Examination of Witnesses (Questions 400
- 419)
WEDNESDAY 13 JUNE 2007
MR MARK
THOMPSON
Q400 Chairman:
Mr Thompson, welcome to the Committee. You have heard my introduction
regarding what we are about. You came to see the former BBC Committee
on at least two occasions previously, and so we know you quite
well from that. Having listened to the evidence that we have just
had, we now understand that you are really the man in charge of
the BBC, are you not?
Mr Thompson: Under this new system, as you know—and
I will not belabour the point—the operational leadership
and management of the BBC is delegated to me but I report to the
BBC Trust, which is the sovereign body. In the end, the Trust
is in charge. Regarding the point I heard Lady Eccles make earlier,
if the Trust gets involved in editorial decisions before transmission,
they become the editor-in-chief and they cannot then stand back
and, as it were, in the fullness of time and with all the facts,
hold the editor-in-chief to account. We therefore have a system
where we have frameworks, editorial guidelines and other agreed
strategies in place; but the reason the Trust does not get involved
in operational decisions is precisely so that they are there to
hold me and my colleagues on the operational side of the BBC to
account. That is set out more clearly in this new system but it
is not a new idea. The idea of a separation between the operations
of the BBC and operational decision-making, including difficult
editorial decision-making, and the governing body is an idea which
began on 1 January 1927 with the first Charter and which has stood
the test of time.
Q401 Baroness Eccles of Moulton:
May I come back to that, as I have been directly addressed? I
suppose the difference is that when the product is something that
is published and is instantaneous with publication, and once it
is done it is done and that is it—it has gone out to maybe
millions of viewers—it is rather different to other products.
If, for instance, it is 40 million tins of sardines, it can be
withdrawn. That is not a very good parallel but it is the best
I could think of on the spur of the moment.
Mr Thompson: I think that we should be realistic
about it. Although I very much like the idea of my examining,
in quiet, careful reflection and contemplation, the merits of
every single programme before transmission, the reality is that
for 80 years the BBC has broadcast, initially hundreds and now
many thousands, live broadcasts—where, sadly, it is physically
not possible for me to be, as it were, sitting shotgun over every
single hour that is broadcast. We have a system, which I am absolutely
in charge of and responsible for, of delegated editorial decision-making
which we trust in large measure to deliver high-quality, dependable,
good broadcasting to the British public. Inevitably in the system
there will be times when mistakes happen. You cannot broadcast
as much as we do without some mistakes happening. I have to say—disagreeing
with one point that Gavyn made, though I am very impressed with
what Gavyn said overall—I think that we do have a pretty
clear and transparent complaints system, which begins as close
to the programme as possible, then moves up to an editorial complaints
unit which is separate from the editorial line management of the
BBC and, if that is not satisfactory to the complainant, the Trust
can step in and look carefully at the complaint. You can go on
our website and see exactly how that system works. The point was
made by several people this morning that they are not quite sure
who to write to. We have 12 million or more interactions with
the public every year; we have many millions of comments and requests
for information from the BBC; a tiny proportion of complaints
relative to the total number of interactions, but still tens of
thousands of complaints. I have to say that people contact almost
everyone in the BBC. What we try to do, however, is to get people
into this coherent, transparent system as effectively as we can,
so that the complaints can be taken seriously.
Q402 Chairman:
Let me go back a little bit, to where we started. We were talking
about the licence fee settlement and the old BBC system and other
things. How do you view that licence fee settlement? What is your
reaction to it?
Mr Thompson: As I said at the time it was announced,
it was manifestly less than we had asked for and in that respect
was disappointing. However, I also made it clear on that day that
I recognise it is a matter for the Government to set the licence
fee. I think that it is a completely reasonable thing for the
BBC Director-General to set out a case for what I believe the
licence fee should be, in the light of what I believe the BBC
could achieve in terms of its public purposes. The Government
having made its decision, I would absolutely be at one with Sir
Michael Lyons and say that the right thing to do is to try and
make sure we use the licence fee over the next period of settlement,
a six-year settlement, to deliver the best possible content for
the British public and deliver our public purposes as well as
we can.
Q403 Chairman:
Inevitably, does it not mean that there will be changes as a result?
You have bid for one; you have not got that; you got less than
that. It must mean that there are going to be changes.
Mr Thompson: There is no level of funding that
you could possibly give the BBC at which there would not be difficult
choices between competing ideas and priorities. The business of
having to make sure that you are focusing your investment and
your resources is true at whatever level of licence fee there
is.
Q404 Chairman:
That sounds lovely and very nice in general terms, but is this
one going to lead to redundancies?
