had some family round. Some of my children have been off to the pub because they see this as a regular place to go on a Sunday afternoon to see a game. I think the big sporting events are very particular in the way in which they are seen as major, shared experiences, where people like to watch with other people. It is part of the tradition of going to watch sporting events with others. I would not necessarily say that that applies to all other forms of entertainment. You were just making the point that more and more people now listen to their music on their own. Far from sharing it with others in their home, they prefer to go off, put their headphones on and listen to precisely the music that they want to listen to. This, it seems to me, is all part of the great, diverse world that we are seeing and the enormous range of ways in which people now access the media in different ways. Many of us have lots of these different gadgets which we use at different points in our day or in our week or in our year to get video, music, to experience sporting events and my suspicion is that it is diversity rather than uniformity that is emerging in this world and I am slightly resistant to suggestions that there is going to be one great method through which all of this is channelled to people. My wife gets desperately frustrated at the number of cables, gadgets and everything else that I carry with me whenever we move from one place to another. Hopefully some day somebody will produce some uniformity of charges and cables that will reduce this particular load, but it reflects the fact that much of this technology is being delivered in different forms. In business we have exactly the same problems. With almost all of our computer systems which have been built at different times to deliver different types, you have a lot of problems in bringing them together. Huge expense is involved and a lot of people simply let them live alongside each other, try and build bridges of one type or another and wait until they cease to be useful any more. Q139 Michael Fabricant: I want to get on to the whole area of how broad is the scope of your non-inquiry but I want to get our feet on the ground a bit and talk a little more about technology. I am not technology averse. When I left the London Business School, I went in broadcast engineering and I love gadgets but at the end of the day I still think we are human beings. Yesterday, the Chairman came up with a marvellous expression when he talked about the conveyor belt of life. The hypothesis, if I put it correctly, is to say that people of a certain age like being passive and not interactive with their entertainment form. Younger people like using their ipods. Younger people want to help create or change the programming by being interactive with it. Other people such as myself think there is a time and a place for everything. If you are tired, you may just want to flop out and watch television and get it sent at you. Maybe you get to a stage of life anyway where you do not want to be quite as interactive. Has any research been done? You talked earlier on about DCMS research. Has any research been done about existing viewing patterns, entertainment patterns, of different age segments and, I guess, socio-economic segments of our population? Lord Burns: I have not seen it, if there has been. There has been an enormous amount of research done into viewing patterns of television and listening patterns for radio. There is rather less across the media and I do not really have much to add at this stage on that. Just as people deliver things through different media, there are some activities that you want to do in an active way and there are other things that you want to do in a passive way. We see this with newspapers. It is only a few years ago that people were talking gaily about the fact that newspapers would have no role in the new world and people would be able to get all this information on the internet from wherever they wanted. They would make their own newspapers. They would draw down all their own stories. The fact is there is an enormous amount out there. You want somebody much of the time to act as an intermediary for you, who is a trusted source, who is going to put together things in the order and with the priority that will suit you and draw your attention to the things that you think are important in life. Newspapers have the great virtue that they order the news for you. They make sure that you are not reading the same thing twice in one day. If you trust the people who are supplying that to you, you feel very comfortable. With a lot of media and television, films etc., there is a similar process going on. People like other people to put together for them schedules of events which are mixed and which they think will be interesting to them on the day and at the time they will be interested in the experience. You get D-Day programmes etc., which happen to coincide with the anniversary of D-Day. If you do that yourself and the whole thing is an active process, you would probably find it quite difficult. My experience and simple observation of people is that in all of these areas we are seeing a combination of active and passive. There is still a role for people who put together schedules, who put together newspapers, who are trusted providers, who select things and act as the intermediaries, who bring you this content in an ordered, trusted way. Q140 Michael Fabricant: Intuitively, I suspect you are 100 per cent right. Lord Burns: I do not have any evidence other than my own observation. Q141 Michael Fabricant: I remember some 30 years ago you telling me off once, because I made certain assumptions and you said, quite rightly, "You may well be right but has any research been done on this?" Can I urge you or the Department of Culture, Media and Sport, if research has not been done, to do research, not just into people's viewing patterns but behaviour patterns? Surely, does that not create a whole direction in which the BBC might go in the future? Lord Burns: I am very happy to be ticked off on that. Q142 Michael Fabricant: How broad is the remit? Derek Wyatt asked about the length of charter renewal, but would there necessarily be a charter? Are you looking at the possibility of there being a statute instead? Are you looking at whether the BBC should be going into new areas of technology, not just broadband, but other forms of interactivity? Are you looking at possibly other forms of funding for