Examination of Witnesses (Questions 140
- 157)
WEDNESDAY 23 MAY 2007
MR DON
FOSTER
Q140 Lord Maxton:
We have seen in the American advise and consent that people's
private lives on matters which have no relevance whatsoever to
the job which they are applying for have destroyed them as applicants.
That could happen here in that sort of situation. I hope it would
not but it could. That would not be right, would it?
Mr Foster: Of course it would not be right but
there are ways of protecting against that: the proper chairmanship
of the scrutiny committee ensuring that inappropriate questions
are simply not asked or do not require answers as part of the
way it is done. There is also the culture in this country where
I do not think it is likely that people would ask those questions.
It is not a matter for discussion now but I am very clear that
issues of the type to which you refer are very often irrelevant
to the person's ability to be able to conduct the job that we
are hoping they are going to agree to do.
Q141 Baroness Howe of Idlicote:
I was going to ask you the question which you have already answered
about whether it is public interest and the chairman of the BBC
being barred for a limited period but you have already answered
that point. Is there anything you would like to add?
Mr Foster: The point Michael Grade made in his
answer to you was very important, that there is a distinction
between the chief executive role, moving from one chief executive
to another, and him moving from the role he had to the one he
has now gone to. I cannot help but reflect that, for example,
Stephen Carter, when he was the chief executive of Ofcom had a
clear contract that barred him for 12months—in fact it ended
up being nine months because of agreements that were reached—after
he left Ofcom before he could enter another job within the same
sector. Indeed, I understand that all of the senior people within
Ofcom have a minimum of a nine month gardening leave clause in
their contracts. While it may well be the case that what Michael
Grade told you earlier is true, that there is a distinction between
his role that he had as chairman of governors and subsequently
of the Trust and being the chief executive of the BBC and then
moving to chief executive and chairman of ITV, nonetheless in
the public's mind at least when questions are asked, for example,
about the fact that the BBC was bidding for the FA Cup, that ITV
subsequently won that bidding- I am not for a minute suggesting
any dubiety whatsoever on the part of Michael Grade in that process—there
will be some at least who are concerned about possible conflict
of interest. For the avoidance of doubt, I think it is absolutely
critical that there be a period of time within the contract in
advance that is known. That may have had pretty disastrous consequences
for the BBC since Michael told your Committee earlier that had
there been such a contract he would not have joined the BBC. That
would have been a shame, but I still believe it is important,
firstly, that there is a contract which currently there is not
and, secondly, that that contract includes a minimum period of
perhaps six months, a separation between one job in the sector
and another.
Q142 Baroness Howe of Idlicote:
I think it does open up this level of "contract", not
least civil servants and others, maybe one level down from this,
are certainly also required to have a period before they take
on a competitive type job. Would you think that it would make
sense to review all this level of chairmanship to see whether
they are fit for purpose in today's world?
Mr Foster: I do not think there is any question
about that and I would also want to question the means by which
people are appointed. In particular, I would want to look again
very closely at issues of secrecy clauses. I find it quite staggering
that, although the Nolan rules have an assumption of a confidentiality
clause when you move from that body to another body, that is not
in writing. I note with interest that it was when the announcement
was made that Michael Grade was going to leave the BBC, the BBC
were very insistent, as I understand it, on obtaining something
in writing to give them an assurance that the confidentiality
that is assumed within Nolan was agreed to by Michael Grade. I
find it quite staggering that that was not part of a previously
agreed arrangement and part of the contract. It is not just the
appointment procedures; it is the contracts for this wide range
of bodies, not just for that individual post.
Q143 Baroness McIntosh of Hudnall:
The essence of a contract is that it should be enforceable. When
we get to issues about confidentiality I do not for a moment suggest
that it is not important that people should honourably observe
the confidentiality that you would expect people to observe when
moving from one job to another but, in all seriousness, is it
possible, whatever you write down on paper, ever to enforce such
a contract because the issue of evidence and so forth would be
very hard to adduce, would it not?
Mr Foster: It would indeed be very difficult.
I agree with you. In no way in anything I have said am I implying
that I do not trust Michael Grade implicitly to stand by the agreement
that he made both implicitly within the Nolan rules and in terms
of any letter of undertaking he may have written. I am sure that
he will abide by that but that is why I believe that it is not
just the contract in terms of the confidentiality clause you have
to have; it is the gardening leave, that period of time so that
the information you might have is out of date, and I think the
two have to be taken together. It is the combination of the two.
I agree with you that in most cases it will be very difficult.
Clearly, there might be situations where it is very obvious there
has been a breach but I accept it is very difficult indeed. It
is more difficult when you think through what information the
individual might have. Is it formal information achieved from
a formal meeting for instance of the BBC Trust or in the informal
conversations, because you are chairman of the BBC Trust, that
you have for instance with the director general? Making that distinction
would, I suspect, be very difficult.
