House of COMMONS



foreign affairs committee



foreign and commonwealth office annual report 2006-07



Wednesday 27 June 2007



Evidence heard in Public Questions 101 - 175





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Oral Evidence

Taken before the Foreign Affairs Committee

on Wednesday 27 June 2007

Members present:

Mike Gapes (Chairman)

Mr. Fabian Hamilton

Mr. John Horam

Mr. Eric Illsley

Andrew Mackinlay

Mr. Greg Pope

Mr. Ken Purchase

Rt hon. Sir John Stanley

Ms Gisela Stuart


Examination of Witnesses


Witnesses: Lord Kinnock, Chair, Martin Davidson, Chief Executive, and Margaret Mayne, Director of Finance, British Council, gave evidence.


Q101 Chairman: Can I ask members of the public to switch off their mobile phones, or take the batteries out, please?

Can I welcome our witnesses today on this historic occasion? Neil, it is very good that you are here before us on this historic day. I also welcome your colleagues, Margaret Mayne, and Martin Davidson. We know Martin, but he is here for the first time in his new capacity. We welcome you all.

Can I begin by asking if you could give us a sense of how your discussions with the Treasury are going about the comprehensive spending review and what would be the impact on you and your work of a flat settlement? Would it cause serious problems? Do you think that you will get a flat settlement, or are you more optimistic? Finally, are there any particular problems that you have that might help you to make the case with the Treasury for greater funding?

Lord Kinnock: Thank you, Mr. Chairman, and thank you for your historic welcome. It is, of course, a delight to be here with Margaret and with Martin; although Martin is an old hand, there is always a first time, certainly as chief executive.

I feel a certain dilemma in responding to your question, because if I were to claim in any way that our discussions with the Treasury are going very well, that might mislead one or two interested parties. At the same time, however, I cannot claim that they are going badly. So, what I can say accurately is that we are getting a reasoning and reasonable participation in our discussions from the relevant officials and indeed from Ministers in the Treasury.

With difficulty-indeed, in the public expenditure discipline, it is bound to be like this, with difficulty-we will accommodate a flat-cash settlement. It will impose strains on the organisation, but we can adapt to take care of it. Where we would be in trouble, even jeopardising the continuation of operations in several countries, is if we had a settlement that was significantly below that level. However, on the basis of rational and highly objective argument, supplemented with a lot of factual information, it is unlikely that we will be dealt with more savagely than a flat-cash settlement.

Mr. Chairman, you asked about any additional requirements we might have that would justify a settlement to meet those proven needs. We do have two sets of requirements: the first relates to the very nature of our major, fundamental restructuring, particularly with regard to the reduction in our expenditure on activities in Western Europe and the use of those savings directly to serve higher priorities in the Middle East, North Africa, and indeed in Islamic countries generally.

It is very clear that if we could get a significant, but not huge, additional sum, we would be able more rapidly to conduct this significant change, and consequently the returns from making that change in terms of impact and effectiveness in those Islamic countries, especially with young people, would be more quickly forthcoming. So we deploy that argument and we have the figures to prove that it would be the case.

The other area in which we can and do make the argument for some additional funding is again based on the proposal that there should be investment in order to achieve change: it is in strengthening our Reconnect programme, which is particularly orientated to working with Islamic youth with the purpose of reducing marginalisation and the possibility of alienation and radicalisation. The reality is that, having undertaken very significant activities with success in several places in this programme, we know that if we could spend more we could extend that success and we could do it particularly in what we can describe as high priority areas.

We are still making those arguments; I cannot report on the conclusion, although I have communicated to the Treasury that we see no advantage for anyone in much further delay in coming to a conclusion, so perhaps we are in the last chapter of this particular set of discussions.

Q102 Chairman: In the current year, and last year, I think, you have received a special payment of £10 million to assist the upgrading of security. Do you expect, or want, to have an additional sum for the future years?

Lord Kinnock: No. In the last but one financial year I think we had £4 million; this year it is £6 million, scheduled in agreement with the Treasury. It was immensely helpful: it meant an upgrading of security for our staff in particular locations, and of course for users of the British Council and visitors to British Council premises. We have made no further proposals for additional sums required specifically for security purposes, although we are assisted by the fact that we know that if evident needs arise the Treasury and the Foreign Office are prepared to be helpful. Obviously, we would not ask for anything that we could not justify. Martin, do you want to add to that?

Martin Davidson: Simply to say that we have spent something like £14 million over the past three years in upgrading security and at the moment we feel that we can manage the security environment that we are in.

Q103 Chairman: What about the cost of the sadly destroyed facilities in Gaza and Ramallah, which we visited?

Lord Kinnock: I am glad you have been there. It is my intention to do much the same thing. It is a supreme irony, to which I draw the Committee's attention, that on the very same day that our premises in Ramallah and Gaza were destroyed, an independent survey of Palestinian youth was published, which demonstrated that of all the international organisations operational in the Palestinian territories, the British Council was by far the most trusted. As for the restoration of premises there, we accommodate the expense. Our difficulty has been that premises that we have identified as suitable places for the resumption of the activities have not so far been accepted as such by the neighbours. That is what it boils down to. For obvious reasons, the people next to the places that we would choose are sensitive about the prospect of those places becoming a target in the future. We therefore continue our activities in temporary locations; it would be much more satisfactory if we could get substantial, permanent quarters again. The difficulty that we have experienced is not with the expenditure, which we will find, but with getting the acceptance of potential neighbours.

Q104 Ms Stuart: Can I take you to your working programme for 2006-07? You helpfully submitted a memorandum with some of those projects. I want to ask you a three-pronged question. First, that list of projects includes a programme that you are running for the Sudanese judiciary, involving "97 Tanzanian women and young African English and French-speaking leaders in partnership with the UN Economic Commission for Africa". On the face of it, that looks like a classic project to run in co-operation with the Westminster Foundation for Democracy. Could you say a little bit more about how you work with the foundation?

The second prong of my questioning concerns your operation in Afghanistan, which we went to look at. I fully understand that you charge for English language teaching in normal circumstances, but in a place such as Afghanistan, I would be inclined to chuck the money at them, to put it bluntly. You want to train as many of them as possible to speak English, so you make that your priority, even though you would not do that in other parts of the world.

Finally, from the list of projects, can you select one that did not work, and tell me why?

Lord Kinnock: I am going to ask Martin to respond to those questions. I think that the Sudan operation is in partnership with the Department for International Development.

Martin Davidson: That is correct.

Lord Kinnock: Martin will respond to the other points, because it is best for the response to come from the executive of the organisation.

Martin Davidson: I shall deal with the points in order. I think that the programme in Sudan is in co-operation with the Department for International Development, but we look to work with a range of partners, including the Westminster Foundation for Democracy. We are seeking not only to maintain the existing level of partnership with those partners but to expand it in every case where we can. Our whole approach is moving away from the belief that we have all the expertise within our organisation, towards trying to find expertise from other British organisations that can work in partnership with us. In the coming year, I expect us substantially to increase partnership activity of that kind. The Westminster Foundation for Democracy is one, but there are number of other potential partners for us.

On Afghanistan, we have something of an internal budgeting issue. We have a requirement from the Treasury, quite rightly, to ensure that the commercial aspects of the work are fully commercial, and not subsidised by any form of public money. We are seeking ways in which we can expand our English teaching work. We are doing that in two ways: first, we want to establish whether it is possible for us to find resources to provide cheaper or free places for target audiences for English language; secondly, we could build out from our direct teaching activity to find ways of working with countries' public education systems, particularly in the area of English language. There is a huge demand for English language right across the globe, as I am sure you are aware. We cannot deliver it directly ourselves, nor should we try to do so. What we should do and will do is build a stronger link with the state education system to create opportunities for people to learn English. We are particularly active in that respect in parts of the Middle East, where we collaborate with virtually every Education Ministry in the area.

You asked what has been particularly unsuccessful. I shall answer that in a slightly generic way, although I think that it will go to the heart of the question. The big shift that we are making is away from a large number of small-scale projects towards a much smaller number of large-scale projects. In doing so, we believe that we will reduce our administration costs.

We know-we have evidence from work that we have already done-that that will have a greater impact. We have nine regional projects in the Middle East, which, rather than being very small and country-specific, are across the region, and in four out of our five areas of measurement, they clearly are providing more of an impact than the individual projects. I think that that shift away from small-scale and country-specific projects towards wider projects gives us a win in terms of running costs and impact.

Q105 Ms Stuart: May I press you a little? You are quite right: you move to the whole project and the Foreign Office does a MENA-a Middle East and North Africa-and you have to fit in. However, there must have been a point in the last year when you suddenly thought, "I thought that would work, but it didn't."

Lord Kinnock: Any organisation that produces an annual report, as we do, that is so comprehensive and thorough that you can find out every flaw, has got nothing to hide. I invite you to have a look at it. It is nicely illustrated, so it will not send anyone to sleep.

