Examination of Witness (Question numbers
94-123)
Mark Thompson
9 March 2011
Q94 Chair: Mr Thompson, thank
you very much for coming today, and for volunteering to do so.
You are clearly a busy man. Are you all right time-wise?
Mark Thompson: Yes.
Q95 Chair: We are about a quarter
of an hour behind schedule. That gives me personally a bit of
a problem, in that after half-past 4 I am double-booked, so shortly
after 4.30 pm I shall hand over the Chair to Mr Gapes. Is there
anything you would like to say by way of an opening statement?
Mark Thompson: No.
Q96 Chair: In that case, can we
start with your general view of the World Service? What do you
think its role should be? How essential are the services, and
do you envisage any change to the function of the World Service
once you take responsibility for it in 2014?
Mark Thompson: The World Service
is one of the most precious things the BBC does. I have had a
chance to see and listen to its work in many parts of the world,
including difficult parts of the world such as Afghanistan, the
Middle East, China and India. I ran the BBC news operation in
Tiananmen Square, and, in Tiananmen Square, listened to the World
Service to find out what was happening. It is a lifeline to many
tens of millions of people around the world who don't enjoy proper
access to accurate, impartial, open media.
Although the world is changing, and people's
use of media is changing—some traditional forms of use such
as listening to shortwave radio are diminishing—I think
the underlying need, justification and argument for the World
Service are as strong as they have ever been, and will be strong
in the future. We are at a point when many big Governments in
the world—we have heard about the Chinese and the Russians—believe
that this is a moment to invest more heavily in international
broadcast services. In this country, we are choosing to disinvest
in ways that I am afraid will have very negative consequences.
I am the editor-in-chief of the World Service
as well as the rest of the BBC. I hope that the BBC will support
the BBC World Service and BBC Monitoring as best we can through
this difficult transitional period. When we get direct funding
of those very important services, we will do our best to reinvest
somewhat in them, although, frankly, I think that that will be
modest, and hold ourselves—both our governing body, the
BBC Trust, but also myself and my successors, personally—to
account for our stewardship of those precious services.
Q97 Chair: Talking about potential
further reinvestment, when would you announce that? When will
we get a clear idea of what it will be?
Mark Thompson: At the level of
the BBC as a whole, we are now looking intensely at how we should
plan our finances between now and the end of the present licence
fee period. I expect to be making proposals later this year to
the BBC Trust about how money should flow across the organisation
between now and the end of 2016. I would expect, either at the
point when I make those proposals or shortly thereafter, that
they will be made public. It is absolutely my view, going into
that process, that I will feel that we have failed if we have
not found a way of directing sufficient funding towards the World
Service; if, in 2014, when we take over funding the World Service,
we cannot make a nominal increase in its funding at that point.
I do not know how big a nominal increase, but these cuts are deep,
and if we can reinvest, we should do so.
Q98 Mr Baron: Mr Thompson, you
have been sitting here through the evidence session, and you have
heard a number of examples of where we have been losing, because
of the cuts, vast audiences to save relatively small sums of money.
The world is an increasingly volatile place. Most people accept
that soft power will be increasingly important. Can I draw you
off the fence a little and get you to agree that these cuts to
the BBC World Service are exceedingly short-sighted to the point
of being perhaps even crass and stupid? A recent example was the
cuts to the BBC Arabic services.
Mark Thompson: I am very clear
about the responsibilities. The Government have the responsibility
for deciding where public money, in the form of grant-in-aid to
the World Service, for example, and the funding of BBC Monitoring
should sit. They have the absolute right to make a political
judgment about how much money they want to devote to anything
in that area. I am quite clear that the headline level of the
cuts means that we are facing very deep and difficult decisions
across our services. You have just heard from a group of people
who are having to, in a sense, recommend such choices, and they
are proposing things that they very much wish, as I wish, they
did not have to do.
The reality is that this funding settlement
begins in three and a half weeks. The money is not there. My
colleagues and I, as well as the BBC Trust, have approved our
taking some of our existing funding, which itself means some sacrifices
in the domestic services of the BBC, and directing it to soften
the blow by paying for restructuring; you heard about the £20
million. We are also looking at whether we can, particularly in
the early years, make the burden of the World Service paying its
share of the pension deficit repayment programme less onerous
than it otherwise would be. We are doing our best to cushion
the effect of the comprehensive spending review on the World Service.