Mr Thompson: In our licence fee bid—so
quite apart from the eventual settlement—we recognised that
the process of continuing to try and find gains of productivity,
through the use of new technology, towards new ways of working—which
we have been heavily engaged on in the last three years—can
and must continue. Like any other enterprise in this country,
it is important that the BBC continues to look hard at what it
does, to see if it can drive better value out of the licence fee
payer. Because of technology in particular, digital technology
inside the BBC quite apart from digital services, we have continuing
opportunities to do that.
Q405 Chairman:
But journalistic redundancies?
Mr Thompson: I want to be clear about this.
I believe that there is no part of the BBC where we should not
be looking hard at whether we can drive better value. It is obviously
absolutely critical that, in doing that, you do not diminish the
quality of your services. A change which reduces the cost that
leads to a diminution of quality is not an efficiency; it is simply
a cut. It is a reduction or a dilution of service. The task we
have across the BBC is to look at whether there are ways in which
we can maintain the quality of existing services, but make changes
so that you secure some resource which you can then apply to the
new obligations we have under this Charter. We are some way off
a formal set of proposals to the Trust, so we are still at work
on this. No decisions have been taken in any part of the BBC about
this. However, you cannot ask the BBC to take the concept of value
for money and productivity seriously, and yet throw up your hands
in horror at the idea that it might have some implications for
the number of people we employ. I am afraid that an inevitable
consequence of looking hard at productivity—sometimes, not
always—is that it affects the number of people you employ.
That is not unique to the BBC. I do not know of an enterprise
in this country where it is not so.
Q406 Chairman:
No, it is not unique to the BBC; but what you are saying is that
inevitably the staff of the BBC will be reduced.
Mr Thompson: When I arrived as Director-General,
we started a three-year programme of value-for-money savings,
which has led to very substantial redundancies from the BBC: 3,800
people will have left by reason of redundancy and, through other
changes and the disposal of some units of the BBC, about 7,000
people have left. I do not believe that over this next six-year
period we will be talking about reductions of that scale again.
None the less, I have to say that I think that part of my duty,
as the Chief Executive as well as the Editor-in-Chief in the BBC,
is to look hard at whether there are ways of running the BBC,
absolutely to deliver high quality, but more effectively and efficiently.
Q407 Chairman:
The point I am seeking to get to at the end of the day is this.
You will have a look at the whole range of the BBC's services.
Mr Thompson: Yes.
Q408 Chairman:
You will put forward proposals, and those proposals will go to
the Trust.
Mr Thompson: Yes.
Q409 Chairman:
And it will be for the Trust to approve them.
Mr Thompson: Yes.
Q410 Chairman:
How does that differ from what happened in the old days?
Mr Thompson: In a number of significant ways.
The Trust themselves have some experts in-house on this topic.
On the issue of productivity and efficiencies they have, in-house,
some experienced people who can advise them directly. Moreover,
they will do something which I believe the Board of Governors
would never have done. Two things will happen. First, they are
going to engage the National Audit Office to look at the definitions—the
baseline, if you like—for efficiencies; so that, as we go
into this new programme, there is absolute clarity about exactly
what is efficiency, what is not an efficiency but a movement of
money from one part of the BBC to another, and so on. So that,
the next time we come to talk about the level of the licence fee,
there is absolute transparency and clarity about exactly what
we are talking about. Each year, in our annual report and accounts,
we will report back on exactly what is happening in those efficiencies.
In addition, the Trust may very well seek independent, external
expert advice, to look at what is being proposed. In my view,
it should be challenged both ways. Is the BBC challenging itself
enough in terms of what it can achieve, or are the proposals so
great that they run the risk of reducing quality? I think that
it is appropriate that these proposals, when they emerge, should
be challenged from both directions, as it were.
Q411 Bishop of Manchester:
In the light of what you have just been saying, I am aware that
the BBC has now signed on the dotted line for the Media City proposals
in Salford. To be realistic, however, how secure are those full
proposals? I know that it is unlikely that, even now, everything
will be there before 2011-12. It sounds to me from what you are
saying that in your own mind it could be quite possible for very
proper arguments to take place within the Trust, which could lead
to a rather lesser arrival of the BBC in Salford than currently
planned.
Mr Thompson: No, we are fully committed to Salford.