The area with which I would be most dissatisfied is in our inevitable residual commitments in Western Europe as a consequence of providing conventional forms of provision. They have been tailing off. We are virtually at the end; indeed, we might be at the end this year. However, coming up to the end of my third year as Chair of the British Council, I know that I speak for Martin and other members of the staff when I express the desire that ideally we would have finished those a little earlier. But we are doing that now. If you make your question explicit to 2006-07, there are a couple of things that we are finishing now that I wish we could have finished in 2005-06.

Martin Davidson: Perhaps I could be a little more explicit. Picking up on what Neil has said, I would say that, for example, we are about to close our library in Athens, as you know. That has cost us between £40,000 and £50,000 a year for about 300 members.

Lord Kinnock: With noble antecedents and great necessity 25 years ago.

Martin Davidson: Exactly. It has filled a very important role for many years, but it no longer does so. We are moving away from that style of work and recognising that a very large number of young people in Europe with whom we are seeking to work get their information in a variety of ways. I think that making that shift and taking the money out and putting it into other things is critical.

Q106 Mr. Horam: May I ask you, Lord Kinnock, about the purpose of the British Council and how your strategy relates back to your purpose? I am sure that you will recall that your fundamental purpose, as set out in the 1934 statement, is "to build mutually beneficial relationships between people in the UK and other countries and to increase appreciation of the UK's creative ideas and achievements."

Those are two very clear statements. You have now said that you are making significant changes and restructuring the work around four areas: intercultural understanding; increasing ties with the UK's creative and knowledge economies; helping tackle climate change; and making the UK a strong multilateral partner on European issues and its neighbourhood. It seems to me that the first two are absolutely within your historical purpose. However, are the second two? Climate change is very much the in thing and so forth, but what does it have to do with your original purpose? Could it not be a Government objective for the Department for Environment, Food and Rural Affairs. It is part of the Foreign and Commonwealth Office's strategic objective. Is the European objective, which you have just discussed to some extent, not an FCO objective as well?

Lord Kinnock: That is a very good and perceptive question. The first two are self-evident. On the second two, it depends on how you go about projecting and applying a programme relating to climate change and the European neighbourhood.

Our climate change programme engages huge numbers, particularly of young people, in a variety of scientific activities. We use distinguished scientists, but also promising post-doctoral people from a British scientific background who are specialists in the variety of issues raised by climate change and the further potential of climatic change. They generate understanding and appreciation of expertise and the inquiring nature of British science and society. They are utterly consistent with the 1934 objectives, which we continue to honour, of getting appreciation and understanding of the United Kingdom, its values and achievements. That continues to be the case.

Much the same applies, in a slightly different way, to the European neighbourhood. Great challenges are posed in respect of countries that have the potential to join the European Union and are in the arc around the present EU. We are engaged in many of them in a variety of conventional British Council activities, from English language teaching to our science programme, our sports leadership programme "Dreams and Teams", music, the arts-the whole gamut.

It is useful if we can take note of one of the Government's strategic objectives, as we do in any case, and continue our activities knowing that they complement those objectives. That, again, is completely consistent with the business of spreading appreciation, understanding and a mutuality of knowledge and values in the way that we have been trying to do for the past 73 years. It certainly applies in that theatre, the neighbourhood, in north Africa, right around the Levant and into the former Soviet Union in a way that we find utterly consistent with our original objectives and the best form of our conduct and pursuit of programmes.

Q107 Mr. Horam: That is a very clear answer. To come back to the two main points of the four, which we agreed were obvious-intercultural understanding and increasing ties for the UK's creative and knowledge economies-in the case of the first you say, "With an emphasis on the Muslim world." We all understand that just like climate change and terrorism, the Muslim world is a big current issue, but are we not really neglecting Russia and China?

Lord Kinnock: No.

Q108 Mr. Horam: I know that there are difficulties with Russia and China, which perhaps are even greater than with the Muslim world. Why exclusively focus on the Muslim world?

Lord Kinnock: We are certainly not exclusive. I shall give you two examples of what is happening in Russia, even with the degree of tension that currently exists between the United Kingdom and its institutions, including the British Council, and the Russian authorities in some respects. Half the primary schools in Russia are using British Council English language primers. We have huge programmes of cultural, economic and scientific activities that attract immense attention and strong commitment from Russians, especially young Russians.

In China the story is spectacular. To use one statistic, through collaboration with China's main information technology portals, in the past year 46 million Chinese had contact with-

Q109 Mr. Horam: That is not very many.

Lord Kinnock: No, as a proportion of China it is not, but if you are from Wales it looks pretty big. That is just one way in which we established contact and tried to generate understanding and appreciation. Part of the challenge there is cultural and a lot of it is to do with understanding of our scientific commitment and economic prospects as well as the values that we naturally try to spread. Our activities in the intercultural dialogue area are not completely transfixed by the challenge of getting a higher level of understanding and mutual comprehension with Islam; it spreads much more widely. We draw attention to the Islamic challenge for the reasons that you inferred and which I know you understand.

Q110 Mr. Horam: Yes, but I think in a way you are probably underplaying yourself, because if you are making those efforts, despite the difficulty, in Russia and China, for example, which are equally important parts of the world as the Middle East, just to mention the Middle East seems rather strange.

Lord Kinnock: That is a fair point.

Martin Davidson: May I add to that? With the statement, we were also giving an indication of some of the shifts of resource that we are making. While we have over the last few years made substantial shifts of money into the Middle East and central and south Asia, into those largely Islamic countries-we are making more shifts to deal with them-that does not underplay the importance of Russia and China to us in those two critical areas of intercultural dialogue and so on.

Mr. Horam: I hope you made that apparent, that is all, because I think it is equally important.

Q111 Mr. Pope: I want to ask about Europe, but just let me say a word on China. The Committee visited the British Council in Shanghai about a year ago and I think we were all impressed by the operation there. It is absolutely outstanding-I just pass that on.

Lord Kinnock: Thank you; they enjoyed having you as well.

Q112 Mr. Pope: You are shifting about 30% of your grant in aid out of European operations into areas of other priorities-countries such as Pakistan, Afghanistan and Bangladesh-and I think that that is sensible. My question is: what effect will that have on European operations? You will obviously have a different style of operations in, say, France, than you would in an emerging, developing country such as Bulgaria, Romania or Turkey. Can you give us an indication of the effect that that change in emphasis in funding will have on your European operations?

Lord Kinnock: First, I would distinguish between the countries that you mention-Bulgaria, Romania and Turkey-and other countries already in the European Union where we are making either no or very little shift in the level and form-I emphasise the word "form"-of activity. In the countries mentioned, we will have back-office operations, but the front office will be open as well. It will be very active, very obvious and very tangible.

I distinguish between those operations and, say, the operations we have conducted in Germany or Austria and our operations in France-since you mention France-because of the level of capability there among our partner and potential partner operations, including the established international cultural organisations, such as the Goethe Institute, the Instituto Cervantes in Spain and the Alliance Française. That is now at a mature level and permits us the opportunity, with them, to sustain a very high level of activity, but without having to allocate the physical resources and maintain the front-office presence that has been necessary for most of the last 70 years, particularly in the immediate post-war period and running up through the cold war. So there is a second category, if you like.

There is a third category, which I suppose we could allocate to Spain and Italy, where in addition to a plexus of cultural and other activities, we have very strong English language teaching programmes, which generate substantial revenue and work to the benefit, of course, of our students, but also to the benefit of our budget. So there are three categories and it is just as well to distinguish between them.

Q113 Mr. Pope: How do you maintain some level of control when you are working in partnership with the Goethe Institute, for example? I can see-this is almost a metaphor for the European Union-that there are advantages in pooling sovereignty, but how do you maintain some level of control over the activities that you wish to promote?

Lord Kinnock: It is because they literally are partnership activities. We also have the context of a European international committee, which includes, I think, 27 cultural institutions from the European Union member countries. We have played a substantial part in founding and developing that. That is a useful form of exchange of views and co-ordination of general policies. The most important thing in the actual delivery of programmes is the transparency and dependability of the kind of partnership, including contractual partnership, that we have. Martin, do you want to add to that?

Martin Davidson: I would just add a couple of things. First, while we will have a partnership approach to those major organisations, the individual partnership will be on a project-by-project basis. It will be a clearly defined project, with a clearly defined set of inputs and outcomes, so that we ensure that we are putting resources into things that matter only to the UK rather than more generally.

Also of importance is that in western Europe in that particular category, we will be moving out of public presence across almost the entire range of countries and will maintain a public presence only when we can do so with resources from the public who want to use it. The second thing worth saying is that we will also put more resources into providing assistance to other UK organisations that want to represent themselves in Europe. Rather than putting money into a particular arts visit or tour-any number of other organisations are able to fund that-we will emphasise the knowledge, contacts and non-financial support that we can provide for that sort of activity.

Q114 Sir John Stanley: Without wishing to overcomplicate your response to Mr. Pope, I suggest that there is a fourth category over and above the Bulgaria, Turkey, Romania group. You mentioned Spain and Portugal as well as France and Germany, but there is also the critical area of the Balkans, which are earnestly in need of a strong British Council presence. I trust that you will be able to assure us that the British Council's approach is fundamentally different from the withdrawal posture in some of the more developed parts of western Europe.

