|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 938 House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
BBC ANNUAL REPORT FOR 2007-2008
Tuesday 8 July 2008 SIR MICHAEL LYONS, MR MARK THOMPSON and MS ZARIN PATEL Evidence heard in Public Questions 1 - 121
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 8 July 2008 Members present Mr John Whittingdale, in the Chair Philip Davies Mr Nigel Evans Paul Farrelly Mr Mike Hall Alan Keen Rosemary McKenna Adam Price Mr Adrian Sanders Helen Southworth ________________ Witnesses: Sir Michael Lyons, Chairman, BBC Trust, Mr Mark Thompson, Director-General, and Ms Zarin Patel, Director of Finance, BBC, gave evidence.
Chairman: Good morning everybody. This is the Committee's annual session at which we examine the BBC Annual Report and Accounts. I should like to welcome Sir Michael Lyons, the Chairman of the BBC Trust; Mark Thompson, the Director-General and Zarin Patel, the Director of Finance at the BBC. I understand that you have already had a press conference and you are having an open house with MPs later so we are jam in the sandwich. Adrian Sanders will begin. Q1 Mr Sanders: Good morning. In the Report you describe performance in television reach as "particularly strong" but there was only an increase of 0.6%, so how do you define particularly strong? Sir Michael Lyons: I think the main reason for using that terminology is that there is no doubt that this is quite an achievement in a world in which viewers, listeners and users of on-line services have so much choice available to them. Indeed, the BBC has been clear that just maintaining reach would be a very considerable achievement so to show even a modest improvement in this year seems something to acknowledge and celebrate. Do you want to say more, Mark? Mr Thompson: Just to say that across BBC services we are seeing a picture in both reach and share which, given the level of structural change in media, feels strong and also, although it is a picture which varies across the BBC, with some of our harder to reach groups, in particular younger audiences on many services, we have seen a slowing, arresting or in some case even a reversal of decline amongst some of our audiences. As you know, the core of what we try and do is to deliver value to every household which pays a licence, and 95% of households do, and to see monthly reach go back up to 95% of those UK households and to see a spread of the usage in some of those harder-to-reach groups is a good result. Sir Michael Lyons: It is probably worth me just underlining the point that Mark has touched on about why this is so important to the BBC. The Trust is very clear about the importance of reach, not only that everybody who pays the licence fee therefore has a right to get something in return for it but also it is inconceivable that the BBC can deliver its important public purposes unless it is connected with the whole population. Q2 Mr Sanders: Your television reach is 85% which obviously means 15% are not seeing any BBC television at all. You have targets for minimum reach. What are the targets that you have set for each of the television channels BBC One, Two, Three and Four? Sir Michael Lyons: Again let me just acknowledge that that 15%, and particularly the fact that its composition reflects disproportionately young people, people with lower incomes and minority ethnic communities, is a matter of concern for the Trust, and we have focused the BBC on the need to strive even further to meet that under that heading of the BBC needs to serve all audiences. Q3 Mr Sanders: But how can the Trust judge BBC Three for example to be performing well in terms of reach when it is watched by barely one in four of its own target audience? Sir Michael Lyons: BBC Three is still in its early days. What these figures show is a considerable increase in the reach of BBC Three, or a notable increase, let me be more cautious. Again I think that is somewhere for us to acknowledge progress. If I took us back to the discussions that we had with you and your colleagues a year ago, there was very considerable scepticism about BBC Three and whether it should be retained in the BBC portfolio. The Trust took the decision in October, following advice from the Director-General, that it was important both as one of the instruments of getting to a younger audience but also in terms of providing a choice and therefore to encourage people to move more actively to digital take-up. Q4 Mr Sanders: With respect, Sir Michael, this is after nearly five and a half years' operation and licence fee expenditure of more than half a billion pounds. I do not think it is good enough to just say, "Oh, it is early days." Sir Michael Lyons: Let me instead say I think this year shows very real progress and we have confidence that this channel is going to do even better in the future. Mr Thompson: The BBC does not set reach targets for individual BBC services but a 15 million weekly reach for BBC Three is strongly up this year (14% across all audiences a year ago up to 17.3%) so this is a service that is growing strongly both in share and reach. Stepping back, if I may say so, the point about the BBC is that we provide a portfolio of services to the British public and the aim is not to get every single member of the public to watch or listen to or to use every single service, but to offer them a choice across which they get value, and the overall story is reach of BBC services across the UK population has been growing. It stands at 95% of households using BBC services. I think 95% of UK households are paying the licence fee. I would say that the story of universal delivery of BBC services is a strong one. Obviously individual services such as BBC Parliament do not appeal to every single household in the land, astonishingly enough. There are people who love Radio One who do not listen to Radio Four. There are people who love Radio Four who do not listen to Radio One. The nature of what we are doing is to try to offer a portfolio of services each of which is a distinctive high-quality service in its own right - and that is absolutely what we are trying to do with BBC Three and programmes like our comedy Gavin and Stacey or the rather wonderful series we did Honour Kills around arranged marriages and some of the issues amongst the communities in which arranged marriages are typical. I think we have seen real progress in BBC Three's public service objectives and its public value over the past year. You will recall when BBC Two launched and indeed when Channel Four launched, there were many years people when said, "What is going on?" It takes time to build new services up until they are really creatively strong, but I believe that we are making real progress with BBC Three. Q5 Mr
Sanders: Can I just come
back to the question, Mark, the BBC Trust might not set a target but does the
BBC set a reach target for each of its television channels? Sir Michael Lyons: Can I come back with a postscript on the Trust oversight of this just to underline that of course we have now started the programme of service licence reviews that we were charged to undertake. I am sure we will get on to the subject of the BBC.co.uk review, which is the first of those, but we will turn to BBC Three as part of our examination of services for younger people in this coming year, so in next year's Report. Q6 Mr Sanders: Mark, if you have that information it may be possible to write to us, but I think it is an important point; if you do not have a target for reach and nobody watches a channel what is the point of that channel actually being in existence? I think it is fairly obvious. Mr Thompson: You will be comforted to know that we do not have any channel where there is nobody watching! Q7 Mr Sanders: Yet. Mr Thompson: On the contrary, what is happening is in many, many of our channels our reach is growing; in other words more people are watching, and particularly with our digital television and radio channels audiences for these services are growing. What we have got, and indeed it is in the document, are our statements of programme policy commitments, which include reach targets for many services, and you will see from that that the overwhelming majority of these programme policy commitments were met over the year. I think there are three examples across the entire BBC portfolio where for a variety of reasons we have slightly missed them. For example, the pattern of the elections in Wales meant that one of or commitments around the coverage of hours we cover on BBC Parliament of proceedings of the Welsh Assembly were slightly lower than they otherwise would have been but that was more to do with the time when the Assembly was sitting. There are about three examples where for various, I would say, technical reasons we have missed our statement of programme policy commitments but the overwhelming majority have been met over the course of the year. Q8 Chairman: Before we leave the subject of BBC Three, you talked about its contribution to public service broadcasting and say that it is making good progress. If I could just give one example: on the day when Patricia Hodgson, who is a member of the Trust, wrote an article on how to safeguard public service media, BBC Three that evening showed two episodes of an American import, Family Guy, alongside Dog Borstal, Most Annoying Pop Songs we Love to Hate and Bizarre ER on which the BBC listings synopsis read "a circus dwarf who has superglued his penis to a Hoover arrives in the emergency ward". Can you tell me how that contributes to public service broadcasting? Mr Thompson: We recommend by the way that the public do not try that at home! Q9 Chairman: This is a channel which costs £125 million a year at a time when you are saying that the BBC is under significant financial pressure; do you really think that is worth £125 million a year? Mr Thompson: It is possible with any service or any newspaper or any other media product which broadcasts year round to come up with individual examples of programmes which do not on the face of it sound as if they pursue public service objectives, but I have to say in my view firstly, the volume of programmes on BBC Three, its news and current affairs output, its consumer journalism, its documentary making, the programmes it is doing about religion and about values, some of the new comedy it is doing (I have mentioned Gavin and Stacey and Honour Kills; I could have mentioned The Mighty Boosh) the way this channel is bringing factual and other topics to life for a younger audience is something which is growing in strength and I would say with many of the examples --- and I missed the man with the penis and the glue. Q10 Chairman: Bizarre ER. Mr Thompson: Did you see it yourself by the way? Q11 Chairman: I am afraid I missed it too. You can send us all a DVD in due course. Mr Thompson: I will slip you a copy, Chairman. My view is that we have tried to be careful over the past year about the titling and about the presentation and about the publicity around some of these programmes. I have to say I have seen some programmes often with quite strong titles. There is a really great documentary called Kizzy: Mum at 14 about the reality of teenage pregnancy, and you will not get young people, who might actually find a programme like that useful and valuable to see, to watch such a thing unless it is in a context where they feel comfortable and they feel the channel is for them. I do not know how well you know Family Guy but Family Guy is an example of the kind of acquisition which in the mix of what BBC3 is is an interesting and in many ways thoughtful piece of comedy. I think again it feels appropriate in this channel. You will understand for the BBC that making outstanding documentaries for Radio Four or for BBC Two very much goes easily with the grain of, if you like, heartland expectations of the BBC. It is quite important that the BBC is not just trying to reach those audiences but trying to find ways of reaching other audiences, particularly with programmes like Kizzy: Mum at 14 which are of value. Of course as this new service grows we should obviously monitor it and adapt it and develop and learn from our mistakes. Q12 Chairman: The serious proposition here is that you might have seen Anthony Jay recently has suggested that the BBC should have one television channel and one radio station. Geoff Randall, who worked for you for a long time, has suggested that in his view the BBC should have two high-quality television channels and two high-quality radio stations. At a time when you say that money is tight and you are spreading yourself thinly, do you really need all the channels that you have and have you considered actually reducing the number of channels and perhaps spending more on the programmes on them? Sir Michael Lyons: Let me take you back to the discussion which I referred to earlier on of last October in the context of the licence fee settlement and the six-year strategy and the Director-General's vision of the future of the BBC. There was an energetic debate there. The Trust did not begin with a proposition that it should defend all of the services of the BBC, and there was both in the public arena and certainly in private discussions a lot of questioning about the role of Three and Four and we were satisfied then - and indeed that was very much the Director-General's proposition to us - that in terms of the BBC meeting its public purposes, in terms of it continuing to offer choice and to get to the whole audience or the range of audiences in the United Kingdom, there was a continued role for both Three and Four, and the very reason for setting them up, which was to pave the way for the digital future, still remained a live issue. This is not set in concrete for ever and a day but I would not want to leave you with the impression that the Trust would be enthusiastic about the idea of distilling the richness of the BBC down to just one channel. Mr Thompson: Anthony Jay, if I have understood his argument, his belief is that services should consist of BBC One and Radio Four. I take it that implies therefore the closure of the World Service, the closure of local radio, the abandonment of the Proms and the orchestras, the closure of BBC Wales, BBC Scotland and BBC Northern Ireland. I put it to you that this is a fairly extreme perspective on the BBC. We talked about 95% of the British public using the BBC, a number which is growing, and I think the idea that the public want fewer services from the BBC is flawed. I cannot emphasise the extent to which the interactions with the public are understandably for more, for better local services, for more investment in programming from Scotland, Wales and Northern Ireland and so forth. When we talk to the licence payers, the people who pay for the BBC, the main impression they offer to us is to improve, strengthen where we can, and broaden our services. However, it is very important also to recognise that we have not for the past few years launched new linear services and we do not intend to launch any new linear services. The investments we are making now are much more about trying to find ways like the BBC iPlayer of getting content we have already made to the public in new ways to try and get more value out of it. We do not believe the BBC should expand its services. I do believe that BBC Three, especially in its role of innovation and finding opportunities for new talent, is a very important part of the mix and I would say if you want outstanding comedy on BBC One, and Gavin and Stacey will come to BBC One, we need