We have to be clear about some priorities at the start of this
process. We are completely committed to the digital switchover
and support of the move of the United Kingdom from analogue to
digital television. It is an absolute headline obligation in the
White Paper and the Charter. We will do that. We are also fully
committed to Salford. The reason that we are fully committed to
Salford is, not least, because in the long run Salford makes very
good economic sense for the BBC. Quite apart from any other merits
of the proposal, I think that in the long run Salford will make
good value-for-money sense for licence payers. We are therefore
fully signed up. I will be literally signing on the dotted line
later today in Manchester, and we are fully signed up to the Salford
project on at least the scale that is currently announced: so
at least at the level of the numbers of people that we have talked
about. It is not impossible that that could grow slightly; it
will not diminish.
Q412 Bishop of Manchester:
Though, reading Ariel, your in-house magazine—
Mr Thompson: I am very impressed that you find
the time!
Bishop of Manchester: ... it is pretty
clear that some people in the BBC need massive persuasion personally
to make that move.
Q413 Baroness Thornton:
That is because they are London-centric.
Mr Thompson: I believe that the BBC should seek
to serve the whole United Kingdom, not just in its services but
also in terms of its investment, from where it draws its talent,
and where it is visibly present in different communities. We have
a tradition in the BBC of extensive and very good local, regional
and national broadcasting; but it is true that, as I think Lady
Thornton was suggesting, there is a long tradition of a very big
London base. One of the things we are doing is shifting the balance
of spend in the BBC from London to the rest of the UK. Does that
present cultural challenges for some of my colleagues or personal
challenges? Of course it does. We tried to give people, in the
context of the Salford move, plenty of notice—many years
of notice—so that they can make a personal decision, and
we will try to find, if we can, the right solution for every single
one of our employees in terms of this move. However, I do not
make any apology for the fact that we are making a change and
trying to embed the BBC more broadly across the UK. I think that
is a good thing and will lead to better services.
Q414 Baroness Thornton:
I agree with that. I just wish that it had been in Yorkshire,
but never mind. Your employees can live in Yorkshire and still
work in Manchester if they want to. I would like to go back to
what you were saying about the National Audit Office, and the
relationship between the Executive Board and the Trust in terms
of accountability, and how you deal with the expenditure and value-for-money
issues. I do not know if you agree with me, but I do not think
that this is an exact science. I am slightly worried that, if
you are going down the route of the National Audit Office and
that is the way that people who are working for the Trust are
looking at how the BBC spends its money, there may be some problems,
and I would just like your comments. First, is flexibility going
to be built into that? Secondly, how are you going to bring forward
innovation? As I have said in previous sessions, I was very concerned
that the Trust turned down BBC Jam, and I would like your comments
on that. I thought that was not a forward-looking decision, and
I would be worried that you might be building up systems which
will stifle innovation. I think that your future lies in innovation.
Mr Thompson: I strongly agree with that last
point. Innovation in terms of services, the kind of content we
produce, and also innovation in how we make services. We will
not achieve the kind of productivity gains that I believe we will
need to make, and should make, without very big innovations in
the way we work inside the BBC. However, let me try to deal with
quite a few big points there. First, regarding the National Audit
Office, the intention will be to get advice from the National
Audit Office in terms of the setting of definitions and baselines
for efficiencies. In the matter of at what level you set the efficiencies,
in my view that is a matter of judgment. It must be right that
there is a significant component of judgment. On the Executive
Board we have access to some non-executive directors of really
outstanding business experience. We have been able to attract
very strong non-executives on the Executive Board; they will help
us. We have our own teams of experts and, again, we will seek
external advice from time to time ourselves. The Trust, as I have
said, has some expertise in-house; they also have recourse, if
they need it, to external advice; and both we in our proposals
and the Trust will have to exercise judgment. That is part, it
seems to me, of what these jobs are about. Do we need to be flexible?
Of course we do. I believe very strongly that in the matter of
efficiencies you do not want a single, salami-sliced percentage
of targets across the BBC. There is an enormous difference between
what one part of this organisation can achieve in efficiencies
and another part. We are currently in a three-year programme of
taking around 8½ per cent a year, each year, out of some
of our overhead departments—the corporate centre of the
BBC. We cannot keep up that rate. Many hundreds of people have
left the corporate centre. I think that was the right thing to
do. It is a much smaller centre to the BBC than it used to be—less
bureaucracy, if you like—but we cannot carry on at that
rate. We need a lot of flexibility; we also need to learn as we
go along. We need to learn from our successes and from our failures.
Let me turn to BBC Jam. I should first be clear that the decision
of the BBC Trust to suspend BBC Jam was one that I agreed with,
and indeed recommended. The reality was that the European Commission
was on the very point of opening up a formal procedure, looking
at Jam: a process that would have potentially lasted a number
of years and would almost certainly have led to suspension in
any event. Moreover, both the Executive Board and the Trust had
come to the conclusion that the way in which Jam had been given
its consent by the secretary of state under the old system had
not won the confidence of the rest of the industry. As a result,
the service had been the subject of constant complaint and review
throughout its life. It was subject to a very complex consent.
