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Lord Crickhowell: My Lords, I am grateful to my noble friend for giving way. I have been listening with great interest and I congratulate my noble friend. Perhaps she can enlighten me on one point because she knows about the agreement and I do not. Am I right—I hope that I am—in assuming that the Comptroller and Auditor General will deal directly only with the BBC and that there will be no involvement of the finance officer of the department because that, to me, is absolutely fundamental. If this is an arrangement in which the National Audit Office deals with the BBC, that is fine, but I was concerned that we would have the kind of arrangement that normally happens with public bodies where the poor old public body is left stranded and the principal finance officer or the permanent secretary becomes involved in the exchanges with the National Audit Office.

7.30 p.m.

Baroness Buscombe: My Lords, I am extremely grateful to my noble friend for that intervention. I am pleased to confirm that what he asks is the case: this is an arrangement. Notwithstanding that we have obviously looked to the Government for their support for the agreement, it is our understanding—which I believe is contained precisely and accurately in the

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letter addressed to myself from the Minister—that this is an arrangement between the NAO and the BBC governors, in terms of carrying it out.

My noble friend is right to raise the issue because it was proving a sticking point on the part of the BBC and rightly so. One of the points I made on Second Reading and again in Committee is that it is terribly important that the BBC governors and the NAO can act independently of government. I urge noble Lords to read this letter of 19th June to reassure themselves that that is the case. Indeed it states that the Government do not envisage a role for the Department for Culture, Media and Sport or its accounting officers in the process and that such a role would infringe the independence of the BBC in its day-to-day operations. I hope that that reassures my noble friend. I beg to move.

Lord Sheldon: My Lords, the noble Baroness urges noble Lords to read the letter. I went to the Library today and they could not find the letter. It is a great pity that we are discussing a letter that is supposed to be in the Library but which was not there—they could not find it anyhow. The noble Lord, Lord Crickhowell, made the useful, but rather limited, point that the finance officers should not be involved.

As well as my long period of service as chairman of the Public Accounts Committee I spent eight to 10 years as a member of the Public Accounts Committee. Over that period I looked at the BBC. In my later years as chairman we considered whether the BBC's role should be investigated by the Public Accounts Committee. When I look at the new clause in Amendment No. 111, I see that subsection (3)(a) makes it,

"an obligation to carry out an examination into efficiency, economy and effectiveness of the BBC's services".

That is value for money.

Economy is not difficult to understand: one obtains at the cheapest price available.

Baroness Buscombe: My Lords, will the noble Lord accept that I said at some length that I do not propose to pursue these amendments because I believe we have reached a good and helpful consensus?

Lord Sheldon: My Lords, I understand that, but I have not seen anything of it. Surely the noble Baroness cannot just say that she has come to an agreement and an understanding when most of us have not seen the letter. I went deliberately to the Library and asked to see it. I might have agreed with what it said, but I have not seen it. If it is not here, I must speak to what is here, which is the matter before us in the amendment.

When we look at economy, we can see that that is easy to handle. When we look at efficiency it is not too difficult to understand that we try to obtain the best possible deal for the lowest possible price. When we look at effectiveness, on the other hand, it becomes much more difficult. How do we deal with effectiveness in the televisual medium? What is effectiveness? Is it a popular programme; one that

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instructs people; or one that receives a great deal of admiration from the literary people concerned, or from whatever bodies might be involved?

I am very uneasy about the matter. I was incremental in securing John Bourn as the Comptroller and Auditor-General. He is an admirable man, and I have no doubt whatever that I would place my complete confidence in him. But I have to take into account the position as it may apply to some future Comptroller and Auditor-General who may not have the same degree of understanding.

As a result, we need to be careful about letting accountants look at the working of effectiveness when they cannot even define it properly. I wanted the National Audit Office to be in all sorts of areas, which it was over a long period of time. I never sought to limit inquiries. But there are a few areas where value for money is hardest to apply. I believe that that is one of them.

Lord Lipsey: My Lords, I am sorry that, inadvertently, the letter that my noble friend intended to place in the Library went astray. If the noble Lord, Lord Sheldon, wants a copy I have one.

The noble Lord, Lord Sheldon, spoke with great passion about the BBC. I agree with all that he said about the wonders of the institution. The BBC has signed up to the agreement. We can take it that the very real concerns that he expressed will have been taken into account by the BBC before signing the agreement. I hope that he will set his mind at further rest by reading the agreement.

The agreement was sent to me. It is a very good deal. I wish to deal with one point that is not concrete in the agreement. It states that the audit committee of the BBC will lay its report before Parliament "probably" once a year at the time of the annual report. That is not terribly satisfactory. It means that in some cases they will sit around for a long time. The PAC will have difficulty organising its programme, which is organised a year in advance around that. I hope that the Minister and the BBC might look again at the inclusion of "probably". It is not a point of principle but a question of efficient and effective management. I do not think that the proposed approach is the most efficient and effective one.

I shall pause for a minute for rosettes, as this is a remarkable item of business. With the possible exception of the noble Lord, Lord Sheldon, we have moved from a situation where some people at one extreme said that the NAO must have full power over everything and others said that the proposals were a disgraceful attack on the BBC's editorial independence. It has been a very good process where everyone has come together and signed up. I pay tribute to the flexibility of the chairman and governors of the BBC, who took some persuading but are now persuaded. They have given the absolute assurance that they will do it properly. I pay great tribute to the noble Lord, Lord Sharman, who endorsed the agreement.

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Finally, I give a rosette to someone who might otherwise lack it, not being on the Government Front Bench: the noble Baroness, Lady Buscombe. I know that this has been a difficult issue in her party also. It is terribly important and significant that in Parliament all sides—subject to anything the noble Lord, Lord McNally, might say—have said that they will give the agreement a go and have another look at it during the charter review, hoping that it will not be controversial. They have said that they are prepared not to hang on to principled speeches and will work towards getting a practical agreement to work. A very large rosette goes to the noble Baroness, Lady Buscombe. I am very glad that the issue has been resolved so satisfactorily.

Lord McNally: My Lords, I know that the noble Lord, Lord Lipsey, received the letter. It also went to Shirley Williams, Colin Sharman, Edward Leigh, Gavyn Davies, Sir John Bourn and, for all I know, uncle Tom Cobbleigh. I did not receive it. I got it from the noble Baroness, Lady Buscombe. I shall be extremely succinct.

Lord McIntosh of Haringey: My Lords, I shall set my stopwatch.

Lord McNally: My Lords, when the great divergence to which the noble Lord, Lord Lipsey, refers, became apparent, I thought it was a good idea and one of the great boons of this House to ask someone who knew about such matters to look at it. I asked the noble Lord, Lord Sharman. What became known as the Sharman compromise is embodied in the letter to the noble Baroness, Lady Buscombe. The noble Lord, Lord Lipsey, is right; the noble Baroness has used considerable skill in persuading her colleagues along the corridor that the proposal is sensible.

My message is very simple. In 2001, at the request of the Government, the noble Lord, Lord Sharman, conducted a review of public accountability of public sector bodies. Unfortunately, the noble Lord has had to attend another engagement, but he asked me to say that he believes that the agreement—which I saw second-hand and that the noble Lord, Lord Sheldon, has yet to see—falls four-square within the recommendations of the report. I share some of the concern expressed by the noble Lord, Lord Sheldon, about leaping straight into full NAO coverage. However, this is a great step forward in transparency and accountability in the BBC. From all that I have heard it will be approached with the constructive spirit for which the noble Baroness, Lady Buscombe, asked, and therefore it is rosettes all round.

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