Joint Committee on The Draft Communications Bill Minutes of Evidence

Examination of Witnesses (Questions 503 - 519)



  Chairman: Thank you very much for joining us. Could we start with a question from Paul Farrelly?

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.

Lord Crickhowell

  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 around—should be around—in 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 down.
  (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 it.


  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.

Lord Mcnally

  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 commercial sector.
  (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 all three—
  (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 bit resistant.

  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 condition—which I can see better than you—is 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.

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