nursery slopes. We need places in our schedules where you can try new things out. Q13 Chairman: You used to have outstanding comedy before BBC Three and Four were invented. Mr Thompson: What I would say is that it has become progressively harder across British television to find new comedy and I would say one of the reasons that BBC comedy is so good because we have the opportunity of digital television and radio channels to launch new talent. We need to use BBC One, BBC Two and Radio Four as well but I have to say I very strongly believe that BBC Three, particularly under it new controller Danny Cohen is doing a really good job in finding new talent. That is important not just for the BBC but for the whole of the broadcast sector. Q14 Philip Davies: Following on about reach and Anthony Jay's article, I have noticed in your Report that you have got a triumphant section on diversity where you proudly announce that the number of ethnic minority staff has gone up from 9.9% to 10.9% in the last two years and the number of disabled staff has gone up from 2.8% to 4.7%. Is this a conscious policy of the BBC? Sir Michael Lyons: It has to be, does it not? Can I take us back to the need to serve all audiences and some of the discussion about those communities which we are not yet serving adequately. Certainly the view of the Trust is that we will make faster progress in responding to the needs of different communities if those communities are appropriately reflected amongst the workforce of the BBC, so it is an aspiration and this is something to celebrate. Q15 Philip Davies: What is the aspiration then? What percentage is the aspiration for the BBC? At what point will the BBC say we now have got a sufficient amount of people from ethnic minorities and disability on our books? Sir Michael Lyons: Of course this is not a static target, although Mark and Zarin might want to talk more about the targets that are set here, it is a dynamic situation, not only in terms of the changing complexion of the UK population but of course it will also be shaped by the BBC's intention to have more of its activity based outside London. Mr Thompson: I think it is also worth saying that what diversity is about is trying to draw on the talents from every part of the society that the BBC serves and to try to reflect the lives and concerns of people from all sections of the community we serve, and ethnicity is important but it is only one part of that story, so in other words different parts of the United Kingdom, different groups in terms of age, ethnicity, faith, and so on, and how we employ people and the balance of people we employ is one lever. It is something that people pay a lot of attention to, I understand that, but it is only part of the story of trying to make sure that the BBC is reflecting the modern UK, modern Britain. I would be the first person to say we are not there yet and I think the BBC has to ask itself constantly whether or not it is really reflecting the people to whom it is broadcasting. For example, one of the things we are doing is moving a significant proportion of the BBC out of London. We are trying to boost investment in network television production and other forms of production in Scotland, Wales and Northern Ireland. We are building a big new broadcast centre in Salford, in the north of England. This is all part of trying to get closer to the whole UK and also to try and draw on all of the talents in a way which I think will leave the BBC with better programmes. What it must not be about is a politically correct determination to hit any one target against one measure. Q16 Philip Davies: That is clearly what it is because you just said how important that it was a focus of the BBC to increase numbers. In your section on diversity it only mentions about black and minority ethnic proportion and disabled; it does not mention any of the other stuff that you have been banging on about in this section on diversity. It seems to me that the proportions are above the population as a whole already before you have even started to increase them. Dr Samir Shah, one of your directors said recently that "the Corporation's new arrangements about diversity means that there are now disproportionate numbers of ethnic minorities on our BBC screens", so is this not really all about political correctness rather than reflecting the country as a whole? Sir Michael Lyons: I would want to say that Samir Shah's views are his own and he would be best interrogated on those on another occasion. In terms of the work the BBC Trust has been doing, there are still concerns in the different minority communities about the extent to which they are appropriately reflected in the BBC's output, as indeed there are for the wider communities outside of London and the South East. Mr Thompson: Although it is true we have mentioned people from different experiences, backgrounds and opinions - it mentions women and gender therefore as well as ethnicity and disability - when we develop our plans in this we try and focus on diversity of every kind. Just to reassure you when we are casting and when we are thinking about on-screen talent, the quality and talent of the people we employ is the most important thing and we do not go for artificial targets. Although it is an important debate, and I welcome Samir's contribution to the debate, I do not agree with Samir that there is a political correctness bias in the way we cast nor, I have to say, are we getting complaints from the public there is such a bias. Q17 Philip Davies: Are all jobs given on merit irrespective of people's race, sex, religion or background? Can you give that categorical assurance? Mr Thompson: Yes. Q18 Helen Southworth: Can I ask you about children's television and reach. The BBC is becoming increasingly influential in terms of the commissioning of children's television and there is a body of opinion which says it is going to be the sole saviour of future children's television. How effective are you in terms of your reach across the population? I am particularly thinking in terms of your comment earlier about reach for people on lower incomes as a general issue. How does this apply to children's television and what are you doiong to reach everywhere? Sir Michael Lyons: Can I take the headline issue of the importance of children's television; that is very strong in terms of all of the work that we have done with audiences across the UK and this is valued both by those who are parents and use the service but equally strongly by those who do not have small children to use the BBC's services, so it is given a proper priority amongst the list of other priorities that the Trust has to consider. Indeed, I think it is an area where the BBC has excelled and I think it is worth underlining that it has excelled despite the slackening off of competition from other UK-produced material coming out of the other PSBs, so you are right that this is a responsibility the BBC needs to take seriously because it is so prominent. I will hand over to Mark to say a little more about the commissioning side. Mr Thompson: Firstly, there are poorer households where CBeebies in particular, the pre-school television channel and website, are amongst the most important services BBC services that these households use. Children's channels are very important from the BBC's point of view in terms of the marginal reach because they are used by households who perhaps are light users of other BBC services and the reach both of the TV channel CBeebies and CBBC has been growing and is growing. The paradox, as I am sure you know, is that although the BBC is very important in terms of UK children's television production, we represent a very large amount of the investment, and our investment is much greater then it was five or ten years ago. In terms of children's consumption it is a very crowded market place with many, many channels available to most children. Digital penetration is much higher in households with children than it is in some other categories and most children have a choice of many, many different children's services, though the majority of those services are dominated by typically American cartoons. It is a very competitive context for the BBC still in terms of winning viewership from children and from their parents but nonetheless our services are performing well. Two more things briefly, the Internet and the children's sites are very, very important, but the other thing is we are trying more in our mainstream programmes - and I guess Doctor Who springs to mind here - to try to go back to rather more programming which works for children watching in a family context with their parents. I think one of the things the BBC in recent years has rather got back to - and I think of Doctor Who and programmes like Strictly Come Dancing and I'd Do Anything are examples of it as well - is produce content which does work very well for children, and children get very excited about, but actually works for their parents and other members of the household as well. Although I do not want to overstate it, I think one of the things licence payers expect from the BBC is strong family entertainment. We got more than 10 million people watching the denouement of this series of Doctor Who this Saturday and that is an example really that that kind of programming still has enormous value to the public. Q19 Helen Southworth: That is very good news to strike that balance with family viewing but in terms of the specific, in terms of outreach, the BBC has always had this issue about whether it is there for middle-class families and whether it is the general population that pays for it. In terms of outreach for children's television, how effective are you at targeting your entire audience? Mr Thompson: As I have said, I have not got the exact demographic breakdown of the performance of these channels and we have limited information about the demographics of children, particularly children below the age of four in our data anyway. Anecdotally however, we know that in households which do not listen to Radio Four, which perhaps only watch BBC One amongst our adult television channels principally for Eastenders and so forth, that CBeebies and access to children's channels without advertising is something which appeals enormously to all parents with children including those in lower income groups. These groups tell us that these channels are particularly important to them in terms of the services they get from the BBC. Q20 Helen Southworth: Is this a check that you will actually do? Mr Thompson: Yes we will go back and look at the data. I have seen some data in the past. It is a level of granularity below what we report in the Annual Report but we will go back and if we find anything useful, I am very happy to send that information on to you. Q21 Rosemary McKenna: Just one quick question on a concern that has been expressed by a lot of people. I agree that you do produce family viewing and that is very good for families to be able to sit and watch and enjoy the programmes together, but there is concern about the story lines particularly in Eastenders. I certainly have some concerns and you had a lot of complaints about the burial alive scene and that story line is going on and on. What is your view on that? Mr Thompson: I think that you will understand that for a programme like Eastenders to capture the public's imagination and to hold their attention, and particularly given that Eastenders has always had an interest in exploring tough and difficult social issues and family conflict, it has always been rather serious-minded about that and often with various kinds of outreach and phone lines and so forth associated with that, that quite often the makers of Eastenders will be coming up with story lines and treatments which are pretty close to the line. I certainly think that the story line involving the burial alive was close to the line, but I watched that quite closely myself around the transmission and I believe that in the context of that story line, of how it has unfolded, that it was in the end justified and acceptable, but I think that what I would say is that keeping a constant vigilance on quite traditional things such as the use of language before the watershed, the levels of violence or implied violence in very popular programmes like Eastenders, we should be very careful about that, and I think that the path we try and tread is quite a tricky one. We want these programmes to feel dramatic, relevant --- Q22 Rosemary McKenna: Do there have to be quite so many disturbed people in one programme? Mr Thompson: There seem to be a lot of people in Albert Square with big difficulties, that is certainly true. It is a bit like Inspector Morse and the appalling murder rate in Oxford and so on. I accept that an awful lot of human woe is concentrated in a small place. For what it is worth, I think the controls we have got in place, the way in which our editorial policy team are involved, and involved early on in conversations about story lines like that, we do try and keep an eye on it. We also try and gauge from complaints, particularly when there are a lot of complaints, about whether looking into the future we need to be more careful but actually, as it happens, although I thought it was pretty strong stuff I thought that that story line was justified. Q23 Mr Evans: Mark, the iPlayer seems to have taken off dramatically - 42 million programmes your Report tells us were accessed over a three-month period. Mr Thompson: It is over 100 million now. Q24 Mr Evans: If you could arrange for the public service broadcast of the circus dwarf, the Hoover and the pot of Superglue to be put on the iPlayer, I should imagine you will do that in one day. You are clearly ambitious for the iPlayer. Do you want to say something about your future proposals for it? Mr Thompson: It is a curious thing because what the iPlayer enables people to do is to do something they could have done 25 years ago with a VHS machine at one level or an audio tape, in other words to have made a note in the Radio Times and carefully recorded the programme and go back to watch it, but the ease of use, the fact that (without getting too techy about it) the Adobe player plays inside the browser so you do not have to download a client or register, you can just click and you are watching or listening to a programme is obviously why people are finding it convenient to use. The underlying idea of the iPlayer has been simply to make it more convenient for people to access BBC programming for which they have already paid. They pay the licence fee; we make the programmes. Historically, broadcasting has not been a very efficient way of getting the right programmes in front of the right people because most of us either forget a particular programmes is on or never knew it was on or we are out doing something else and we never quite get round, even if we record it on our DVR or SkyPlus, to actually watching it. I believe firstly that the iPlayer will make it much easier for people to catch up with recent programming and if they would find it interesting and enjoyable to watch and to enjoy it. We are looking at our archive. We have got the biggest archive of television and radio in the world. There are amazing treasures in the archive. We have got to be quite careful, it will mean careful consideration by the Trust because again there are market impact concerns about suddenly releasing this tidal wave of programming to the outside world. We are looking at the archive. We are looking at whether or not there are