the BBC? What assumptions are being made as fixed or are there no assumptions about the future of the BBC at this stage? Lord Burns: What we are looking at is charter review, charter renewal. Within that charter and the letter of agreement at the moment, there are a certain number of things that have to be decided. One of the things that has to be decided is a system of governance and regulation. Some things will come to be determined at the point of the charter renewal and in the letter of agreement. Some of the other things that tend to be discussed would be things that you would hope would emerge through the process of governance and regulation. Not everything has to be decided at the outset. I am very conscious that quite a lot of things you could not hope to decide at the outset. In terms of things which you have mentioned, they are very much on the table, as you will see from the consultative document that DCMS issued, so issues of funding, issues of governance, the particular structure of the BBC, as well as what the remits of particular channels and particular programmes should be are very much there to be debated. At this stage, we are pre-Green Paper. As far as I am concerned, that leaves almost anything to be debated that people wish to be debated. At the Green Paper, some of those options will probably be narrowed down ad there will be argumentation for and against some of the options. There will be another period of consultation which will lead to the White Paper later in 2005. At this point, we are willing to look at a very wide range of issues and I hope that that was demonstrated by the nature of the consultative document that was issued at the end of last year. Q143 Michael Fabricant: How much freedom do you think the BBC should have to explore new areas? The Chairman and I were discussing this yesterday. We do not think the BBC had to seek permission to go into new media. I personally think that it was a wise decision and the BBC news website is probably the best website of its type in the world. Certainly if its hits are anything to go by and its popularity is anything to go by it must be because it is the most looked at news website in the world. Do you think the BBC should have that freedom to do that or do you think the BBC should be more constrained to just provide broadcast television and radio? Lord Burns: It is very difficult over a ten year period to define at the outset what it is that a broadcasting company can do. That is why I made the point that you need a remit, a broad charter and a broad set of obligations that fall upon the corporation; and you need a system of governance in place, in which you have confidence, that can make some of those decisions during the course of the charter period. Some of the issues in terms of scope, reach and the approach to dealing with new technology are things that should be possible to be taken care of within a good system of corporate governance and regulation. You do need some constraints. As you will have seen from some of the evidence that you have had presented to this Committee as well as the evidence that we have had, one of the things that worries some of the commercial competitors at the BBC is that the BBC can decide what to do without any process of consultation and without any constraints being placed upon them. Some others worry that it may be over-constrained in not being able to go into some new areas. What you want out of the system of governance and regulation is something that can take care of both of those events, which draws the line in the right kind of place but which nevertheless gives the freedom to move into areas that it is sensible they should move into. That is a combination of the remit that they are given and of the governance process which again is trusted, as you go through a charter period, to be able to make those decisions. Q144 Chris Bryant: With all the cables, boxes and so on that you now have to have in your sitting room to be able to watch television, let alone to make sure that other sets in the house can work, and watch the channel that you want to watch, it is pretty perplexing. When you go to Dixons or wherever to buy a television, it is almost impossible for the ordinary consumer now to see their way through the complexity. The traditionaal argument for a licence fee, which is obviously deliberately circumventing the market, is that we are buying a public good, whether in terms of the local production because we are making British programmes which might not be made if it were not for the licence fee, or you have local news, extensive news gathering which would not be commercially viable and you are doing genres like comedy that would not be commercially viable, and on top of that there is a universal access provision. Do you think that argument still holds for the licence fee? Lord Burns: After the digital switch over, some of the arguments that were made for the licence fee are going to be less powerful than they were. Some of the points that you make should not exist in quite the same form that they do now, or that they did before we were in the multichannel world. One of the objectives of public service broadcasting was in order to get a variety of programming, not necessarily just catering for the mass audiences at all times: particular types of genre, particular types of programming, that might not be commercially viable in advertising funded media. As you move into many, many channels, it should be possible to see more of that programming. On the other hand, it is quite striking to me that in terms of discussions that I have participated in so far and the evidence that I have read that people still see an important role for a broadcaster who is not being driven by either the requirements of subscription or the requirements of advertising, both in terms of the diversity of programming and in terms of being able to reach audiences for specific types of programming, which gives confidence in terms of quality. A lot of people simply enjoy watching television without any advertising. Although it has weakened in some areas, I think there is still going to be a demand for a certain type of what is called public service broadcasting. I thought the Ofcom review took us through quite a lot of that argumentation very well. I also agree that the time will come that, if the number of people who are watching the BBC declines very sharply and there is the ability to switch people off who do not wish to pay, the