Q144 Baroness Eccles of Moulton:
I wanted to think a little more about the distinction between
a non-executive contract which will have a life and being a member
of the fully pensionable staff of something like the BBC. So often
a non-executive contract may be only a relatively small part of
an individual's total job package. Therefore, when one is talking
about contracts and gardening leave and all the other aspects
that might go into it, it is surely very important to remember
that those are two very different types of employment and that
one should not fetter somebody who is perhaps occupying a fifth
or a quarter of their time in one particular role to such an extent
that it makes it very difficult for them to have enough flexibility
in their working life and also the sort of cross impact it might
have on other jobs that they might be doing.
Mr Foster: I entirely agree. Michael Grade made
that point earlier. However, I think it is worth reflecting that
there are non-executive jobs and non-executive jobs. In this particular
case when Michael Grade was appointed as the chairman of the Trust
the Secretary of State said so important was this post that we
had to raise the bar for this particular appointment. She made
clear so important was it that they were going to change the procedures.
I think there is a distinction to be made not only between executive
and non-executive but also between the level of importance of
the non-executive post.
Q145 Chairman:
That is an important point because the difference between being
the chairman of the BBC or, say, the chairman of British Telecommunications
or something like that is that that may be a non-executive post
but they are big jobs.
Mr Foster: Exactly.
Q146 Baroness Eccles of Moulton:
Should the salary that is being offered to the chairman of the
BBC therefore reflect the fact that the bar has been raised and
therefore they should be paid more?
Mr Foster: More than what? The chairman of the
BBC for a part time post is being paid considerably more than
a Member of Parliament. Where do you draw the line? As Michael
Grade made very clear, this was a post that very many people would
have been very keen to get, very senior, expert people and they
would not have done it entirely for the money; but nevertheless
you have to pay them. It is a complex equation to ensure that
you get the very best but you do not want to just get people who
want to do it for the money. I am not convinced that we have to
start paying a part time chairman of the BBC Trust which is not
a job I believe should exist anyway—I think there is a more
important job to be done by somebody who might be paid rather
more—but whether that needs to be paid anywhere near on
par with the chief executive, for instance, of ITV.
Q147 Lord Inglewood:
I have always understood that the only purpose a football manager's
contract played was that it was the basis for compensation when
his term of office came to an end. Is not the point about the
contractual arrangements in a context such as this not that they
provide you with a Byzantine means of enforcing some particular
provision but that they clearly lay down the rules of engagement
between the parties? The real problem here, it seems to me, is
that in the case of Michael Grade, as he himself said, it was
necessary for him to talk with the vice-chairman of the BBC board
to discuss how they would handle the particular issue. All that
should have been agreed in the public domain, in general terms,
before it got under way.
Mr Foster: I entirely agree with you. It does
set down the rules of engagement from the outset which can have
a bearing upon who is willing to accept the undertaking. It is
really quite significant that Michael Grade said to you that,
had that undertaking of for instance gardening leave been a requirement
in advance, he would not have taken the post. I think it is important
that it does set the ground rules for the relationship that is
going to exist and that may have an impact on who chooses to undertake
that activity.
Q148 Lord Inglewood:
Michael Grade's reply was a hypothetical reply to a hypothetical
question.
Mr Foster: I doubt if it was entirely.
Q149 Baroness Howe of Idlicote:
Michael Grade indicated that this job is such a prestigious job
and seen as so important that the salary would not put off many
people. That is one view. If one looks at the arguments that were
made when Ofcom was set up, the great argument was that people
having the top positions in that organisation had to be paid at
a fairly high level in order to be able to ensure you had the
right level of competence to compete with salaries that were being
paid within the broadcasting world. That surely must have some
influence in deciding that it makes sense for the BBC or whoever
pays the bill out of the licence fee to pay for this job. Has
it some relevance for the future way of appointing people to this
job?
Mr Foster: One of the debates that it would
be lovely to have in some detail is whether or not we have the
right organisation in the BBC Trust. I have touched on that. You
know my views and anyway the issue has been decided and will be
with us for some time to come. Therefore, the distinction has
to be made. Yes, it is an important job but it is nowhere near
as prestigious a job as I would like it to have been. I do not
believe that the job of chairman of the BBC Trust with the responsibilities
that post holder has is frankly comparable with the responsibility
of the chief executive post of Ofcom. There is a distinction there
also between the chief executive of Ofcom, to which I think you
were referring in terms of the money, compared to for example
the chairmanship of Ofcom which I suspect is paid at roughly the
same sort of level of magnitude. That is the comparison perhaps
you should make. Ofcom is a much bigger body with my wider responsibilities
anyway.