As soon as the licence fee takes over, with
the planning beginning now, we will try to find a way of investing
more money via the licence fee. Moreover, the audiences of our
commercial global services of the BBC—BBC World News, our
television channel and BBC.com, the English-language global website—are
growing, as are their commercial revenues. This year, I expect
BBC World News and BBC.com to generate about £100 million
in commercial revenue. We want to look hard at whether we can
grow those revenues and, as far as we can, use the BBC's international
revenues, again, as a potential source of reinvestment in the
BBC's complete international news offering. We believe that the
BBC and its brand, and the reputation and trustworthiness of the
World Service, gives this country, in many ways, an exceptional,
rare advantage in getting through to many different societies
with outstanding, high-quality, trustworthy journalism. Everything
we do is to try to maximise the opportunity of doing that.
Q99 Mr Baron: But would you accept
that it is short-sighted? You have just given us a very good
exposition of what you are going to do to respond.
Mark Thompson: What I would like
to say is that the consequences of this decision are clearly deeply
disappointing for those who believe these services are critical.
Q100 Mr Watts: Can I just be clear
about 2014? You're doing a review now on what will happen. Is
it your intention publicly to ring-fence the World Service and
give an undertaking that after 2014, the budget will be increased,
not decreased?
Mark Thompson: What I expect to
do is the following: propose a funding level for the World Service
for the remaining years. As my colleagues and the unions made
clear, there will only be two years left in the present licensing
settlement, but for those years—2014-15 and 2015-16, I think
they are—we will propose to the governing body of the BBC
a funding level for the World Service. As my colleague Peter Horrocks
made clear, the expectation is that in some form, the BBC Trust
will issue a service licence, as it is called in the jargon, for
the World Service, which will set a parameter for the funding
of the World Service, with the ability to vary it up or down,
as part of the way the BBC Trust will hold me and my colleagues
to account for how we spend the money.
We should say as well that from this year forward,
our expectation at the start of each year is to publish an indicative
budget for the BBC's expenditure for that year. Our belief is
that we need some flexibility, and that funding across the organisation
will vary year by year, but in advance, each year we will publish
an indicative budget. I would absolutely expect people who have
a particular focus on and concern about the World Service, as
I do myself, to look very closely at that budget to see how much
of the licence fee will be going to the World Service.
I take the point absolutely about the effectiveness
of this Committee, in terms of making the case. You will not find
me—or, I believe, my successors, or my colleagues at the
BBC Trust—turning down invitations to this Committee, if
you want to question us about our level of support or funding
for the World Service.
Q101 Mr Watts: That is coming
at it from a different angle. Can I just be clear that what you're
proposing is that the domestic TV licence payer will pay, and
that a bigger proportion of the budget—of what they pay
for their services—will now go to cross-subsidise the World
Service?
Mark Thompson: The British public
have been paying for the World Service through general taxation
since the 1930s. As you know, virtually every household pays taxes,
and virtually every household also pays a licence fee. Last summer—the
summer of 2010, long before we came to the last settlement—we
did some audience research in this country about support for the
World Service. We asked them a question about what they would
feel about the licence fee being used to pay for the World Service.
Many people believed it already paid for the World Service, and
broadly—subsequent polls have suggested the same figure—the
majority of the population are very happy with the idea of the
licence fee paying for the World Service, because they, too, are
very proud of the World Service and believe it is something this
country should be very proud of. I am not suggesting that in 2014,
there's going to be an enormous transfer of money, but if I can,
I would like to make a modest increase in the funding, and I believe
that we could make the case to the public for why that makes sense.
Q102 Mr Watts: I am not making
any judgment on it; I am saying that you propose using TV licence
payers' money to increase the subsidy for the World Service in
future.
Mark Thompson: I wouldn't say
the subsidy; to increase the money we would direct to paying for
the World Service.
Q103 Rory Stewart: What guarantees
can you offer that the BBC is not going to siphon money away from
the World Service to put into other bits of domestic programming?
