Examination of Witnesses (Questions 503
THURSDAY 20 JUNE 2002
Chairman: Thank you very much for joining us.
Could we start with a question from Paul Farrelly?
503. Recently the Government has published proposals
for a new agreement for the BBC. Do you think OFCOM's board should
be party to that agreement and that its contents should be subject
to further discussion with the chairman and chief executive of
that board when they have been appointed?
(Mr Davies) The agreement is traditionally
agreed both with the DCMS and the board of governors and that
is really what has happened this time. My feeling on that would
be that OFCOM are not a direct party to this agreement, and I
do not think they should have a formal role in consultation on
the agreement. However, obviously the agreement needs to be published
and the DCMS has published a document on the agreement that fully
lays out everything in it essentially, and it is subject to Parliamentary
scrutiny in the same way that it always has been. I think that
the way that the agreement and the Charter works has always been
broadly acceptable and successful as a process, and I am not sure
the existence of OFCOM makes much difference to that process.
504. What disadvantages would be added, briefly,
if OFCOM were party to that agreement?
(Mr Davies) I think that it would imply that OFCOM
has a regulatory jurisdiction over the BBC in general as opposed
to on tiers 1 and 2, economic regulation and complaints, which
is where OFCOM will, and rightly should, have jurisdiction over
the BBC. The DCMS is the ultimate public body responsible for
the performance and behaviour of the BBC, and I think the agreement
under which we operate should be between us and them.
(Ms Thomson) The current document, of course, is not
the full new agreement: it is a document for consultation which
DCMS has published. So there is widespread consultation going
on including with all the other regulators and I would fully expect
OFCOM to take part in that consultation, so in that sense I think
their views will be taken into account but I think we all feel
that we wanted the new agreement to come into position as OFCOM
happened rather than then wait another period for further consultation
before it could be put into position.
(Mr Davies) The governors are one party to this agreement
obviously so on behalf of them I should reassure you that clearly
we will take account of the whole of the consultation process.
As Caroline says, OFCOM will not be there for at least the beginning
of the consultation process and the agreement is needed on day
1 of the new regime, but I think there are some logistical problems
in doing what you suggest as well as the earlier problems I raised.
505. Following on, while I understand the final
point you made because it is a point I have been making repeatedly;
since OFCOM was set up, the way it was set up has left a tiny
gap before the board is in existence, so I accept that is a difficulty,
but nonetheless re-reading the proposed agreement today and the
repeated statements of OFCOM's role paragraph by paragraph, and
feeling decidedly uncomfortable, having read it, that really all
this is not covered in the Bill but is in a totally separate and
parallel agreement, I find it slightly bizarre as a proposal that
OFCOM, who has to carry it into practice, is not going to be consulted
and that it is a cosy thing tidied up and OFCOM will then have
to deal with whatever the result is without having had the opportunity
to point out the practical difficulties or the consequences that
arise from the legislation. I find it a very unconvincing answer
that you have given.
(Mr Davies) I would say, Lord Crickhowell, that some
of the officers of OFCOM may well be aroundshould be aroundin
the next several months and hopefully will have every opportunity
to comment on the agreement. Certainly, speaking for the board
of governors, there is absolutely no intention of ignoring OFCOM's
opinion in matters where they will have to work with us later
so, for example, the parts of the agreement that are going to
be covering quotas, the parts of the agreement that are covering
to be covering tier 1 and the parts that are going to be covering
all the matters of OFCOM in relation to the BBC, I would be very
interested to see what the new officers of OFCOM have to say about.
Clearly we will be happy to take that into account in redrafting
this agreement. I also say, and I am not sure I am right on this,
that the details of what is in this agreement may not be that
contentious. There may be some arguments about that particular
wording but from our perspective the subject matter in this agreement
is not really something that we are being reluctantly drawn into:
it is something we enthusiastically want to do in co-operation
with OFCOM and the DCMS.