ways in which we could play a part - only a part and with partners - in making it easier for people to get services like the iPlayer on their main television set. We have already got the iPlayer in Virgin homes and in cable homes in the UK you can now get the iPlayer and use it directly. Our ideal would be to offer people the iPlayer functionality in every home in the country if we could do that, so we are looking at ways of doing that. We are also looking at whether for people on the move, whether they want to download in an iPod like way content or whether they want to receive content on the move so they can get our content on the move. The iPlayer is part of a bigger story which has two or three basic themes one of which is BBC content you have paid for but getting it when and where you want it, with a slightly more personalised shape of services presented to you, and the fact that broadcasting was once largely transitory becoming permanent, so once something is made people can go back and watch it again and so on. It is part of a revolution really in what broadcasting means but at each stage of this and the reason the Trust is looking so closely and looking to stage it is because it obviously has impacts beyond the BBC. Sir Michael Lyons: That is the issue of balance which I think we come back to time and time again. There is a limited fund from which to draw. The debates that took place last October and which will continue as we move across the six-year period the Trust will constantly keep under review, the balance between these different services and the values that they are generating and particularly that balance between investment in platform and production of distinctive contents. Q25 Mr Evans: You have got a problem, have you not, with the iPlayer because it is programming that you say people have paid for which they can access on their computer? In the old days, even if you did not have a TV, if you had a VCR, you needed a licence fee. If you have got a lap-top or a computer you do not need a licence fee. If you access BBC programming via an iPlayer you do not need a licence fee. Where I think Anthony Jay was coming from is that we have moved on. We are now using this new technology and if you do not need a licence fee to pay for it then how much longer is the licence fee going to exist? Is it not a fact that the licence fee is now being put on Death Row? It is pointless. We might as well just pull the lever and scrap the licence fee. Mr Thompson: I think my headline would be "Steady on". Look at the sale of television sets at the moment in this country, in particular high definition television sets. The British public are buying television sets in great numbers because the television experience is growing. You will appreciate that for decades now the licence fee, which is being collected on the basis of having a television receiver, has paid for BBC radio content and the reason it has been able to do that is because pretty much every household has a television set and it seemed futile to have a separate radio licence. Why not use the television as the MacGuffin or the justification for making the charge? I believe the overwhelming majority of British households will have television sets well into the next decade. They may well be using their computers and radios and other devices to access our content as well, but they will be using television sets and watching some live content. For the final of Wimbledon on Sunday there was an enormous audience and with the Euro 2008 final there was an enormous audience. If you watch live television with a mains powered device you will have to pay a licence fee. If you are watching live content through a PC you will have to pay a licence fee. That will continue for many years to come in my view. If you say at some point in the future as broadcasting evolves the British public want to go on paying for a BBC and pooling investment to pay for high quality content you may have to adjust the terms on which the licence fee is defined by making a technical fiscal adjustment. I do not believe we will even get to that point for many years. If we did get to that point, even then I believe the adjustment could easily be made. The point about the future of the BBC and about public service broadcasting is around the willingness of the public to pool investment to pay for the content. It is not really about the technicalities, which I believe could be addressed, if they needed to be, as we go forward. I think Death Row is going it a bit! Q26 Mr Evans: If you are looking at the exponential growth and the way that people are accessing it and also the philosophical argument that comes from people like Jeff Randell and Anthony Jay --- You have just smiled there. There is an online petition, which Jeff talks about, which says that "the world has moved on since the days when the BBC was central to British life. Any modern government that fails to acknowledge this fact quite simply is defying the will of the people." Anthony Jay talks about the BBC and says that in its sprawling bureaucracy its reliance on funding through a compulsory, ruthlessly enforced levy in the form of a licence fee, in its determination to dominate every field of broadcasting, in its adherence to fashionable, liberal orthodoxies, even when those views are at odds with most of their audience, the BBC is acting like the monopoly provider it was in the mid-Fifties. What do you have to say about that? Sir Michael Lyons: The BBC has a long history of facing up to challenges from those who would like to see it narrow down what it does for different reasons. There is the danger in doing that that it would end up not meeting this requirement to deliver something to everybody who contributes to its cost, as Helen Southworth underlined. The challenge here for the BBC is not to take those things, important though they are, that you might find on BBC One and Radio 4 and say, "This is all excellent material. Let us concentrate on doing more of this." Both of those have apportioned audiences but not the entire range of audiences that the BBC serves. I think we come back to a different challenge. The last Charter set down some very challenging public purposes for the BBC and recognises that in the making of programmes it contributes to the very nature and quality of the life that we live in this country. I think those public purposes themselves very clearly underpin the fact that the BBC remains at the heart of many of the big debates about the development of a democratic discourse in this country, about the development of skills and creativities. There is no backing off from that big agenda, but there does have to be a recognition - and you see that graphically underlined in our PSB response document - by the BBC that there is more to be done in the future in working in an even more co-operative vein with others. I do not think this is the time for the BBC to back off in terms of its commitment to those public purposes, but it is the time to recognise that others can contribute too. Mr Thompson: We have talked already this morning about reach and it is 95% of UK households and growing. It is hard to see how you can argue that as a broadcaster meeting 95% of all households - there is virtually no other public service in the UK with that kind of penetration and it is currently growing - the BBC is not central to our national lives. You might argue you do not want it to be central. Q27 Mr Evans: You are in a unique position, Mark, with a Poll Tax on everybody's television sets. Mr Thompson: What both Anthony Jay and Jeff Randell are suggesting is that this position is changing and there is always new media which means that this centrality is less true than it was in the past. Projects like the iPlayer suggest a BBC which is rather effectively migrating into this new digital space and is maintaining the loyalty of audiences because it is changing with the times. Sir Michael Lyons: Can I just make an anorak point and it comes back to the issue of the use of the iPlayer? Somewhat to our surprise, most of the use is as a result of people streaming rather than downloading programmes. Our very clear understanding is that you need a television licence to be able to do that. Q28 Mr Evans: To screen but not to download? Sir Michael Lyons: If you are watching it as it is broadcast you need a licence. Mr Thompson: There has been a presumption almost since the moment that television was created in the 1930s that you would see substitution, that radio would give way to television, that the movies would give way to television and actually what we have seen is these things co-exist, that BBC radio is very hail and hearty despite the fact we launched our first television service in 1936. I would expect a future media environment where you continue to see radio being very strong, you continue to see a lot of broadcast television, particularly of live events in people's lives, but all of these other media devices and methods are going to co-exist. What is happening is the world of media is getting a lot more rich and complicated. Q29 Alan Keen: Somebody might look at Jay's argument and find it seductive. It would get rid of all this bureaucracy and all these people earning lots of money. Could you help me paint a picture of what people would have to watch and listen to from 1 January next year if the BBC had only one channel? What would the broadcasting industry exist on? What would we have to listen to? Mr Thompson: At the end of next week we are going to start The Proms. It is the biggest and greatest music festival in the world. It is broadcast extensively on Radio 3, on BBC Four and BBC Two. The Proms would not exist and all of that classical music investment would not exist. You would not get anything like the amount of history, science, natural history, music and arts and religious affairs on television. Popular music in this country would be a shadow of itself. I was talking to a very senior leader of an American global record label last week and he said that one of the reasons that British rock and pop is so strong is because you have got - and you do not have this in America and most other countries - a big broadcaster prepared to put unsigned new artists on the air and to build them. We live in a news environment where people expect to get news 24/7 on whatever device they are close to, with the website and so forth. You would go back to a handful of television and radio news bulletins but the reach of broadcast news would shrink. BBC Parliament would be taken off the air. There would be no live television coverage of Parliament. It is a splendid headline in The Sun, but is that really what the British public are saying they want to happen? When Ofcom asks the public about public service broadcasting there is a lot of support. You may be able to argue some philosophical argument about how that at some point in the future it may not be required because of changes in technology. If you ask the public about public service broadcasting, there is colossal support for it because of some of the things I have talked about, because of the sheer range and diversity of choice it offers people. Sir Michael Lyons: It would be rather strange if the debate about what the public want in return for their licence fee was driven by the objective of reducing or abolishing the number of folks that actually manage it. The debate ought to start with what the BBC is for. What are its public purposes? Are they still appropriate? Does it serve those public purposes? Are the British people still willing to pay a dedicated sum, whether it is the licence fee today or some other arrangement in the future, for that bundle of activities that they get? That ought to be the debate. Let me offer you one particular proposition on this. One of the things the Trust is interested in is the wider economic impact of the BBC, recognising that sometimes that will be very positive, as indeed we see illustrated in the BBC's commitment and impact on training across communications and broadcasting industries, but at other times it might have a different impact if it impacted on competition in the market. With that in mind we have now commissioned a major piece of work, which will be made public before the end of this year, into the economic impact of the BBC which will give us more evidence to conduct this debate about what would be lost and possibly what might be gained if the BBC were smaller in size. The Trust's commitment is taking an evidence-based approach to this and putting that evidence into the public debate so you can have informed debates rather than hastily put together articles prepared for newspapers which are not always revealing the real interests of those commentators responsible for them. Q30 Helen Southworth: Could I put in a small request regarding the phenomenally successful iPlayer and the obvious specialism and expertise and knowledge that the BBC has got within it to be able to think these things up and make them work? In terms of digital switchover, are you going to be able to make sure that older people, particularly frail older people for whom television and radio is the amazing link to the world, get the benefit from future technologies, not just a digibox which means they have to watch stuff when it is on and cannot access other services? Sir Michael Lyons: Let me just start with the headlines on the digital switchover. I think Mark will have some interesting comments to share with you about the BBC's willingness to look constantly into the future and bring forward developments which have exactly the impact that you are looking for. The iPlayer itself has already been revised in its very short life to make it friendlier and easier to use. We have now had the first experience of switchover from Cumbria. It went very smoothly. There was a particular focus on the frail, elderly and those who might have had economic difficulties in being prepared for the switchover. The lesson that comes back from that is that most of the population anticipated the change and made their own preparations. We have not only looked at the figures but we have also gone back and done some survey work through Digital UK about how people felt about the way they had been handled in that process and it is remarkably positive. That is just the first step. You are right to focus this debate on the scale of the change that is still to be implemented, but I think it is worth underlining that most people have already made their preparations for this and that makes it easier for us to focus on those who are needy. Mr Thompson: Whenever we come up with a service like iPlayer we build accessibility in from day one. We will see different versions of the iPlayer. There is going to be an iPlayer interface for children, for example, and again with accessibility so children with disabilities can use it. On accessibility for older people, we have gone to 100% subtitling now on our television services. We are working hard to broaden and strengthen audio description and so forth. In our target help scheme the partner we chose was partly because of their experience with the Warm Front scheme and their proven ability to understand and be trusted by older and vulnerable people with new technology and new technical issues. We absolutely recognise we have a special responsibility both to encourage older, more disadvantaged groups to consider digital technology but also to help them make the transition as well. Q31 Chairman: Let us move on to acquired programming. You told this Committee about a year ago