Examination of Witnesses (Questions 100-110)
BBC
WEDNESDAY 6 JUNE
2007
Q100 Derek Wyatt: Lastly, when you
decided on the Freesat, which I opposed and wrote to say so, how
did you take a judgment that actually broadband television was
going to come faster than a Freesat? Who gave you the risk analysis
of taking an investment in something and actually the trends are
moving away from that type of production delivery.
Mr Peat: The analysis of Freesat
was undertaken for the Trust by the Trust Unit with advice and
the view was taken that this was a very important means of helping
to spread the availability of digital television and indeed of
television generally across as many licence fee payers as possible
because we were constantly aware of the difficulties of so many
licence fee payers who could not get good reception and could
not access the different channels through Freeview. We saw it
as a high priority as part of our charter obligation to spread
the availability, to make sure that there was as much availability
through satellite as well as Freeview as possible as soon as possible.
Mr Thompson: It is also worth
saying, a bit like about Freeview, that it would be perfectly
possible for a manufacturer to meet a Freesat standard but also
include broadband connectivity into the box as well.
Derek Wyatt: As you know, I have been
arguing about the digital box for over 75-year-olds which does
not have a return path, so why are we spending £400 million
of our money on it? That is another issue.
Q101 Chris Bryant: Incidentally,
they agreed with the people in the Rhondda; that is why they did
a Freesat. Your biggest long-term risk is losing the licence fee
completely or for that matter having it undermined, sliced in
half or whatever. Over the last few years the Government have
been robust supporters of the concept of a licence fee and of
the licence fee, indeed it is said that in the settlement of the
licence fee before last it was the first occasion that a secretary
of state asked for a certain amount, the Treasury asked for a
higher amount and the Prime Minister insisted on yet a higher
amount. That is not the view that the Conservative Party has tended
to take of the licence fee. How do you manage the risk of a Conservative
government or a Conservative policy?
Mr Thompson: I am not quite sure
I accept the premise. I do not think the most important risk for
the BBC is about the way it is funded. The most important question
for the BBC, which includes a risk, is whether it can deliver
its public purposes in ways which mean that it still has a real
value for this country. My view is that, if the BBC succeeds in
meeting the British public's needs and the British public value
it highly, that is the most important thing. I cannot predict
the political stance of any party or any future government but
it seems to me that if we, with this very precious national asset,
develop it, continue to make it valuable to the people of this
country with very good content, very good programmes and services
and do it in a way which feels, to all those who scrutinise it,
including everyone in this room, to be good value for money, that
is all we can do and in the end, the matter of the future of the
BBC, when this next comes up for debate, is going to be for the
government then in power and the Commons or the Lords then in
place and we will see where we get to. It seems to me that all
we can do with that risk is to do the best possible job we can
for the public.
Q102 Mr Mitchell: One of the major
risks we face, although it is very occasional, is political. It
happened in 1956, it happened when Wilson effectively replaced
the Chairman and it happened in the Gilligan affair just a few
years back. In that affair, in my view the Government behaved
very badly indeed, but the BBC did not behave particularly well
either. Its response to the Government's attack, a kind of rabid
dog attack, was a bit weak, it did not stand up, but the response
of the governors was worse in the sense that they undermined the
Director-General, thinking they had a Director-General who was
not acceptable in Whitehall and therefore it was better to let
him go. Of course I do not expect you to comment on those statements
despite their obvious accuracy and neither of you was there at
the time. Is it your impression, with your system of risk management
and the new system of Trustees replacing the governors that in
such a situation, when it comes to political bare knuckle confrontation,
as it did then and sometimes will again, the BBC is in a better
position to stand up to it than it was then?
Mr Peat: As you say Mr Mitchell,
I was not there; I was not a governor at the time, so I cannot
judge. What I would say is that the arrangements under the new
charter are crystal clear as to the responsibilities of the Trust
and the responsibilities of the executive. Having six public purposes
set out as our responsibilities to deliver for licence-fee payers
and the separation which now exists between the Trust and the
executive in different roles places the BBC in a very strong position
to deliver value for money and to maintain its independence and
integrity. That is the challenge for us now.
Q103 Mr Mitchell: It makes it clearer;
stronger becomes clearer.
Mr Peat: I very much hope so.
Q104 Mr Mitchell: What is Mark Thompson's
view?
Mr Thompson: I think that having
systems in place and having these kinds of processes in place
which are what this Report is about—and you can look at
some of this and think it looks very complex; the responsibilities
chart on page 7 looks rather like the new Olympics logo to me—you
can absolutely look at it and see it is complex but having these
things actually embedded and in place is never more important
than when the red mist descends and when you are in a crisis and
the danger is that you lose objectivity. If there is one thing
I hope we can do, it is to make sure that because we have many
more outsiders inside the BBC, both in the Trust but also on the
executive board, what we will not do is end up with tunnel vision.
I suppose my one observation would be that in a crisis, in crisis
management, if you end up with tunnel vision and stop asking all
the questions, that is when you get into trouble.
Q105 Mr Williams: One final question,
coming back to an earlier point you made about having a lot of
risk and coming back to those initial figures, the five risks,
the 44 top risks the 140 baseline risks and the 85 divisional
risks, how do you allocate resources between risks? What resources
does risk management take up? How do you determine whether you
are getting value for money? In paragraph 40 it does say: "...there
is a tendency to over-manage some minor risks" and: "...the
costs and benefits of risk controls are sometimes considered it
is not routinely done". How would you go about that?
Ms Patel: The rating system is
really important and some of the work we have done recently is
to get people to understand what the likelihood of a risk means.
Is it going to happen every day? Is it going to happen once in
a blue moon? Then the severity of the risk; when it does happen
what is it going to cause? Is it going to cause severe harm to
people, major financial loss? We are trying to get people to be
sensible about allocating those. If you are in business continuity,
you are assessing your risk in isolation from the rest of the
BBC, so for you a breakdown of BBC1 and it going off air is a
really big risk but by making sure that people are rating risks
sensibly, you make sure that they are trying not to over-manage
them. It costs you a huge amount to have BBC1 never off air in
terms of the resilience and backup. Risk management does not have
its own budget; each individual area would. As we do the three-year
budgets and business plans, we think really hard about the level
of investment in a particular area to the level of risk we are
willing to tolerate.
Q106 Mr Williams: Do you know what
it is costing you?
Ms Patel: Risk management across
the BBC?
Q107 Mr Williams: Yes.
Ms Patel: We do not measure the
actual cost of risk management.
Q108 Mr Williams: Not even globally?
Ms Patel: It is completely embedded
in day-to-day life and managing your business. It should not be
a separate cost in my view; it should be very much part of your
daily management of your business objectives.
Q109 Mr Williams: Thank you for the
good-natured way in which you have responded to the questions.
I look forward in a year's time to hearing from the NAO on the
follow-up to see whether what we have been told today has actually
been implemented.
Mr Peat: May I suggest that I
liaise with Sir John Bourn as to the appropriate time for that
follow-up as part of the regular discussions we have on the value
for money programme? We really would welcome the NAO's re-examination
and seeing how we are progressing.
Q110 Mr Williams: I am quite happy
for that to happen. The only condition I would add to that then
is that if there is any notable drift beyond the year, would you,
Sir John, notify the Committee?
Sir John Bourn: Indeed I will.
Mr Williams: Thank you everyone.
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