Mark Thompson: The World Service
and BBC Monitoring are both very precious things. We have many
precious things in the BBC. We have, for example, the home service
on BBC Radio 4, and our commitment to the Proms and to our symphony
orchestras, performing groups and so forth. Our governing body
is, quite rightly, charged with that under the charter, but it
is also, it seems to me, obsessively concerned that precisely
this kind of siphoning should not happen. This is a moment in
the BBC's history when the amount of money that the BBC spends
on television entertainment, acquired programmes and feature films,
for example, are all substantially reducing, and we are focusing
increasingly on original high-quality journalism and other forms
of content. The background is that the direction of travel inside
the BBC is to spend more money on things like the World Service
and less money on, if you like, mainstream entertainment.
As I have just said, the first guarantee is
that we are going to be wholly transparent about this, and not
just in retrospect in our annual reports, but also in prospect.
You and every other citizen will be able to see how much we are
proposing to spend on the World Service. The expectation is that
there will be some form of service licence; that is, a formal
document that requires the BBC to pay within a certain parameter
plus or minus x% of the licence fee to this service. That will
be accounted for, and it will be audited afterwards.
If I or my successor choose to make a significant
change to that, I will have to go through a process of proposing
it formally to the trust, and there will be a public consultation.
Bluntly, under any future Director-General, if there was an attempt
to make a substantial reduction in the funding of the World Service,
unless there was good cause, there would be blue murder and rightly
so.
All I would say is that our current system has
led to a very substantial and damaging reduction in the funding
of the World Service. We are moving to a system where that will
be harder and much less likely to happen. I think that there will
be more security in the future than there manifestly is in the
current arrangements.
Q104 Rory Stewart: But you are
putting a huge amount of reliance on the BBC Trust, and in particular
in your international trustee.
Mark Thompson: To some extent,
Mr Stewart; except that not just I, but the BBC management as
a whole, are passionately committed to supporting the service.
It is very important to say that we regard the BBC World Service
as wholly part of the BBC. I feel personally absolutely and wholly
responsible as the editor-in-chief for this service. I can't for
the life of me understand why we, in terms of the operational
management of the BBC, would want to do anything other than support
it. As you have heard, even in this transition and with some difficulty,
we are trying to do our best to limit the consequences of what
has happened under the present arrangements.
Q105 Rory Stewart: As my final
point, it is wonderful that you have so much passion, but obviously
our concern is what happens if you fall under a bus or something
happens in the future. Who knows? We are trying to think about
the long-term governance arrangements. Everything seems to rely
on the BBC Trust, and an enormous amount of that relies on your
international trustee, who does not necessarily have the depth
of reputation and international exposure that previous international
trustees have had. What changes might you make to the governance
structure of the trust to guarantee its future?
Mark Thompson: I definitely think
there is a case, when the process of debate and the drafting of
the next royal charter of the BBC arrives, that—although
the present charter absolutely lays out the BBC's responsibilities
in relation to the World Service, and one of the BBC's public
purposes is precisely about, in the jargon, bringing the UK to
the world and the world to the UK—rather more specificity
about the BBC's international mission, and consideration of what
particular safeguards we might want to put in place to make sure
that that mission is fully discharged, is something which probably
should be set out more clearly in the next charter, given the
way in which the funding arrangements have changed.
Q106 Sir John Stanley: Mr
Thompson, I have a series of factual questions that I would like
to put to you, relating to how the transfer of the World Service,
as a grant-aided body, from the Foreign Office to the BBC took
place. First, can you tell the Committee whether the initiative
for this transfer came from the Foreign Office or from the BBC?
Mark Thompson: The first time
it was substantively discussed was when the Secretary of State
for Culture, Olympics, Media and Sport rang me to raise the broad
topic of whether there was any kind of Government expenditure
currently on the national accounts that the BBC might potentially
be prepared to fund through the licence fee. He mentioned the
possibility being discussed in Government at the time of whether
the funding, which the Department for Work and Pensions then made
and still makes, in respect of licences for the over-75s could
be forgone. That would mean, as it were, that the other licence
payers would have to pay, instead of the Government, for licences
for the over-75s. I thought and said—indeed, the BBC Trust
was very clear—that that was not an acceptable idea to the
BBC.