that it was your intention to reduce the amount of money that the BBC spent on acquisitions from overseas. Can you tell us, in terms of the amount that you spend and in terms of air time, how much you have reduced acquisitions by? Ms Patel: We spend broadly £70 million a year on acquisitions. It depends on what we buy and what we show. In hours terms it is about 5,600 hours, which has been broadly constant over the last couple of years. The big shift came in 2005. If you look at peak hours, we show about 486 hours in peak time and on BBC One in peak time we only show 28 hours of acquisitions from outside the UK. Q32 Chairman: Are you saying that in the past year you have not reduced the amount you spend on acquisitions? Ms Patel: The reduction came in the last few years. In the last year it has held steady. Q33 Chairman: It was last year you told us you were going to reduce it. Ms Patel: I think by then we had already reduced it. It is because we buy non-UK acquisitions a long time ahead of the time we show them on screen. The reduction will have come much earlier. Mr Thompson: It is 28 hours in peak per year. That is less than half an hour per week on BBC One. The biggest single transaction in acquisitions over this past year has been the loss of Neighbours. Neighbours, as you will recall, was an Australian soap opera running five times a week in two slots on BBC One, one after the One O'Clock News and again at half-past five in the afternoon and it was actually much loved by the audience of BBC One. There was an auction for it and eventually Neighbours was bought by Channel 5, another free-to-air channel and available for the public to see on Channel 5. It would have cost the BBC a great deal of money to retain Neighbours. We took the decision, as we did with The Simpsons and the X-Files, that the licence fee was better used making original British content. Although you will still sometimes see us buying pieces, we are trying to focus more on pieces - I think the series Madmen for BBC Four would be an example - where there is very limited or no other terrestrial interest in the piece, so this is not a piece which would be easily seen elsewhere and where we think the quality and the particularity of the piece means that in the context of the rest of BBC Four it will be something that people really enjoy. The point is that the bar that a piece has got to pass to be bought by the BBC is much higher than it has been in the past and will grow higher. Certainly in the core parts of the schedule I expect the reliance on acquisitions to be far less than it used to be. People forget that BBC One was once dominated by acquisitions, the Kojaks and a man called Ironside, The Virginians, Dallas and Dynasty, it was the core of the BBC One schedule most evenings of the week and we are now down to half an hour at a peak time per week. I suspect that the reliance of the BBC on acquisitions in peak times to reduce further. Q34 Chairman: Are you suggesting that if there is a strong bid for an overseas programme from a commercial channel the BBC will not bid against that? Mr Thompson: I think there have got to be very powerful reasons in that context why we would. We talked a year ago about Heroes. With Heroes there was no interest from a UK terrestrial for series one. We bought series one. When it became a hit in the United States we decided it was an important piece that we wanted and we did compete to retain Heroes. I think the test now of whether the BBC should compete, especially when the alternative is another free-to-air broadcaster, is higher. We have had a parallel example recently. We decided not to bid, despite extensive press speculation that we would, for the rights to show the Champions League, the rights currently enjoyed, at least partly, by ITV. The reason we decided not to bid was not because they are not attractive rights, they are very attractive rights, but because we could not see that the extra advantage the licence payer would get - no advertisements, our presenters, our analysis - outweighed the very considerable cost when you are talking about competing with another public service broadcaster. Q35 Chairman: If it did not apply to the Champions League why did it apply for Formula One? Mr Thompson: As you will recall if you read the papers at the time, although it is not for me to get into the whys and wherefores of the relationships between the rights' holder and ITV, ITV made it very clear that it was very happy to have seen the Formula One rights transferred to the BBC. It wished to concentrate its fire power on its football rights. I spoke to Michael Grade afterwards. There was no sense of the BBC "taking" these rights from ITV. It was an arrangement which seemed to suit all the parties. There is an interesting difference between Formula One and football, which is that for the fans of Formula One the ability to show Formula One races without advertising breaks is a very considerable benefit. Moreover, the commitment by the BBC both to show the races prominently wherever they occur, because of the time zones, they occur around the clock, and to develop across our web and across other media, including the iPlayer, lots of ways for the fans of motor racing to follow Formula One, meant the creative opportunity for Formula One was so good and is one of the reasons the rights' holder chose to go with us. There was no sense from ITV that this was the BBC coming in and "taking" their rights. Q36 Chairman: They did win a Bafta for their coverage of Formula One so they were not exactly doing a bad job. Mr Thompson: I believe that ITV has done a very good job with Formula One. I hope we can build on their success and do it even better. Q37 Chairman: Apparently you have bought the format rights to the Japanese programme "human Tetris" which is described as "celebrity contestants clad in shiny leotards try to force themselves through various holes in a giant moving wall or end up head first in a swimming pool." Is this another one where you felt this was such an important acquisition from overseas it merited licence fee payers' money to be spent? Mr Thompson: Some years ago we bought the format to the programme The Apprentice. Had you looked at the original version of The Apprentice in the United States I think the Committee might have raised an eyebrow about whether this could be made into a programme which would, as it were, express the BBC's values and be appropriate on a BBC channel. Over the past few years I think we have done a good job both with our own formats, formats like Strictly Come Dancing, and also with some formats which we bought but then changed substantially, eg The Apprentice and Dragons' Den, to make something which creates wholesome, enjoyable, high quality entertainment for licence payers to get through the BBC. I have not seen the programme. If there is a celebrity version of the programme you will be the first on our list to join it as a contestant! The business of making popular entertainment in my experience can be a little bit hit and miss. Not every single programme we have high hopes for turns into a great hit. Our entertainment commissioners are looking far and wide for interesting formats. Japanese game shows, which has been covered very extensively in the Western media, is an intriguing, bizarre and strange world. Do not discount the fact that something interesting and enjoyable may come out of it. It is a bit too early for you and I to judge how that will come out. The idea we are looking for unusual and interesting new ideas does not shock me too much. Chairman: We may revisit this next year. Q38 Paul Farrelly: Sir Michael, I would like to ask a question about the table on page 69 of Part Two of the report regarding independent production quotas. I see from that that the BBC has exceeded more than in the past its quotas of 25%. I make the point every year, Sir Michael, about how this does not tell me very much about how the BBC has achieved those targets. For instance, it does not tell me how original and creative the programmes have been or whether they are settled BBC formats, such as Question Time, that are farmed out to independent staging companies, it does not tell me which of those programmes have been produced by producers in which the BBC has got a stake or which are connected to BBC employees current or former, nor does it tell me the genre or strands that are involved, nor, if you go down to the levels of original production, across which parts of the BBC they are being transmitted. Is that information that you request and receive as part of your monitoring of how the BBC fulfils those quotas? Sir Michael Lyons: I think the important thing to say is that we are drawing to a close a piece of work to look at the operation of the WOC(?). That will have delved much more deeply into this and it has sought to explore some of the issues which I think are implicit in your question about the way that the world of supply is changing and the extent to which the BBC starts with a programme that it seeks to commission or responds to ideas that emerge from the independent sector. What these figures clearly show in headline terms is the earlier anxiety that the BBC did not fully recognise the skills available outside of its stores certainly no longer prevails, if it ever did. Here is very firm evidence of the BBC looking for value, being willing to work with independents and independents doing very well, on the face of it, out of the WOC(?). The very reason for reviewing that is really around this issue, amongst others, of sustainability. Q39 Paul Farrelly: Is this the PriceWaterhouse review? Sir Michael Lyons: It is, commissioned by the Trust. Q40 Paul Farrelly: Due in July this year? Sir Michael Lyons: It is indeed. It would be much easier to have this discussion once that has been made public and we have your reactions to it. Q41 Paul Farrelly: Will you publicise that? Sir Michael Lyons: We will publish it. It is the Trust's policy, as we have undertaken this body of work, to publish what we find, not only so that people can see us doing our work of holding the BBC to account, but also to encourage debate both within and outside the BBC. In many ways that is one of the biggest changes of the new governance arrangements. Q42 Paul Farrelly: It is a question I have asked a number of times in sessions such as this and in the past. Is it fair to say that, pending receipt of that report, in the past you have not asked for that level of detail as the Trust or as the top level board and therefore have not received it? Sir Michael Lyons: What you related was an extremely ambitious programme of information. There are clearly limits both in terms of the BBC Trust focusing on the most critical issues and also in terms of the demands that it ends up making on the BBC Executive. There has been quite an active debate this year to get the right balance about the requirements of the Trust for information so that it can hold to account and the cost and extra burden that imposes on the BBC. None of this is straightforward. None of us wants to see inappropriate amounts of licence fee payers' money driven into a wholesale collection of data. What I can reassure you of is our interest in the issues amongst which are those that you focussed on, of how the WOC(?) is operating, what its implications are for the BBC, what its implications are for the creative sector and you will see that covered in the report. That seems to me the right way for the Trust to work rather than to regard this as a weekly monitoring task. Q43 Paul Farrelly: I will take that as a no as far as the past is concerned. When you agreed the strategy "Delivering Creative Future", which releases some investment and there will be a 10% fall in originated programmes, did you explore with the BBC how that fall would be shared between the BBC itself internally and the independent sector? Sir Michael Lyons: You cannot easily prescribe that with a guideline figure. As I think you have anticipated in your earlier question, it is a function of ideas that are generated outside and ideas that are generated inside. The BBC's obligation is to get the best of both and one of the things that we will be exploring in that review - and I would like to underline our ongoing monitoring of the BBC - is exactly whether the British public is getting the best out of that arrangement and that we have sustainable arrangements. Mr Thompson: I do not want you to have the impression there is any kind of deep, dark secrets here. Much of this does not need to be kept commercially confidential. I am very happy either to write to you or brief you on the broad shape or the size of indices, where they are based, the patterns and the trends in the kinds of indices and so forth. As it happens, it is not based here, but there is plenty of management information --- Q44 Paul Farrelly: It was more the role of the Trust and seeing how you made those up. I was not implying anything. If you have more statistics to show how the BBC has achieved them then I think we would like to see that. Mr Thompson: I am sure we could do that. Q45 Adam Price: Let us turn to the King report on the network in the four nations. I think it is fair to say that not since Brian Hutton put pen to paper has there been such a scathing criticism of the quality of BBC journalism. The report talked about a "metropolitan mindset", it referred to "institutional inertia" and it said that you had failed to get to grips with the newspaper reality of the political geometry of the United Kingdom. It is almost a decade since the advent of devolution. How could you get it so badly wrong and what are you going to do about it? Sir Michael Lyons: Let me begin by underlining that the King report did not just emerge. This was evidence of the new governance arrangements of the BBC working effectively and responding to a clear message from audiences in its headline terms that they do not always feel - and this is particularly the case in Scotland, slightly less so in Wales, Northern Ireland and some English regions - that life as they live it and understand it is adequately reflected on the BBC. We have touched upon that remaining a mission for the future, to better respond to that, in earlier answers. The Trust decided that the strength of view coming back to us was of sufficient intensity that it should be the subject of our first impartiality report. Rather than deal with the whole of the representation of the nations and regions we focussed on this specific issue of the extent to which the new devolved realities of Scotland, Wales and Northern Ireland were adequately reflected in the network production. It was the Trust that commissioned the report. It is harsh. It is written in very strong terms. Different people take different views on the colourful language that Anthony King has sometimes chosen. I would have some problems in recognising in King's report, important and challenging though it is, something that I would want to compare with the Hutton report. It is a very clear challenge to the BBC to do better. It is a clean bill of health on impartiality but a very clear message that, in terms of the breadth and accuracy of the reporting, there is more to be done. I do not want to stand in the way of that conclusion, but I do want to be clear that the Trust has led the inquiry and do commission the work and it is something that we are now looking for a clear response to. I personally have been heartened by the fact that the Director General and, perhaps more importantly, the Deputy Director General as Head of Journalism