Examination of Witnesses (Questions 260
- 279)
WEDNESDAY 6 JUNE 2007
MR SHAUN
WOODWARD AND
MR ANDREW
RAMSAY
Q260 Baroness Bonham-Carter of Yarnbury:
Was it a wrong impression that it seemed to take rather a long
time to find someone to take up this appointment?
Mr Woodward: It was a wrong impression.
Q261 Lord Inglewood:
In the recent discussion about the relationship between the Executive
Board and the Trust, we have been looking at it in terms of the
legal relationship between the two. If we look at it in a different
way and say the BBC is a broadcaster, we find that all the hardware,
all the business, the delivery business, is under the direct control
of the Executive Board. Disregarding exactly where responsibility
for what lies, and what responsibility might entail, the reality
of that physical relationship is surely that over time the only
way the relationship between the parties can be sustainable is
that the Trust essentially is a regulator, because it has not
got any day-to-day control over what the BBC actually is doing.
Is that right?
Mr Woodward: Insofar as it shares its regulatory
responsibilities with other organisations, like Ofcom, yes.
Q262 Lord Inglewood:
It is inevitable that the relationship is going to be one, using
the word in a general sense, of a kind of quasi-regulator with
an operator?
Mr Woodward: As Andrew said, I think what you
have to recognise is, in crude terms, it provides the context
within which the BBC can operate.
Q263 Lord Inglewood:
Yes, but also, if you look at the two parties, you have got to
identify where the initiative is going to come from?
Mr Woodward: The initiative of the regulator
will also come from, for example, organisations like Ofcom.
Q264 Lord Inglewood:
I accept that, but in terms of the way this broadcaster operates,
it is likely that the initiative is going to come out of the Executive
Board to the Trust?
Mr Ramsay: I think actually it is a bit more
complicated than that. I think you are absolutely right that the
separation has been established, but if you look at what they
actually have to do in the Trust, they represent licence fee payers'
interests, that means finding out what the licence fee payer thinks
and reflecting it back into the BBC. That is an initiative from
their side. They have to secure that the independence of the BBC
is maintained, so, on behalf of the whole organisation, they are
looking outwards to Government and to others to ensure that independence
is maintained. As a couple of examples, if you go down the list
of things that they have to do it goes beyond what one would normally
classify as a regulator yet there is a strong element of the regulation.
Q265 Lord Maxton:
Let me put a direct example. Let us say that there was a decision
taken that BBC Three should become BBC Sport rather than BBC Three;
is that a decision for the Trust or for the Management Board?
Mr Woodward: Again, I think it is a little bit
more complicated than that, because also it would have to look
at whether or not the BBC was fulfilling its Public Service Agreements.
At all levels you would see engagement in the decision-making
process but, ultimately, setting the broad parameters of the BBC
providing those Public Service Agreements, the Trust would have
to set those parameters, but the day-to-day decisions about what
the programmes would be, how much football, how much tennis, those
would be the responsibilities of the Executive.
Q266 Baroness Thornton:
I have a question really about whether there could be potentially
a conflict between being guardians of the licence fee and the
public interest and to do with this issue about being a regulator,
and it is really, for example, a decision that was taken about
BBC Jam, which I think was a wrong decision by the Trust. It was
taken, I suspect, on the grounds of the role that is in here about
their guardianship of the competitive impact of their activities;
the Executive Board had recommended that investment in a new technology,
which I think would have been a very good thing for the BBC and
entirely appropriate. I happen to believe it was a wrong decision.
To whom do they account for the fact that in five years' time
the BBC may be in a very disadvantageous position because of that
wrong decision and how are we going to deal with that?
Mr Woodward: The matter of BBC Jam is a matter
for the BBC.
Q267 Baroness Thornton:
Do you think they were serving the licence fee payers' interests
there; whose interests were they serving there?
Mr Woodward: We have created a system which
enables the BBC to make programme decisions and channel decisions
for itself, so long as it fulfils the agreements that we have
with them.
Q268 Baroness Thornton:
How many times do you think the Trust can turn down the Executive
Board on those sorts of decisions before we should start to be
worried?
Mr Woodward: I do not believe we have any reason
to question the overall basis of the structure on the decision
on BBC Jam at the moment.
Chairman: Can we move on, lastly, to conditions
of service.