balance of the argument between the licence fee and subscription is going to change through time. Q145 Chris Bryant: Would you accept that maybe whilst that is an argument and that perhaps leads you to a situation where you would say you have to much more narrowly circumscribe what public goods you are buying and the BBC has to therefore have a much more detailed list of things that it has to do and things that it cannot do, perhaps there is another argument which suggests that because broadcasting will always tend towards monopoly because it is very expensive to make the first copy, relatively cheap to distribute to everybody else, but it is very difficult for new people to enter the market and you need a hefty player which does rig the market so that there is competition for quality as well as just a competition for viewers? Lord Burns: The way I have approached this is very similar to the way it has been approached in the Ofcom review. I start with the question: what type of programming do people wish to see available? The second question is how much of this is likely to be delivered by the market place and the third question is, if there is a difference between those two things, what kind of intervention do you need in order to bring it about? Because our market has been so rigged throughout its entire history of radio and television, we have no real way of judging with any confidence what an entirely market driven system would produce for us and whether it would produce those things that we want or whether it would fall short of those things. I am certainly not going to jump in and make any strong predictions about that at this stage, but it will begin to emerge as we move into the new world and as we gain experience of it. It is going to be important to be rather more specific about what the remits are of the BBC with regard to both radio and television. It has to take into account what is being delivered in he market place more generally. To me, you cannot just set about it as if that market place did not exist. Q146 Chris Bryant: One of the traditional parts of the BBC's remit has been producing British programmes and British content. Lord Burns: I suspect that will remain important for some time. Q147 Chris Bryant: If you translate that into a new era, the content that many young people -- the 15 year olds and so on that we have been talking about - enjoy is some form of game. To old folks like us, a game is something ephemeral and irrelevant, but the content inside that can be every bit as imaginative and creative and story driven as a BBC costume drama. Is there any reason why the BBC should not be doing games? Lord Burns: I would ask the same questions that I asked earlier: what kind of games would you like to see available to people? Maybe some of them would be educational; maybe some of them would be aimed at particular age groups; maybe some of them would be aimed at particular niches and you might ask yourself the question are they going to be delivered by the market place. If yes, end of story. If not, you may then ask yourself the question whether the BBC are the appropriate people to be doing it. My instinct is that I would doubt it but it would be possibly one of the ways in which you might wish to intervene in this market. There are other ways of bringing that about if you want a particular kind of educational game and software. I approach this from the point of view of asking what is it we want to see; what is it the market is going to deliver; what is the best way of intervening in order to get the outcome that you want. So far, the licence fee has been shown to be an effective way of doing that. Q148 Mr Flook: You spoke earlier about how well loved the BBC is and indeed it probably is one of the great brands of the 20th century. Yesterday, we heard from Simon Jones, the head of MIT Europe, when we visited them, that that is potentially very similar to Kodak which made silver paper. They were well aware of the digital threat and they could see it but they would not do anything about it. They had great leadership, a great brand, the ability to produce an alternative but they did not do anything about it. What role do you see in giving your advice to the BBC going forward and what role do you see charter renewal has in helping the BBC to avoid that sort of damage? Lord Burns: First of all, it is an important part and has been an important part of the BBC's role that it has engaged itself extensively in the technology of broadcasting. It has been a very important player in developing new technology. Far be it from me to defend the BBC but so far I would have said their record was pretty good in embracing digital television and digital radio and the internet. Already, we see the enormous use that is being made of broadband with respect to being able to listen to radio programmes that you may have missed. It would not be at this stage one of my criticisms of the BBC that they had been rather sluggish in the way in which they have embraced new technology. Indeed, I still now get surprised when I go to some other countries and discover that they do not have a lot of these things. That is not enough of course. We are looking at this in a forward looking sense and I think it is an important part of the remit that the charter has - I think it is in the present charter - about the BBC's role in developing broadcasting technology as well as trying to make it universally available of course. Q149 Mr Flook: Which is precisely what the Kodak executives said as well. They could see it but they would not do anything about it. I am no technologist, but there could be a tremendous sea change in the way we all receive and watch television. That may not be broadcast and that is a dangerous word. We may not receive broadcast media. We may receive programmes which the BBC makes and we could hold out the BBC justification from within quite simply. I rather hope you will be able to take that on board and talk to the MIT people you mentioned earlier, because I think there are lots of things in the future that the BBC are aware of but could not necessarily do anything about. Lord Burns: I take on board what you say and I am very happy to follow that up. I would again want to ask the questions as to whether some of this will emerge anyway and whether it is the BBC's role to get themselves involved in it, and how it fits with the other players in the market place. Q150 Alan Keen: Because of the nature of your role, we are