The Balkans have high levels of poverty and are recovering from the combination of a long period of communist domination and one-party rule. They are trying to move towards democracy, but many parts of the area are recovering from horrendous strife and civil war. I hope that those countries are very much to the forefront when you are thinking about the disposition of resources in Europe.

Lord Kinnock: I certainly accept your point, Sir John. I did not put those countries in the European category not because they are not in Europe-they manifestly are-but because we are actually engaged in strengthening and, in several cases, further developing our activities in several of those countries, both those already in the European Union and those that are still outside. I suppose that they could be a fourth European category, but they are beneficiaries of the transfer and reorientation strategy and are not countries in which commitment or presence will be reduced.

Q115 Mr. Hamilton: Lord Kinnock, may I ask you about other parts of the world a little further away than Europe? When we had our last inquiry, we asked the Foreign and Commonwealth Office to explain why you were proposing the closure of the British Council's teaching centres in places such as Istanbul and Tel Aviv, and whether it had made an assessment of the effects of the British Council's withdrawal from those cities in terms of the benefit that language teaching brings to our overall public diplomacy effort. Can you tell us why we were told in November last that the library services will be closed in Jerusalem and that you are relocating the Jerusalem office, which I suggest is a key place? Why are you closing library services in Jerusalem and moving the office?

Lord Kinnock: The level of provision that we can make and the participation that we attract in Jerusalem does not now justify the continuation of that commitment. In the course of closing our library, which a couple of decades ago had huge relevance and was an immensely valued asset, we have shifted all our resources into the public library in Jerusalem, with full accessibility and the same quality, releasing ourselves from the obligations of making provision so that we can deploy resources more usefully. That is the kind of strategic managerial decision that has to be made on an objective basis. We have explained it to everybody who has been interested in the provision and future of the library in Jerusalem. People have recognised the common sense of our making the move without removing the facility in the accessible public library, if people want to use it.

Q116 Mr. Hamilton: Can you make, have you made or do you plan to make an assessment of the effect that that library closure, or move, will have on our public diplomacy effort and the teaching of English?

Lord Kinnock: Yes, we have. I do not think that anybody could claim that it is even marginal. If Martin has any substantial addition to make, I would welcome it, but we have certainly undertaken exactly that kind of examination.

Q117 Mr. Hamilton: How long have we been in Jerusalem?

Lord Kinnock: Since 1946.

Martin Davidson: Perhaps I could add something. To take your Istanbul example, I have just come back this weekend from Istanbul. The city has between 15 million and 20 million people, depending on how you add the numbers. We were offering teaching to about 500 or 600 individuals within Istanbul, and there was a huge diversion of our time and effort from management and other resources into doing that. We are now working with education authorities across all the major cities in Turkey on the use of English within the public education system.

Our assessment in the case of Istanbul was that that diversion of effort, from working with a very small number of people at the elite end, to working in the main state education system, was worth while in terms of the impact that we can have. Obviously, we are continuing to test that, to see whether that is the case; we will do the same in Tel Aviv and Jerusalem. At the moment, the initial indication is that by moving the resource from our own library into the public library in Jerusalem, we are getting greater use of the material than we did when it was on our own premises.

Q118 Ms Stuart: Just help me understand. The use of materials is fine, but I would like people to know that they are using British Council material. For example, in an earlier answer you said that half of Russian primary schools are using primers in English. Do they know that the British Council is involved, rather than just that it is English? Do we know why the use of the British library in Jerusalem has been falling? Have we missed a trick? When in the main library people use materials from the British Council, will people know that they are from the British Council? Forgive me, but what is important to me is not that people are using English language material, but that they know that it is British Council English language material.

Martin Davidson: Our starting point is that people have to know that such material is the UK's contribution to their learning. That is the critical thing. We absolutely ensure that that is clear in respect of the material that is being used. Yes, of course we want the British Council name to be on it, but that is secondary, I would suggest.

Why has usage fallen? That is largely because of alternative availability-the availability of books and materials, and how young people access information, are changing radically. We have to make sure that our provision remains relevant, so we are putting much more effort, for example, into providing educational information through internet-based services. Again, such services are clearly signposted as being about the UK and from UK institutions. We are putting considerable effort into providing English language material through virtual services. We have, for example, a service now in Arabic, called Go4English. It is in partnership with the BBC. We have more than 200,000 individuals using that service regularly. It is on a completely different scale from that which we can deliver through our direct teaching operations. That is not to say that I do not think the direct teaching operations are important; they are important in particular areas, but they are not sufficient in themselves. We have to begin to deal more widely.

Q119 Mr. Hamilton: Can I move on?

Lord Kinnock: On the Russian question, we are engaged in the training of 30,000 primary school teachers in Russia so far and I think that unless they have been going round with their ears and eyes shut, they know that that is being managed and provided by the British Council.


Q120 Mr. Hamilton: On Russia, you have kindly told us the excellent news about teaching English in Russian primary schools, which is really good to know; well done on that. However, we were in Russia earlier this month and some of us went to lunch with the British Council. If I remember rightly, we-our predecessor Committee-were there three years ago and I think that it was just after, or perhaps just before, that the tax authorities raided the offices there.

Lord Kinnock: I do not know if it was connected with the visit to the British Council.

Q121 Mr. Hamilton: I am not sure whether our visit was connected or not, but they did that, as you know, and they claimed that we were involved in illegal commercial activities on which we were not paying tax. We have had the dispute ever since. It seems that whatever we try to do to resolve this, the Russian authorities find some other way of trying to close us down.

In December 2006, you informed this Committee that you were closing down all language teaching in Moscow because of this licence requirement, which, of course, you had previously been told was not necessary. You have now stopped teaching in St. Petersburg, and I think just last week the Russian authorities demanded that you move out of the offices in Ekaterinburg. What progress are you making on trying to agree a new cultural centres agreement with Russia? It seems from everything we have heard and read that that is the key to being able to carry on our work in Russia.

Lord Kinnock: We greeted the news in early 2006 that the Russians wanted to return to discussion and negotiation on a very advanced, near-final draft of a cultural centres agreement. That is because the hope that we had and the intention that we had of concluding a satisfactory agreement was then nearly eight years old. Frankly, we did not build our hopes too high, but we thought this was evidence of a fresh initiative from the relevant Russian Ministries. Those discussions continue. We are now in the middle of 2007. The impression is conveyed that there are only one or two small outstanding issues, and it could be concluded. We attach great importance to the conclusion of that agreement, because it would, hopefully for once and for all, settle exactly what is our taxation status, our diplomatic status, and the status in citizenship terms and migration terms of people working for the British Council-both Russian nationals and British people. Obviously, that stable negotiated agreement, signed by both sides, would have great value. Presumably, that is why it still has not been concluded.

I am naturally constrained in some of the views that I can express publicly on these matters. We are certain, of course, that the conclusion of a satisfactory agreement would be of mutual worth, because by any judgment the demand for our services and the interest in everything that we provide anywhere that we do it in Russia is huge. It was a matter of great regret to us that because of an absolutely intolerable statutory environment, which suddenly came upon us, we were not able to continue our teaching English language in Moscow, and, for similar reasons, we had to cease our very well attended, over-subscribed classes in St. Petersburg a year before that.

We persist in our efforts. We are always ready to undertake fresh initiatives. Some of our interlocutors give us the impression that they are just as anxious as we are, but for reasons of what I will call superior political consideration in the Russian authorities, we have not yet been able to conclude that agreement.

Q122 Mr. Hamilton: I understand the sensitivity. If there is anything further that you could add but are not able to say in open Committee, perhaps you could write to us.

Lord Kinnock: We could relate the full litany of our relationship with the Russian authorities over, let us say, the past four or five years. There is nothing scurrilous about it, nothing that will lead to an international incident, but a letter would enable us to put everything into context with great accuracy.

Mr. Hamilton: That would be very helpful to us. Thank you.

Q123 Mr. Illsley: Is our relationship with Russia and the obstacles and problems unique? Is there any other country in which the British Council is based with similar problems and tax demands?

Lord Kinnock: No, not to the same extent. We have an active operation to ensure that our status everywhere is regularised. Where it is not regularised to our satisfaction, it is generally-I say "generally" because this does not apply in every case-because of the relatively relaxed view that authorities have taken of our status: whether it is commercial or non-commercial, whether we are a non-governmental body, a charitable organisation or a provider of trading services. Of course, the views about that vary from country to country. We strive with some success to regularise the position in every country. It would not be true to say that our encounters in other countries are the same as they are in Russia.

Martin Davidson: I would only add that we are looking at every country at the moment, as Lord Kinnock said, to ensure that our status matches both the range of activity that we undertake and the shifts and changes in the nature of cultural relations around the world. Many countries find our insistence on discussing our status curious, if not slightly uncomfortable, because many of them are actually very happy with the arrangements that we have at present, but, clearly, we come from an environment where we have to move towards much greater clarity than is normal.