Q269 Baroness Howe of Idlicote:
We are back, to some extent, to this question about what are the
responsibilities at this level of appointment, Privy Council level,
where the decision goes to the Prime Minister and then to the
Queen. Is there any justification, do you think, in view of what
has happened in the past, of this sort of level appointment having
a rather more formal contract of employment, the same kind of
contract that you might have in the private sector, where you
would not really want the sort of rapid departure in the middle
of negotiations from one job to a competitor? Would you like to
comment on that?
Mr Woodward: I think there are genuine questions
to be asked around this issue, and are we able to improve on it
in the future should undoubtedly be something that sits in the
minds of all of us, whether we are defending the current position
and the status quo or we are truly, as you are, genuinely open
to looking at whether we can improve it. I think one of the issues,
again, looking back at the evidence that you have been taking
in this Committee from those who have come before this Committee,
which I find weighing strongly on my mind, in anticipation of
the question, is enforceability. Again, look at the practical
circumstances. For example, even if the BBC had different terms
and conditions of contract with Michael Grade, once he had decided
to leave the BBC, if he had been bound by a contract which had
made him still come into work every day, would we really have
had a better position? We might produce something which looks
better on paper but, in practice, I believe Michael did the right
thing, in terms of, having made the decision, he decided on the
basis of his conscience that actually he should tell the BBC immediately,
and the BBC, in the light of that, basically, I think, were quite
right in expecting him to leave. All I think I am doing here is
suggesting that if we can see practical examples which will allow
us to improve it then we should look at them, and issues around
producing paper contracts which might work better obviously we
should look at. I think, again, let us look at the circumstances
here. If he had been bound by a contract to come in every day,
if ITV had been prevented from him taking up the job for three
months, what would the practical consequences of that really have
been; would the BBC have been in a stronger position by him being
prevented from going to ITV for three months, or six months, or
a year even? I do not think so. Would ITV have benefited from
his delayed arrival? I do not think so either. Would morale at
the BBC have been improved by seeing him imprisoned by those conditions?
I am not sure it would have done. All I am saying really is I
can see why you are driving this line of questions and I appreciate
that, but equally I am conscious, and I think there is an onus
to ask ourselves, in practice, would it have improved the situation,
and I am not sure it would have done.
Q270 Baroness Howe of Idlicote:
I think really I am asking a slightly wider question than that.
For a start, if he had a contract of employment, I am not suggesting
he would have had to come in every day to fulfil the full length
of the contract, obviously I think that would be a rather difficult
thing to enforce. The idea, which applies in many other areas,
and indeed for civil servants as well, that there should be a
period where he does not go and work for a competitor, just to
put the thing outside, into a different area, not thinking in
terms of just this one specific area, surely that is desirable.
If we have moved to a situation where the likes of Michael Grade,
and I accept totally what he said, he said there were one or two
times when he had to not answer certain questions when he was
working for ITV, that is relying a great deal on the individual's
integrity to stand by the, what shall we call them, almost `old
boy' conditions on which these types of appointments have been
made in the past. I am asking really a much bigger question: is
it better, in view of what has happened, to change the procedure
so there is a rather more formal method for appointments in these
cases, all these types of cases?
Mr Woodward: Certainly I believe it is something
that we should look at, but also I believe it is something we
should ask genuinely whether or not we would improve it. In this
particular case, and you raise the example rightly that Michael
gave about one or two issues where he had to say nothing, it is
a matter of integrity; but ultimately any process we come up with
is going to rely on integrity, integrity of the process and ultimately
using the process to find the individuals with the highest integrity.
We are going to have to rely on this rather imperfect human form.
Q271 Baroness Howe of Idlicote:
But does it give confidence, let me put it like this, to the public
that this sort of thing is going on and where you expect a completely
different set-up in the—- -
Mr Woodward: If the question is do I believe
that the public should have confidence in this process now, I
think the answer is, unequivocally, yes.
Q272 Chairman:
Minister, Michael Lyons does not have any different contract or
any different oversight.
Mr Ramsay: If I may add something, the arrangements
for the appointment by the Privy Council are the same and the
Secretary of State's letter to the new Chairman are the same,
but the BBC themselves have put in place for their trustees and
for the Chairman a confidentiality agreement which, I am told,
is available for people to see on the Trust website. They have
all signed up to maintaining confidentiality about BBC matters
and, I believe, to a three-month period, subject to review as
there may be no issues of conflict, where they would hold off
moving to something else. That is there for you to have a look
at, in the case of the BBC specifically, and that is something
the BBC has done. More generally, we need to think about it in
relation to other bodies, of which we have many.