In a sense, there were two possible paths in front of BBC Jam,
one of which was a process in Europe which could have lasted a
very long time, and still might not have achieved consent and
support for the service. The other was to use the new system,
with a very clear market impact assessment done by Ofcom and the
new process of the public value test, to take the BBC's formal
learning proposition and debate it publicly, with public consultation,
consultation with the rest of the industry and, using this new,
much more transparent system, to try to build support around the
proposition. The other thing to say is that BBC Jam emerged as
an idea in the late 1990s and went through its consent process
with the secretary of state in the early years of this decade.
The reality is that in many ways the consent rather froze BBC
Jam in aspic, because the nature of the consent was that you had
to do exactly what was there. I believe that we were doing that.
I am not sure that the complaints against it had merit. In my
view, however, we need a proposition which can be developed and
innovated over time.
Q415 Baroness Thornton:
So you are going to do that?
Mr Thompson: I believe that the BBC, playing
the right role—a complementary role—in supporting
formal education in this country, supporting students, parents
and teachers with the educational mission of this country, is
incredibly important; but it needs to be done in a way, if it
can be, which is complementary to what is provided by the market.
Q416 Lord Hastings of Scarisbrick:
Sir Michael Lyons implied fairly heavily that the Trust is quite
significantly dependent on the executive for advice, particularly
on strategy and future process. Could you tell us, practically,
do you attend every meeting of the Trust? If you do, do you attend
alone or do others attend with you? Do you attend with members
of the Executive Board and do you attend also with, as it were,
your officials?
Mr Thompson: First, I want to distinguish. The
Trust expects the management of the BBC to make proposals to them.
That is the nature of the relationship. With proposals of any
significant scale at all—I am not talking about major strategies
but a significant proposition about, for example, something that
our commercial arm might do—the Trust will seek independent
advice, either from its own experts or externally. The Trust now
always relies, for decisions of any scale, on independent advice
which has nothing to do with the management and which, characteristically,
the management will not seek to see and will not see. I am at
the disposal of the BBC Trust. I attend meetings whenever I am
invited. That, by the way, means that I attend some of some meetings.
Typically, I would attend a significant part of their monthly
meeting, but there will also be significant parts of that meeting
at which I and the rest of the management are not present. Characteristically,
if other executive directors of the BBC are in the room, I will
be in the room as well; but typically it is very practical, if
we are going to discuss a particular topic which relates to one
part of the BBC—our commercial operations, our news operation—then
the appropriate director will be there. Typically, the Finance
Director, the Chief Operating Officer and the Deputy Director-General
will be present when I am present. In terms of the relationship
between Trustees and the non-executive directors, typically these
are informal; but, in my view, to get this system to work well—and
I think that we have got off to a good start—it is important
that there is regular independent contact between non-executive
directors and Trustees, and that has been happening.
Q417 Lord Hastings of Scarisbrick:
Is that regular independent contact between the two boards an
informal contact? I recall that in previous years there used to
be lobbying sometimes between one group of executives and the
governors, and the other way round. Although you may not attend
every part of every meeting, is your advice sought about the agenda
of every part of a meeting?
Mr Thompson: No.
Q418 Lord Hastings of Scarisbrick:
Do the Trust—both ways round, between the executives and
the Trust—seek to influence the decisions of the whole of
the board, of either board?
Mr Thompson: First, on the matter of agendas,
the Trust agendas are absolutely a matter for the Trust. Although
I may be consulted in terms of the practicalities of who turns
up when and the sensible order in which to take items, to be very
clear, they set out their own agenda and it is fundamentally a
matter for them. The agenda of the Executive Board is a matter
for me. In terms of influencing Trust decisions, the characteristic
process is for the Executive Board to come to a conclusion about
a particular project or strategy and then to put that proposal
to the Trust. Are there conversations around that? Yes, there
are. However, it is a very different world than the one even a
few years ago, where a very large amount of business was done,
as it were, offline. It has now become more formal and more transparent,
and both the proceedings of the Executive Board and the proceedings
of the Trust are made public.
Chairman: What are the meetings you are
not there for? Do you know that? When are you excluded?
Q419 Baroness Thornton:
He is not admitting to anything!
Mr Thompson: For the reasons that your questions
suggests, I am not able to give you a complete answer on this,
but—
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