Lord Kinnock: It is worth adding that in Russia we are not the only international cultural/educational organisation encountering the form of difficulties that have come upon us. We may be unique in degree and intensity, but other international cultural organisations-for instance, others from Europe, some of which we have mentioned in the course of this afternoon-are also suffering similar problems, although they are not afflicted to the same degree as we are.

Q124 Mr. Illsley: I want to turn to the idea of shared services. As you are probably aware, the Foreign and Commonwealth Office annual report states that it is planning to share services with you. Could you give an account of what that will entail and perhaps some examples of what services would be shared? The obvious example that comes to mind is premises. I wondered whether the plans would entail your sharing premises, and whether that would impact on staff relocations and so on.

Margaret Mayne: Shared services is certainly a topic of the moment. It is actually a catch-all that is used to describe a number of different activities that we can share. We collaborate very closely with the Foreign Office in a number of areas. For example, we currently undertake shared arrangements for the provision of our web services, which means that a third-party supplier can supply both us and the Foreign Office, and that we can share procurement and software licensing costs. We can work together to ensure that we have best practice and share knowledge about how to use the tools within the organisations. We also work closely on procurement through Office of Government Commerce contracts. We have used them particularly to look at things like our mobile phone, travel and hotel contracts. Those shared services are already in place and working very effectively.

With the implementation of our SAP system-a new global business software for systems applications and products-we have been looking much more intensively at our arrangements for banking and managing our foreign exchange. We have been talking to the Foreign Office, and indeed DFID, about those arrangements and about how we might collaborate on using them and working more effectively to create a better solution-in a sense, a shared service.

We are in the early days of exploring shared services in accounting terms-basically, the back-office accounting function. The Foreign and Commonwealth Office has recently also implemented a new accounting software, which is different from ours. We are looking at combining our accounting service on a regional basis, and the FCO is very interested in what we are doing in that respect. As our conversations develop, we will be able to look at opportunities for sharing services in transaction processing as well.

Q125 Mr. Illsley: Would it be true to say that you are looking more at efficiencies, joint working and saving money where these things can be achieved?

Margaret Mayne: It is, absolutely.

Chairman: I have been told that we are going to have a vote very soon, but we will plough on.

Lord Kinnock: You always do when the British Council comes.

Chairman: I am sorry, but that is the fate of meeting on a Wednesday. I will call Ken Purchase, and if you have to stop halfway, we will come back.

Q126 Mr. Purchase: Thinking about value for money, efficiency, the early days of the NAO inquiry and Gershwin-sorry, Gershon-

Mr. Pope: It would be better if it was Gershwin.

Mr. Purchase: Yes, yes, absolutely-"Rhapsody in Blue". On the Gershon efficiency savings, you met the £8.6 million target for savings last year, but the figure for this year is greater, at £13 million. How can you produce those efficiency savings without affecting the quality and breadth of the services that you offer?

Lord Kinnock: The first thing to be understood-we try to make this clear at all times, but I understand if it is not absolutely clear-is that the £13 million target for efficiency savings, which we are certain of reaching in the coming financial year, is a cumulative figure, just as the £8.6 million figure was. What we are really doing is adding £4.4 million to the savings that we have managed cumulatively to make over the Gershon period, if I can call it that. We think that that is a spur to efficiency and we welcome the discipline of it. Of course, we are reasonably proud of the fact that we have been reaching targets, and satisfaction has been expressed by external examiners at the way in which we have achieved that. Martin, do you want to add to that? Sorry, Margaret.

Q127 Mr. Purchase: I hope not to put words in your mouth, but I am happy that you are assuring the Committee that the breadth and quality of services is compatible with the kind of savings that you are looking at.

Margaret Mayne: It is. Let me just add that efficiency savings do not get turned on and off: they are part of a planned programme of change.

Mr. Purchase: Of course, we appreciate that.

Margaret Mayne: So, in many ways, the roll-out, for example, of our new IT software has already led to some efficiency savings, and it will lead to more next year. Likewise, on our IT programme, we have already, for example, implemented voice over internet protocol, which will save us quite a lot of money next year. So, it is an ongoing rolling programme, which, in a sense, comes to fruition year on year.

Q128 Mr. Purchase: I understand, and the Committee is fully on board with what is happening in management terms, but I want to move on a little further. I have some ambivalence about targets, performance indicators and so on. None the less, you have a scheme that is designed and which is in place. Last year, you suggested to us that part of the reason for your failure in reaching targets was due to the impact of negative perceptions of the UK arising from the military presence in Afghanistan and Iraq. Now, you are still a little below three out of five of the targets. Against that, you have also had quite a large rise in participant numbers. Can you shed some light and common sense on that?

Martin Davidson: The point that I would like to make is that as an organisation, we have been subject to such efficiency savings over such a long time, there is no longer the space simply to find a bit of money here and there to meet them. The disciplines that we are under mean that we have to shift substantially and radically the way in which we do our work. So, for example, the move from a large number of small-scale activities to a smaller number of large ones is part of the process of trying to get much more benefit out of a given level of expenditure. So, the move towards regionalisation is again about making a step change in the way in which we work, which gives us the capacity to draw efficiency savings. Of course, it also has an impact on effectiveness, and the critical thing for us is making sure that we are aware of the likely impact of any change on how effective we will be as an organisation.

On the sort of change that we have made in the last year, traditionally we have looked at our effectiveness at the end of each year, and said, "We hit this one, we missed a little bit there." What we are now doing is trying to test these things quarterly. So, instead of looking backwards and saying, "We have missed," we are beginning to try to look forward and say, "How are we going to make sure that we hit them?" Of course the problem with all targets is that if you drive the whole of your activity to hit a particular target, they can distort the nature of the shape of the work.

Q129 Mr. Purchase: All right. Can I just go quickly still on the performance side? Colleagues earlier spoke of the restructuring of your work under the four main objectives. Do you plan to make any changes in the scheme of performance measurement to take account of those changes?

Lord Kinnock: The best woman to answer this is Margaret; the best man to answer it is Martin.

Q130 Mr. Purchase: So which one am I having?

Martin Davidson: You are going to get me first of all, and then Margaret will correct me.

Mr. Purchase: That is a proper woman.

Martin Davidson: I am reluctant to change the major measurement, because there is always a danger of constantly shifting your measurement, and then it is difficult to demonstrate year-on-year. But, as part of the relationship through the public diplomacy board and the whole of the move towards a more joined-up measurement system, I think that we will probably add some measurements, taking into account the shift to the four. We will not add a lot of data; we have a huge amount, and it is really a question of how we utilise the data and the evidence that we draw from it. So, the emphasis will be on a more intelligent use of the data that we have, rather than on the collection of a lot more, and on finding ways in which we can match the measures that we take, so that they are comparable with those that the World Service and the Foreign Office take.

Q131 Mr. Purchase: Just one final point, because my colleague Eric Illsley also touched on the question of shared public diplomacy. Is there an evaluation framework developing for that, too?

Martin Davidson: Yes, there is. As you probably know, the public diplomacy board commissioned a study on measurement across the three organisations earlier this year. That has reported, and we are considering ways in which we can find common measures.

Chairman: We will take questions from Sir John Stanley. There will hopefully be a couple more questions, and then we will conclude.

Q132 Sir John Stanley: You kindly sent us your draft annual report for 2006-07. Could you tell us of the 7,900 staff whom you employ, how many are employed in the UK and how many are employed in the rest of the world?

Lord Kinnock: I am now going to ask the chief executive, because the last time you asked me that question, I got the answer wrong. I answered with huge confidence, then went back to the office and realised that I was a couple of hundred out. So, Margaret?

Margaret Mayne: There is a note in the annual report which sets this out very clearly. In the UK we employ 1,097 staff on average throughout the year, and overseas we employed-the number is the balance, so I shall have to add this up in my head-5,019 staff on operational activities and 1,809 teachers. In total, that was 7,925 staff for a year.

Q133 Sir John Stanley: Is it a surprise that approximately one eighth of your staff in this international organisation are based in the UK?

Margaret Mayne: It is not a surprise. A lot of our support services sit within the UK, and of course, the staff in the UK are a very important link between our stakeholders in the UK and our customers overseas. I do not find it that surprising. We have reduced our number of staff in the UK over past years, and our restructuring within UK operations will see a further reduction in that number next year.

Q134 Sir John Stanley: Lord Kinnock, you will be aware that amongst a number of the major, originally UK-based, international overseas aid charities, there has been a sustained pattern of redeploying staff entirely outside the UK to the countries in which they work. Is that a policy that the British Council is considering?

Lord Kinnock: Our efficiency changes and the closure of a substantial number of British Council offices in the UK, because of changed mission, all subscribe to the improvement of the use of personnel in the UK. The reason why we have this proportion of staff in the UK is, as Margaret says, entirely to do with the organisational and executive functions that they must carry out to facilitate work elsewhere.

It is possible that we will see further changes. Margaret mentioned the way in which we are regionalising some back-office operations. It is conceivable that some functions could be transferred out of the UK and into those regions, so there would be a change of the proportion of staff in the UK. It is also conceivable that there will be a reduction in staff, which consequently would affect marginal labour costs. Those changes can come about, but we must do things carefully, because we cannot afford to lose links in the chain when international connections and conformity to high standards are fundamental requirements.