did not do what it might have been easy for someone to do in these circumstances, ie to point to the strong language that King had used, to point to efforts that the BBC has made in recent years to deliver more effectively in this area and to seek to push back the message. Instead there was a very clear and public recognition that there is a deficit to be filled here. Q46 Adam Price: Full marks to the Trust. You identified the problem. Mark, maybe you are the source of the problem so we will come on to you in a second. You referred to the colourful and strong language of the report but it is evidence based. Virtually all the respondents were making the same point. The Cardiff School of Journalism research pointed out that in the period they were looking at 136 health and education reports on Network News and all of them were exclusively in relation to England. The report says that almost none that had been issued since 2007 election coverage dealt with Wales in any way. That is evidence based, not conjecture or subjective interpretation. Sir Michael Lyons: It would hardly be in the interests of the Trust, as the owners of this piece of work, who commissioned exactly that evidence base so that Anthony King would have it available to him --- It is hardly within my responsibility for audiences to try to blunt the message. I only want to underline that the process that we followed here was to ask Tony King to produce effectively a personal commentary as a result of his interviews and the work that we were able to make available to him and, of course, that commentary selects from the information. It is an issue of colour rather than whether the message is the right one or not. Mr Thompson: I think I had better deal with this as the source of the problem! Q47 Adam Price: And hopefully the solution as well. I would be interested to hear about the action plan. Is that ready to go? Mr Thompson: You must recognise that across quite a broad front, the new commitments on the network, more investment in nations under the Ofcom definition, Salford and so forth, we are really committed to getting this right. There are two caveats. Firstly, audience approval for BBC news and its coverage of the UK is pretty high across the UK and it is particularly high in Wales. It is higher in Wales than it is in England even when you ask questions about the way in which Wales is covered. In some ways Welsh licence payers are pretty supportive. Secondly, in the matter of impartiality and fairness and in accuracy narrowly defined, again the King report was pretty complimentary. I would certainly accept that we will have to do a lot better in reflecting, comparing, contrasting and giving the public the right context to understand the very different administrations around the UK. To me this is potentially a source of interest and of value to the public across the UK to understand how different experiments in social policy and different approaches to the same issues are being undertaken. We are coming back to the Trust in a week's time with a comprehensive set of proposals about how we make sure that the BBC gets this right. Q48 Adam Price: How is it possible - and this happened after the King report - when I was listening to the World Service covering the UK press at 5 o'clock in the morning it covered the Scottish press headlines whereas two hours later when the Today programme did the same exercise it was only the London papers? If the World Service can reflect the Scottish press why cannot the Today programme? Sir Michael Lyons: You might take from this one positive message, which is that the BBC is not monolithic! I do not want to detract from the finding or the importance of setting this right. I do want to acknowledge that, even in the few weeks since the King report was published, I and many people who have spoken to me have seen greater precision in the labelling of stories and indeed a really concerted effort by the BBC to do rather more in covering the devolved administrations. This is not the whole story. The Director General has been charged with bringing an action plan forward. That will be in front of the Trust at its next meeting. I just want to offer you one insight which may or may not be helpful. I think there is just a danger in this discussion that this is seen as wholly the BBC's problem. Certainly the BBC must do better and more effectively cover the reality of life across the United Kingdom, but they have had to contend consistently with ministers and governments speaking as if devolution has not taken place, offering messages as if they applied. The right challenge here is, nonetheless, BBC journalists have the job of challenging that, but I think we should not under-estimate that they have had to contend with a sort of assumption that statements made from Westminster continue to prevail across the whole of the United Kingdom when that is no longer the reality. Mr Thompson: The other assurance we can give you is that once we have come up with our management plans about training, about making sure we have got the right level of seniority, of editors who are focusing on this and so forth it will not be the end of the matter. The Trust will continue to monitor this very closely. It will draw on the advice of the audience councils across the UK. We will continue to listen to outside critics as well. There will be plenty of opportunities in the years to come to track our progress and to judge whether the BBC has improved this or not. We are totally committed to getting this right and we recognise we have got quite a lot to do to get it right. Q49 Adam Price: The one area where the report does give you a clean bill of health is on the question of impartiality. Were you surprised to read the comments of the General Secretary of the Labour Party in Scotland in their submission to the Broadcasting Commission in which the Labour Party criticised BBC journalists in Scotland for their use of terminology, their references to a London Government, et cetera, which they said placed those journalists in the position of appearing to be a partial contributor rather than a neutral observer and interpreter of political events? Is that a legitimate criticism of the BBC in Scotland by the Labour Party or is it paranoia on their behalf? Mr Thompson: I would not want to characterise it. It is for others to judge what it is. The Tony King report is an objective expert assessment and that is why we must take it so seriously. His objective expert assessment is the BBC is impartial. As part of the hurly-burly of politics there are rare occasions when politicians accuse the BBC of being partial. The right thing when we are accused of that is for us to take an honest look at what we are doing. The Trust is there to do it independently anyway and work out whether that is true or not. The fact that a particular politician at a particular moment in time accuses us of being impartial is part of the rich tapestry of what happens. I do not dismiss it out of hand. We should look at it closely. In my watching and listening to the journalism that comes out of BBC Scotland I do not see systematic or serious bias of the kind that you quote at all. I think that we try in Scotland, as we do across the whole UK, to reflect the political scene as objectively and impartially as we can. Sir Michael Lyons: I did speak to Anthony King in some detail about his findings and pressed him on the strength of his conclusion given that this was a report that we commissioned into whether or not the BBC was truly impartial and he said that throughout all of the interviews that he had held across the parties nobody had suggested at any time - and he pressed the matter - that the BBC could be accused of partiality. I think we can have some confidence in what he said. There are live debates taking place at the moment in which people have their own interests. Q50 Adam Price: And by-elections! Sir Michael Lyons: Quite possibly. Q51 Rosemary McKenna: I cannot say that at the moment the BBC is ignoring Scottish issues! I want to move on to your proposals to try and locate at least 50% of BBC staff outside of London by 2016. That would mean more production outside of London. How can you not do more production outside of London because that would appear to me to be absolutely crucial to developing the talent that is in the UK outside of London? Sir Michael Lyons: It is, and the BBC as a whole is committed to developing the creative industries across the United Kingdom. The public commitments to moving towards the Ofcom targets, both in terms of the 50% ambition for out of London but also the network production targets that we have agreed to, came out of intense discussions between the Trust and the Executive about the right way to lay out our common commitment to serving all audiences and making a stronger contribution still to the economy of the nations and regions. I do not want to leave you with the impression that we have a rather simple view and Mark will say more about the first steps in this direction. I think there is a legacy issue here. Even the decision to build Pacific Quay is very important and, as we said at the time, it is important not only to Scotland, but it is even more profoundly important to changing the shape and responsiveness of the BBC. The decision to move to Salford had not previously been fully turned into plans to have both the impact on production locally but also to ensure that we capture all of those audiences and respond to those quite stark figures that show that as you move away from London affection for the BBC does reduce. It is not a consistent pattern, but by and large the further you move from London the bigger the problem is in winning the affection of its audiences. The important message to leave with you is that this is very prominent in our current agenda. That is reflected in the fact that we have set completely new targets and it reflects detailed discussions between the Executive and the Trust. It is not a question of it being imposed, it is a shared ambition. There is no doubt at all that it is going to be tested. Mr Thompson: What are the elements? The elements are trying to build high quality, state of the art broadcast centres. Q52 Rosemary McKenna: Pacific Quay has been there for a year and it has not increased its production. Mr Thompson: We are increasing network production in Scotland and over the coming years we expect it to go on increasing. Secondly, partnerships are with the broadcasters. Thirdly, stretching the targets of the commissioners is an absolute determination that the commissioners should do to make sure that we are commissioning production from across the whole UK and specifically Scotland, Wales and Northern Ireland. Q53 Rosemary McKenna: We have some excellent independent producers in Scotland, which is recognised by everyone. I think there is a danger that we are going to lose some of that talent if it is not used. I want to ask you a specific question that was raised with this Committee by SMG about Scottish Television. Why does the BBC not recognise them as an independent producer? Mr Thompson: The issue of whether they qualify as an independent producer is a matter for the Ofcom definitions under the statutory 25%, it is not a matter for the BBC. We cannot declare people independents or not independents. It is about whether they meet the criteria which are laid out in the legislation and which effectively Ofcom gives a view on. The nature of the beast is to try and create an independent productive sector which is not over-influenced by the broadcasters. Q54 Rosemary McKenna: I will explore that with Ofcom. Mr Thompson: That is not a matter for the BBC. However, the fact they are non-qualifying does not mean we cannot potentially commission something from them. Q55 Rosemary McKenna: It is an excellent facility. Mr Thompson: Right from the start we built up PQ by talking to SMG and with an expectation they would share many of our facilities. It is very different from the past. Around the country we are trying to work with SMG, ITV and Channel 4 so that you deliver a critical mass which helps the whole sector, not just the BBC. Q56 Rosemary McKenna: You will know that this Committee was instrumental in unraveling the whole issue of quiz call television, et cetera. How do you feel that you are managing to rebuild trust? Sir Michael Lyons: Perhaps I ought to give you the Trust's judgment on this. There is no doubt at all that those lapses that were revealed last summer were serious lapses. I think the BBC established some public credibility with the fact that it recognised them as serious, it did not seek to reduce them or diminish them and gave a very clear statement of intention to set things right. The Director General brought forward at that stage an action plan which was considered and agreed with the Trust and we followed that up by asking Ron Neill, an established figure in this industry, to go back in and to check in some detail not just that the changes had been made, but that they had had an impact and we then published his report. The Neill report makes very interesting reading. It gives a very positive response in terms of the fact that the BBC did exactly what it said it would do and it had changed its practices and had increased arrangements for proper compliance. You then come to those figures, which again are in the public domain now, showing that public trust in the BBC has gone back to levels before those incidents occurred. None of us is complacent about this, absolutely not, but I think this is a matter well handled and something of a case study that others might follow. Q57 Helen Southworth: Could you not lift the milestones for Media City in Salford? What are you expecting and how soon are you going to do it? Sir Michael Lyons: I am sure you will have seen how fast it is taking shape. We are still on course for 2010 as the completion date. A very important issue for the Trust is making sure that the Salford operation, BBC North, is appropriately led. That is a very important issue for us. The physical project is moving on in good time. I just want to take the opportunity to underline that the BBC is a very important part of this, but Media City is nine times larger than the BBC's input. I only underline that because I want it to be clear that here is the BBC working in partnership, it is doing its bit. It cannot do this by itself. Mr Thompson: We are currently on time and on budget with the project. 