House of Commons - Future of the BBC - Culture, Media and Sport

Future of the BBC - Culture, Media and Sport Contents

1 Introduction

""…while the BBC has a duty to contribute its ideas to the debate, it also knows that the question of its future is not one that it itself can or should decide. That decision rests firmly with its owners, the British public." - Building public value, June 2004, the BBC's initial contribution in advance of its Charter expiry in 2006

1. The BBC was founded in 1922, through a union of leading manufacturers in radio technologies who through a joint enterprise went on to become among the world pioneers in broadcasting. The BBC grew quickly into what many claimed, and continue to claim, to be the world's most respected public service broadcaster. Since then the BBC has become a shared, everyday part of many people's lives in the UK but it also touches upon many millions of other lives through its own international services and content exported to others. Most people can identify easily those BBC programmes and services they like, and some those they enjoy less or even dislike profoundly, but probably many people consume BBC content without any real conscious appreciation or consideration of what it might be like without a BBC or availability of high-quality public service content.

2. By 2017, following the expiry of the BBC's current 10 year Royal Charter,[1] the BBC will have reached its 95^th year and, should a further Charter be granted, it would most likely cover the BBC's centenary. An important reason for establishing the BBC by a Royal Charter is the perceived security of tenure and independence it affords the Corporation, but a Charter also presents opportunity for periodic reviews of the strength of the case for having a publicly-funded national broadcaster such as the BBC, for taking stock of whether and how much the people who pay for it value it and of the extent of support for its continuance, and for considering its functions and structure.

3. More or less every 10 years the government of the day has led a review of the BBC, towards the end of its Charter period, to which Committees such as ours, with specific responsibility for broadcasting, have contributed. This has allowed a comprehensive review of the BBC's performance and its place in the future.

4. Since the last Charter Review there has been a significant increase in the range and choice of content via a variety of communications platforms, services and devices available to consumers, and analogue TV has been switched off with the complete move to digital platforms. Nonetheless, one of the most surprising features of UK broadcasting since the last review has been the continuing popularity of viewing programmes as they are broadcast on traditional scheduled television channels. In the lead up to the 2006 review, many had anticipated that in the decade ahead people would have been likely to move away from watching "linear", scheduled broadcasts,[2] to watching time-shifted programmes and video-on-demand supplied by many content producers via individual devices. The changes to traditional viewing have not been as rapid or dramatic as predicted. According to Ofcom people are still coming together to watch television in the living room. Nevertheless, habits are changing: younger people are watching less television than older people[3] and over a quarter of UK adults now use the internet to watch catch-up TV.[4]

5. Regrettably, during the current Charter period, the BBC has on occasions attracted attention for the wrong reasons. In 2012, the exposure of Jimmy Savile and other ex-BBC celebrities' legacy of criminal sexual behaviour has revealed a bleak period where a culture prevailed at the BBC, and more widely in parts of the broadcasting industry, which allowed a few individuals to get away with appalling behaviour. The BBC's culture and practices during this period, and the scale of the abuse that took place at the BBC whilst Jimmy Savile was there, are subject to an independent review by Dame Janet Smith. She is expected to report her findings shortly, which will feed into other investigations looking into historic cases of sexual abuse.

6. What made these matters even worse for the BBC was the news of serious editorial failings in its reporting of the Savile revelations which led to an allegation that there had been a deliberate attempt by the BBC to axe a Newsnight investigation exposing Savile's past in favour of a tribute programme on his life. This was followed by a further serious mistake in a Newsnight report which led to the late Lord McAlpine being wrongly implicated in child abuse. These mistakes were compounded by the BBC's handling of these events. George Entwistle, the newly-appointed Director General, was widely seen to have dealt with the crisis badly and was forced to resign from his post after only 54 days in the job. His severance terms then highlighted a whole raft of excessive pay-offs to BBC executives, many of which went well beyond contractual entitlements.

7. Nick Pollard, a former head of Sky News, was asked to investigate the way the Newsnight programme had dealt with allegations about Savile and the reasons why the investigation had been halted. His review cleared the BBC of the main accusation that there had been a deliberate move to protect the Savile tribute programme but reported significant managerial and editorial failings in the BBC's decision to drop the original Newsnight investigation and in the way the BBC had handled matters. However, even after the publication of his report, a cloud of uncertainty remains over what actually happened and who knew what about Savile at that time.