Q135 Chairman: Finally, may I ask you about public diplomacy? There has been a new structure to the relationship since the permanent under-secretary was no longer a member of your board, and you have the public diplomacy pilots that have been developed. What impact are those changes having, and how is the new public diplomacy board working?

Lord Kinnock: Before I go to Martin, who is a member of the public diplomacy board, I must say that I had great reservations about the FCO's decision not to have the permanent under-secretary on the British Council board. I will say, however-without withdrawing those reservations-that the increase in the number of meetings between me and Ministers and at official level between the British Council and the FCO is entirely healthy. We are not living in each other's pockets, but there is an improved flow because we cannot take the relationship for granted because the FCO's senior civil servant happens to be on the board. So, although I regret the way in which the number of board members came to be reduced by one, there have been compensatory developments.

Will you say something about the board, Martin?

Chairman: Briefly, as there is a Division.

Lord Kinnock: Yes, indeed.

Martin Davidson: We have made a start with the board. We welcome the pilots because they give us an opportunity to see how the three organisations work together. We would like the board to focus more on the broader strategy and less on the detail of operations.

Chairman: Perhaps you could send us a note if you have anything to add to what you have already sent us.

I conclude this part of this afternoon's session. Thank you Lord Kinnock, Mr. Davidson and Ms Mayne. No doubt, we will be in touch with you in the coming months and will see you again next year to discuss these matters.

Lord Kinnock: We welcome all contact from this Committee.

Chairman: We will, I hope, restart the session with our next set of witnesses in 15 minutes, after the Division. If there are two Divisions, it will be in half an hour.


Examination of Witnesses


Witnesses: Nigel Chapman, Director, and Ms Alison Woodhams, Chief Operating Officer and Director of Finance, BBC World Service, gave evidence.


Q136 Chairman: Enough people are now back from the vote for us to be quorate, to start again. Others will come, no doubt.

I welcome you, Mr. Chapman and Ms Woodhams, and apologise for the three votes that have disrupted this afternoon. This happens on Wednesdays, unfortunately. Let me begin by saying how delighted we are that you have come today, because we closely monitor closely what happens with the World Service. Could you tell us how your negotiations are going with the Treasury so far, with regard to the comprehensive spending review? Are you in that context confident that you will get the funding which was announced? [Interruption.] Excuse me, we are in the middle of a sitting.

Andrew Mackinlay: Sorry, Sir. I have come straight from a Division.

Chairman: To get back to the question, are you confident that the £15 million announced by the Chancellor last year for the Farsi language service will be confirmed in this spending review?

Nigel Chapman: Let us first of all talk about the overall atmosphere of the spending review and the bid. Obviously, the Treasury and the Foreign and Commonwealth Office have been considering the bid for a number of months now. I think that we are clear about the priorities here. The priorities are that the funding for Farsi TV should be confirmed as part of the spending review outcome, and that the Arabic television money should be forthcoming to extend the service to 24 hours; and to fund other issues around restructuring and issues of that kind.

You ask if I am confident that the funding is going to be forthcoming. In some ways that is a question you have to put to the Treasury, but if you are asking me I believe that it will be. Everyone is signed up to it. It is a major strategic priority. It has been announced by the Chancellor, now the Prime Minister, and in that context I am hopeful that it will be forthcoming. I made it clear to both the FCO and the Treasury, as the BBC as a whole has done-when approval for the project was given back in the autumn of last year-that if there are no funds for Farsi television, there is no service. We are not going to reprioritise a load of our existing services to find £15 million to put Farsi television on the air. If there are no funds there is no service.

Q137 Chairman: You also, with our support, want £16 million extra to be able to extend the coverage-the number of hours-of the Arabic television service.

Nigel Chapman: Mr. Chairman, if I may just correct that, the rest of the bid is £16 million; it is £6 million to extend to 24/7. Again, I think there is a total unity of purpose between ourselves and the FCO about that priority. It is, alongside Farsi, the highest priority of the bid and the case for it is very strong. I think that everybody accepts that. Provided we get a reasonable settlement, I would expect it to be part of the settlement.

Q138 Chairman: But if you do not get a reasonable settlement, you cannot extend the number of hours; you have not got the resources for that.

Nigel Chapman: Indeed. We have been, again, absolutely crystal clear about that. If you remember, the cost of the 12-hour Arabic service, which is £19 million a year, has already been found from the restructuring and reprioritisation of the eastern European language services and some money that was held back from the outcome of the spending review of 2004, so we are already effectively funding over two thirds of the cost of Arabic television from existing resources. That is as far as I can go. If we are serious about this project-and we need to be, for all sorts of very good reasons-the service needs to be 24/7 and needs to be funded accordingly.

Q139 Chairman: You also, as I understand it, want another £10 million for additional investment.

Nigel Chapman: Well, yes, we have asked for a further £10 million to deal with new media investments and to get a foothold in certain other television activities around African English and Urdu.

Q140 Chairman: How is that going to be broken down?

Ms Woodhams: It is £4 million for Urdu television, £2 million for African television and £4 million for the new media developments.

Q141 Chairman: Presumably Urdu television would have a huge audience, potentially.

Nigel Chapman: Absolutely. It would have a huge audience because of the BBC's brand and effectiveness in Pakistan, although not just in Pakistan, because it would, obviously, be available via satellite and terrestrially via partner stations. So there is an appetite for it, and in the context of what is going on in Pakistan at the moment, there is a very strong case for that sort of development.

Q142 Chairman: Presumably, it would also be watched by the British Pakistani community.

Nigel Chapman: It could be if enough satellite space was booked for it. Yes, absolutely, it could be seen here.

Q143 Chairman: The other issue that I would like to raise is that you are requesting additional money for redundancy costs.

Nigel Chapman: Yes.

Q144 Chairman: It is £9 million.

Nigel Chapman: Yes.

Q145 Chairman: Why is that necessary?

Nigel Chapman: Because most of the World Service costs are around people and if we are going to meet the Treasury's savings target of 3% a year, which comes to something like £18 million across the three years of the next spending review, we will inevitably have to involve ourselves in restructuring and redundancy costs, and we need support for that. If we do not get that support, we will have to make deeper cuts to fund the redundancy costs that come from the changes, and that takes us down avenues that are not appropriate.

In addition, the World Service should be treated like every other publicly funded area. The Treasury is saying in principle that it will fund up to 50% of the restructuring costs that are brought about by cashable savings, and the World Service should be treated in the same way as the Foreign Office, the British Council or anybody else in that respect. In the past, we have not asked for that, because we have been able to absorb costs in our existing resources, but we have got to the point now where we cannot do that. Therefore, I am saying to the Treasury and the FCO, "Treat us fairly. Treat us the same as everybody else. We can bid for up to 50% of the savings target, which is £18 million, so we can bid for £9 million, and we expect to get a fair share of that in this settlement. Otherwise, you will just heap more difficulties on us than we can cope with in terms of the cost of restructuring and change."

We have a good record in restructuring and change, which the NAO, by the way, looked at and verified when it came in only a few months ago, and we were one of the very few organisations to be given a green rating-a top rating-for the way we have been conducting ourselves. So we have a very strong record, but there comes a point where, however strong a record your record is, you cannot carry on absorbing all those costs ad nauseam, without their having a deleterious effect on the business because they are just too much to bear.

Q146 Mr. Hamilton: Mr. Chapman, since we saw you last year, quite a lot has happened in the World Service. What do you think your key achievement has been in the past 12 months, since we last had you in front of the Committee, and what is your main disappointment?

Nigel Chapman: One key achievement is that, despite the competition we face around the world, which is intensifying, we have raised the overall audience by 20 million in a given year, from 163 million to 183 million, which is a fantastic achievement. If you had said to me that that was possible, I would not really have believed it.

Secondly, it is not just the volume of the audience-the numbers of people who listen and use our services-but what they think about them. We publish a lot of data about our reputation, objectivity, relevance and so, and those are also extremely strong in pretty well every market that we are serving; we are the most successful against those criteria of any international broadcaster in the world.

In addition, we have made steady growth in our online service and the use of them. Our audibility has improved. We have had a pretty good year. There are things that we could do better, and there are parts of the world where audiences have gone down-they are not up everywhere. However, where we have focused our energy, which is around the middle east, the wider Islamic world and Asia-top-priority markets, if you like-it is a pretty well universal story of an improved impact, which is a very laudable achievement. Any organisation that could come along and tell you that would have to take a reasonable pat on the back for its performance over the past 12 months.

Q147 Mr. Hamilton: That is a great achievement. What has disappointed you this year?

Nigel Chapman: What has disappointed me is that it has been a turbulent state of affairs in one or two markets. Russia has been difficult, not because the programmes are not good or the people are not trying hard, but because of the political climate and issues of distribution, which have been difficult. We have lost some audience in eastern Europe and south America. That is partly as a result of increased competition and partly as a result of partnerships not working as well as we would like. In those markets, the great bulk of the audience comes through third parties-radio stations that carry our content. If we have difficulties with a key partner, as we have in Romania, Ukraine or south America, that has an adverse effect on our performance. I would like to get us back up there in those markets.