2011 is the main year for occupation and we will be broadcasting out of Salford by 2011. I expect that by early autumn we will have had something to say publicly about the leadership and how we are going to structure this part of the BBC with the rest of the BBC and hopefully we will get leadership in place by mid-autumn of this year. Q58 Helen Southworth: In terms of production within the region and the creative industries, what is your vision for that? Mr Thompson: What we hope we can do is be an anchor tenant in this place. We have been talking to ITV, Channel 4, Channel 5, PACT and the NWDA and so forth. What we hope is that the BBC's activity there, several thousand people, hundreds of millions of pounds of investment, will form the core of a growing creative industry and that Media City will become a critical mass which more and more people join to create opportunities for employment, for new businesses, for new independent production businesses and other businesses, for some of the craft skills we use, for partnerships with the academic institutions, the universities, but also with schools and academies in the area and with various local communities. We are thinking hard about Salford, Greater Manchester, the North-West and the North. Q59 Helen Southworth: Warrington? Remember Warrington! There are very able and creative people in Warrington. Sir Michael Lyons: Each of my regional or national visits has included a detailed discussion with the independent sector. The meeting in the North-West was quite distinctive in terms of the recognition of both the importance of what the BBC is doing there and its willingness to put a hand out and work much more closely. Q60 Mr Evans: Mark, how much did the BBC pay Jonathan Ross last year? Mr Thompson: As you know from our exchange a year ago, we do not release the details of any of our contracted on-air presenters. Q61 Mr Evans: Being the BBC I thought you would enjoy a repeat! Mr Thompson: There are less now on BBC One than ever before, you will be pleased to hear! Q62 Mr Evans: I am just wondering why it is that people think that if MPs' pay is known and their expenses are known it keeps a lid on it, but the BBC think that if they keep a lid on their stars' salaries and expenses that somehow that keeps a lid on it. I do not understand why there is such a big difference. Mr Thompson: What I accept and other members of the Executive Board of the BBC and of the Trust would accept is that as public officers of the BBC it is absolutely appropriate that our emoluments and our expenses should be subject to any amount of scrutiny and, believe me, mine are! I am just that, I am a public officer of the BBC. When we contract someone to present a television programme or a radio programme it is a very different relationship. Our belief, common in our industry, nobody else does this, is that the interests of confidentiality apply as they do throughout most of British public life. Q63 Mr Evans: It is public money. You accept that the licence fees are taxed. The Freedom of Information Act has changed everything. Are you sitting on many Freedom of Information Act requests at the moment about some of the stars that you employ on their salaries and expenses? Mr Thompson: You will recall that within the Act there is a derogation relating to the editorial content of the BBC and indeed Channel 4. A large part of our editorial and creative operations lie outside the Freedom of Information Act. More generally, of course, the BBC is constantly receiving requests for freedom of information and indeed the reach is also constantly asking for information. We are a big user of the FOI as a journalistic organisation and a broadcaster as well. There are extensive numbers of FOI requests on everything under the sun. Q64 Mr Evans: I notice from p59 of the accounts that you now have this wonderful senior managers' headcount by salary band, although I think you originally did manage to miss off the four people earning more than a quarter of a million and you have put a little sticky erratum over that. Is it possible that in the future we could see a salary band as far as some of the stars that you employ? You are not compromising the fact that Jonathan Ross is on £18 million over three years or whatever it is, but at least we would start to know exactly how many people are receiving huge chunks of money. Sir Michael Lyons: I want to come back to the Trust's work this year in part as a response to the concerns that we heard from this Committee and other places about big salaries based on leaked information. We asked Oliver & Ohlbaum to take a very close look at the way the BBC goes about recruiting and retaining top talent. A particular strand I want to draw from that report was their message that the BBC was not a market maker certainly as far as television was concerned and indeed in places was paying less than the market rate. It is that second finding that I want to focus on for a moment. The proper test as far as the Trust is concerned is whether the publication of top talent salaries in detail lead to better value or worse value for the BBC. I have to tell you, our view is that it will almost certainly lead to worse value. You see that illustrated in a current case, which I do not want to get into, where information has entered the public arena about one member of a team and how much they are rewarded and starts to bid up. In a highly competitive area that cannot offer the way forward for better value for the BBC despite our commitment to openness fully reflected in the fact that we published that report minus the salaries. Q65 Mr Evans: Perhaps you could look at the bands for the future, although I think you will have to extend it way above a quarter of a million to be able to get a proper --- Sir Michael Lyons: I will take that away to consider as a proposition but without leaving any suggestion that I think it might be in the licence fee payer's interest for us to move in that direction. Q66 Mr Evans: I was staggered when I read in the newspapers that Jenny Abramsky will be drawing an annual pension in excess of £190,000, which is a staggering figure of money when you consider the Prime Minister does not even earn that now. How come we have got ourselves into a position whereby one of your directors has got a pension pot of over £4 million and is going to be picking up more than the Prime Minister? Mr Thompson: It is not normally our policy to talk in detail about an individual's remuneration. It is worth saying that Jenny has had a truly distinguished and exceptional career as the leader of BBC Radio for many years now and many other great achievements in her career. Jenny's story is a fairly simple one. The BBC has had an unexceptional final salary scheme. She joined the scheme and has stayed in the scheme and is now taking retirement. The scheme itself is unexceptional. Q67 Mr Evans: The pension is not unexceptional, though, Mark. Mr Thompson: What is exceptional about Jenny Abramsky is she spent 39 years working for the BBC. The only reason that the sums are as they are is because she spent 39 years in continuous service, ultimately service to the British public, in various roles inside the BBC. It is a highly unusual circumstance. Most people in broadcasting move around. I left the BBC to go to Channel 4 and I have come back again. My pension pot will be a lot smaller than Jenny Abramsky's as a result. There is no special favouritism here. All that simply happened is that she joined what I would describe as a pretty bog-standard, final salary scheme, but, if you pay into a pension pot for 39 continuous years and, in particular, you join the scheme before, to get techy about it, the 1989 Inland Revenue cap, it builds up over time, and it is no more, no less than that. Although I recognise that it will be considered by many people to be a considerable pension, nothing exceptional has happened; the only exceptional thing is four decades of public service. Q68 Mr Evans: Yes, but you will recognise as well that there will be a lot of people who also would work continuously for an organisation who will be on pensions of less than £25,000 a year, so, when they see somebody working for an organisation which is in the public service sector and they are going to be ending up with £190,000, which is more than the Prime Minister's salary now, then the public themselves will be rather startled. Sir Michael Lyons: Inevitably. Inevitably, there are many members of the public who are startled by the modest remuneration that Members of Parliament receive. Q69 Adam Price: Sorry, I have never heard that on the news! It is lovely! Can you just say that again, Sir Michael! I have never heard that before! Sir Michael Lyons: Of course you know there is a very firm editorial divide here, so I will have to leave Mark to reflect on whether that is appropriate! Just coming back to this, big salaries, big remuneration inevitably draws public attention. The two points that I would make is to underline that the BBC cannot be compared simply with the public sector as a whole. There are a whole series of tasks, activities and posts where it has to recruit in competition with the private sector and very clearly, and you know this, but we could certainly provide you with further information, where the remuneration packages in competing private organisations are of a completely different order. Jenny Abramsky has stayed loyal to the BBC through a revolution in radio where, at any point, she could have gone out and joined an industry where there were very substantial equity rewards for sometimes not very great professional risk. She chose not to do that. She, as a result, finishes her career as a good public servant, yes, with a very generous pension, nobody could detract from that at all, but without the wealth that she could have accumulated if, like some others, she had moved backwards and forwards between different companies during that radio revolution, so I do not think it would be at all appropriate either to question the BBC's remuneration policy on this point, although we are here to be accounted for on that and other matters, or to hold Jenny as having done anything other than work faithfully for an organisation and be paid accordingly. Q70 Mr Hall: If we look at the BBC and scrutiny, on the first part we have got the list of the 12 trustees, four of whom are regionally based and there are six of them not. I tried to get information from the BBC as to whether there was any regionalism in the appointments of the remaining six trustees and the BBC have refused to answer that question. Is there anything you can tell me that tells me that the trustees, apart from the four nationally based trustees, are not just London-centric? Sir Michael Lyons: Well, let me speak in very personal terms, with the prospect of another week living in the same hotel before I go back to my home in Birmingham. The Trust is not only made up of Londoners plus the four people who are specifically recruited because of their responsibilities for the four nations. The question is really more properly asked of DCMS because all of the trustees are appointed through the DCMS through the normal public appointments process, although in the end of course the appointments are approved by the Privy Council. Q71 Mr Hall: So how many of the six trustees live in London? Sir Michael Lyons: I would be very happy to give you the answer to that. Q72 Mr Hall: Why do you not do it now then? Sir Michael Lyons: Well, because I want to go back and just check, but certainly I do, the Deputy Chairman does, so I am already, if I put the four national trustees together, up to half of the Trust, so I do not think the concern that the Trust is made up only of Londoners is actually likely to stand up, but let me reply to you in writing and show you where people's homes are. Q73 Mr Hall: Can I then refer you to page 39 and this talks about the remuneration policy for members of the Trust. It goes on in the final paragraph, the middle column, "The trustees are additionally reimbursed for expenses incurred on BBC business, for example, travel and accommodation, in line with the Trust's Code of Practice. Some of these are expenses, together with some support services which are booked centrally, classified as taxable benefits and are paid for by the BBC". If you turn over the page and we look at the table there, when we look at the trustees, there is very little that is down as taxable benefits, so does this table include everything that is paid to trustees or are there other expenses that are paid that are not listed? Sir Michael Lyons: This shows taxable benefits. As that text that you have just read out shows, there are out-of-pocket expenses which are not taxable expenses, and in exactly the same way as you would find in any organisation, I think, including Members of Parliament, there is a distinction ---- Q74 Mr Hall: Well, we do not have any problem with ours being made public. Sir Michael Lyons: ---- you do not have any problem here with us making public those taxable benefits. Q75 Mr Hall: So there are benefits that are paid that are not actually listed in this table? Sir Michael Lyons: No, there are expenses which are reimbursed. There are no benefits that are paid that are not listed in this table. Q76 Mr Hall: So there are other payments that are made? Sir Michael Lyons: There are expenses which are reimbursed. Q77 Mr Hall: Reimbursed, fine, but they are not in this table? Sir Michael Lyons: No, but they are included in the total figures at the end. Q78 Mr Hall: In the total figures? Sir Michael Lyons: In the total figures for the Trust expenditure. Q79 Mr Hall: So that is in the £642,000, yes? Sir Michael Lyons: No, no, not this. This is a simple sum of the money paid to trustees in fees and in taxable benefits, but, if you go to the figures on page 38 which show the total running costs of the Trust, they are included in these other operating costs, but can I just get the spirit of your question, that we will be publishing all of the details of the expenses received by individual trustees. They are not in the Report, but it is our policy to publish those and they will be on our website later in the year. Q80 Mr Hall: Is it appropriate that the BBC licence fee is used to provide private medical insurance cover for senior BBC managers? Sir Michael Lyons: I should just acknowledge that this is part of the package of remuneration that has been established to attract and retain staff, and private healthcare is very much a norm amongst private employers and that is very much the area that the BBC has to look to to make sure that it can genuinely recruit at any one time the most talented and the best skills for the BBC. I acknowledge that that is not the case everywhere, although it is increasingly taken up elsewhere in the public sector. Q81 Mr Hall: Mark, can I just deal with the non-exec directors now which is in the second part of the Report and turn to the table that is on page 93. We have the same question in regards to the reimbursement of expenses because there are not any taxable benefits or reimbursement of expenses listed for the non-executive directors. Mr Thompson: It is the same answer. This, as always, is a benefits table and other expenses are treated elsewhere. Q82 Mr Hall: But I am correct in saying that the BBC actually cover the taxable cost of those benefits and they are not met by the non-executive directors or the trustees? Sir Michael Lyons: I think the key issue here, and I can speak authoritatively for the Trust, but I think it applies to the non-executives as well, is that those taxable benefits essentially are the costs of moving from one's home, the travel costs associated with coming down and staying in London to do the job, so this links back to your very first question. If you want more people who are not London-based to contribute, whether it is to the BBC's governance or indeed other public service, then the costs of travel not only need to be reimbursed, but, because they fall for taxation purposes as taxable benefits, you also have to pay the tax that would have been paid on them, otherwise the individual ends up out of pocket and, therefore, the role looks very deeply unattractive. Q83 Mr Hall: Is the information that you say is not in the report but will be made available the same for the non-executive directors? Ms Patel: If you go to page 92, the middle column, you will see in the second paragraph the terms under which the non-executive directors receive base pay. Their business expenses, for example, travelling to BBC premises to attend a meeting, are reimbursed and the tax met by the BBC. They do not have, for example, access