Examination of Witnesses (Questions 20-39)
MS PATRICIA HODGSON, MS SARAH THANE AND MR RICHARD PEEL
THURSDAY 23 MAY 2002
20. That is helpful. I shall now come to where I was going to start which is on the public service remit and local production and all that. In a sense there has been, correct me if I am wrong, a certain contradiction. You have perfectly reasonably, I think I quote you right, said this morning that you want "simple remits that OFCOM can vary" and "not too much regulatory creep" and comments of that sort, but in a number of places in your submission, on page 3 of your covering letter, I think in paragraph 8 on page 16 of your submission, you talk about the remit and imply or indeed actually suggest that the Bill needs strengthening or alteration. Rather irritatingly, from our point of view, you are very vague about what the terms of that strengthening should be. Again I am asking you, therefore, whether specifically in this area of the remit of public sector broadcasting you do think that the Bill needs changing and, if so, could you give us either today or later some indication of what the change should be because you speak of the change, but you do not specify?
(Ms Hodgson) I would not wish to suggest it is strengthening because, as you say, that sounds re-regulatory and I do not mean to be so. I think it needs rebalancing and I would make a few headline suggestions now and then perhaps we could write to you. The Bill, I think, is right to include this overarching definition of public service broadcasting and then flexibility in how that may be applied to particular service providers, but there are some problems with it. The overall definition of public service broadcasting is taken from the BBC's licence and agreement. It is stronger than anything that has yet been applied to the commercial sector. That seems to me a little odd at this stage. Then it is translated into remits for particular channels that simply have quality and diversity for Channels 3 and 5, therefore, possibly leaving the whole of the rest of the burden on Channel 4. Now, Channel 4 does not have a great deal of funding and that seems a bit odd, so we think that the high-level remit needs possibly to be simplified a bit and then the remits for particular channels need to offer just a little bit more differentiation between the kind of channels they can be, given their funding. We think that a channel which has a high share of revenues, which at the moment is Channel 3, it may not always be, but at the moment it is Channel 3, could accept investment in original production targets and we have reason to believe that at the moment Channel 3 would not be averse to seeing some of the responsibilities it currently delivers included in its remit, certainly high levels of original production, certainly a strong commitment to the news, and, just in passing, there is just one omission in the Bill in relation to news which does not carry over from the 1990 Bill, the requirement for a sufficiency of news in peak. I think that is very important for democracy. The high-funded channels might well accept a responsibility for landmark programmes, The Forsyte Saga, the big documentaries. All these things have to be flexible over time. They are pretty high level, but I think there needs to be just a little bit more focus on getting it right. I do not know whether Sarah has anything to add.
(Ms Thane) I think it is this concern that there is a very ambitious list of elements in PSB that need to be delivered by the commercial broadcasters and a slight disconnect then between how OFCOM will ensure that delivery because they really have not got the right levers at the moment because of the vagueness of the remits and, as you read that whole section in the Bill, there is a very significant amount of detail about the annual reviews that the licensees must conduct, a tremendous amount of detail there, but it seems to me that the emphasis is slightly wrong. We need a little more shifted into what they are going to deliver and perhaps a little less on how.
21. I think none of us are parliamentary draftsmen and I dare say you would say the same, but I think if you were making a specific criticism of the Bill here or implying it, it would be quite helpful to have a little elaboration of that.
(Ms Thane) We will write.
22. You have picked up the annual reviews or rather triennial reviews issue, and perhaps I will follow it up at this point. You reasonably say that particularly as we are dealing with competition issues such a long time before dealing with comments from the public, they are only really reviewed every three years and then you have to get them implemented and so on, that the timescales are so long that nothing may be achieved. Would you comment a little further on your suggestions that really we ought to be looking at this on an annual basis, that OFCOM should be reporting to the public and to Parliament annually on how it sees things going. As a former Chairman of an ITV company, I know that when criticisms are made publicly, actually boards are sensitive to them and one is anxiously awaiting to see what the ITC says, when I had that role, every year, so I take the point that it is no good waiting for three years. Would you like to say a little bit more?
(Ms Hodgson) Well, the broadcasters, as you say, report annually and so should OFCOM. An analysis, an independent, objective analysis of what the market is providing, and the public service broadcasters within it, must be the context for self-regulation and for annual statements which, as you say, in the case of the commercial licensees, OFCOM has the fall-back powers and in the case of the BBC, the Secretary of State has the fall-back powers. Without something to test self-regulation, we believe that in the case of the commercial licensees, OFCOM will be left reacting to their annual statements, nit-picking without anything to root their comments in and creating an antagonistic, ineffective relationship and my experience of the BBC is that the Governors need all the independent information they can get to make their writ run. I think there is a danger that if you have three-yearly analysis, expectations and frustrations will build up over three years so that that analysis will be much more interventionist than is the intention of this whole part of the Bill and that there might indeed be a counterproductive pressure, given the order-making powers for Ministers, to draw politicians in every three years, which would be wrong, I think, for the industry. As you said, the broadcasting market moves very fast and if there is a two-year commissioning cycle and a three-year reporting cycle, that is five years before levers work. Well, if you look back five years, we had no digital broadcasting in the UK five years ago. It just seems to me that if you want something to be high level, non-interventionist, you just have a natural rolling framework for self-regulation.