having a discussion rather than an interrogation. Lord Burns: I am very grateful for that. Q151 Alan Keen: We have quite different views on the Committee. A lot of the time we want to be entertained. I am lucky enough. My interactivity is on cricket or football themes still. When I watch television, I am in a wonderful illustration of the binary code which is really the basis of all this important technology. I am either awake or asleep on the settee. Nothing beats that. I have never taken drugs but I am sure you cannot beat drifting in and out of sleep. I want to be entertained. At MIT it is obvious what wonderful technology they have. The BBC can still put on what I would call shows but maybe we will get not just 3D TV but characters that can appear to move around the room. This is where we can use the technology but we still want to be entertained. The important thing is this: people have talked a lot of tripe about public service broadcasting and trying to define it. Why cannot we look at the BBC as just a different way of ownership? Why do we not democratise it a bit more so that the public own it and can influence the decisions that are made by the BBC more than now? Some people say they are impressed by commercials or it should only give weather forecasts and the rates of national insurance contributions. Can we not just say to them, "Do what you like, BBC. Provide what the public want but democratise it so that the public have an input"? What do you think about that? Lord Burns: Let me repeat one of the observations that I think is made in the Ofcom review: there is a group of people who talk endlessly about public service broadcasting. When you go and ask the customers, the consumers, the people who watch and listen, about public service broadcasting, they do not have a clue about what it is you are talking about. The issue is do they like and trust what they get or what are some of their concerns. As I said earlier, one of the conclusions I reach is that most people do seem to like the BBC but that does not stop a substantial number of them having a grouse of one kind or another. One of the grouses is that too many of the programmes are derivative of other programmes that they can see elsewhere. They seem to be copied and there are endless programmes of the same type. Also, one of the issues that does get raised is whether or not they themselves are having sufficient influence in terms of the governance and accountability process. I have some sympathy with what you say, but if you are going to raise the amount of money that the BBC gets from the whole population in the form of this compulsory levy, if you wish to watch television, it seems to me that there are quite a lot of obligations that fall upon you rather than just doing what they want to do. The debate about public service broadcasting is trying to define what those obligations are. Historically, those obligations have been about putting on certain types of programming, about the quality of them, about fairness and impartiality in news and current affairs, about meeting a range of types of programming for a range of people, not just concentrating upon the things which large audiences wish to watch. My instinct is that that is going to remain the case. If you are going to fund an organisation in the way that the BBC is funded, some very special obligations fall upon it as to what it should do with that money as well as that it should be accountable and it should be influenced by what the viewers want. Q152 Alan Keen: The health service is quite a good parallel. We do not think that having 147 private companies providing health care throughout the country is going to give a better service than the health service. The health service has certain things it has to do. I would pay £121 for Radio 4 alone. It is a cheap way of providing wonderful broadcasting, the same as the health service. Please look at that. Lord Burns: There is force in what you say but the health service is rather different from broadcasting in respect of the alternative means of delivering those things, the alternative ways in which people receive their treatment and the extent to which it is necessary or not. We have obligations that we place upon people in return for public funding and, having spent a large part of my life engaged in the job of trying to decide who should receive public funding and what they should do in return for that, I do think it is important that there should be some very strict criteria and remits and there should be very tight control in terms of ensuring that you have good systems of corporate governance for people who are in receipt of large sums of public money. The BBC is in receipt of a very large amount of public money. Q153 Mr Doran: I want to pick up a few micro issues to get away from the big picture and I will wrap everything up in one question. One of the areas that the BBC have not been very good at over the past few years is, first of all, in the use of independent producers. I know that is an area that you are going to look at. In terms of regional production, often there has been a feeling that a regional production is just a crew moving from London, doing the filming and everything else in the region, but we want to see the use of regional facilities. In the area of public service broadcasting, the BBC along with the independent television companies have an appalling record, not just in supporting British film but in showing British film on television. As far as the first two are concerned, I would be interested to hear how you are going to approach these two issues and, on the third, I would like your confirmation that in looking at the public service broadcasting remit you will be looking at the attitude to British film. Lord Burns: Each of those issues does come up in the consultation and, in terms of the visits that the Secretary of State has had around the country, talking to various groups in preparation for the debate on charter review, those points have often been made. Each of them however - independent production, regional production, issues about films - fall into the two categories I mentioned earlier. It is partly a question of how you deal with them in terms of the overall remit that you give to the BBC at the time of charter renewal. The second thing is how you engage the system of governance and regulation to deliver what you have asked them to do. In the case of independent production, from what I can gather, there are ambitions