to cars or other taxable benefits. Q84 Mr Hall: We have got the Trust that has been set up to do its particular job and then we have got the non-executive directors who are set up to do a slightly different job. Mark, one of their roles is to bring to your attention issues that are maybe of concern or of public interest. Mr Thompson: Or to use their experience to advise us and to help us in our decision-making in a way that plc non-directors would. Q85 Mr Hall: Have you any examples of the sort of issues they have brought to you? Mr Thompson: Absolutely. One of our non-executive directors, Mike Lynch, is a leading technologist and he has been incredibly useful in thinking through, critiquing, pointing out the weaknesses in the plans for the iPlayer, the plans for Kangaroo and so forth. We have got Marcus Agius, who is also Chairman of Barclays PLC, one of the most experienced City figures and City board chairmen, who is incredibly good at putting Zarin through her paces in terms of the financial planning of the BBC and so on. Each of them has been chosen because of the expertise they brought in. Q86 Mr Hall: Give us a specific example where they have come along and said, "We are doing this wrong. We need to put it right." Mr Thompson: On BBC investment proposals around iPlayer, for example, they have come up with specific suggestions for modifications or adjustments to the proposals. Once the non-executive directors are happy with them they have to go for scrutiny by the Trust. The idea of having the non-executive members of the Executive Board was to have people who were supportive of what the BBC management were trying to do improving decision making whereas the governors have to do a bit of both. You have got a much clearer role for the Trust, which is that once the Trust receives a proposal they are not there to champion it, they are there to critique it and make a judgment about whether it is right or wrong. Sir Michael Lyons: You talked about whose job it was to bring up issues of public interest. That is the job of the Trust. The job of the non-executive members of the Executive Board is to strengthen the BBC's business processes. That is where their challenge comes and I can say that, from what I have seen of it, it is very effective. The issue of protecting the interests of the licence fee payer, the public interest, is the job of the Trust. Q87 Paul Farrelly: I would like to ask a few questions on the scrutiny role the Trust plays with respect to BBC Worldwide and its commercial activities. I am sure some of these questions will be addressed by the PriceWaterhouse review. Let us put that to one side for a moment. The commercial sector is not shy of crying foul with respect to BBC Worldwide, be it Kangaroo, be it international web advertising, be it the level of integration between the BBC and Worldwide, the transparency and whether it overpays or underpays for different types of rights. Recently you have had the misfortune to buy a very well known household name which lends itself to headlines called Lonely Planet. I am a great supporter of the BBC, but this is a well-established brand. I am not surprised that Timeout has gone crying foul to the Office of Fair Trading. This leaves me quite uncomfortable as to why the BBC is buying another brand when Worldwide is about promoting the BBC brand and taking advantage of it. To a certain extent I cannot help feeling that this is an own goal. Sir Michael Lyons: It has certainly been controversial, there is no doubt about that. When the proposal came up for consideration by the Trust we focussed on the key issue of whether this really did meet the purposes for which BBC Worldwide was set up, to exploit BBC generated intellectual property rights and to bring back a return for the licence fee payer who has effectively invested in those property rights. That is the whole purpose behind Worldwide. That is, of course, an agreed function which a number of governments have not only endorsed but actually championed. That is the approach that we brought to this. As to the purchase of Lonely Planet, it is important for me to say that the BBC had not gone out to the market looking for this. The owners had come to the BBC and said that they were looking to sell if they could find an organisation whose ethical and editorial interests aligned with those they felt that they had nurtured in the company and they saw the BBC as very much the preferred buyer. The issue for the Trust to consider was whether we could see that this really would exploit existing BBC intellectual property. Our view was that we could and that it was therefore right to approve it. We will see this unfold. We are not sitting here thinking that is finished and we are off to another project. We will continue to scrutinise this. The progress made was debated only at the last board meeting. We will see whether the Trust was right to be reassured as we see this unfold, but you are right, it has been controversial. Mr Thompson: Central to the question is whether or not we are actually able to demonstrate the use of BBC intellectual property. We have identified over 3,000 hours of completed programming and about 15,000 clips of BBC content about travel, natural history and so forth which we think we can integrate. It is content which at one level has been sitting in the archive gathering dust. We now believe that we can get commercial value from it around the world in ways which will get more profits to Worldwide and which in turn can be invested back into the public services of the BBC. Q88 Paul Farrelly: To my mind there is a large difference, which is part of the discomfort, between synergy and BBC travel guides promoting, like the BBC magazines, what it does on air and therefore creating its own brand in that business. Have you been approached by Timeout for a meeting to discuss those concerns before or after they went to the OFT? Sir Michael Lyons: I am just trying to think back in detail so I can answer that absolutely precisely. I think we have had correspondence about this. I do not think it was correspondence which suggested a meeting as the right way forward. Q89 Paul Farrelly: Was that from your side or their side? Sir Michael Lyons: I do not remember the correspondences asking for a meeting to discuss this. I would be surprised if they asked for a meeting and it was turned down because the policy that I have got personally and the Trust has across the board of our activities is a willingness to engage with all comers, particularly to take full account of the competitive impact. You can see that reflected in all of the work we have done, each one of the PVTs, the work that we did on BBC Jam, et cetera. Our house style is not to shrink from discussion with those who have a view --- Q90 Paul Farrelly: As the Chairman of the Trust, if you were approached by a major organisation which was a competitor of BBC Worldwide that asked for a meeting to discuss its concerns your general approach would not be to turn it down because you were too busy, would it? Sir Michael Lyons: Not at all. It certainly would not have been turned down because I am too busy. On occasion it may be inappropriate for me as the Chairman of the Trust or indeed for any representative of the Trust to meet an organisation if actually we would be conflicted by that, but that would be a minority of occasions. Q91 Paul Farrelly: I want to get a feel for the level of scrutiny that you have been indulging in. Let us put Lonely Planet as a household name to one side. Let us take Freehand Productions in Australia, for instance, where again there are some of the concerns about their having first option or right to look at BBC distributed content or formats, similar concerns from the free market. Now, in June 2007, you endorsed BBC Worldwide's growth strategy. With acquisitions such as Freehand or Left Bank, do you look at those in detail or do you rely on a self-certification process by BBC Worldwide and the BBC Board to say that this is in line with the growth strategy that you have already approved? Sir Michael Lyons: The Trust does not approve each and every investment of Worldwide, it is a question of their scale, but the issue of how the BBC as a whole properly scrutinises these investment decisions has been the subject of intense discussion between the Trust and the Executive and has included the non-executive directors, and it is one of a number of areas, and I might come back in a moment to something I said about the press conference this morning about the position of both the Trust and the Executive on the Worldwide future. It is an area where we have strengthened and intend further to strengthen the scrutiny by the Executive Board of Worldwide because it is a subsidiary of the Executive and, therefore, that is appropriate, we think, and the right place for these sorts of decisions to be made. Q92 Paul Farrelly: So, below a certain threshold, you would rely on a self-certification process? Sir Michael Lyons: Absolutely, but I do not want to give you the impression that that does not mean there are still ---- Q93 Paul Farrelly: But what is the threshold? Sir Michael Lyons: Do you know, I do not have that to hand. Ms Patel: The Worldwide Board itself, which has got external non-executive directors, will look at any investment above £2 million. Q94 Paul Farrelly: But what is the Trust's position? Sir Michael Lyons: My note here just reminds me that it is a much bigger figure, it is £50 million, unless it is novel or contentious, and of course that takes some interpretation, so I will answer the question before you hold me to it. Mr Thompson: Just to be clear about 'novel' and 'contentious', like beauty, I think it is in the eye of the beholder, and 'novel' and 'contentious', in my view, should absolutely be in the view of the BBC Trust, so, in other words, if we think something might possibly be considered as novel and contentious by somebody, we always seek advice about whether, in the Trust's view, something is novel and contentious. It is also worth saying that the acquisitions that BBC Worldwide has been making in independent production companies are minority stakes, 25% in Cliffhanger and Left Bank, for example. Sir Michael Lyons: Can I just come back because I do not want to do less than justice to my colleagues on the Finance and Strategy Committee of the BBC Trust who receive regular reports, and the staff that support that are in constant dialogue, so, as Mark sought to reflect, these are not things that just pop up and actually there is a long, detailed and close relationship between Executive and Trust staff, looking at things as they develop. Mr Thompson: Moreover, acquisitions of any scale at all would be considered closely at the Executive Board, and I can tell you that I have an absolute policy on the Executive Board that, unless the non-executive directors are happy with a proposal, it does not go through. Q95 Paul Farrelly: I now understand, above and beyond the actual and then the qualitative judgment threshold of 'novelty', how you will decide to approve an acquisition, clearly whether it is in the interests of the BBC's public purpose activities, its fair training policy and so on and so forth. Sir Michael Lyons: Yes, it is four tests. Q96 Paul Farrelly: Just on the commercial side, and clearly we all want to make sure that the BBC is investing the money wisely, but just as an example on Lonely Planet, and this is ignorance, I do not know the answer to this, have you announced the terms of the acquisition? Sir Michael Lyons: Yes. Q97 Paul Farrelly: The price? Ms Patel: Yes, and in the note to the accounts you will see the price of the assets we acquired and their fair value as well. Q98 Paul Farrelly: Also, is there any option on the remaining 25%, for example? Ms Patel: The Wheelers, who own currently the 25% stake, have a put-option in about two years' time to request that the BBC buys their 25% share. Q99 Paul Farrelly: And that depends on? Ms Patel: On an agreed formula. Q100 Paul Farrelly: Is that all published? Ms Patel: It is in the Annual Report. Q101 Paul Farrelly: So you are transparent in that respect? Ms Patel: Yes. Q102 Paul Farrelly: Are you transparent with every acquisition that you make? Ms Patel: It is about size, but most acquisitions have historically, in the BBC's accounts, had a clear analysis of what we bought, what the options were, what the contingent proceeds were, if there were any, and that is part of it. Q103 Paul Farrelly: So, if we were to ask you for the amount that you paid for your stake in, say, Free Hand or Temple Street or Left Bank, you would be able to state those publicly? Sir Michael Lyons: Yes. Q104 Paul Farrelly: And it is quite clear to those people selling that you are a public corporation and need to be as transparent as possible? Ms Patel: In the accounts, small acquisitions will all be combined, but we definitely have them there. Q105 Paul Farrelly: And their terms could be freely available if anyone wished to ask for them? There are no clauses of confidentiality? Ms Patel: There may of course be some clauses of commercial confidentiality, though I would not know them for each one, but in general the price we paid, the terms on which we bought and the amount we bought would be freely available. Mr Thompson: And all of this is obviously is to be seen in the context of our Charter and Agreement, that we should drive residual commercial value achievable through exploiting, if you like, beyond its public service window what the BBC does and in the context, when you see, perhaps you already have seen, in the BBC Worldwide Annual Report a year when we have seen good growth across that business and profits which three or four years ago were languishing in the mid-30s and are now hitting £118 million, so it clearly raises questions and clearly bears scrutiny, but this is a success story. Q106 Chairman: We may wish to return to Worldwide, but I want to just touch on one or two other areas where there is a real clamour of concern about the impact of the BBC on commercial companies. You have come up with a novel suggestion to Ofcom as part of your submission to the PSB Review that you may make available video content, news content to commercial broadcasters to sustain plurality, but you will be aware that there are commercial companies out there who sell that content. How are they going to be affected if the BBC starts giving it away for nothing? Mr Thompson: I think as I said at the time of the launch of our submission to Ofcom, clearly any suggestion that we might share footage of regional television programmes, for example, so that the economics of others, principally ITV we had in mind, making regional television might be more sustainable, a suggestion made by the Secretary of State, Andy Burnham, and a suggestion raised with us with ITV, so it is not something the BBC is suggesting, clearly we need to explore the market impact implications of such a suggestion, and I am quite certain that the BBC Trust would wish to satisfy itself that there would not be significant adverse market impact. Q107 Chairman: But the BBC Trust would carry out a public value test of this proposition, would it, if it were to proceed? Sir Michael Lyons: It is not a new service, is it, so it is unlikely to do that. We would look at it in detail. Perhaps I can just make clear, if I can just go back to this, Chair, that in the submission that we made we were very clear that we wanted to send a strong message of the BBC's willingness to be a partner, to build on its track record here and that we had a view