Q150 Bishop of Manchester:
Can we stay with Michael Grade's sudden departure but move away
from the issues about competition and contracts and look at the
Corporation itself and the effect that his sudden departure may
or may not have had? I heard what you said about the role of the
chairman of the Trust now. You were also saying earlier on that
he was seen as a guardian for the licence fee payers. You talked
about somebody in whom people needed to have confidence. I think
it is probably true to say that Michael Grade certainly held the
post and people had that kind of confidence in him. Therefore,
one might expect on his departure that there is a pretty devastating
feel around the place. I wonder if you have any evidence though
to suggest that the sudden departure of the chairman of the Trust
really did have a significant, negative influence on the BBC.
After all, this is at a time in the BBC when some major alterations
were taking place. People were feeling pretty uncertain and for
six months they are left without a chairman of the Trust. Did
it matter or not?
Mr Foster: Michael Grade is a very special person.
Michael Grades do not come along very often. Michael Grade in
any organisation is worth more than the post that he occupies.
Michael Grade going to the BBC at a particular time I think was
critically important. He did far more in terms of not just the
job he did but the morale raising that he was able to bring because
people felt we had among us somebody who was very highly regarded.
When he left the post itself in terms of the job he was doing,
frankly it would not make any difference. He himself rightly said
that the ink had already been dry on the Charter and agreement;
that everything the BBC could say about the licence fee settlement,
what they wanted it for, all the negotiations had been conducted.
There was nothing more he could do in that post than to merely
wait for a decision to be made after the dust settled in the wrangling
between DCMS and the Treasury, which is why one assumes there
was such a long delay. Therefore, the departure of Michael Grade
was nothing to do with the departure of a particular chairman
but it was to do with the departure of the particular individual.
I think it did have an impact on morale within the BBC but that
is very difficult to identify. It is only from conversations,
discussions and articles I have read that suggest that that is
the case. I do not think it was more than the individual and we
should not equate that with the departure of any subsequent holder
of the post, although Sir Michael Lyons may end up being as highly
regarded as Michael Grade was.
Q151 Bishop of Manchester:
Presumably it is rather important that this kind of situation
does not happen in the future and that there is always the built
in agreement that proper notice is given and that the Trust is
not left in that kind of limbo, because one might then go on to
argue that if the BBC can survive that kind of departure maybe
it does not need a chairman of the Trust anyway.
Mr Foster: Sure. That is why it refers to the
earlier conversation about the nature of the contract providing
a framework and understanding for the terms of agreement. That
would be part of the contract. You cannot say to somebody they
cannot resign or leave. That happens with all jobs with a due
period of notice and we note that Michael Grade with ITV has a
very clear contract—at least he has one which he did not
in his previous job—and that the period of notice is very
clear. We heard it referred to earlier.
Q152 Lord Maxton:
You heard the question I asked about the licence fee payers' right
to know exactly what people are paid who they are listening to
or watching. I accept some of the argument that Michael Grade
made but the media is a very important part now of the whole democratic
process. The BBC in particular is an important part of the democratic
process. In terms of openness and accountability, should we not
know exactly what these people are paid? Would you support any
move towards freedom of information being used on what is after
all a publicly funded body?
Mr Foster: I agree entirely with the answer
you were given by Michael Grade.
Q153 Chairman:
Go on.
Mr Foster: In its entirety. I think it is absolutely
important that we know the salaries of those members of the executive
board, the senior members of staff working within the BBC. There
is public information. Those people who provide their services
in the entertainment industry to the BBC under contract are entitled
in the free market to have that information remain confidential.
We would not be going along to Sky and saying, "Tell us how
much Adam Bolton is being paid."
Q154 Lord Maxton:
I would.
Mr Foster: You are entitled to ask whatever
question you like but I suspect the answer that you would get
would not be very helpful.
Q155 Chairman:
You do not feel that the secrecy surrounding this area might have
the effect of hiking up the salaries?
Mr Foster: It might have the effect of ensuring
that some of the best talent available for television performances
might not end up in the BBC. The public outcry about some of the
assumed salaries of some of their top, most popular people would
lead to the backlash which would end up meaning that the BBC would
no longer be able to attract those people to perform on it.
Q156 Baroness Eccles of Moulton:
There is a link here between the executive/non-executive relationship
and also between the freelance and the permanent, pensionable
employment relationship. It is very different. However senior
you are, if you are Jim Naughtie or John Humphries or one of the
very prominent presenters, you still have a contract which can
be terminated and you are left with nothing. That is such an important
distinction to remember when talking about the information being
in the public domain.
Mr Foster: Yes. As a side issue, we could have
a length discussion about the number of members of BBC staff who
are now on contract rather than on permanent staff but that is
beyond the remit.
Q157 Chairman:
Unless there are any other questions, I would like to thank you
very much for exceptionally clear evidence. Thank you very much
for coming and giving evidence. We look forward to seeing you
again at some future date.
Mr Foster: Thank you very much. Good luck with
your deliberations.
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