This inquiry is the first step in a wider process of examining the role and position of the BBC, as well as the way it has been managed, governed and held accountable, before the current Charter expires at the end of 2016. Over the last few years, at times, the BBC has been beset by mistakes of its own making but despite this many people judge the broadcaster first and foremost on the quality of its content, on its programmes, on its journalism, on the value for money they consider it delivers, and on the societal and cultural contributions it makes.
The BBC makes a valuable contribution to many people's lives as the nation's broadcaster reaching 96% of the population on a weekly basis and many millions more overseas through the provision of its international services. Its continuing importance as a provider of impartial news and its capacity to bring the country together where its output remains universally available are aspects which many people continue to associate with the Corporation. Yet, given a public intervention of close to £4 billion is made in paying for the BBC's activities, key questions arise in determining what purposes justify an intervention of this magnitude and what scope and scale are appropriate for the Corporation as a publicly-funded broadcaster, in a world where content is available in much greater volumes, from a multitude of sources and consumed in more ways than ever before. Moreover, the BBC is a powerful player and unchecked there is a danger that it will, by accident or design, crowd out smaller rivals and inhibit their ability to grow.
There currently appears to be no better alternative to funding the BBC in the near-term other than a hypothecated tax or the licence fee. However, the principle of the licence fee in its current form is becoming harder to sustain given the changes in communication and media technology and changing audience needs and behaviours. We conclude that a degree of subscription could be a possibility in the future if the BBC moved to a more personalised service but as a minimum the licence fee must be amended to cover catch-up television as soon as possible. In any event, the BBC should look at the practicality of introducing controls for authorising access to the iPlayer.
Our view is that the justification for criminal penalties for non-payment of the TV licence fee and the way TV licensing enforcement is carried out is anachronistic and out of proportion with responses to non-payment for other services. Decriminalisation of the licence fee could be linked to introducing controls for access to television services or moving to a German-style broadcasting levy.
A move to a broadcasting levy on all households is our preferred alternative to the licence fee. Such a levy on all households would obviate the need to identify evaders and would be a fairer way of ensuring those people who use only BBC radio and online services contribute to their costs.
A broadcasting levy would enable a small proportion of the revenue raised to be used to fund public service content and services provided by others, enhancing plurality in certain types of content. For example, we support a small proportion of the licence fee (or broadcasting levy) being made available for public service content priorities such as children's broadcasting and local and regional journalism. In addition, we recommend extending the BBC's independent production quota to cover local news.
We challenge the claim that the BBC needs to provide "something for everyone". The BBC should reduce provision in areas that are over-served or where the public service characteristics of its output are marginal or where others are better placed to deliver excellence and better value for money. As such, we believe the BBC needs to be able to make bigger, braver decisions on its strategy and inevitably must do less in some areas. In practice, the level of funding the BBC receives will be a principal lever in determining and adjusting the BBC's scope and scale.
Whilst we welcome the BBC removing in-house production guarantees and opening up the majority of BBC commissioning to competition, we are sceptical of the suggestion that the BBC should become solely a publisher broadcaster. Given the BBC's long successful tradition of making high-quality television programmes, we conclude that it should continue producing content where its output is distinctive from the market and where it makes economic sense to do so. The challenge lies in the BBC demonstrating a transparency in its commissioning processes in its pursuit of the best content, and not favouring old ties with BBC Production, and a transparency of costs if it is to eliminate suspicions of cross-subsidy of its commercial work and production of content for others.
We consider that the BBC Trust has not lived up to its expectation in the present Charter period and it was a mistake not to pass oversight of the BBC to an external body in 2007. We recommend that the BBC Trust should be abolished and new arrangements made for both the regulation of the BBC and its governance, clarifying lines of accountability. We recommend the BBC to have a unitary board with a non-executive Chair and a majority of non-executive directors where the board has complete responsibility for the BBC's corporate governance and operations, within the confines of the Charter and Framework Agreement with Government. A unitary board would be better placed to reshape the BBC in line with its core public purposes, to respond to its critics and be directly accountable for its performance and services.
The BBC Board must be subject to rigorous and independent scrutiny. We recommend that a new Public Service Broadcasting Commission (PSBC) be established with the role of scrutinising the BBC's strategic plan, assessing the BBC's overall performance, and determining the level of public funding allocated to the BBC and to others.
The Commission would be free to initiate public value tests on all the BBC services in reaction to valid and justified complaints that the BBC was drifting from its core public purposes. The Commission would have influence over the BBC by virtue of its role in advising Government on the level of the BBC's future funding requirement as well as through managing a fund for certain public service content and genres which was open to competition. As an ultimate sanction the PSBC would have at its disposal a backstop power to recommend withholding funding from the BBC in cases where there was a persistent disregard of its representations about the BBC.
Given the financial problems in the current Charter period which dented the BBC's reputation, the National Audit Office (NAO) must now be given unrestricted access to the BBC if it is to provide assurance that the Corporation is spending money wisely and trading fairly. The NAO is held in high regard for its financial scrutiny of Government and has a good track-record of refraining from commenting on policy. There is no reason to doubt it would subject the Corporation to tougher and prompt financial challenge but refrain from comment on editorial matters.
We see Ofcom continuing to play its part in assessing BBC competition issues and acting as the final arbiter of all complaints regarding BBC content including on matters of impartiality and accuracy. We believe this transfer of responsibility will, if anything, strengthen the independence of the BBC, and make the complaints process simpler, and appear more transparent and fair.
The process for agreeing the future shape, funding and constitution of the BBC must be as thorough, open and democratic as possible. We recommend that the Government seek cross-party support for establishing an independent review panel now on the 2017 Charter Review, along the same lines as the panel led by Lord Burns in the run-up to the 2007 Charter. Our principal conclusions and recommendations in this report set out a basis for the terms of reference for this panel and the areas that need further, in depth analysis. Similarly, we recommend that Ofcom take a lead role reviewing the "terms of trade" between the BBC and independent producers given the proposal to allow the BBC to become a commercial provider of content to others.
It is our view that a Royal Charter for constituting the BBC has stood the test of time and that a new 10-year Charter remains the best constitutional arrangement for the BBC. However, should there be insufficient time to complete a comprehensive review of the BBC before the present Charter's expiry, we recommend that the BBC be granted a short, supplementary Charter of no more than a two-year period to enable a full review to take place and to implement detailed plans to replace the BBC Trust.