of the importance of a more co-operative future for the broadcasting sector as an alternative to ever-tighter regulation. The device of ensuring that there was some granularity to that, there were some illustrations which used that box device to take some suggestions from the Executive to make it clear that none of these has yet been agreed by the Trust, they are put there for debate and consideration, and the Trust completely reserved its ability to come back should such a proposition come forward. Just to answer your specific question, what we would do in this case would be a non-service approval, but that would have many of the hallmarks of the PBT process, it would be open, it would be published, there would be intense consultation and it would be evidence-based. Q108 Chairman: But is there not a real problem here, that you, as the Trust, have put in a joint submission to Ofcom proposing something where you may then have to arbitrate over any complaints which are subsequently raised? You are trying to fulfil two functions. Sir Michael Lyons: Chairman, this is the world we live in, and we can give you other illustrations. Kangaroo is another illustration where the Trust has not finished, or even started, its appraisal of the Kangaroo proposition. How could we because in fact the proposition itself is still taking shape? What we have done is to say that, for what we can see of this proposition, we have authorised the Executive to talk to other players in the industry, to talk to those who have already been identified as co-operators. In no way does that constrain the Trust when the day comes that it has a detailed proposition in front of it. Frankly, you cannot use our quite detailed processes on something before the proposition has really taken shape in each of these areas. Mr Thompson: The BBC submission to Ofcom makes it very clear at this point that the Trust has challenged the management to come up with some ideas. The ideas have not yet been approved. They are being developed and I will come back with more detailed proposals in the autumn. These proposals are then put very clearly in a separate box with my authorship and they are a work in progress for the management. The Trust is not endorsing these particular proposals, but we thought it would be useful to see the ideas the management are coming up with to meet the Trust's challenge. Q109 Chairman: Would it not have been better for the management to submit this to Ofcom and had the Trust stand aside so that they could then be completely independent to judge any subsequent complaints? Sir Michael Lyons: That is what we have done. Q110 Chairman: Your name is on the document. Sir Michael Lyons: Not on the suggestions. They are very clearly headed. There is a very clear statement that these have not been approved by the Trust. I am not blind to the issue you have raised with us. As we came to the decision of how we were to put together our responses to Ofcom at one stage we considered separate reviews, but we did not feel that would help either the public or Ofcom. Q111 Chairman: The press release you issued said that the BBC Trust and Executive have submitted a single response to Ofcom's consultation reflecting their shared thinking on the challenges ahead and the issues raised. It does not say in brackets "but not the bits which are controversial and which we might have to then arbitrate over". Sir Michael Lyons: It is the one section of the report presented differently clearly ascribed to the authorship of the Director General. I do not think we could have gone further in making it clear that these were put there for the purposes of discussion as the response to the Trust challenge, but I take your view that perhaps we should have done. Q112 Chairman: I merely observe that it does not say that in the press release. You could have said that which would have made it clear. Mr Thompson: Let me make two points on the idea itself. This is not a completely novel idea. There is something called the Eurovision news theme which has existed for many decades where European broadcasters pool news footage to improve the exchange of views across Europe. The idea of an exchange of footage between broadcasters is not a novel one. Quite apart from the BBC Trust, there has been an appetite in some quarters for us to make, because of our news gathering across the UK, some of the marginal footage available to others so that the continuation of a high level quality of regional broadcasting from ITV and potentially other regional players becomes more economic and sustainable than it otherwise would be. However, if it turns out, in consultation with all the players, that the feeling is that this might cause problems for commercial media then we will not do it. The only reason for doing this would be if it helps, as it were, make plurality in this part of broadcasting more sustainable than otherwise would be the case and only if for all of the players, including agencies and local newspapers and others, it makes sense. It needs to be tested and over the course of the summer we will be talking to all the players. If there is a consensus it is not a good idea we will not do it. Q113 Chairman: Is that your answer to local video services as well? Mr Thompson: Over the last few years you will have seen the way in which the BBC's plans in this area have changed and adapted and become more modest in dialogue with other media players. What is going to happen in terms of the core part of local video services is there will be a systematic scrutiny of the market impact of this. You have talked positively about the broad idea of improving local services yourself in the past. This is an area where the public say they would like better local services from the BBC. I think we have substantially changed our plans to try and address some of the issues and concerns that have been raised. The eventual proposals are now going to be tested to destruction through the process of both the BBC Trust and Ofcom and we will see where we get to. The critical thing to say about local video services as well is that we absolutely accept, and I accept, that these kinds of ideas from the BBC should be tested and that the market impact of the ideas should be a critical consideration for the Trust in deciding whether to go ahead or not, and we are not shying away from that. Q114 Chairman: Can I just check with you that video content, if you do make it available, will be BBC-branded? Mr Thompson: The initial intention is that it should be used on BBC-branded services, although of course you will see in the age of the iPlayer that, increasingly, people ---- Q115 Chairman: But, if you give video content to ITV, let us say, for use in their regional news programming, will that video content have the BBC symbol in the top corner so that the viewer knows that it is the BBC's? Mr Thompson: Honestly, I would say that is something that we need to consider, but my presumption would be that, for it to be fully valuable to other providers, it would not be BBC-branded. Q116 Chairman: As you will understand, that will increase the anxiety amongst the commercial providers. Mr Thompson: It is a very good example of the kind of trade-offs one is trying to work with. The advantage of not branding it as BBC is, it seems to me, that other broadcasters can make more of it without feeling that they are sort of throwing in the towel. The disadvantage is that, without that kind of clear labelling, it potentially might increase the market impact. I just want to stress again, Chairman, that all of this we will discuss with a broad range of players and we will not go ahead with this proposal unless we think we have either found ways of solving the market impact issues or unless some of the commercial players believe the benefits are so great that it is worth, as it were, testing the positive and negative market impacts. Chairman: We have one last subject which my colleague, Philip Davies, wishes to raise. Q117 Philip Davies: I just wanted to drag you back to the subject of impartiality that Adam mentioned earlier, the general point. I am slightly confused because last year we had a quick discussion about where the BBC itself was accepting that it may well have not been perfect in the past, and I think we discussed the Middle East, the European Union and climate change as three examples of that, yet now, based on a report by one person, Anthony King, who is a contributor to BBC political programmes himself and particularly election programmes, you now seem to be claiming that you have got a clean bill of health, so what has changed in the last year to evaporate all of those concerns? Sir Michael Lyons: If we have left you with the impression that Tony King said anything more widely about impartiality than within the very narrow remit that he was given of looking at the coverage of the devolved arrangements in the three nations, then we are at fault. Certainly there is no intention here to say that Anthony King's comments have any wider relevance at all, and the BBC, I think both Trust and Executive, believes that the work started previously by the governors, we of course being responsible for publishing both the Impartiality in the 21st Century Report, the Report on the BBC's coverage of business in the United Kingdom, and now this is part of a dialogue, a rich dialogue in the BBC about what 'impartiality' means. There is certainly nobody sitting here saying that the BBC is, or ever will be, satisfied that it has reached some sort of state of grace with respect to impartiality. This is a constant dialogue, a constant debate. Q118 Philip Davies: So those issues that I just mentioned that we discussed last year, there is still a concern that the BBC's output may not necessarily always be as it should be? Mr Thompson: There has been a series of reviews, impartiality reviews, commissioned initially by the BBC governors and subsequently by the Trust, each of which has found many points of praise in what the BBC has done, but each of which has also found areas where, you know, improvements could be made. In each case, we are tracking our progress and reporting from time to time back to the Trust on the outturn, so the order each time has been report, dialogue between governors and then Trust and BBC management, management response, actions taken and then a process of tracking whether the actions have made a difference. Did creating a Europe editor and appointing Mark Mardell make a difference to the quality of the way in which we cover European affairs? We believe it has. Business was another subject. Has the way we are covering business improved in the light of the changes we have made? I would argue that over the past 12 months, Northern Rock, the credit crunch and all the rest of it, we have got strikingly better at covering business. There has been some progress. In each case we are tracking back. As I have said already in response to Mr Price, we would expect, in the matter of Tony King and the reporting of the UK, not just to put a series of actions in place, but also to systematically report back as we go forward on whether we have made the improvements or not. Sir Michael Lyons: Can I add to that the important long-stop role (?) that the Trust plays here? My colleagues who serve on the Editorial Standards Committee are the final point for where people have gone through the complaints process on issues of partiality. In the end the Trust makes the final judgment on these matters. Q119 Philip Davies: Newspapers have an obligation to be accurate and when they get it inaccurate they have to publish an apology. The BBC has a clear duty to be impartial, but when the BBC accepts that on a particular programme it was not impartial and it was not right why does it not itself have to print or broadcast an apology? Mr Thompson: Obviously you will have seen and heard upheld Ofcom complaints and BBC Trust adjudications. We do exactly that. What we try to do far more than in the past is that when we think we have made a mistake of any kind we try and say so immediately without having to be told. We believe last week on the Ten O'Clock News it was a mistake to show an accident with a bus that was rammed by somebody in a JCB and the individual was shot by an Israeli security guard. We showed the moment of death at some distance. It was thought by the editors at the time that was the right thing to do. Within a few hours we said we thought that was not correct and it should not have happened. What we are trying to do now is, very publicly, when we think we have made a mistake, to correct it ourselves immediately. Quite apart from that, when there are any kinds of formal complaints upheld we broadcast the results. We also have feedback on Radio 4, we have NewsWatch on our BBC News channel and we publish corrections and apologies on our website and so forth. When we think we have got things wrong or we are told by the Trust or by Ofcom that we have got things wrong we publish it. Q120 Philip Davies: I was on the Richard Bacon show last week and Jonathan Crawford spoke to me afterwards and he acknowledged that the presenter was not as impartial as he should have been, he did not challenge the other guests in the same way and that mistakes were made and it did not go well and he was very sorry and lots of learning will take place. When it comes to any action of saying we got something wrong publicly, as you have just said, that never enters into it. Sir Michael Lyons: It does enter into it. Q121 Philip Davies: It did not in this case. Sir Michael Lyons: It may not in that case. Do we not want this to work at a number of levels? You would want to be reassured, as I would as the Chairman of the Trust, that there is a real commitment within the BBC to being impartial and to challenge constantly and question what that means in a modern and changing age. There will be mistakes made. There will be things where afterwards people feel that the balance was not right, that there might not have been an appropriate level of partiality. Across the hundreds of thousands of hours of broadcasting there are bound to be those occasions. I am pleased to hear that the programme producer spoke to you afterwards and dealt with the matter then so that you did not feel you had to pursue it through the complaints procedure. What I want to underline is that the complaints procedure is robust and it includes the ability to require the BBC to publish an apology, but let me also say that that must be used sparingly. The notion that every time things go wrong across all these thousands of hours it would lead to an onscreen apology would mean for some pretty boring hours of screen apologies! Mr Thompson: Minutes anyway! I have news just in from the press release which accompanied our Ofcom submission and what it says in the body of the press release is, "As part of the submission process, the BBC Trust challenged the Director General to explore new ways of helping bring the benefits of BBC scale and public investment to the whole sector. In response, the Director General is sharing some initial ideas on a range of practical partnerships with PSBs and other parties that could make a significant difference to the industry and benefit audiences. These ideas will be developed over the summer and submitted to the Trust for approval later this year", so actually the press release did try to make exactly the same point. Chairman: It has been a marathon session. Thank you for answering all of our questions, and I suspect my colleagues in the House of Commons may have a few more this afternoon.
|