6 Transparency and accountability
Transparency
86. In the previous Parliament, our predecessor
Committee was frustrated by the BBC's reluctance to increase transparency,
particularly with reference to BBC staff and talent costs. In
2007, the BBC told the Committee that disclosing talent costs,
even grouped in bands, would cause commercial prejudice to the
BBC and potential exposures to actions for breach of confidence.[105]
It was only in February 2010 that the BBC first disclosed the
total amount paid to artists, presenters, musicians and other
contributors across its services (for the year ending 31 March
2009) and a breakdown of the total amount paid in four bands —
the top one being £150,00 plus. The BBC did not disclose
the numbers of individuals in each band.
87. Our predecessor Committee was still pressing
for further transparency in March 2010 in its last report on the
BBC, when it recommended that:
[…] additional payment bands for talent should
be introduced, disclosing the number of individuals and total
payments for those earning £250,000 to £500,000; £500,000
to £750,000; £750,000 to £1 million; £1 million
to £5 million; and £5 million plus. We do not expect
to see any entries in the £5 million plus category.[106]
In July 2010, we were able to publish the BBC Trust's
response to our predecessor's Report. We were pleased to read
that the Trust now:
[…] agreed with the Committee that the current
bands are not sufficiently transparent in explaining how talent
pay is broken up.
The Putting Quality First document also reflects
the Trust's commitment to publishing talent costs broken down
into figures for aggregate spend in the bands suggested by our
predecessor Committee, as well as indicating the numbers of individuals
falling into each band. The same document also commits the BBC
to producing an annual report on all public service senior manager
pay, with salaries anonymised but published in bands no greater
than £5,000 wide and fitted into an organisational plan.
On 24 March 2011, our Chairman wrote to Mark Thompson expressing
disappointment that the banded information on talent salaries
was still not in the public domain, given that it was July 2010
when Sir Michael Lyons announced that the BBC would publish it.
He pointed out that, by waiting until the publication of the 2011
Annual Report, the BBC would have taken nearly a year to implement
the decision made by the Trust and saw no reason why this information
could not be published now, in advance of the Annual Report. Mark
Thompson's response, published in this Report, was unhelpful.[107]
88. We welcome the commitments
the BBC Trust has now made on transparency. We are, however, disappointed
and frustrated that the banded information on talent salaries
is still not in the public domain, given that it was July 2010
when Sir Michael Lyons announced that the BBC would publish it.
This is another example of the long gestation time between the
BBC identifying a need for policy change and delivery of that
change.
89. It is undoubtedly helpful that the outcome
of the strategy review includes, as one of its key four objectives,
setting new standards of openness and transparency. We note, in
particular, that Putting Quality First states that:
A key test of the success of this strategy will be
whether it can be shown to be working through a much wider pattern
of public disclosure and reporting.
In the past our predecessor Committee has observed
a perhaps unsurprising tendency in BBC Annual Reports to highlight
favourable over unfavourable information, for instance with reference
to BBC Three performance. In a similar vein, the recent NAO value
for money study, The BBC's management of the costs of producing
continuing drama, noted that the BBC's reliance on cost per
viewer hour as its main measure of value for money had its limitations
and recommended that the BBC Trust "require the BBC to use
a range of measures to report against value for money, including
the cost of producing an hour of programming".[108]
We assess that the BBC
still needs to raise the bar with regard to transparency. We welcome
its commitment to go further in this area, and will continue to
monitor its publications and statements closely for signs of change.
Accountability
90. Transparency and accountability are closely
linked. During the last Parliament both our predecessor Committee
and the previous Committee of Public Accounts pushed for the National
Audit Office (NAO) to be given full access to the BBC's accounts
to ensure that the BBC was held sufficiently accountable for the
licence fee money it spent. The coalition's programme for Government
included a commitment to give the NAO full access to the BBC's
accounts by November 2011. Knowing that the media had reported
that Sir Michael Lyons and Mark Thompson had been lobbying against
the NAO having anything more than selective access to BBC accounts,
we pressed the BBC on this issue during our first oral evidence
session.
91. In response, Sir Michael Lyons was cautious,
arguing that there were three important principles at stake: accountability;
transparency; and, perhaps in opposition to these first two principles,
the independence of the BBC. He asserted that the BBC already
worked closely and effectively with the NAO on value for money
studies, and that he would have no objection to the NAO bidding
to become auditors of the BBC when KPMG's current contract came
to an end. He observed, rhetorically:
Does the Trust take seriously its responsibility
for both challenging expenditure within the BBC and making sure
that people understand what money is being spent on? Yes, it does
and I don't think there is any room to criticise that role and
I underline that the NAO has been an ally in the way that we do
that job.[109]
Mark Thompson supported Sir Michael Lyons' arguments,
suggesting that:
[…] it is laid out very clearly in the Charter
that the BBC will be unlike other public bodies. Yes, it gets
public money but it will be unlike other public bodies in the
matter of how it is held to account for value for money, specifically
because of the need to keep it independent of Government and the
political process for its editorial reasons.
Sir Michael Lyons did see scope, with respect to
the NAO's value for money exercises, for the NAO to have greater
freedom to name the areas they want to go in — subject to
certain ground rules being established, such as ensuring that
the BBC's negotiating position in the market place was not impaired
by more financial information appearing in the public domain.
He also affirmed that he would be content for the NAO to undertake
a value for money audit of the BBC Trust.