506. Our difficulty as a Committee is that we
are supposed to be looking at the effectiveness of a piece of
legislation which is going to be crucially dependent on the drafting
of a quite separate agreement, so you will understand our concern
that the two should be working effectively with an effective linkage
otherwise the whole legislative part of the process will break
(Mr Davies) Yes. On this matter and probably quite
a few others there will be another opportunity to think again
at Charter renewal time. At that stage OFCOM will be fully up
and running: we will have some experience of operating agreement
and it will then be rewritten, of course, but, again, from the
BBC's perspective we are not reluctant to listen to what OFCOM
thinks on this.
Lord Hussey of North Bradley
507. I want to ask a question about provision
of information. I am not quite clear why the BBC should not be
subject to the same obligations as other broadcasters, such as
SC4, to provide information to OFCOM as that body needs to fulfil
its activities. It seems to me rather hostage to fortune to stand
apart in that way.
(Mr Davies) We have absolutely no desire to block
the provision of information on matters where OFCOM is the body
concerned with regulation, and we are entirely happy to have a
requirement placed on us to submit the information necessary for
OFCOM to undertake its obligations in tier 1 and tier 2. It should,
in our view, however, be information which is relevant to what
OFCOM is responsible for doing.
508. That is a perfectly fair point.
(Mr Davies) And, in our view, it should be in the
agreement. I think it is in the draft agreement, is it not, Caroline?
(Ms Thomson) Yes.
(Mr Davies) In any case, we are entirely happy to
have a requirement to provide evidence and information to OFCOM
in matters where they have a legitimate jurisdiction over us.
509. I am sure we would all be glad to hear
that. The other position seems to me to be realistically untenable.
(Mr Davies) We have no problem with that at all; we
are happy with that. I think a generalised requirement to provide
any information that OFCOM wants is a different matter but, as
long as it is pertaining to their duties, then I see absolutely
no problem whatsoever.
Lord Hussey of North Bradley: That clarifies
510. It does seem to us that, first of all,
in many cases regulators do not act when they might have done,
and the reason for that is they do not have the information fully
to understand the market. It would seem that the BBC is uniquely
placed to ensure that the new regulator really does have the understanding
of the market place, and a huge chunk of that market place in
order to move properly, and all I would suggest is that where
and whenever possible you would be an enormous help to their learning
curve in developing expertise and so on.
(Mr Davies) We are absolutely enthusiastic about doing
that because, for example, in operating the quotas under tier
2, a lack of understanding by OFCOM on what the numbers mean would
be disastrous for us, so it is enormously in our interests that
they understand that precisely what they are responsible for ensuring
occurs within these quotas.
511. When it comes down to it, Ms Thomson, rather
than "where necessary", perhaps "where helpful"
would be the criterion?
(Ms Thomson) Yes.
Lord Pilkington of Oxenford
512. In your agreement you say that you are
going to have a statement of programme policy. Is that for all
the public service channels or will you give a statement of programme
policy for each separate public service channel?
(Mr Davies) Yes.
(Mr Dyke) Each separate channel, yes.
(Mr Davies) And we are publishing the first generation
of this on 17 July.
513. The BBC's radio role is not specifically
covered by OFCOM. Do you not find that surprising?
(Mr Davies) I do not find it too surprising, Lord
McNally, since the Bill does not apply tiers 2 and 3 to radio
at all. Of course, under tier 1, which the Bill does relate to,
the Bill and OFCOM will have jurisdiction over BBC Radio but elsewhere
the Bill, as I say, does not seek to apply its provisions to tier
2 and tier 3. I do not think BBC Radio is particularly unusual;
I would say it is radio as a generality which is excluded from
tiers 2 and 3.
(Mr Dyke) I would add that obviously we at the BBC
will voluntarily apply similar principles that may apply under
tiers 2 and 3 to television to radio, as we do now.
514. With the vast experience of the BBC on
radio, do you think that the regime for local radio and diversity
in local radio looks okay?
(Mr Dyke) I know there is real concern, I think both
on radio in the BBC and in the commercial radio sector, that radio
somehow gets lost inside OFCOM, and I think you need to ensure
that does not happen.