23. Finally, can I take you back to this vexed question of regional output about which, you will understand, I feel quite strongly. You will know that I asked a question at a meeting in this very room attended by parliamentarians last week, expressing my worry about changes in media ownership with possible overseas companies with a mass of output and so on, and that although the industry here might well benefit from the source, from my former experience I recognise the importance of a company having adequate resources as long as the providers encourage local production. Are you happy, again coming back to the Bill, that the powers are there to enable the regulator to ensure that there really is enough local production out in, say, Cardiff or Bristol, which are my obvious examples, but wherever it may be?
(Ms Hodgson) I think the foundations are investment requirements and we really welcome investment targets for spending in the nations and the regions. I think we could do with seeing them in general investment in original production. There are also strong requirements in the Bill for investment in news which we think is extremely important. There is then the very difficult question of where that investment gets spent if there is a tendency towards single, London-based, big companies. I do not know whether perhaps Richard might say something on the local accountability.
(Mr Peel) Yes, as I said earlier, we think, particularly now we have moved to a position of deregulation where the licensees are duty bound to produce statements of intent and then reflect on how successful they have been in relation to those statements and the ITC reports on those, that they do need to be properly accountable to their audiences. As I mentioned earlier, we are hoping we will be able to make a mutual announcement early next week to talk about the strengthening of that accountability. We think it is essential that there is more participation from audiences and other stakeholders in relation to the services that are provided in particular by the ITV licencees.
Lord Pilkington of Oxenford
24. Could I return to the relations with the BBC which you have touched on already. As you have said, the draft Bill gives a definition of public service broadcasting which includes BBC output, but then OFCOM will not have the same powers with respect to that output as it will have with other broadcasters. Would you see any value in defining non-BBC public service broadcasting in the Bill on the understanding that the agreement with the BBC would require the BBC to provide content complementary to that non-BBC output?
(Ms Hodgson) This is of course a very contentious area
25. That is why I asked it!
(Ms Hodgson)which Parliament will in its wisdom determine. I think we believe that the BBC should do more than complement the commercial sector. It should set standards for the whole of British broadcasting and all the tastes within the audience which need to be served, clearly with distinctive services that do not foreclose the commercial market, except insofar as the BBC really is supplying something that cannot be delivered in the commercial market. We know the Committee will look forward to seeing the proposed new BBC agreement so that you can understand the whole ecology because undoubtedly, as you imply, the ecology rests on what the BBC supplies and is determined by what the BBC supplies. It has a third of all revenues and very large proportions of audiences. While the new agreement is being developed, Members may wish to consider key points which might be in the new agreement. We believe that OFCOM should certainly have powers to obtain data from the BBC for its analysis of the market in the same form as it can get data from the rest of the market, otherwise it cannot do that job, that the BBC should probably have up-to-date transparency and accountability requirements that mirror OFCOM and duties on the BBC to provide distinctive standard-setting services which are distinguishable, but this is a very difficult area and I would not comment further than that, I think.
26. Could I ask you something else, drawing on your experience or the experience of the ITC. The ITC has had very wide responsibilities with licensing, judging content, privacy and things like that, but OFCOM is going to have even more wide responsibilities to incorporate. There are no separate bodies like the Broadcasting Standards Commission and things like that. Do you see from your experience in the ITC dangers of conflict between the various aspects of OFCOM and how did you avoid this in the ITC? What should they learn from you?
(Ms Hodgson) A few years ago I think I would have in a rather cautious manner preferred a consolidation of the broadcasting regulators and then the networks and systems regulators on the other side, but my experience of the last few years is that in order to deliver effectiveness in a decent framework for a competitive, vibrant industry, there are decisions that are taken across those bodies which for all the collaborative working that we do have, and it is excellent collaborative working, nevertheless, it is not as good as it might be. Let me come back to the access issues. ITC are enormously concerned about the terms on which broadcasters can get access to audiences. The responsibility for those terms is OFTEL's. Now, we work closely together, but inevitably OFTEL's experience is all of plain old telecoms, and we gradually get there. OFTEL has now put out a consultation document, moved, changed its requirements, but it has taken a very long time and I think that OFCOM will help us towards integrated, well-informed decision-making across the board. I am really repeating myself in answering your concern about too many powers and too much conflict when I say I hope that the difference with the Content Board, which can focus on the complexities of standards and redress for members of the public, will keep that away from the main Board which can then make these very difficult trade-offs.