that have been laid down which have not been met and it seems to me that that is an issue for governance as to how it is that that is the case and how it is that the governance process insists that it should happen. In terms of regional production, most people outside of the M25 who are in the broadcasting world complain quite bitterly about the amount of work that goes on inside the M25. Again, as long as government defines what it is it expects in those areas, it should then be a matter for the governance to take care of. Films I have heard rather less about but it is an issue that comes up and I am certain it will be aired as we go through this period of consultation. Q154 Rosemary McKenna: I am one of those people who absolutely love the BBC and I do think it is really important, with a worldwide reputation, and the BBC World Service is so important. But ought not the BBC to concentrate on providing really good quality news and entertainment? Should it continue to make some decisions, that it has done, I think, over the last few years, purely on commercial grounds, to keep or increase its audience share, and should that be part of the Charter Review? Lord Burns: I think a lot of people share just the views that you have mentioned, which is that they do like the BBC a great deal and they do want to concentrate on providing very good quality news and entertainment. The issue of quality comes up time and time again in terms of the feedback that we have. From what I interpret from this evidence, people do not want to see on the BBC simply what it is that they can see elsewhere; they are expecting something that is a bit better. There is also, undoubtedly, in the consultation that we have been through, some concern as to which emphasis is being put upon gaining audience share, and I think one of the issues that will come up for quite a lot of discussion during this period is what is a better set of measures of success at the BBC, rather than simply looking at what is the share time of peak viewing that they get Monday through Sunday? There is already talk of giving greater weight to things like audience reach rather than simply audience share, but then there must be other means of trying to get people's appreciation of the quality of what it is that they have seen as well as whether or not they have watched it, and that has become quite an active area for debate. It is very interesting, when I read the autobiographies of people who have worked for the BBC in the past, you can see that this struggle has gone on for quite a long time, of trying to keep a balance between audience share and the quality of programming because there is clearly a fear that if you let the audience share drop below a certain level, that you will begin to put in doubt the future of the licence fee upon which all of their lives depend. So you are trying to ride the balance of the two issues, about being innovative, about doing new things, about keeping up levels of quality, but also hanging on to a certain audience share. We will each have our own views at different points in time as to whether that balance has swung one way or it has swung the other way. Quite clearly quite a lot of people share your view, that it has swung slightly in the direction of worry about audience share, and I think one of the things that we hope to debate during this period is to see if there are some other measures of success and appreciation that may be able to figure a little more prominently than simply the question of audience share. Chairman: Thank you. Lord Burns, it is always a pleasure to have you here. So many jobs to do and only one person to do them! Thank you very much indeed. Witnesses: Mr David Scott, Chief Executive and Managing Director, Channel 4, John Newbigin, Head of Corporate Relations, Channel 4, Professor Elan Closs Stephens, Chair S4C and Mr Huw Jones, Chief Executive, Channel 4, examined.
Chairman: Good morning, welcome. First of all, Michael Fabricant. Q155 Michael Fabricant: Obviously not in an attempt to ingratiate yourselves with this Committee, Channel 4 suggested that this Committee does not have oversight for the BBC. Perhaps you would like to expand your reasons for suggesting that? Mr Newbigin: There are two reasons. One is the Communications Act sets out a very clear definition of Public Service Broadcasting, and it seems to us logical that there should be a parliamentary body which is the final port of call for discussions about how broadcasting fits into the larger public realm. Secondly, that the process during the passage of the Communications Bill, of the Committee of both Houses that scrutinised the Bill, was a very successful and very happy process. It seemed to us that it is worth building on that and acknowledging the particular importance of broadcasting in the media by giving it a Committee all of its own. Q156 Michael Fabricant: So you would expand that, would you, to the Public Service Broadcasting provided by Channel 4? So are you saying, in effect - and I do not want to get knotted up here about this Select Committee - that the Select Committee should not be looking at any public service broadcaster, including the BBC? Mr Newbigin: No, we are saying that there should be a specially established Committee, which looks at Public Service Broadcasting right across the piece, i.e. the BBC, ITV, Channel 4, Channel 5, and clearly that does not cover all the DCMS responsibility so there would, de facto, need to be another Select Committee which looks at the other activities of DCMS. Q157 Michael Fabricant: Channel 4 is, as you say, and I think we would all agree, a good Public Service Broadcaster, though rather different in size to that of the BBC. It is also different from the BBC in the way it is set up; it is set up by statute. Do you think there is an argument to suggest that either Channel 4 should have a Royal Charter or the BBC should be set up and operate by statute? Mr Newbigin: Channel 4 certainly does not want a Royal Charter, thank you very much for the offer! We are very happy with statute. In our view a Charter for the BBC is appropriate and a ten-year Charter is appropriate, but, as we said in our submission to DCMS, we think there should be a very substantial midpoint review after five years, to tie in the ongoing processes of the BBC into the wider scheme of management for Public Service Broadcasting that the Communications Act sets out, with the five-year review by Ofcom. That is the logical time to look