515. The Friday afternoon syndrome?
(Mr Dyke) Yes. I think even inside the BBC at times
we make great efforts to make sure, as Lord Hussey knows too well,
that radio is one of the central parts and is core to our business,
and I think there is a great danger in something the scale and
the size of OFCOM covering such an enormous sector in the whole
telecommunications area, and radio could be in danger of getting
lost for a minute.
(Mr Davies) You certainly get the impression when
you read the Bill and the documentation that it has been written
for television. Part of the reason for that I think is, of course,
there really is not any such thing as commercial public service
radio in the UK so I guess the philosophy in drafting the Bill
has been that public service radio is provided by the BBC and
the regulation of that by the board of governors is the right
way of proceeding.
(Mr Dyke) We in the last couple of years have made
a significant additional investment into radio, particularly into
local radio, and in a world where most local radio is aimed at
a particular audience which is 15-35, we have local radio stations
that are not aimed at that audience at all, and if you look at
the role they played in times of real crisis, like foot and mouth
or the fuel crisis, etc, you suddenly see the value of public
service local radio.
516. I suppose the other criticism is that a
good section of BBC Radio is not public service at all but highly
commercial radio, which could just as well be provided by the
(Mr Davies) That is a long discussion but I think
we would have trouble agreeing with that. If you take Radio 1
for example, which many people make that allegation about, our
view would be that the type of music played on Radio 1 and the
breaking of new bands on Radio 1 and the public service news and
information content on Radio 1 is entirely different from what
is available on most commercial radio stations, so I think we
would be pretty resistant to suggesting that our major radio networks
were not public service networks.
517. Just as a conclusion, however, we have
had three questions now which have suggested that the BBC might
cede some of its powers to OFCOM, and you have firmly resisted
(Mr Davies) No, I have not, actually.
518. Well, you had an interesting subclause
on the first concession.
(Mr Davies) On information we are not in the least
519. But you will determine what is the relevant
information, not OFCOM, and I do not want to go back to that question.
I am a little bit worried that the BBC's relationship with OFCOM
is not going to be as constructive and harmonious as you are at
present suggesting. I am worried that, unless we put specific
commitments in, when it comes to the day the BBC will turn up
with a battery of lawyers and a whole lot of fine print to be
referred to, to keep OFCOM at arm's length and we are supposed
to be creating this super regulator which will have a few exceptions
for the BBC, whereas you seem to be arguing a much wider fence.
I cannot see why OFCOM cannot take full control of radio but that
is one of many. It seems your whole body language is, "This
is an organisation that is going to be kept at arm's length and
we are going to resist encroachments".
(Mr Davies) I do not know what my body language is
because I cannot see myself, but my mental conditionwhich
I can see better than youis not that at all! You have really
not reflected my mental condition correctly in that question.
I want actively to co-operate with OFCOM in the interests of the
overall ecology, but I do think there is and should be a separation
of powers between us and the Bill clearly separates powers. OFCOM
has jurisdiction in tier 1 and tier 2, in economic regulation
and in appeals on complaints. We, the governors, retain our jurisdiction
on the public service remit of the BBC and I think that is the
right split. On radio, the issue I think is not a BBC issue as
such: it is an issue relating to the entire radio market place
where the Bill is perhaps more silent than it is on television.
(Mr Dyke) From an executive perspective, the worst
thing that can come out of this if you are trying to run the BBC
is to have confused regulation or dual regulation. There would
be nothing worse than to have the BBC governors regulating the
BBC and then another regulator effectively regulating the BBC
governors. It would be a nightmare. Personally I am a great believer
in plurality of regulation, just as I am a great believer in plurality
of broadcasting. I think to have one content regulator across
the whole of British broadcasting would be a very real mistake.
A single content regulator would be a mistake.
(Mr Davies) Greg has just said it would be a nightmare
for him to have a double regulator sitting over him. From my perspective
as chairman of the governors it would be difficult to retain,
I think, the high quality board of governors that I wish to attract
and be the Chairman of if we were simply being second-guessed
all of the time on all issues by another regulator. So from Greg's
perspective it is double regulation of the executive: from mine,
it is concern about retaining a realistic role for the governors.
I would argue that the independence of the BBC over many years
has served it and the nation well and that the core principles
of that should be maintained.