In that first phone call, I think it was
me who first raised the idea of whether the licence fee could
take over funding the World Service. The director of the World
Service, Peter Horrocks, and I talked several times over the summer
and very early autumn about this as a possibility, not least because
we—Peter was right in the middle of this—were being
very forcibly reminded of just how fragile the grant in aid process
was. This was in the middle of the conversations with the Government.
The involvement of the BBC in the comprehensive
spending review is, to be honest, a pretty unattractive thing
for an independent broadcaster. So we began to explore and, as
I said, we did a bit of audience research to look at whether it
would be desirable potentially under the right circumstances for
the BBC to take over the funding via the licensing fee.
Q107 Sir John Stanley: So this
was a proposal that was initiated by yourself. If you can't recall—I
quite understand if you can't—can you give us in writing
the date of the telephone call from the Culture Secretary to yourself?
It would be useful for us to have that.
Mark Thompson: Yes. We're talking
about early October, but we'll get you a precise date.
Q108 Sir John Stanley: Thank you.
Can you tell us at what point, if ever, there was a face-to-face
meeting between yourself or your chairman with Foreign Office
Ministers to discuss this proposal?
Mark Thompson: I believe that
there have been two such meetings. The first one was immediately
prior to the announcement of the comprehensive spending review
in October, which involved the chairman of the Trust, myself and
the director of the World Service, Peter Horrocks. That was principally
a meeting to discuss the wording of the governance arrangements
in relation to the Foreign Secretary's continuing role in being
involved in decisions involving changes to the portfolio. It was
about the governance arrangements, rather than about the quantum
of the settlement. That took place immediately prior to the announcement
of the CSR.
There was a subsequent meeting with the Foreign
Secretary that I attended with colleagues. In a sense, that was
a meeting exploring the consequences of the CSR settlement for
the World Service and, as it were, the options in terms of service
closures and reductions in English language, shortwave distribution
and so on. It was exploring, given the settlement, what we were
thinking about in terms of the range of services that could or
should be explored.
Q109 Sir John Stanley: So there
is just one meeting between you and the Foreign Secretary prior
to the Government's announcement of the public expenditure review
in the House? You said that that was immediately before the public
expenditure announcement here.
Mark Thompson: These are the
meetings that I was involved in myself.
Q110 Sir John Stanley: That you
were involved in yourself. I just want to focus on the top-level
meetings. Can we have the date of that meeting that you had with
the Foreign Secretary, so that we have that precisely?
Mr Thompson, from what you say this would appear
to be very much in time terms a shotgun marriage and not a very
long courtship. Would you not agree? If that is the case, how
do you think the Committee can possibly be convinced that the
issue was given the serious and full consideration that it deserved?
Mark Thompson: You have heard
me say that we, at the top of the BBC, had in our own time and
on our own terms in that summer discussed, researched, considered
and come to the conclusion that, on balance, the merits of moving
to licence fee funding over grant in aid funding outweighed the
demerits. We came into the conversation with Ministers in October
with a considered and carefully researched view that under the
right circumstances this could be a good idea. All I want to say
to you is that it has been well documented. The process of reaching
an overall settlement in terms of the BBC's funding from the licence
fee took place at a fair clip, as you say.
As we modelled the funding of the World Service
between now and 2016, knowing that the early years were already
fixed by the comprehensive spending review, I was very clear that
one of my responsibilities in this rather rapid process was to
make it absolutely clear that I could be sure that when the licence
fee took over in 2014, not only was there going to be enough money
to maintain the funding at the level that we would inherit, but
that there was good reason to believe that we could slightly increase
it, so I could be confident and I could also advise the BBC Trust
that we could take over World Service funding. In the context
of the settlement that we were getting through the licence fee,
I could recommend that we should be able to increase the funding
slightly.
Q111 Sir John Stanley: So if I
may summarise the facts that you have very helpfully outlined,
we are basically being told that the radical proposal to transfer
the World Service from the Foreign Office to the BBC sprang out
of a telephone conversation with the Secretary of State for Culture,
Media and Sport, and that within what must have been a very short
period from that conversation, which began in October, there was
a meeting with the Foreign Secretary on the detailed wording of
the financial aspects, and a few days later there was a public
expenditure announcement. Out in the big wide business world,
if you had made decisions of that magnitude, with that very limited
degree of due diligence, your shareholders would have a lot of
questions to ask.