8. At the same time as the allegations of sexual misconduct and child abuse became public, there were several costly blunders which made the BBC's stewardship of the licence fee appear profligate and inept. The Digital Media Initiative, a major IT (production) project, was found to have been mismanaged on a large scale and was dropped having delivered few benefits at a loss of £100 million. Similarly, BBC Worldwide's move into risky commercial activities, not in line with the BBC's core public service remit, led to a similar loss through the acquisition and sale of the Lonely Planet publishing business.

9. There was also a growth in the BBC's senior management cadre and their salaries, and then a spate of excessive severance payments to a number of BBC executives, which culminated in the infamous appearance, in front of the Committee of Public Accounts, of BBC director generals and chairmen, past and present, attempting to justify the BBC's management culture and executive pay offs, and publicly arguing over who was to blame. Without doubt public trust in the BBC dipped as a result of these episodes. They seemed to demonstrate a mind-set at the top of the Corporation which was completely out of kilter with public sector principles and evinced a resounding failure in the BBC's governance mechanisms and accountability to the licence fee payers.

10. Following these events, in the autumn of 2013, whilst the BBC's woes were still being publicly felt, and a degree of ambiguity remained on exactly what had gone wrong, who was to blame and what the consequences should be, we announced our inquiry into the Future of the BBC. We could have examined any one of these events in depth but we agreed then that rather than dwelling on failures, it would be far more productive to look forward and to start the debate on the BBC's next Charter Review, whilst holding in mind what had gone wrong and the changes that were likely and desirable as a result. Even though the BBC has been subject to regular scrutiny of its annual report and accounts, and additional scrutiny by us and other parliamentary committees of some of the high-profile issues for which it had been subject to criticism, we believe the future course of the BBC should be determined in a large part by matters such as the purposes, boundaries and governance structures set by the next Charter and the equally important Framework Agreement with the Secretary of State[5] and so we decided to begin the consideration of the BBC's future position beyond 2016.

Our inquiry

11. In October 2013 we announced our inquiry into the future of the BBC[6] and during 2014, we took evidence from a wide range of witnesses, and received written submissions from approximately 120 organisations and individuals in response to our call for evidence. As always we are extremely grateful to those who engage with our work and contribute to our inquiries. In addition, we conducted several visits to help us experience directly aspects of the BBC's work and to compare broadcasting environments elsewhere. We visited:

· Global Radio's headquarters in Leicester Square in November 2013;

· BBC Broadcasting House in January 2014;

· BBC North and ITV's studios in Salford in March 2014;

· Broadcasters and regulators in the Netherlands, Germany and Denmark in May 2014;[7] and

· A film set during the filming of Woman in Gold in London in June 2014 (a co-production by the BBC).

We express our appreciation to those who hosted us on these occasions and took the time to explain their roles, experiences and views on the BBC with us ahead of Charter Review.

12. Finally, we ran a three-week web consultation on the Student Room website to hear younger people's opinions on the BBC and to find out about their media preferences more generally. We are grateful to the Student Room and its student community for assisting our inquiry in this way. We have produced a summary of the responses posted and have cited some of the comments left throughout this report.[8]

13. We also wish to note our gratitude to Ray Gallagher, our specialist adviser on broadcasting, who has continued to assist us throughout this Parliament and especially for his advice during this inquiry into the BBC.[9]

Background

14. The BBC was initially set up as a private company to provide radio broadcasts. In its infancy, on 31 December 1926, the service provided by the British Broadcasting Company passed over to the British Broadcasting Corporation, which derived its authority from a Royal Charter. The principle of the licence fee was established, where a share of the revenue from wireless licences supported the BBC. Since then BBC Royal Charters have been granted in the following pattern:

· 1927 Charter—for ten years

· 1937 Charter—for ten years

· 1947 Charter—for five years followed by a Supplemental Charter extending it for six months

· 1952 Charter—for ten years followed by a Supplemental Charter extending it for two years

· 1964 Charter—for twelve years, extended by three years in 1976 and a further two years in 1979

· 1981 Charter—for fifteen years

· 1997 Charter—for ten years

· 2007 Charter—for ten years

15. The Charter establishes the BBC and defines its general objectives and functions, and is supported by a Framework Agreement with the Secretary of State which sets out how the BBC will meet its general obligations, the services it will provide, and the standards it will meet. As can be seen from above, not all BBC Charters have been granted as 10-year constitutional documents, and sometimes supplemental Charters were used to extend the duration of an existing Charter. The current Charter, the eighth, comes to an end on 31 December 2016.