at the part that the BBC is playing as one of a number of players in the whole area of Public Service Broadcasting; in other words, acknowledging that Public Service Broadcasting is not the BBC plus a few also-rans, it is a whole system. Q158 Michael Fabricant: By the way, being half-Welsh, I do invite S4C to contribute if they wish to. May I ask a further point, and then I will conclude, if I may, Chairman? Do you believe that the BBC should not only have its own Committee, but do you believe that the BBC should fall much more under the aegis of Ofcom than it presently does? Mr Newbigin: In our submission to DCMS, I think you probably know that all through the passage of the Communications Bill we argued long and hard that the BBC should be answerable to Ofcom, again on the point that that there should be one system which looks at the whole of Public Service Broadcasting. Acknowledging that Ofcom has quite a lot to do and that the world is moving fast, what we suggested in our submission is that at the time of the next five-year Ofcom review, if there was a midpoint review on the Charter there should be a very serious and explicit consideration of whether the BBC at that time should come fully under Ofcom or not. Q159 Michael Fabricant: Does S4C want to comment? Professor Stephens: Obviously we come under Ofcom to largely the same extent, that there is an overarching responsibility in terms of protection of minors, decency, morality and in terms of independent quotas and so on. I think the question one has to ask is not where does the overall regulation lie, but where does the place for actually delivering those issues lie? You cannot get away in the end from the presence of the Board, however constituted, which actually has the responsibility and the care for that organisation and the passion for it. I am somewhat perplexed myself as to the immense passion at the moment to say that it is not always possible to do the two things, that is to regulate and to govern. In some ways one can argue that in bringing up children one has to do exactly that - it is not rocket science. We are complex and sophisticated people, and in many ways the presence of somewhere like the ITC has not stopped the ITV news from moving from nine to ten. I came down yesterday on a train from mid-Wales; the train was horrendously late, but we do have a strategic rail authority. So the presence of a regulatory body that finds ad hoc and sets parameters is a very different animal from a public service body that actually has a care and a commitment and an obligation to what it is doing. Q160 Alan Keen: May I ask a very simple question, John? Can you paint us a picture of what would happen if the BBC ceased to exist in so many years' time? If it were given away, sold off, what would the broadcasting arena be like? What would be the advantages and disadvantages? Mr Newbigin: If the BBC was, as you said, sold off, then what would happen is that over a period of time there would be a degrading of the quality and the level of innovation and the range of skills that are available in British broadcasting, and the long-term consequence would be dire. Mr Scott: If I may add, one would need to ask how would the new body be funded? Because if it was funded by advertising it would have significant impact on ITV, Channel 4 and Channel 5 as well. Professor Stephens: Could I add to that, that certainly from the point of view of Wales and the culture of Wales and the politics of Wales, the contribution of the BBC to Welsh life has been immense since the 20s, not just in terms of news gathering and regional - now devolved - and national news, but also in such things as the National Orchestra of Wales, and the support it has given to young singers, and so on; it has been an immense cultural asset. As we look to the long-term future of the commercial broadcaster, ITV, and the kind of economic models that are coming out with digital switchover, and how far PSB can be sustained in that atmosphere, then I think that the presence of the BBC in the national regions is of acute importance. Q161 Alan Keen: Is there any way you can tell us how it could maybe be democratised further than it actually is at the moment? Mr Newbigin: In our submission to DCMS we suggested a structure which is actually closer to the Channel 4 structure, which is that there should be a Management Board, which is a proper Management Board of the BBC, which might include some non-execs, and that they should report to the Board of Governors and the Board of Governors should be an arm's length regulatory body with clearly a majority of lay persons, but it also ought to include some heavyweight broadcasting expertise and it should be broadly representative of the population of Britain. That, in our view, is the best way to make the BBC more accountable. If, in the long-term, it were to come fully under Ofcom then that would be the second stage in that process. Mr Scott: I think that if each of our services had a more explicit remit laid down, which was measurable, accountable and transparent, that would be a proper role for the governors to supervise and report on, and actually agree those remits at the outset. Professor Stephens: I suppose there could be an argument for strengthening the regional bodies, the Broadcasting Council for Wales, the Broadcasting Council for Scotland, and so on. At the moment they have an advisory role but not a budgetary or regulatory role in the proper sense. So that is an area that could be explored. Q162 Derek Wyatt: Good morning. I have been on record as wanting to try and persuade the BBC to create a UK film channel only, and Channel 4 has some experience of that. If I fail to persuade BBC governors and new management to do this, do you not think that there should be some way that we can address that which is missing in the public sector, by top slicing five per cent or ten per cent of the licence fee, and, if you could, would that have influenced the way in which you have approached film in the last two or three years yourselves, Channel 4? Mr Scott: There are two issues there, one of production of the films and then the running and the organisation of a channel. Our Film 4 channels, I am glad to say, are doing well and will be profitable this year, and that is a great achievement. On the production side, as you know, we have had to scale back our ambitions. A couple of years ago we found that the structure which we were pursuing was not really effective, and in