Q148 Mr. Hamilton: How are you going to do that in places such as Latin America, Romania and even Ukraine?

Nigel Chapman: Only by finding different and better partners. Direct, short-wave listening in those markets is negligible, so it has to be through third parties, to some extent through internet connectivity but mainly through radio stations carrying our content. That means that our business development people have to work really hard to find alternative means of distribution.

Q149 Mr. Hamilton: There is no FM band space for you at all?

Nigel Chapman: Not directly. In South America, no. In most South American countries we are not going to get our own FM relay transmitters. In Ukraine we have a reasonable service in Kiev but not outside. In Romania we have a sprinkling of them.

The issue in Romania is not so much distribution; in the end, it is what we talked about last time on Eastern Europe-the changing nature of the world is lapping firmly eastwards to Romania, and people are starting to use their own local and national services more and do not need the BBC as much as they used to. In the end, if we lose 3 or 4% of our audience in gross terms in a year, that sends a signal that life is getting pretty difficult.

Q150 Mr. Hamilton: There has also been a decline in English radio listening in Africa, with notable exceptions such as the Democratic Republic of the Congo, I am glad to hear, which is primarily a French-speaking country. What steps are you taking to try to reverse that situation in Africa?

Nigel Chapman: Let me just give a bit of context about where in Africa this is going on. One of the key reasons why the audience is falling year on year is the loss of FM opportunities in Nigeria. In the past we had quite a major partnership with a company called Ray Power in Nigeria, but when we surveyed again this autumn, the programmes were no longer on the air and we had therefore lost something like 1.5 million listeners in Nigeria. Interestingly, the Hausa service had increased its listenership, so there were compensatory factors going on.

In the end it is about ensuring that the African schedule-there are programmes purely for Africa, which fit into a wider schedule of global English programming-is scheduled well, of high quality and the sum of its parts for African listeners. If I were being self-critical I would tell you honestly that we have perhaps not focused hard enough on making it the sum of its parts. We have some very good programmes in English for Africa and for the world, but if you are a listener in Africa perhaps it is not as coherent an offer as you would like.

We need to change the schedule, improve the quality and ensure that the FM relays that we use in Africa have a more local sound to identify the role of the BBC and its presence. It is a relatively easy technical thing to sort out. So there are things to do, and then we have to market hard. We have focused a lot on marketing the language services in Africa, and the results have been very good in the Swahili, Hausa and French for Africa services, which are running at an all-time high. I now need to focus more energy on marketing the English output in Africa.

Q151 Mr. Hamilton: Why do you think you have done so well in the DRC? Is it because of the end of the civil war? It is not an English language country.

Nigel Chapman: It is partly because we have been able to serve a bigger area. We have always known that we have a very decent audience in the DRC, but the circumstances that you have alluded to have prevented us from doing any decent audience research. That has now changed and we have some comprehensive national figures. It is a strong story.

Generally, although there are other areas, Africa is the heartland audience of the World Service and continues to be strong despite TV and more competition. We have often exploited-in the best sense of the word-the arrival of new radio stations by making them our partners and therefore improving the distribution and sound quality that people can access.

Q152 Mr. Hamilton: You also have a very good internet presence. Your page hits have gone up in the past 12 months from 546 million worldwide to 704 million. How much of that is due to the increased use of the world wide web and how much is due to your own efforts to get people to log on and see what you are doing?

Nigel Chapman: I could not give you a mathematical answer to that. It is impossible.

Q153 Mr. Hamilton: But you do a lot of promotion, presumably.

Nigel Chapman: Yes. We do a lot of cross-promotion on the English output.

Q154 Mr. Hamilton: Partnerships with major portals as well?

Nigel Chapman: That is critical. It has been critical in south America for the Spanish service and the Portuguese service in Brazil. It is less important at the moment for something like Urdu or Arabic services, for which there is not a major portal to have that partnership with. It is going to come and we need to be ready. We have added video to what we offer in some of those languages in addition to text and audio, which is very important. In some ways people have bypassed audio, other than to listen to the radio as a stream, like a radio station. When people listen to individual programmes, they increasingly want to be able to watch them on the web as broadband connectivity increases in the urban centres of the world. Those things are going in our favour, as is aggressive cross-promotion.

Q155 Mr. Hamilton: A short while ago, I think that Farsi was your biggest non-English language website in terms of growth, although that was perhaps a few years ago. What is it now?

Nigel Chapman: It depends on whether you measure it by the number of page impressions or users. According to the number of page impressions, Farsi would still be at the top, despite the difficulties of access in Iran. A lot of Farsi speakers overseas really enjoy going to the website and there is a great diaspora that speaks Farsi. In terms of unique users-numbers of people-the Portuguese for Brazil site is doing really well, partly because of the number of partnerships that it has established. Every major portal in south America, whether it is a Spanish or Portuguese language portal, has some well-displayed BBC content on it and that drives new users to us. It is like a great shop window for our content and is a big factor in why those sites have done rather well.

Q156 Mr. Hamilton: Finally, what have your scores been compared with your competitors on essential issues such as reputation, trust and objectivity in the past 12 months?

Nigel Chapman: In the back of the annual review that we sent you a copy of, we have published the public service agreement target scores. They have always been strong, and there is only one criterion in one place in the world, which is so marginal it is statistically irrelevant-I think it is in Russia or China-where the World Service is not ahead of its competitors in every single criteria that you have talked about for subjectivity relevance. It is pretty much 100 out of 100. I cannot really do much better than that-or maybe I could get from 99 to 100, which would be even better.

Q157 Ms Stuart: May I just probe a little further into the areas that my colleague, Mr. Hamilton, touched upon about falling audiences and more website hits in some areas? What is your vision of what media the world service will use in five or 10 years' time in various parts of the globe to transmit its message? Will it continue to be radio and television, or are we moving into a completely different world of websites and downloading programmes? If you were to come back in five years' time, would you still say that radio and television are your main media? What is your vision?

Nigel Chapman: It obviously depends on which market you are talking about. In five years' time, in many markets it will not even be radio and the web; radio alone will continue to be powerful. I am thinking of large parts of Africa, lifeline services for the Burmese and parts of Central Asia. In other markets there will be a full panoply of tri-media activity, of which Arabic will definitely be one, Farsi will be another, and I suspect that there will be two or three others by then. There will be some people in the middle who still have a radio and have some new media services alongside that. I do not accept the notion that watching or listening to a linear stream of content will suddenly go out of the window in five years' time and that everyone will access content through the web as their only source. Often it is supplementary to traditional linear media, but not instead of it. It would be a very unwise broadcaster who put all of their eggs into the broadband basket as they would end up with a small, very niche, very selective audience. That would also mean that they were giving up on the purpose of bringing news of the world and of people's own societies to a reasonably mass audience, which would be a mistake.


Q158 Ms Stuart: When you go to the Treasury, you measure your performance against your PSA targets. Does that change in relation to how you are measured in different places of the world? Do you feel that those targets are sufficiently flexible for you and that, when you report back, you have been measured on what is your real performance?

Nigel Chapman: Yes, broadly, I do. Because they match up volume impact. You need to know how many people use the services, but the targets also measure well what people think of those services. We can then cut and dice the content into more niche segments, so that we can see whether, for example, within a capital city we are particularly effective with opinion formers and people of influence. I am broadly happy with the targets. I have one caveat, which is that it is quite difficult to measure the impact of the web. Radio and television are easier-they have a long history-but it is a bit harder to define the benefits that people get from interactivity with us and taking part in things. In the next two or three years, we will have to work harder on that to find the right measures of success and failure. I think that we must grapple with that intellectually.

Q159 Andrew Mackinlay: First, may I apologise for the hiatus before I came in? I was genuinely surprised that we were in session, but that is a matter for me and my colleagues. I apologise; no discourtesy was intended.

On the technology, I am a bit of a technophobe, but you have things such as 18 Doughty Street station, which basically provides television services over computer. Under statute, the BBC cannot provide the television service. BBC World is commercial-we know the history of that. Can your BBC World Service radio, by stealth, come on to a screen? That really follows on from my colleague's point about the future. Surely, if you are broadcasting in any language your BBC World Service radio programmes, will there not come a stage when incidentally you will start putting in a camera so that people will be able to see the personality talking to them and the discussions going on? If not, why not? It seems that in a sense you will develop a television service by stealth. Should we not embrace that?

Nigel Chapman: Yes, but with knowledge of the limitations to that. There are high-quality television services. If we did that-we are not proposing this-in a developed market such as the middle east, we would not be competitive. We would have to make a quality offer. In other areas, yes. I suppose that what you are really driving at is: how can we combine the audio and data? I think that that is more the issue than seeing the person doing the broadcasting. We could do that, but then we would have to think about the device through which that would happen and how we would access it. That is always the proportion issue about investment.