16. Substantial public funding is involved in the BBC's activities. In 2013/14 the BBC's income totalled more than £5 billion, comprising over £3.7 billion from the television licence fee, and £1.3 billion of commercial income from BBC Worldwide and grant-in-aid for the World Service.[10] From April 2014, the following BBC services have been funded through the licence fee:

· Nine national television channels (BBC One, BBC Two, BBC Three, BBC Four, CBBC, CBeebies, BBC News, BBC Parliament, and BBC Alba[11]);

· 10 national radio stations (Radio 1, 1Xtra, Radio 2, Radio 3, Radio 4, Radio 4 Extra, Radio 5 Live, 5 Live Sports Extra, 6 Music, and BBC Asian Network);

· National television and radio services for Scotland, Wales and Northern Ireland, and over 39 local radio stations and regional TV services for England;

· BBC World Service;

· BBC Red Button interactive TV; and

· BBC Online.

Additionally, the licence fee is used to support non-BBC services including local television services, broadband, digital transmission, BBC Monitoring and S4C.

Previous Charter Review

17. In September 2003, more than three years before the expiry of the last Charter, Dame Tessa Jowell, as Secretary of State, appointed Lord Burns as her independent adviser on the BBC Charter Review. She also appointed an Independent Panel on 15 June 2004, to work alongside Lord Burns. The panel held a series of seminars to debate a number of key issues for Charter Review, which had been identified through an earlier DCMS public consultation launched in 2003. The public seminars ran from July to December 2004 and looked at a range of topics such as how the BBC was run and regulated, what its purposes should be, on television, radio and online services, and its role in education, citizenship, culture, representing the nations and regions of the UK and its international role.

18. The panel produced a report on "Emerging themes", including views on the BBC's public purposes and remit and how the BBC should be funded, in advance of a final seminar in December 2004. These themes were brought together to allow for a debate on the implications for three broad models of governance and regulation. The panel's final advice, which among other things recommended a new governance and regulation arrangement for the BBC, was presented to the Secretary of State in January 2005. The Government published a Green paper[12] on Charter Review in March 2005, and followed this with a White paper[13] a year later.

Preparation for the next Charter

19. In contrast, this time round, with less than two years to go before Charter expiry, the Government has yet to initiate any explicit Charter Review activity, and the Rt Hon. Sajid Javid, the Secretary of State for Culture, Media and Sport, has announced a postponement of Charter Review until after the general election. He told us that if the review had started before the election it might have unnecessarily got too politicised which would have risked distorting the process.[14] Despite this decision, we note that some work which has a bearing on Charter Review is already under way and other, indirectly related work may be started before the election. For instance, in November 2013, the Secretary of State set up a review into the possible effects of decriminalising licence fee evasion in response to Andrew Bridgen MP's call for such action during the Committee stage of the Deregulation Bill. The Secretary of State said that he did not want to pre-empt Charter Review but that "I want to ensure that, when it begins, it has a solid evidence base on which to draw."[15] In addition, the Government is planning to launch a consultation on carriage of Public Service Broadcasting (PSB) channels on cable and satellite platforms. And earlier, in 2013, the Government committed to consulting on discoverability of public service content on broadcasting platforms and the PSB channels' positioning on electronic programming guides.[16] Neither of the two latter consultations or reviews has started but they could, we believe, usefully inform Charter Review.

20. A timely occurrence is Ofcom's five-yearly review of public service television broadcasting which is under way and will be completed by the summer of 2015. Its focus will be on past delivery of public service content, with a view to maintaining and strengthening the PSB system. Among other things, it is considering the effects of the changes in broadcasting and wider communications sector since its previous PSB review in 2008. Ofcom has been clear that the review will not be seeking to ask or answer questions concerning the BBC which should be matters for Charter Review.[17] However, its research, analysis and conclusions will inevitably inform aspects of Charter Review and issues under consideration.

