The Implications of Cuts to the BBC World Service - Foreign Affairs Committee Contents

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, the English-language global website—are growing, as are their commercial revenues. This year, I expect BBC World News and 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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