1 Introduction
1. The Culture, Media and Sport Committee conducts
annual scrutiny of the British Broadcasting Corporation (BBC)
and its Annual Report and Accounts on behalf of Parliament and
the licence fee payer. Our role in holding to account the BBC
Trust (the independent governing body responsible for setting
the overall strategic direction of the BBC) and Executive —
and the part played by the Government in relation to them —
has been of particular significance over the last year. During
this time, pivotal decisions about the future direction of the
BBC have been made without consultation or significant Parliamentary
debate.
2. When we began our annual scrutiny of the BBC
in September 2010, it was already clear that this was an important
year for the BBC, given the anticipated publication of the outcome
of the BBC Trust's review — entitled Putting Quality
First — of the BBC's overall strategy. The BBC Trust
initiated the first stage of this review by tasking the BBC Executive
to submit its own proposals. In its own words, the BBC Trust:
[…] challenged the Director General to undertake
a review of the BBC's overall strategy in July 2009 to address
questions about the scope of the BBC's activities, focusing on
how the BBC can most effectively deliver its public service mission
and meet audience needs and deliver value for money.[1]
The Strategy Review also offered the BBC the opportunity
to address criticisms that it was straying too far from its public
service broadcasting remit; was being too profligate with licence
payer money; and was insufficiently transparent, particularly
with regard to the salaries of senior staff and talent. During
the last Parliament, our predecessor Committee had highlighted
some problem areas, including the expansion of BBC Worldwide;[2]
the level of expenditure on Project Kangaroo (a now-defunct proposed
joint venture video-on-demand service with ITV and Channel 4 that
was blocked by the competition authorities);[3]
and the need for greater transparency on pay.[4]
3. At the time of the Committee's oral evidence
session with the BBC on Wednesday 8 September 2010, the BBC Trust
had already published the initial conclusions of its Strategy
Review, and BBC Director General Mark Thompson had recently highlighted
some key themes when he gave the MacTaggart lecture on Friday
27 August 2010 at the Edinburgh International Television festival.
4. Shortly after the session, on 16 September
2010, the Rt. Hon Jeremy Hunt MP, Secretary of State for Culture,
Olympics, Media and Sport, announced that the Government had accepted
a proposal from the BBC Trust to forego the planned rise in the
licence fee in 2011/2012. Already in September 2010 then, the
BBC was coming under pressure to show that it was aligned with
the new climate of austerity and public sector belt-tightening.
However, it was only in the days leading up to Wednesday 20 October,
the day of the Government's announcement of the outcome of its
Comprehensive Spending Review (CSR), that reports started to emerge
of a comprehensive licence fee settlement that would last until
the end of 2016/2017. The previous BBC licence fee was not due
to expire until 2013. The confirmation on Wednesday 20 October
2010 that the Government and the BBC had indeed done a deal —
and one moreover which also involved the BBC taking on a number
of new responsibilities in return for a guarantee that the licence
fee would remain at £145.50 until the end of 2016/2017 —
was, therefore, highly significant.
5. We quickly concluded that the settlement had
huge ramifications for the BBC and licence fee payers. We also
observed that negotiations had been completed in an unprecedentedly
short period of time, with no opportunity for consultation. Despite
its significance for the BBC and viewers, Parliament had been
given no opportunity for scrutiny. We decided, therefore, to prolong
our scrutiny process, and held a second oral evidence session
with the BBC on Wednesday 15 December to provide the opportunity
for the detailed scrutiny that the settlement, and the manner
of its negotiation, called for. Following this oral evidence session,
we sought further clarification on a number of points, in writing,
from both the BBC and the Secretary of State. This correspondence
is published with our Report. Finally, on 10 March 2011 we held
a pre-appointment hearing for the position of Chairman of the
BBC Trust, with Lord Patten of Barnes, the Government's preferred
candidate to replace outgoing Chairman, Sir Michael Lyons.[5]
6. In recognition of the unprecedented nature
of the events of October, the next three chapters look at the
negotiation process and the settlement outcome, explaining what
went on and why and assessing the wider significance and impact.
Chapters five and six — set within the context of the new
settlement, the Strategic Review and the BBC's 2009/2010 Annual
Report and Accounts — assess the progress that the BBC is
making against three key themes of long-standing interest to the
Committee: content, transparency and accountability. Chapter seven
examines the progress of the BBC's relocation to Salford Quays,
which the Committee visited in November 2010. Finally, chapter
eight concludes with a brief look at the way ahead for the BBC.
7. Finally, we would like to extend our thanks
to Ray Gallagher, the Committee's broadcasting specialist adviser,
for his invaluable contribution to this Report.
1 Lyons sets out initial conclusions on future direction
of the BBC, BBC Trust Press Release, 5 July 2010 Back
2
Culture, Media and Sport Committee, Fifth Report of Session 2008-09,
BBC Commercial Operations, HC 24 Back
3
'Project Kangeroo' - Final Report, Competition Commission Press
Release 05/09, 4 February 2009 Back
4
Culture, Media and Sport Committee, Fifth Report of Session 2009-10,
BBC Annual Report 2008-09, HC 515 Back
5
Culture, Media and Sport Committee, Second Report of Session 2010-12,
Pre-appointment hearing with the Government's preferred candidate
for Chairman of the BBC Trust, HC 864-I Back
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