92. At the time of the first oral evidence session,
discussions with regard to delivering the Government's commitment
were ongoing. On 22 September 2010, the Government announced that
agreement had been reached to give the NAO full access to the
BBC accounts for the first time. The agreement included:
- NAO routine access to BBC management information;
- NAO right of access to any information it needed
to identify and carry out its duties;
- NAO access to confidential BBC contracts with
third parties; and
- Agreement that the NAO would not question the
BBC's editorial policy.
The Government press notice explicitly stated that
the NAO would have the authority to determine which areas of BBC
expenditure it wished to scrutinise. It also, however, advised
that — uniquely for NAO reports — the value for money
studies would be submitted first to the BBC Trust which would
then transmit them to the Secretary of State for laying in Parliament.
Normally, it is the NAO itself which determines when it reports
its findings to Parliament, subject only to the limitation that
its Reports are published when Parliament is sitting. The Government
announcement also stated that discussions would now be taken forward
to implement these changes well before the original deadline of
November 2011.
93. Recognising that the devil might lie in the
detail, we wrote to the Comptroller and Auditor General in October
2010 seeking his assessment of the new arrangement. We are publishing
his response, which took the form of a covering letter, and a
copy of a letter sent to the Secretary of State, on our website.
94. The Comptroller and Auditor General revealed
in his letter to the Secretary of State his concerns at the manner
in which the agreement had been announced — with the NAO
apparently only informed a few days before the announcement was
made. He also queried the scope of the agreement, noting that
the NAO was not solely interested in BBC spending, but rather
in the use of all BBC resources. He noted that, without a statutory
right of access, the NAO would continue to have no access to information
covered by the Data Protection Act. He was seeking further clarity
on the requirement to inform the BBC Trust before the NAO decided
upon its programme of work, particularly given a Trust statement
that this would be decided on an annual basis. [110]
He made it clear that he would be unwilling to commit to annual
plans, as the NAO needed the flexibility to react to changing
circumstances and the issues of the day. He expressed his disappointment
that the Government was content for NAO reports on the BBC to
reach Parliament via the BBC Trust and the Secretary of State
because:
It raises the possibility that the BBC Trust or the
Secretary of State could redact material or indeed not publish
the report, and, under current arrangements, it means that the
BBC, uniquely, responds to the issues raised by our reports before
they have been considered in Parliament.
He expressed his view that the NAO would be better
placed to deliver a fully informed programme of value for money
work if it was the BBC's external auditor. Finally, he concluded
that the fact that audit access remained dependent upon a continuing
agreement between the Government and the BBC, rather than on statute,
left important matters unresolved, and might mean in practice
little progress in terms of independent scrutiny of the BBC.
95. We were copied in to the Secretary of State's
response, dated 18 November 2010, which we are also publishing
on our website. He advised that he did not intend to give the
NAO statutory access as he wanted a successful outcome within
the current Charter and Agreement framework. He agreed that a
mutually acceptable definition of editorial policy was required.
He rejected requiring the BBC to appoint the NAO as its external
auditor, observing that it was open to the NAO to compete for
the contract when it came up for renewal in 2012.
96. Reading the Comptroller and Auditor General's
letter, we were surprised by the number of issues which still
needed to be addressed. As things stand, the arrangements with
regard to setting an inquiry programme on an annual basis and
submitting resulting reports to the BBC Trust rather than to Parliament,
do not meet the original commitment to give the NAO unfettered
access. This matters because, as shown in its recent Report on
the BBC's management of its Digital Media Initiative, the NAO
is identifying deficiencies in the BBC's approach in this case
to project management.[111]
Furthermore, the Public Accounts Committee's (PAC) own Report
into the Digital Media Initiative, concluded that:
The BBC's confidential settlement with the contractor
delayed the C&AG's access to relevant information, and led
the National Audit Office's review being held up for eight months.[112]
Calling this unsatisfactory, PAC affirmed that it
expects the BBC and BBC Trust to ensure that full access is given
promptly in the future.
97. We understand that negotiations on the detail
of this agreement are ongoing. Having
originally made a clear commitment to allow the National Audit
Office unfettered access to the BBC, we are very concerned that
the Government's proposals fail to deliver this. We urge the Government
to address the concerns expressed by the Comptroller and Auditor
General and to reach an agreement that will give the National
Audit Office all the powers it needs to provide independent assessments
of the value for money of BBC expenditure. These should be reported
to Parliament rather than to the Secretary of State through the
BBC Trust.
105 Culture, Media and Sport Committee, Fourth Report
of Session 2007-08, BBC Annual Report 2006-07, HC 235 Back
106
Culture, Media and Sport Committee, Fifth Report of Session 2009-10,
BBC Annual Report 2008-09, HC 515 Back
107
Ev 66 Back
108
National Audit Office and BBC Trust, the BBC's management of
the costs of producing continuing drama, Report by the Comptroller
and Auditor General presented to the BBC Trust's Finance and Compliance
Committee, 3 March 2011, p 9 Back
109
Q20 Back
110
Ev 65 Back
111
The BBC's management of its Digital Media Initiative, Report by
the Comptroller and Auditor General presented to the BBC Trust's
Finance and Compliance Committee, 13 January 2011 Back
112
Public Accounts, Twenty Ninth Report of Session 2010-12, The
BBC's management of its Digital Media Initiative, HC 808 Back
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