particular we had scaled up an operation in the hope of getting a decent American studio deal, which we did not get in place. So our production model has gone back to where it had been in the time when we were being successful. We are commissioning films out of the main channel's programme budget and those films are beginning to come through now. As for the running of a UK film channel, are you suggesting that that would only have British films on it, or be broader than that? Q163 Derek Wyatt: No, I was thinking of a British film channel. You have huge film libraries that are just laid bare, which would need digitising, but there is a cultural need to show film. If you cannot show it on the BBC then why should we not have a public service UK Film Channel? The logic escapes me at the moment. Mr Scott: I have not seen a business model for that. Q164 Derek Wyatt: There is not a commercial business, as you know, and I have talked to the commercial entities, but why could there not be a Public Service Channel? Mr Scott: It sounds a very interesting idea. Professor Stephens: Could I add, that wearing my other hat as a governor of the BFI that obviously I would be delighted to see more film on, by whatever means possible. Q165 Derek Wyatt: But we will not attract children, we will not attract the next generation unless there is a public service need, and that is a failure; that is what everyone says the public service means. It is a failure of the commercial, or you cannot run a UK film channel? Mr Scott: I really do not know the complexity of the rights position and where those catalogues sit and who owns them, but I am certain that those are all issues that can be dealt with. Q166 Derek Wyatt: So let me ask you all, are you in favour, therefore, of being able to apply for a fund so we could top slice the licence fee? Film is not the only channel that the BBC does not do; it does not do sport, it does not do sport health, sport psychology or sport education. It could easily run a sport channel but chooses not to. Mr Scott: Whether it is the role of the BBC licence fee to do this or whether it is something which the Film Council should look at, I do not know, but it is an interesting idea. Mr Jones: It seems to me that the question is what then gets cut in order to fund the additional channel? We sometimes portray our own dilemma in deciding how we decide on our priorities by saying we could spend the whole of our programme money on making a single blockbuster film each year, but then you would not have a television channel. Somewhere in the range between that absurd extreme and the other pragmatic policy there is the truth of what we do, which is to fund up to two films a year because we think that is appropriate. But your proposition is that something would have to go in terms of the general presence of broadcasting at the moment. Q167 Derek Wyatt: Forgive me, but BBC3 is watched by less than 2000 people an hour and costs £100 million; it would cost less than £100 million for a UK film channel. Mr Newbigin: I would have thought with the BFI and the Film Council exploring the possibilities of E-cinema that, if one was going to look at a film channel, to do something on broadband is something that would be worth exploring and would be infinitely cheaper than starting a television channel. Derek Wyatt: I agree it would be cheaper in broadband if we can get the bandwidth. Thank you, Chairman. Q168 Rosemary McKenna: You may not be able to answer this question, but I think it is interesting that the creation of S4C, did you at any time consider making a similar arrangement in Scotland, because there is an upsurge in Gaelic broadcasting in the language in Scotland? Has that ever been considered or would you consider it in the future? Mr Scott: I think that it was briefly considered some time during the 80s and the outcome of that consideration was the setting up of the Gaelic Television Fund, which was then providing programming, which was transmitted on ITV's Scottish Services, and I think on the BBC as well but I am not entirely certain. Q169 Rosemary McKenna: There certainly is not anything like the volume. Mr Scott: The commercial impact on Channel 4, if we had Scotland separated away from Channel 4, would be quite severe; it is obviously a large audience for us. I hope people in Scotland enjoy our programmes as well, so it is probably good to have Channel 4 there and a Gaelic Fund. Professor Stephens: Of course, as the new digital age evolves Channel 4 will be UK-wide side by side with other broadcasters such as ourselves, which is a very good thing for viewers - they are provided with a diversity of programming. We are very aware of the needs of Gaelic speakers for greater coverage and more programming. I think that the difference in Wales over the years has been the political will to make the language survive. At the moment the language is, as you know, compulsory in schools; it is the avowed intention of the Assembly Government that it should survive and that it should be encouraged. Therefore, the position is somewhat different in political terms over the whole of the country, and I think we are the beneficiaries of that political will. However, one could argue that the small drop in the number of Gaelic speakers at the moment is an argument for enhanced coverage because we are all the losers when a certain culture disappears. Q170 Chris Bryant: S4C, it is interesting that you said it is good for viewers that you have Channel 4 and S4C alongside each other in Wales, but I guess it is difficult for you because you have lost a third of your audience in the last three years. But today is not about you, it is about the BBC. You argue in favour of the licence fee, but you are funded by grant-in-aid and I guess you want a bit more grant-in-aid as well, and the World Service is funded by grant-in-aid and not by the licence fee. Why are you in favour of the licence fee? Why should it not just be grant-in-aid, as it is in Holland? Professor Stephens: I suppose it is an argument we would have to have with the Treasury as to the way in which they would wish the licence fee to become a grant-in-aid. Would that then have repercussions for their own rate of inflation, RPI, whatever? I am sure that there are issues around this subject, which they have already debated. I suppose the old way of looking at it was to say that this is the buffer zone between an arm's length government intervention and the broadcaster. I am not quite certain