27. Would you see any role for a ring-fenced ombudsman to deal with more sensitive issues of privacy?
(Ms Thane) I believe that planning of the work streams and how OFCOM handles its responsibilities will fall to the Chairman and the Chief Executive of the Board to decide, but it seems to me that the way in which the Broadcasting Standards Commission has dealt with fairness and privacy, it is perfectly capable of just shipping into OFCOM with the involvement of a professional staff preparing all the casework paperwork and the lay membership of the OFCOM Content Board, a sub-committee of it, dealing with fairness and privacy issues and redress for individual complainants in the way that has so successfully gone on until the present day.
28. You do use in your paper that overworked phrase "a level playing field". Would you agree that it is neither the British people's wish nor Parliament's intention to create a level playing field between the BBC and the commercial sector? The BBC is our broadcasting flagship and it is going to rightly have certain protections from the marketplace that are the way of delivering a robust public service broadcaster for this country.
(Ms Hodgson) Yes, I absolutely agree and I also think that, as you say, our foundation for public service broadcasting funded by a hypothecated tax needs special arrangements that make it directly answerable through the Minister to this place. The phrase "level playing field" is used in respect of editorial standards where the BBC will be brought under OFCOM and it does seem somewhat off if every other broadcaster is subject to sanctions and not the BBC. We take concerns that licence fee-payers' money should not be syphoned off to the Treasury as a result of some producer making a mess-up or something, but there may be constructive ways around that whereby there are flows which are constructive or something which helps standards, like training or some other mechanism.
29. Just to clarify that, are you saying then that as regards the Tier Three regulation, I was a little confused, you are content that that rests with government and with Parliament and it is just content sanctions on the BBC that you think that the Board should address?
(Ms Hodgson) Yes.
30. In what sense is any of this more light touch? How do you think this is a more light touch with what you are proposing which includes, according to Sarah, that we should have more demands on what broadcasters do and that there should be requirements for landmark programmes? You did say it was more detailed and interventionist, but then you went on about investment targets, possibly by genre, I do not know.
(Ms Thane) No, certainly not.
31. In what sense is it more light touch than what we have got at present?
(Ms Hodgson) At present we have a system of licensing which draws the regulator into types of output, specific genres, real detail. What the Bill proposes, and we have put it in deliberately, is to step back from that. It is liberalising ownership which we support. It is carrying forward simplified arrangements for Tier One and Tier Two, which we think will work very well, and they include aspirations for more co-regulation again, which we support, and Tier Three is genuinely deregulatory because it moves to self-regulation and, as we said earlier, if you just think that probably because of pressure of time those clauses are not quite clear enough and because they are struggling with it, they begin to look to detail and that there is an overarching simplicity which is self-regulation in the context of the annual analysis of how the market is delivering. That is quite simple.
32. I notice on liberalisation of ownership you are quite relaxed and, indeed, encourage that. Could there be an argument that really, in terms of the quality of our public service broadcasting, what a regulator can do is relatively limited; it is about the culture of our broadcasting companies? Would you see yourself being more prescriptive with Disney than with Carlton and Granada?
(Ms Hodgson) My experience in recent years is that a regulator, a bureaucrat, cannot intervene and affect the creative quality of programmes. What a regulator, I think, can do is ensure that there is a proper foundation which I think is an investment foundation, and can create a framework of information that provides pressures on licensing boards, on governors of the BBC, gives Parliament public tools, to see what is being delivered against what is wanted.
33. On "must carry", is there not an argument that that should apply immediately and not just wait for the digital switchover?
(Ms Hodgson) We believe that "must carry" and "must offer" need to be properly balanced, otherwise in any negotiation about the terms your carriage, one party to it, is at an advantage. We would like to see "must carry/must offer" sooner rather than later. We have got powers under the current legislation for the ITC to make a judgment about when is appropriate, and that might be a good thing to carry forward.
34. Finally, just going back to the media ownership question, is there not a real argument for reciprocity here
(Ms Hodgson) Absolutely!
- And given that you were quite humble there about the powers of regulators to make a difference, it is going to be a huge shock if Disney, to give one example, take over Channel 3. Is there not really an argument for being a bit more cautious here, giving you time to bed down and have long and extended negotiations with our American friends we stand shoulder-to-shoulder with?
(Ms Hodgson) Under the current legislation, European companies from Berlusconi to Bertelsmann can own our broadcasters and I think it is a matter of judgment whether you prefer them or Disney. I think what is important are the tools under the Bill to require investment in our creative industries.
Chairman: Can I just ask the Bill Team whether there are any issues they would like to give clarification on? If not, Patricia, Sarah, Richard, thank you very much indeed.