In theory, I could spend quite a lot of money putting cameras into BBC World Service language services tomorrow, but at the moment the audience in a lot of countries does not have the wherewithal or the devices, either mobile or fixed, to make the most of it. Relatively speaking, I would be spending a lot of money, therefore, for very a poor return. However, over the next five years, as internet access and broadband improve, and mobile devices become more user-friendly and screens get bigger, yes, there is a definite possibility of that.

Q160 Andrew Mackinlay: You have two categories of service do you not? There are the foreign language services, which broadcast in Farsi and Kyrgyz and other languages, but the other audience is a worldwide one, often including English-speaking peoples. Surely, that category could be advanced along the way that I have explained, and at minimal cost? It cannot be rocket science.

Nigel Chapman: No, it is not rocket science, but you must look at that in the context of BBC World's presence. I would argue that if we want to reach out with a visual medium to people who speak English as their primary means of accessing information from the United Kingdom, BBC World is the way to go. It exists already, is getting more and more popular, improving in quality and getting more widely distributed. It is therefore the primary way in which to reach out to those who do not want to listen to the radio, but listen to a television-type service. Let us say that we put cameras on Robin Lustig doing "Newshour" or "The World Tonight" on the BBC World Service. It might be quite nice to see him and I am sure that some people might like to watch, but it could not compete in English with fully fledged television services-nor should it, because we would end up doubling up our activities and being rather inefficient. We have an English service-BBC World-which I genuinely believe is getting better and improving and whose audience is growing fast.

Q161 Mr. Illsley: May I ask you a couple questions on distribution, particularly in India and China? First, have you made any progress or are you in negotiations with the Indian Government to persuade them to let you broadcast news over the FM system in that country? Secondly, you announced in February of this year some changes to how you are going to target programmes in China. Has that had any noticeable impact?

Nigel Chapman: May I may start with India?

Mr. Illsley: Yes.

Nigel Chapman: We have been arguing ever since I have been in the World Service, which is now seven years, and, I think, before then, that we would love to see the Indian Government liberalise the FM market. I see no signs of that happening. What they have agreed is that FM stations, which exist in increasingly large numbers in India, can carry information content on issues like sport, entertainment and business. We have a partnership with a major chain of radio stations, in which BBC Worldwide owns a stake, called Mid Day Radio, but unfortunately, the thing we really want, which is a relaxation in relation to news content-that is, geopolitical news and current affairs; politics, if you like-is not on anyone's agenda in India. The Indian stations are not even allowed to carry news about India, never mind news from-

Q162 Mr. Illsley: Just remind the Committee of the reason for that.

Nigel Chapman: You would have to ask the Indian authorities; I can only surmise. I think it is perverse, in the sense that they have opened up the media market in India for television, so there are plenty of 24/7 television stations around if you go to Delhi, Mumbai or anywhere like that, but radio is a protected species, and it is All India Radio, in particular, that is a protected species, because it is the only one that is allowed to broadcast news. Why? I would say it goes back to a feeling that radio is a mass medium. It has high levels of impact in rural areas, away from the centre of power and government in many parts of India, and I think the authorities-I am surmising; I have never asked them this point-blank-worry about that. They worry that if radio is opened up and liberalised, all sorts of inappropriate coverage of politics and so on might go on, but the irony is that they have already opened up and liberalised the television market on a mass scale, with six or seven stations, so I would argue that the genie is out of the lamp-it left the lamp a long time ago-and I made that point to a number of Indian Ministers when I met them.

Q163 Mr. Illsley: Does that come back to your reply to an earlier question that it depends on the equipment that the listener is using to access the news, and with such a huge-for want of a better word-poor population in India, who might have access only to a radio, the fear is that those classes of individual might be opened up to a whole new world of politics?

Nigel Chapman: If you are worried about volatility in an electorate, you are inevitably concerned about that. That way of thinking runs the risk of damaging the Indian radio industry significantly, because people will increasingly turn to television, which they can easily get. A lot of small Indian towns and villages now have access to satellite television. People wire up their little televisions to a common satellite opportunity and start watching TV. You cannot beat people in that respect. They are going to find ways round it and then-unlike in this country, where there has been a strong radio service for a long time and a strong television service, or in the United States or the rest of the developed world-you end up with a weak radio service alongside a television service, and that damages the media mix that you are offering a society.

In relation to China, we announced some changes in February. It is too early to know what impact they have had, because they have not yet been fully introduced; there are discussions with staff and trade unions about them. But it is about making a proportionate level of investment in broadcasting for China in a world where, despite our best endeavours-and there have been many endeavours-access to the BBC Mandarin Service in China is extremely difficult. Blocking of short wave is very persistent. In China, if you try to access the BBC website for the English news, never mind Mandarin, you are not going to make much progress. Therefore, in the end I have to make sure that the investment is commensurate with the other needs that we talked about earlier, so we are going to maintain a strong presence, but it is proportionate. There is no point in putting out repeats of programmes on short wave that no one can access. It is just in the end a waste of resources.

Q164 Sir John Stanley: Mr. Chapman, you were copied in on a letter that was sent earlier this month by a number of leading figures who have been championing freedom of expression in Russia and who now live in this country. The letter was headed by one of the, I think, most distinguished and certainly one of the bravest of the Russian dissidents in the Soviet era, Mr. Vladimir Bukovsky. The letter was copied to the Foreign Secretary and to the shadow Foreign Secretary. It is headed "BBC Russian Service's Lack of Impartiality", and the opening sentence reads: "We have serious concerns about the BBC Russian Service's weakening ability to report objectively about Russia." The letter goes on to detail in considerable depth a comparison of the coverage of what are, in Russian terms, controversial issues; for example, Mr. Litvinenko's murder and the sequel to it. It compares the reporting of that story by BBC news in this country and worldwide with the coverage of the same event by the BBC Russian service. The detail appears to indicate quite clearly a different type of coverage by the BBC Russian service, less critical than the BBC news of the Putin Government.

The question that I want to put to you is, is it the BBC's policy as far as its Russian service is concerned to cover contentious issues involving the Putin Government in the same way as they are covered by the BBC elsewhere?

Nigel Chapman: In a word, yes. I saw the letter, and, obviously, I helped supervise the reply to it. We went painstakingly through the observations and criticisms in the letter, but the team could find no justification for them. I do not accept them. I do not accept the insinuation that runs through the letter, which is that we are somehow soft on the Russian authorities for some sort of ulterior motive to do with improving our broadcasting capability inside Russia. I do not accept that. The people who wrote the letter have not proven their case. The quotes are extremely selective, and the comparisons are not contemporaneous. They juxtaposed bits from the English website with bits from the Russian one. That was not fair, because they were not taken at the same point in time. With respect to those people, who obviously feel passionately about the issue-I understand their passions and concerns-I cannot find any evidence to substantiate their claims.

Q165 Sir John Stanley: I am grateful for the very important assurance that you have given to the Committee that the coverage of events by the BBC Russian service is, in political terms, basically the same as one would expect to find in the BBC news service. I am glad to have that assurance.

I would like to follow that up with a request that you provide the Committee with a copy of the reply that was made to the letter of complaint, so that the Committee can see what response was made.

Nigel Chapman: By all means, and may I just add one further comment? The point is made around parts of the London media-you read it some times-that the Russian service is soft on the Russian authorities because of the need to get better transmission arrangements. All I say to those people is, if the Russian service is so soft on the Russian authorities, why did the Russian authorities come down extremely hard on our partners in St. Petersburg and Moscow? Why did they do that, if we were so lily-livered and lacking in substance and fibre in relation to coverage of Russia?

I am sorry, but when you look at the totality of the story, the Russian service is asking awkward and difficult questions of all parties: the Russian authorities, and people based here, including some of the people who signed the letter. That is its job, and I believe that it is doing a good job. If there were any inkling at all that it was not subscribing to the BBC's editorial values, I would be down on it like a ton of bricks.

Sir John Stanley: Thank you. We look forward to seeing a copy of the reply.

Q166 Mr. Purchase: There is nothing the London media mafia likes better than to attack the soft liberal underbelly of the BBC.

Thinking about financial management and efficiency savings, may I pick up on two points? First, you spent a considerable fraction of £28 million on the content delivery programme. Do you have a framework by which you can judge the effects and benefits of that programme?

Alison Woodhams: Well, the main benefits that we see coming out of content delivery include better coverage; the new deals that we have with satellite give far better coverage. The cost of technology and of satellite distribution has come down enormously over the past few years, so we are able to buy a lot more. That is particularly true in places such as Africa, which we talked about earlier, where people do not have access to the internet; we can have much better coverage, and we can do other things, such as direct-to-home via satellite. It gives us increased resilience: there will be far fewer single points of failure within the system, which means that we will have a much more resilient distribution system than we used to have.

Most important, we have much greater flexibility. At the moment, it is quite difficult to change any of our schedules or to introduce any kind of flexibility, because we have limited capacity in our distribution system. That is why we make changes to our schedules only twice a year; it is such a major undertaking.