Q273 Chairman:
It is clear that this is an issue on which you are keeping an
open mind?
Mr Woodward: I think one should always, My Lord
Chairman, keep an open mind on these issues.
Q274 Baroness Howe of Idlicote:
Three months is what the BBC have decided upon; if that is so,
is that comparable with what happens in the private sector, on
the non-compete clause? Perhaps you could let us know?
Mr Woodward: I think we have to look at it sector
by sector rather than describing it generically as `the private
sector'.
Q275 Baroness Howe of Idlicote:
I am talking about the non-compete clause?
Mr Woodward: Yes, except each of these sectors
may have limited pools of people who may be suitable, and the
job of Chairman, for example, of the BBC is different from the
job of being chief executive of another organisation, like Channel
Four. I would not expect, for example, if Andrew Duncan were to
decide to leave Channel Four next year, that he would be the obvious
candidate to emerge as a future successor as Chairman of the BBC,
although Director of the BBC would be very different.
Q276 Baroness Scott of Needham Market:
Michael Grade's remuneration, his basic salary, at the BBC was
£87,000. It is expected that at ITV he is going to earn £825,000.
Can you say whether you believe that at that level of differential
it is going to be possible for the BBC to continue to recruit
candidates of the highest quality?
Mr Woodward: Let us remember that at ITV, in
effect, he combines two roles. The Director General of the BBC,
Mark Thompson, I think earns in excess of £600,000 a year.
The salary for Chairman of the BBC is £140,000. If you add
those two together they are only slightly short of the salary
that Michael Grade is drawing at ITV. In that sense, I think they
are comparable. In relation to being Chairman of the BBC, the
level of remuneration of £140,000, which is twice, I think,
what the Chairman of Channel Four is paid, albeit that I think
Luke Johnson does one day fewer for that, again, it does not seem
to affect the calibre of candidates. In the event that it did
then, of course, it would be quite right for us to look at that;
but I think we have arrived at, and on the best advice that we
could be given, a reasonable compensation for the amount of work
that we are doing. I think we would be misleading ourselves if
we thought that the reason somebody applies to be Chairman of
the BBC is because the salary of £140,000 is what attracts
them. By the same token, although the amounts of money, for example,
paid for Chairman of the BBC undoubtedly give rise to something
of a sensation in some quarters, I think we have to understand
that the Director General of the BBC, Chief Executive of Channel
Four, Chief Executive of ITV, need to be the kinds of sums of
money which are going to attract the best people and I am afraid
that is the sort of sum we have to pay.
Q277 Lord Maxton:
The executive side of the BBC is covered by Freedom of Information,
therefore we can find out exactly what the salaries are. Does
the fact that the competitors in the media industry know and can
find out exactly what these people are earning in any way affect
the ability of the BBC to recruit, or do they steal people and
poach people from the BBC, as a result of that?
Mr Woodward: There is a lot of stealing and
poaching which goes on from both sides all the time and even if
figures are not published they seem to find a way of being discussed
between individuals, not least because some of them may actually
have occupied the job in the first place. There is no evidence,
I think, to suggest that we are seeing organisations adversely
affected from this, and undoubtedly the proof is in the pudding,
the levels of compensation are pretty comparable between the public
and the private sectors here. I would expect the BBC to maintain
its position as an outstanding broadcaster but, even though it
is in the public sector, it will need to continue paying levels
of remuneration for executives at the level that it does. Although
artists' contracts need to remain confidential, again, it was
a source of fascination to me that despite some chose to launch
outstanding criticism, for example, of the amount of money that
was paid to Jonathan Ross, and without making a party political
point, an observation, most of that criticism was made by Her
Majesty's Opposition, it was also significant that in the same
breath the Leader of Her Majesty's Opposition could not wait to
go on the programme.
Q278 Lord Hastings of Scarisbrick:
A very small, factual point, just to follow up something you said
earlier on, Mr Ramsay, which is that because the role of the Trust
is to represent the interests of the licence fee payer therefore
the Trust will conduct research to find out the licence fee payer's
interests. Are you saying, from that, therefore, that the Executive
Board, and therefore no executive function of the BBC, conducts
any such equivalent research?
Mr Ramsay: No.
Q279 Lord Hastings of Scarisbrick:
Therefore, the BBC editorial will have lots of licence fee payer
information and the Trust will have licence fee payer information?
Mr Ramsay: Absolutely.
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