Mark Thompson: If I might add
one footnote, it is my recollection that I raised the issue of
the World Service in that first conversation with the Secretary
of State. But it is quite clear to me that that was, as it were,
in the air and would have been raised in any event. Indeed, it
was raised at subsequent meetings by Ministers. I am not claiming
any particular credit for that, but, as it happens, I think I
was the first person to say that it was one of the possibilities
that should be explored.
Sir John Stanley: If I could have those
precise dates that I asked for, I would be grateful.
Q112 Mike Gapes (in the Chair):
Mr Thompson, can I take you a bit further on this? Was the 2014
date simply because of the timing of the CSR? Or was it considered
at any point that the BBC might take over financial responsibility
prior to 2014?
Mark Thompson: It was considered.
A large number of scenarios were considered in that period.
Q113 Mike Gapes (in the Chair):
Considered by whom? In your internal discussions or with Ministers?
Mark Thompson: It was considered
in discussions with my colleagues, but also considered and discussed
in the dialogue with Ministers.
Q114 Mike Gapes (in the Chair):
In this very short period. Did you have any modelling?
Mark Thompson: Absolutely. We
had a complete computer model to look at all the different scenarios
and financial implications. We had been doing a large piece of
work about the strategy of the BBC as a whole, and we had—I
don't want to exaggerate—a way of modelling many different
scenarios immediately and looking at the consequences of different
scenarios.
Q115 Mike Gapes (in the Chair):
But your bottom line was that you did not want to deal with the
free licences for the pensioners issue. You were unhappy with
that and you saw that basically the Foreign Office was preparing
to have a major reduction in the amount of grant in aid that was
coming through, and then you thought, "Well, basically, the
best thing is that we take this over and then we will have more
stability and more certainty." Is that a fair summary?
Mark Thompson: And the prospect
of never again being fully involved in a comprehensive spending
review because there will be no more funding streams out of Government
Departments, and a hope that, although the World Service already
enjoys very high standing, its listeners around the world would
have even more confidence in a service that was funded directly
by the British public rather than via the UK Government.
Q116 Mike Gapes (in the Chair):
So, just to be clear, when the final proposal was put forward
by Ministers, you were fully cognisant, and were completely happy
with what they were proposing for the transfer to 2014.
Mark Thompson: Yes, and it has
a different quality from that of the CSR settlement. The licence
fee agreement is just that. It is an agreement that I recommended
to the BBC Trust and to which the BBC Trust, as it were, freely
agreed. Obviously the CSR settlement is just a settlement; it
is a determination by Ministers of a piece of public funding.
Q117 Mike Gapes (in the Chair): You were,
of course, consulted on that, because that was a matter between
the FCO and the World Service, not the BBC Trust.
Mark Thompson: To be quite clear,
managerially the BBC World Service is part of the BBC, and I was
fully consulted on and fully engaged with the process of the World
Service's negotiations with the Foreign Office as well.
Q118 Mike Gapes (in the Chair): But you
weren't content in the same way as you are with the 2014 decision.
Mark Thompson: As you have heard
me say, the consequences are going to be very damaging but, to
be honest, we weren't asked in the end to be either content or
discontent—it was a decision by Government.
Q119 Mr Baron: May I pursue, if
you don't mind, the line of questioning with regards to protecting
the funding for the BBC World Service within the Trust, and the
possibility of funds being diverted to more "popular"
things, such as the cult of celebrity, etc?
Mark Thompson: Are they terrible
things?
Mr Baron: Well, they are not terrible
things, but there is a balance, and it is your job to make sure
that that balance is maintained.
Do you understand our concern here? The change
in the governance arrangements happened over what, to us, seems
a relatively short period of time, and we are concerned about
the short-sightedness of the decision. We are concerned about
the budget being raided, perhaps. Is there a fail-safe method
out there—a mechanism? There has been talk about ring-fencing.
Is there such a system in place, or could something be put in
place to ease our concerns?
Mark Thompson: The mechanisms
that we've talked about, which are used for our domestic services,
are absolutely intended, among other things, to ensure that, as
it were, the Radio 3 budget does not get pilfered, that a proper
balance is kept and that significant changes to that balance do
not take place without an explicit and transparent process of
consultation, in which a number of people who have frequently
been in Select Committees in the House of Commons will take a
view, and opinions will be expressed. I think that this system
of scrutiny and accountability regarding where the money is spent
should offer a high degree of protection. Moreover, it is likely
to deliver a higher level of protection than that which the World
Service has enjoyed up until now. We are at a moment when the
existing arrangements have not succeeded in protecting the World
Service's funding as much as we would have wished.
