Select Committee on Culture, Media and Sport First Report


FOREWORD AND SUMMARY


The BBC is subject to periodic review courtesy of the need to renew its Royal Charter and associated Agreement with the Secretary of State. Charter review and renewal provides the opportunity for all interested parties to examine all aspects of the Corporation and its performance and for the Department for Culture, Media and Sport to develop proposals for the BBC's next mandate. The current Charter review is the most significant for a long time; perhaps since 1927 when the first Royal Charter was granted. This is for two reasons.

First, within the next ten years Britain is expected to "go digital". The analogue TV signal will be switched off and the country will enter a brave new world of abundant spectrum with great potential for increased viewing choice. In addition to the quantitative leap that this represents, there is also the qualitative dimension of new routes and devices for receiving content; increased control over where, when and how that content is viewed or heard; and new capacity for tailoring content and interactivity between broadcaster and viewer. In addition to digital switchover affecting patterns of media consumption, Ofcom asserts it as "inescapable" that the return expected, in terms of public service broadcasting, from the commercial broadcasting sector will reduce significantly over the next decade with the BBC and Channel 4 left to pick up the burden.

Secondly, there is a strong perception, and some evidence, that the constitution of the BBC is unworkable and out-of-date in the light of developments such as: evolving governance elsewhere in both public and private sectors; economic and technological developments in the wider broadcasting ecology; changing audience, and licence fee payers' expectations; devolution; the establishment of Ofcom; and the findings of the recent Hutton inquiry. It is unarguable that the BBC governance has evolved extremely slowly over the years with the Corporation itself citing significant innovation only in 1972—separate meetings of the Governors and the executive—and 1997 when the Governors' precise functions and duties were set out in the Charter for the first time, 70 years after establishment. What is clear is that the BBC Governors' dual role, as simultaneous champions and regulators of the Corporation, is, as the Secretary of State told us: "unsustainable".

Accordingly the Committee has identified four key inter-linked issues and one over-arching question, that must be tackled head-on. The over-arching question is whether, in the light of the potential upheaval surrounding digital switchover, the BBC requires a charter for change, or a strategy for stability? The key issues we believe must be settled are:

  • The BBC's scope and remit and the extent to which these need explicit refocusing to clarify the Corporation's public service remit, and proper inter-relationship with other broadcasters, or whether its own Charter-inspired initiatives are enough.
  • The level of the financial settlement and the prospect of an alternative to the licence fee (a good way of funding a national broadcaster but a very bad way of taxing people); if not, then what flexibility exists to be less regressive with those on low incomes and less aggressive with those who have no licence (especially when they have no television).
  • Increasing the accountability of the BBC: in terms of responsiveness to licence fee payers; in terms of ex post openness and transparency with external bodies—such as this Committee—on performance against objectives and value for money granted via the licence fee; and in terms of ex ante challenge with regard to commercial activities.
  • Dealing with the BBC's creaking constitution: separating governance from regulation, judge from jury, champion from challenger; as well as the case for switching from a Royal Charter to a modern statute.

The status quo is not an option and the test is a crucial one for the Department and indeed the Government as a whole. Our work and recommendations are aimed at assisting with the development of proposals that will take a strong and properly independent BBC into the future as far as that future can be seen.


 
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Prepared 16 December 2004