Examination of Witnesses (Questions 80-99)
BBC
WEDNESDAY 6 JUNE
2007
Q80 Ian Lucas: Television, radio
... ?
Mr Thompson: Probably the most
recent data would suggest that, and this is not a new thing, the
World Service of the BBC has the highest reputation of all our
services.
Q81 Ian Lucas: What about local radio?
Mr Thompson: Without sounding
too Panglossian about it, our services typically have high reputations
with the public, high levels of satisfaction. Most of the quality
indicators for virtually all of our services are going up at the
moment and, it depends whom you ask, people, and there are millions
of them, who rely on local radio regard it as being incredibly
good and one of the most important services they receive from
the BBC.
Q82 Ian Lucas: I agree with that
entirely. Why is there no BBC local radio in Wales?
Mr Thompson: Indeed. A decision
or a position was reached over many years by the BBC, absolutely
led by the BBC in Scotland, Wales and in a slightly different
context in Northern Ireland, that the main focus of BBC services
in these parts of the United Kingdom should be to build compelling
popular useful distinctive national services for those nations
and so, resources in Wales went in to the best line-up of programming
for BBC1 Wales, BBC2 Wales and other digital services, Radio Wales,
Radio Cymru, and an effective website focusing principally on
really good coverage of Wales as a nation.
Q83 Ian Lucas: Is that not a political
judgment?
Mr Thompson: This is not a new
thing; this has been true over decades. There was a sense that,
given limited resource, delivering outstanding programming for
the whole of Wales was the highest priority. What is interesting
and one of the possibilities that we are considering is the idea
of principally using the web and broadband to deliver better regional
coverage of the nations. What is absolutely true is that there
is an appetite in Wales, in Scotland and in Northern Ireland for
better coverage of the regions of those countries, rather than
nationally. The point about regional coverage is, of course, although
the cost might be relatively modest for any one region, that by
their very nature once you go into regional content of any kind
there are many regions and the aggregate costs are quite high.
With the funding we will have over the next five or six years,
affording that is the question.
Q84 Ian Lucas: It is a question of
priorities Mr Thompson. We would love a BBC local radio station
in North Wales. We call BBC Wales BBC South Wales where I come
from.
Mr Thompson: I shall certainly
take that away and discuss it with my colleagues. What I would
say is that it is an aspiration of the BBC and an aspiration of
mine. Whether we can deliver local radio stations, I do not know
and to be honest I question whether the resources are possible.
Delivering improved coverage of the regions of Wales and the regions
of Scotland and the regions of Northern Ireland as well as improving
what we do in England is definitely an aspiration I share.
Mr Peat: Can I just say on behalf
of the Trustees, I know that the BBC Trustee for Wales and the
BBC Trustee for Northern Ireland and I all totally understand
what you are saying and share the aspiration for better regional
news.
Q85 Ian Lucas: But Mr Peat, I have
been saying it for five years and my constituents have too and
no-one is listening.
Mr Peat: The point is noted.
Q86 Derek Wyatt: May I ask the National
Audit Office a question first? On figure 1 on page 7, which lists
the nine areas, can you tell me whether you ranked them in terms
of risk? So for instance, if you do not collect the licence fee
you are really in schtuck, if you only collect 85% of the licence
fee instead of 91% and so on against the overall business. Could
you give me some idea as to where you thought the risk was yourselves
and whether you put them in a one, two, three, four, five and
so on?
Mr Hawkswell: The short answer
is that we did not rank them in that way. These are in themselves
summary themes as the witnesses explained earlier on, so quite
a bit sits beneath those. This is purely a representation of how
the BBC regards its top nine themes.
Q87 Derek Wyatt: So when you come
back to look at this in two years' time or three years' time,
how will you judge yourselves as to whether they have been successful?
Mr Hawkswell: Clearly that is
something we will need to give a little bit of thought to as the
time approaches. We have set out a number of recommendations in
the Report. The BBC has said to the Committee that it is taking
action on those and is implementing changes and we will look to
see that those changes have actually been made.
Mr Thompson: I accept that it
is not obvious from the table but business continuity is a category
into which certain risks fall and it is true of each of the risk
themes. So under business continuity a recent list of risks would
be terrorism, information technology and information security,
physical infrastructure, incidents which may cause harm to people,
employee relations. In a sense the action is happening within
these categories one layer down: the risk of terrorism and the
impact of terrorism potentially on the BBC's ability to continue
to broadcast, to maintain the security and safety of its staff,
its centres. As a risk it depends very much on the wider terrorist
risk in the UK at any one time. What is happening is that within
these broad categories risks are coming in, being considered,
weighed, some of them will depart. You have a population of risk.
This is just a way of trying to divide the risks up into manageable
themes.
Q88 Derek Wyatt: Maybe you could
tell me where these two are then? Your move to Manchester, which
is a high risk. You have staff who may not want to move, if they
do not want to move, you have redundancy, if they do want to move,
you have to pay for them to relocate, if more people do not want
to move, you have to start a department all over again. There
is quite a lot of risk there. You have then also got to link electronically
and by satellite the Manchester group with the London group and
so on and so on. I do not know whether it is £500 million,
£600 million, £300 million but I would love to have
a breakdown. I have never seen a breakdown of how you have evaluated
the risk and the costs.[5]
Mr Thompson: Manchester is a really
good example but it is also an example of the complexity because
self-evidently this is a project with multiple risks along multiple
themes. When the project was considered as a proposal by the management
and as it has developed and as the financial and commercial transaction
associated with the project has come forward, there have been
risk registers at every stage of the process which try to consider
and weigh the risks.