Q120 Rory Stewart: I put on the
record that I am broadly supportive of this move. I think it was
right to move the licence fee funding from the Foreign Office
to DCMS. But to push again on the governance issue, have we now
got the person running the World Service—Peter—at
a significantly senior level within the BBC? I understand, and
perhaps I am wrong about this, that when Sir John was doing the
same job it was reporting at a different level. Can we change
that, to support the BBC World Service?
Mark Thompson: One of the things
that we've been trying to do at the BBC is to make sure, firstly,
that at the top of the organisation you've got all the right things
being considered and all the right interests being represented,
but we have rather fewer overall leaders in the organisation than
we used to. Under the new arrangements there will be a director
of news—Helen Boaden is the current occupant of that post—who
will be on the executive board of the BBC and who will be in charge
of delivering all the BBC's journalism. They will have explicit
objectives in ensuring that the BBC's international journalistic
services, and specifically the BBC World Service, are delivered
to the highest possible standard. At the moment, the World Service
is represented on the executive board by the deputy Director-General
of the BBC, Mark Byford. That post is being closed. We have also,
in the past year, combined two roles: the director of global news
with the director of the World Service.
We are reducing the number of people, but I
am quite clear that the executive board will consist of some non-executive
directors. Among the executive directors there will be seven,
one of whom will be the director of news. That is a small number
for the BBC, but there has been considerable and proper pressure
to reduce the number of senior managers. One of those seven is
the person charged with the overall journalism of the organisation,
but within her brief, I am clear that she will be charged and
held to account for the quality and support of the international
services.
Q121 Rory Stewart: Can we not
just push that one more time and see whether it is worth reconsidering?
You are taking on a huge thing—full responsibility for the
World Service, which is leaving the Foreign Office. Does that
not justify a seat on the executive board?
Mark Thompson: The answer is that
I do not believe that it does. If we had an executive board of
10 to 15 senior executives, there would be no question—even
at nine members. The BBC is a big organisation with many operations.
For example, we have a commercial arm, BBC Worldwide, which has
a turnover of well over £1 billion a year. The chief executive
of BBC Worldwide is not on the executive board. We try to keep
the top of the organisation as a relatively small number of people
not least so that the boards are effective. You will know from
public limited companies that most plc boards have a relatively
small number of executives, precisely so that they are effective.
Does that mean that the World Service will not be discussed? We
have had more discussions about the World Service in recent months
at the executive board than almost any other topic. It is very
much front of centre. I believe that I have an explicit personal
responsibility, as my successors will as well.
Mike Gapes (in the Chair): Thank you
very much. One more question.
Q122 Mr Watts: Mr Thompson, you
have heard people say that part of the problem could be resolved
if DFID were to make a contribution to the BBC for some of the
services you provide. Not everyone would agree with that, but
have you had any indication that DFID would be happy with that?
Do you expect the discussions going on at the moment to come to
any positive conclusions?
Mark Thompson: Look, it is heartening
that so many people are making this case, but, just to repeat
what my colleague Jim said earlier, I do not have any indications
yet that any fresh, additional or compensatory money is available.
We understand that it is not a matter for us. It is a matter for
the Government to decide on what they want to spend and how they
want to spend it. It is inappropriate for us to badger or to attempt
to dictate that. The case for the developmental value of much
of what the World Service does is considerable. It is encouraging
that others, including members of this Committee, seem persuaded
of that. As yet, we have not heard anything that gives us comfort
that that broad sense of support is being translated into money.
Q123 Mr Watts: Are you taking
this possibility seriously, or do you believe that it is unrealistic?
Mark Thompson: I think we should
hope for the best, but prepare for the reality of the funding
that we have. That is what we are doing.
Mike Gapes (in the Chair): Thank you,
Mr Thompson, and all the previous witnesses who have stayed and
diligently listened to the whole session after giving their own
evidence. Thank you for coming. It has been a valuable session.
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