21. For it to be meaningful, Charter Review must allow sufficient time for a comprehensive analysis of all aspects of the BBC and enable members of the public and all other stakeholders the opportunity to voice their views on the BBC's future. Last time the DCMS and Lord Burns led a very open and consultative process. No less thorough and transparent an approach is merited this time round. The same must happen again. Philip Graf, a former Deputy Chairman of Ofcom, told us that, as part of the next review, research needed to be done to look at what people wanted from public service broadcasting and the BBC and on what they were willing to pay for BBC services.[18]

22. Leaving Charter Review until after the May 2015 general election is likely, in our view, to allow insufficient time. It would only give around half the time that was allowed before the 2007 Charter. Jon Zeff, the Director of the BBC Trust Unit, having previously been head of broadcasting at the DCMS during the last Charter Review, was able to draw comparisons with it. He noted that the 2005 general election had punctuated the last review, causing "quite a long hiatus" around the election itself. Yet Mr Zeff considered that it would be "perfectly possible to run a good process in a shorter period".[19] Similarly, the Secretary of State thought starting the process in June 2015 would allow enough time to go through all the key issues.[20] According to Lord Burns, even with the general election approaching, there was no reason why work on Charter Review should not start straightaway.[21]

23. At this stage in the current Charter period, we are surprised that the Government has not started the Charter Review process and that the BBC Trust has only just begun to initiate a debate on the fundamental questions on the BBC, the body which it oversees.[22] We understand that Lord Patten's unexpected and sudden departure, as Chairman, would have interrupted the Trust's scheduled business but with a new chairman and director in place, the Trust must now ensure licence fee payers are properly engaged and consulted on the BBC's future.

24. As the Government's preferred candidate for Chairman of the BBC Trust, Rona Fairhead told us she planned to approach Charter Review with a "degree of open-mindedness" and "without baggage"[23] She explained that the debate on Charter Review needed to be "guided above all by the needs and demands of the audience, the licence fee payer—the BBC funders and users". We hope that as the BBC Trust's new Chairman Mrs Fairhead will see it as her prime responsibility to ensure the Trust enters Charter Review without any preconceptions or judgements on what the licence fee payers' expectations are and accept that it is her task to initiate a full and frank discussion on all aspects of the future of the BBC.

25. We agree with Lord Burns, the former Government's adviser on the last Charter Review, that even with the timing of the general election, preparatory work for 2017 Charter Review should start as soon as possible. Consideration of the future of the BBC is too important to rush. The BBC Trust must demonstrate a readiness and willingness to ensure that a full and frank debate takes place on all aspects of the BBC as part of Charter Review including through its own engagement with licence fee payers on all the fundamental issues concerning the BBC.

26. The process for agreeing the future shape, funding and constitution of the BBC must be as thorough, open and democratic as possible. For this to happen, we recommend that the Government seek cross-party support for establishing an independent review panel now on the 2017 Charter, along the same lines as the previous Burns' model, led by a figure similar to Lord Burns, so that the vital preparatory work and research to inform Charter Review can begin without further delay. Our principal conclusions and recommendations in this report set out a basis for the terms of inquiry for the independent panel.

27. As with the previous Charter Review, the Government must ensure that the public and other stakeholders are fully consulted and able to put across their views on the future of the BBC. We expect sufficient time to be allocated for this and for the development of, and consultation on, Green and White Papers, and for parliamentary scrutiny on these and any draft future Charter and Framework Agreements. If there is insufficient time to undertake this properly before the current Charter expires another option would be to grant a supplementary Charter extending the current Charter for an appropriate period in which to complete the review process.

1 Broadcasting-Copy of Royal Charter for the continuance of the British Broadcasting Corporation, Cm 6925 Back

2 That is, watching programmes at the time they are broadcast, usually on a television set Back

3 Ofcom-Public Service Content in a Connected Society: Ofcom's third review of public service broadcasting-Consultation, 15 December 2014 Back

4 Ofcom's International Communication Market Report 2013/14 Back

5 Broadcasting-An Agreement Between Her Majesty's Secretary of State for Culture, Media and Sport and the British Broadcasting Corporation, Cm 6872 Back

6 The terms of reference for the inquiry are set out in annex B Back

7 See annex C for details of the Committee's visit programme Back

8 See annex D below for a summary of the e-consultation on the Student Room website Back

9 The Committee reappointed Ray Gallagher as its specialist adviser on broadcasting on 7 January 2014. Mr Gallagher's relevant interested were declared at the Committee's first meeting of this Parliament on 28 July 2010. Back

10 The BBC World Service has been financed through the licence fee since April 2014 Back

11 BBC Alba is a Scottish Gaelic language digital television channel jointly owned by the BBC and MG Alba Back

12 Review of the BBC's Royal Charter - A strong BBC Independent of Government, March 2005 Back