Q89 Derek Wyatt: I just wanted to
see a risk analysis that you could send us and a costing attached
to that risk analysis.
Mr Thompson: We can send you that.
Q90 Derek Wyatt: The second thing
is that as more and more programming is commissioned from outside,
if you are an independent producer and you make a mistake on the
funding, the company takes the hit. If internally you overspend,
you do not take the hit personally. How do you assess whether
the organisation that keeps overspending is actually worth employing
any more, or individuals in those departments who continue to
overspend?
Mr Thompson: We are very lucky
that Zarin Patel, who is here today, is the Chief Risk Officer
and is also the group finance director. With very tight management
understanding and in particular post-investment reviews of projects
which we commission and looking in particular at overspends, rare
but they certainly happen, and in particular any patterns of overspend;
it is critical that we keep a tight grip on them.
Ms Patel: Overall, programme departments
have a cash limit that they are managed to and I track how they
are doing against that cash limit every month, both the actuals
and the forecast outlook as well. Within a department the finance
director will look at big programmes. To an extent, if you have
ten projects in your department, you will make sure you balance
the books across those ten but you have to do that and, again,
there are very strong green-lighting procedures before a programme
is commissioned to make sure the budget is balanced and all the
risks are taken account of and then a post-investment review after
the programme. There are thresholds; if the overspend is between
0% to 5% there is a certain amount of scrutiny, if it is bigger
than that it comes to the finance committee which Mark chairs
right at the top of the BBC.
Q91 Derek Wyatt: How many go to that
Committee every year?
Ms Patel: In the two and a half
years I have been finance director, I have seen two. There were
two particular issues: one was a very, very complex production
in Egypt where, because of the weather and various local issues,
it had overspent. I cannot actually remember the other one, but
it was a big complex fiction drama.
Q92 Derek Wyatt: When I was a publishing
director at William Heinemann in the 1980s, we belonged to a FTSE
100 Company which was a pain in the neck because we got 24-hour
cash calls because that is the business they were in. Is there
a procedure? Does Mark have an idea? You say monthly, but you
are a huge business here. Does he get a weekly note of whether
you are plus or minus and then how is that related to the Trust?
Does the Trust get any idea that you are in real trouble here
on a big project? How soon do you know? Do you know the day it
happens or does it come up in the monthly meetings?
Mr Peat: It would go, first of
all, to the audit committee and we have quarterly Reports on issues
and we also have the Director-General's Report monthly where,
if there are any major issues, we would expect Mark to report
them to us at our monthly meeting. We formally have a report on
the finance side every quarter. May I just also mention that independent
commissioning was the subject under the value for money programme
in the last year and in-house commissioning is a subject in this
year's value for money programme?
Q93 Derek Wyatt: Good. Will you publish
that?
Mr Peat: Yes.
Q94 Derek Wyatt: I mean publish it
for us, the nation.
Mr Peat: Yes, of course. The English
one is published already.
Q95 Derek Wyatt: So when there is
a red-hot issue of risk, which is often a journalist in a rather
risky area or a team that have got stuck or something, does Mark
make a phone call to the chairman of the Trust.
Mr Thompson: Yes.
Q96 Derek Wyatt: So that there is
then a round robin and everyone is ticked off, as it were. You
do not wait the month and all that.
Mr Thompson: Yes. I would absolutely
regard it as my responsibility to inform both the non-executive
directors of the executive board and the Trust of any serious
risk, financial or otherwise, that emerges.
Q97 Derek Wyatt: Now I know this
has probably been mentioned before but as I came late forgive
me if I am going to repeat myself. On page 11, the figure 4, risk
identifications integrated, I think I heard Ms Patel say that
something had changed. Let us say that I am made head of documentaries
and I have been a producer. Being a producer responsible for budgets
at half a million is substantially different to a department that
might be £80 million or £150 million; you get the point
I am trying to make. What pre-training is there in that producer's
education? They go from actually running a smaller budget to a
much bigger budget and they are managing people and so on. Is
there any training in between the allocation of that person to
become that or is it just: "As you are, good luck, well done
and on you go"?
Ms Patel: No, there is real training.
The selection of the producer and the director on a programme
is key, not only for the creative output but to the financial
control of it as well. I do not know the absolute detail on every
part of the BBC but certainly as you progress up the chain, certainly
in terms of your financial training and your financial experience
and judgment, that is a key part of the selection criteria.
Q98 Derek Wyatt: Are you confident
Mr Peat that the Trust can read a balance sheet?
Mr Peat: Yes.
Q99 Derek Wyatt: All members?
Mr Peat: I would not say that
all members were equally able to, but I am also confident that
we now have very strong non-executive directors including the
finance director of a FTSE 100 company so we have capability amongst
the non-executive directors and the audit committee and also amongst
members of the Trust, through the finance and strategy committee
and the full Trust.
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