that that argument prevails totally. Q171 Chris Bryant: Are you compromised by being funded by grant-in-aid? Professor Stephens: No, we are not, and I would say that the fact that Parliament in a sense sets the licence fee is in itself a little bit of a compromise on the absolute independence of that fee. It has been a useful device, which currently most people subscribe to, and, as we heard from Lord Burns, the research and the Ofcom research shows that at the moment it is not under immense threat. Therefore, all we are saying is, so long as that remains a viable way for people to pay for their Public Service Broadcasting then we are supportive of it. Mr Jones: And the size of the population of the UK gives you a product of the licence fee, which enables a very wide, rich range of services to be provided, which would not be the case in a smaller country where other mechanisms have to be put in place in order to sustain what is considered to be a desirable service. Q172 Chris Bryant: A different question. At the moment you get ten hours a week from the BBC, produced by the BBC for you, and that comes out of the licence fee, and you are going to lose ten hours a week of English broadcasting from Channel 4 when Channel 4 is available to everybody in Wales? Mr Jones: More like 70 or 80 hours. Q173 Chris Bryant: A week? Mr Jones: Yes. Q174 Chris Bryant: So an enormous hole in both money, because you are not able to sell the advertising, and in terms of programmes. Would it not make more sense in this new Charter just to put you into the BBC? Mr Jones: The reason why S4C was set up as a separate channel and as a separate authority was in order that there should be this space, which gave primacy to the Welsh language, and when you have 200 to 300 English language channels that argument still prevails in respect of giving that space, where the Welsh language has primacy in Wales. The reason a separate authority was set up was to ensure that there was a body which had the interests of that channel as its primary function. A separate funding stream was set up, again so that that primacy was sustained throughout. We think those arguments are still as strong as ever. Q175 Chris Bryant: But there must be costs to having two structures, to having a separate Board, a separate organisation, a commissioning through to the BBC, and, at the same time, you have no power really to say to the BBC, "Excuse me, you are spending lots more money on English language programming in Wales, but you are not spending proportionately the same amount of money on Welsh language programmes that you make for us." So actually you lose out. Professor Stephens: We are a very hybrid organisation; we take advertising, we take sponsorship and so on, in an upfront way which is not currently the BBC model. So I think there are some problems as to the way in which we are a suitable fit for the BBC. Having said that, I do not think that there are sufficient savings in just the movement from a single Board, which is probably costing in the order of 21,000 or something per annum, to actually make up for 70 hours' loss of programming. The most important point - and I think this is a serious one, because I take your point very seriously - when I am trying to be very good and very moral I try my best not to suffer from institutional-itis, and to say, "I am defending the present structure at all costs." In the interests of the viewer we have to look beyond that. When you look at the print media in Wales, at the lack of diverse voices in that print media, when you look at the power of the English Press in Wales, as opposed to Scotland, when you see what could be happening to ITV Wales, I do think it is important that there is more than once voice in Wales, and that is one of the principal arguments for the existence of a separate channel. Q176 Chris Bryant: Thank you very much for that. One question to Channel 4 - and it looks as if you are going to get away without any questions about Big Brother today, which is going to be quite an achievement - on the governance of the BBC, do you think it will make any significant difference if the governors were to become more independent from the Board of Management, as Michael Grade seems to be suggesting, as well as obviously independent from government? Mr Scott: We certainly believe that is the direction they should move in. As John was saying earlier, we envisage a Board of Management with perhaps non-executive directors, who would manage the business and the governors as regulator at some distance, arm's length, in their own building, with a degree of separation. We think that would strengthen the whole structure of governance at the Beeb. Q177 Chairman: Just to proceed on the question that Chris Bryant was putting about funding the BBC through grant-in-aid. I made some headway in persuading Harold Wilson, when he was Prime Minister, to do exactly that, but Denis Healey, who was Chancellor of the Exchequer, would not have it because grant-in-aid can only come out of general taxation. The licence is hypothecated tax for which the Chancellor does not have to find the money; you are a public sector organisation but you find your own money. It is in a sense a rhetorical question, is not the only future for funding of the BBC in those circumstances either to go on being funded by the licence or to find its own way of funding in the way that Channel 4 finds its own way of funding? Mr Scott: We believe that the licence is the correct way of funding the BBC. If they were to be funded through subscription I think what we would find is that perhaps half the country would want to pay it and it would have to be £200 a year, and the other half of the country could not afford it or did not want to pay it, and I think much of the benefits of the universality of the BBC Services would be lost. I think that if the licence fee is the right way, even after switchover we will find that many of the DTT Free-view boxes will have no conditional access slots and cards. Even at that point I do not think that the equipment which will be in people's homes would enable a simple charging mechanism. I think the issue on the licence fee - and we believe in the licence fee - is the question of how much should it be? I think there is scope there to look at the quantum of it and the cost to the various BBC Services and what things we want them to do. I support a licence fee. Chairman: Thank you very much indeed; we are most grateful to you for attending. |