The change will allow us to have many more channels to distribute via, which means that we can introduce much more flexibility across the services. We can also be more reactive to local events, and we can tailor what we send out much more for our local FM partners. They want more localisation and more tailoring, but until we complete this programme we will not have sufficient bandwidth to get that down to them. It will give us much more flexibility, which will make what we are delivering to them a much more attractive proposition.

Q167 Mr. Purchase: I do not want to press too far-it is early days-but do you have in your mind's eye any sort of framework to allow you to evaluate things?

Alison Woodhams: We will be able to measure a number local stations that are taking different content, or a bigger variety of content, as a result. Where we have rolled it out, we have already started to do that. We will then be able see whether audiences have changed.

Q168 Mr. Purchase: So at some stage we will see some positive results-or negative-that can be compared?

Alison Woodhams: Yes.


Q169 Mr. Purchase: I move on to my second point. The Committee was critical of your decision to close 10 language stations. We asked you to reconsider that decision with the Foreign Office. Can you tell us anything about that? Are you currently re-examining the situation? How much cash would you expect to save if those stations were closed, and what would be the potential impact of further closures?

Nigel Chapman: We are not re-examining the decision to close the 10 services that were announced in October 2005. They are long gone. It is history.

As for other services, we continually review them against the criteria that we mentioned last time-the relative geopolitical importance of broadcasting to a society; the impact of receiving a service from the BBC as against competitors, local and national players; and the extent to which there is access to free and independent media in that country. Those are the three criteria that we used last time, and they are still pretty good criteria. We would want continually to reassess them, so I do not close the door on further changes, but I do not think that they will be on the scale of the past. However, we have to judge all that against the 3% savings target that the Treasury is insisting on, which everyone that is part of the process has to meet across the three years of the spending review.

Q170 Mr. Purchase: We know that you have been meeting those targets year on year, which is very good news. The Committee is interested to know how you use those savings, when they accrue. Are they to be used for further investment in the service, to ensure that the reputation of the BBC is enhanced and broadened whenever applicable and appropriate?

Nigel Chapman: The key words are applicable and appropriate. The way the spending review process can work, in effect, is that we bid for a sum of money-as we said earlier, it is £31 million across the three years, but that is for specific purposes-for Farsi television, Arabic television and so on. The framework is the costs of running the business, and the extra costs of running the core business. You do not get new funds for that; in effect, that is where your savings go. That is how it works. To get into the room to argue about the new investments, you need to commit yourself to the 3% savings targets. When we get the settlement, I will have to go away in the autumn and see what we need to do.

I would say this, Mr. Purchase: I am determined to protect the services and activities that have the greatest impact. I am not a salami slicer by temperament; I do not believe in making everybody say the same. If you do that to organisations, you end up with everything being less good than it needs to be and with no focus and concentration. One of the success stories of the World Service, in the past 10 years in particular, has been a greater sense of focus and energy on critical markets. As a result, we are doing the best that we have ever done in most of those places. That vindicates the strategy, but it does not always make me popular and it means some difficult choices. However, the other way is just to hollow out everything at the same level, and that is not a good strategy in my view.

Q171 Mr. Hamilton: As my colleague Mr. Purchase has just mentioned, in October 2005 you famously announced a significant strategic shift as part of your 2010 strategy. We know that that included plans to close the 10 language stations, which you did. It also included plans for the Arabic TV service and increased investment in interactive services and FM transmission facilities, as well as overseas news bureaux and further marketing.

In your bid for the comprehensive spending review, you focused on two key areas of investment for 2008-11: building services to regions of geopolitical insecurity and enhancing interactive digital services to engage with new influential audiences. First, Mr. Chapman, may I ask whether you have had any serious difficulties in your preparations for the launch of the Arabic TV service this autumn?

Nigel Chapman: No, I have not.

Mr. Hamilton: Good.

Nigel Chapman: But we are not yet at the witching hour. The service will be launched by the end of the year and a hard-working, good team-a nucleus of people-is working on it at the moment. But the vast bulk of the staff will not turn up in London until July, August or September. That will be the critical time, when we start to rehearse and pilot the programme.

Our work on the service is going well at the moment-we are on timetable and budget-but in some ways, we are just starting the process of making sure that it will be a quality service.

Q172 Mr. Hamilton: How much will your TV output as the World Service relate to BBC World? In particular, how will you ensure-or will you ensure-that you have consistent editorial lines with BBC World?

Nigel Chapman: First, all the services from the BBC-television, radio or any kind of service internationally and nationally-have to subscribe to the BBC editorial guidelines. There is no difference between the guidelines for Farsi and Arabic television and those for BBC World.

Secondly, the content generated by BBC World, particularly in terms of news gathering in the Middle East and the wider Islamic world, will be rather valuable to the BBC. Therefore one of the really critical things is to ensure really good co-ordination between BBC World, the BBC as a whole and the material generated by those television services. We are putting that into place, physically and editorially, so that we can make sure that we do not let excellent material in one place not be seen in another.

In terms of the strategic balance, I would say that although BBC World's audience is growing in the Middle East, it is doing so slowly and at a low level, because you need English to be able to watch it. I think that we will get a substantial audience of those who want to consume media in the Arabic language watching Arabic TV, and that will be complementary. BBC World does not have a significant audience in Iran, partly for linguistic reasons, so a whole new audience will come to Farsi television.

It is fair to say that we are careful about the judgments that we will need to make about the complementarity issue. For instance, if you asked whether we should launch a major television service in eastern Europe in the eastern European languages, I would turn around to you now and say no, because of the impact of BBC World in those markets. Its audience is growing at a great galloping rate, and it is doing the job for the BBC and for Britain, so there would be no point.

Seeing this thing in the round is important in getting the balance right on investment and priorities. You have to see the three media from the BBC together, and the role of BBC World and bbcnews.com in English as part of the mix. At the end of the day, what audiences care about is that it is the BBC. They do not differentiate that much the BBC World Service, BBC World or bbcnews.com. It is the BBC that matters; that is the brand. We have to present to audiences a coherent face-a coherent, joined-up set of opportunities for them to consume our services, which I think are broadly pretty good. We should shout about them loudly, and make sure that people do that.

Q173 Mr. Hamilton: I mentioned earlier your two key areas for investment under the CSR bid for 2008-11. Are they linked to the FCO's strategies and strategic priorities, or are they entirely independent?

Nigel Chapman: No, they are not independent, nor are they slavishly aligned. There is a balance. I can make out a case for Arabic and Farsi television on a whole host of grounds: on a broadcasting basis, because if you want people in those societies to access your content, you need to be on television; you could definitely argue that access to a free and independent media is a strong case for it, definitely in Iran and large parts of the Arab world; and in terms of Britain, wanting a service-made in Britain, with British values at the heart of it-that can connect with audiences in the Middle East. That is a strategic priority of the Government-to increase dialogue. Those things fit together, so this is an example of when all the criteria of decision making and selectivity drive you in the same direction. It is a happy fit, and you should not apologise for that; it is perfectly sensible.

Q174 Chairman: Mr. Chapman and Ms Woodhams, can I ask you one final question? What impact has the public diplomacy board, which has been established by the FCO, had on the World Service? Do you have any concerns about how it is working, or are you comfortable with the way it is working?

Nigel Chapman: As you know, I am an observer on the public diplomacy board, and I attend its meetings regularly. I have not missed a single meeting. I do not have concerns about the way it is working, because everybody is clear about the ground rules. First, the editorial independence of the BBC must be protected. Let us be clear about this: I am not doing campaigns, and I am not going to do them. Nobody has asked me-to be fair-to do them, so that is fine. Secondly, I am not putting money on the table for campaigns; that is also clear. The countries and topics that we are examining in relation to human rights and democracy, climate change and economic development seem to me to be sensible, and the piloting is starting with various activities. There is quite a good opportunity in some of those societies for the World Service Trust, which has a bit more latitude because of its role in media training and general development work, to play a part in that.

Part of my job is to make sure, when we are talking about Nigeria, Pakistan or wherever, that the World Service Trust is playing a proper part and that we are not trying to reinvent the wheel in some other place when we have expertise at hand to provide that sort of training or programme making with third parties on human rights and governance issues, which the World Service Trust has a long and distinguished history of doing. I am helping to join up the bits, really; that is part of my job.

Q175 Chairman: What about joining up with the British Council? Are you doing any joint work with the council?

Nigel Chapman: We are; indeed, we are doing more work with it than we have in the past. It has a useful presence in many of the societies in which we have a broadcasting strength. It creates content, in effect, and editorial opportunities, which we need to maximise. It has supported us with various launches of transmitters and things of that kind, so it is being supportive. I would like to push it on harder, to be honest, which means that we have to have closer liaison and more conversations about the sort of activities that it is up to and whether they are broadcastable. If they are broadcastable, you reach far more people than you could possibly reach in the flesh, if you like, in a city by doing a play or other activity, such as having a debate or discussion. There is opportunity there, and we need to work harder, but I cannot police it every minute of the day. You have to get the producers to work with the council in a constructive way, and I think it is getting better.

Chairman: Good. On that optimistic note, I thank you both for coming. We look forward to receiving further information from you in the coming months and years. Thank you.