Examination of Witnesses (Questions 440
- 448)
WEDNESDAY 13 JUNE 2007
MR HUGO
SWIRE
Q440 Baroness Eccles of Moulton:
I want to go back for a moment to a comment you made at the beginning.
It is a non sequitur with the discussions going on at the minute,
but I did not want to lose it. When you were talking about the
Chairman of the Executive Board, I thought it was quite interesting
how Mark Thompson very much stressed that he was both the Chief
Executive and the Editor-in-Chief and that he chaired the Executive
Board meetings. I think that he was trying to move emphasis from
being Chairman of the Executive Board. I wonder if this has arisen
as much from the semantics used in the Charter as to how the internal
workings of the BBC see the relationship between the, as it were,
sovereign Chairman, who is Michael Lyons as Chairman of the Trust—and
he said, "I am the Chairman"—and we have been
allowed to be confused into thinking that there are two chairmen
sitting in chairs, not quite side by side. Actually, it is just
the fact that Mark Thompson chairs the Executive Board, which
is a perfectly natural thing to happen in many different contexts.
Mr Swire: He chairs it; he is also the Director-General.
It would be perfectly natural for a senior non-executive director,
such as Marcus Agius, formerly at Lazard's and now at Barclays,
to be the chairman. Sir Michael Lyons is clearly the Chairman
of the Trust. I hope that is a chairman in a more regulatory sense
than the day-to-day operational sense, and I think that there
is a division of responsibility there. I just think that, in this
drive towards trying to create a BBC which is compliant with modern
ideas of corporate governance and divisions of power, as it were,
it is something that should be looked at again. I do not think
it helps matters that, in a sense, there is arguably a duality
of role there for the Director-General.
Q441 Lord King of Bridgwater:
Did you hear Mark Thompson at the end—perhaps I am the only
person who was surprised to hear him say it—saying that
Sir Michael Lyons was the non-executive Chairman of the BBC Trust?
Nowhere in the appointment by Number 10 does it describe him as
non-executive. He is supposed to do three to four days' work a
week. By any standard, that makes him certainly part-time; but
it seemed to be that this was a further illustration of some of
the confusion that seems to exist here.
Mr Swire: Rather like Gavyn Davies, who was
the Chairman of the Governors and who said his was a non-executive
role. I think that it is one of these jobs, being Chairman of
the BBC Trust, particularly now, which you probably cannot do
in two or three days. It may be designed to do that, but it pretty
much becomes a full-time role.
Q442 Lord King of Bridgwater:
Regarding the way the appointment was done this time, we recommended
in the previous Committee that it should be an independent panel
that made the appointment and it should not be chaired by a civil
servant. What emerged was that it was not independent; it was
chaired by a civil servant and, in fact, there was certainly one,
if not two other of the three other members, who only very recently
had been senior civil servants. What are your views on that?
Mr Swire: My views are pretty much the same
as yours. We would agree with what your Committee had decided
on. There was a significant change in the previous appointment,
when three Privy Counsellors were involved; but I do not think
that to have a civil servant still chairing the selection process
is very desirable. I made something of a noise at the time of
Sir Michael Lyons's appointment. I congratulated him on his appointment,
but pointed out his close political connections with the Labour
Party. I can see that chairmen and governors of the BBC historically
have had links with the Conservative Party, but I would argue
that there has been a trend in the politicisation of these appointments.
I made that remark at the time, based on the fact that we had
just gone through Ofcom, where both the chairman and the chief
executive have strong Labour links. Basically, therefore, you
have both of the regulators for broadcasting with Labour links.
There is also the fact that the Chairman of Sport England, Derek
Mapp, was a donor to the Labour Party and a close friend of the
Deputy Prime Minister. The Board of the Big Lottery Fund, which
was announced last autumn, had five out of 12 members with connections
to the Labour Party. It was therefore part of this trend, with
which I was uncomfortable. That is why I would agree that these
selections should not be chaired by civil servants. There should
be far more transparency. I also have views as to what part Parliament
should play in the process.
Q443 Lord Maxton:
I can take it then that, in the very unlikely event that you should
win the next general election and you were the secretary of state,
nobody will be appointed to a public position who has any connections
with the Conservative Party?
Mr Swire: No, absolutely not. Your Lordship
will be aware that, under Nolan, it is something that I would
declare but it does not exclude you from being in the running.
Some of you may have followed my colleague Ken Clarke's task force
which has come up with some ideas, and indeed David Cameron has
also made this very clear in the past, saying that there are some
appointments—and I think he cited the Chairman of the BBC
Trust as being one such appointment, or the Chairman of the NHS—which
should in some way be subject to a hearing, if you like, by Parliament.
The way I think that would happen is that a selection committee—
Q444 Chairman:
And you agree with that?
Mr Swire: I do, very much so. The selection
committee would be established. I do not think—and I know
that others do—it is for Parliament to get involved in that
initial sifting process; but I do think that there is huge merit
that, regardless of the candidate's political affiliations, or
none, they should come before the relevant select committee. In
the case of the Chairman of the BBC Trust, that is clearly the
Culture, Media and Sport Committee in the Commons, and I would
have thought that your Lordships could also properly have some
part in this. That person should come before the relevant select
committee, and the members of that select committee should be
able to ask the selected candidate the same questions that presumably
he or she should have been asked during the selection process.
It is quite clear that the select committees should have no role
in any way to impede the appointment of the appointee, other than
making their views very clear. I think that it would be a very
brave secretary of state indeed who insisted on appointing a candidate
who had not been signed off by the relevant select committees.
Certainly, if and when I am the secretary of state, if this opportunity
came up before me again—that Sir Michael Lyons's term came
to an end and he did not seek to extend it, or whatever the case
would be—I would be very happy to have the candidate whom
the selection panel had appointed ratified in some way by a select
committee hearing. Then, if that candidate was accused of having
political affiliations which coincided with mine, I would be in
a position to say, "The select committees, who are cross-party
committees, ratified this appointment", and that would put
me at one distance away from the appointment. I think that it
is a win/win situation.
Q445 Lord Maxton:
Gavyn Davies made the point that he was the first Chairman of
the BBC to be appointed under Nolan rules, where he had to give
his political affiliations. All of the previous ones had been
basically by a phone call from the Home Secretary, as it was then
done by him, and not by any open process whatsoever. Also, Michael
Lyons made it clear that he was not approached by any political
figure to stand and put his name forward for that post. I assume
that you would accept his word on that.
Mr Swire: I certainly do. On the latter point,
I have asked him that directly. I have meetings with both the
Director-General and the Chairman on a fairly regular basis, as
you would expect. I totally agree with you that Nolan has introduced
into the system entirely beneficial results, but I think that
we can go further than Nolan. The secretary of state herself has
said how important the appointment is. She said at the time of
appointing Michael Grade the first time round how important this
appointment was, and I think that Chairman of the Trust is even
more important. Other than there being some members of Parliament
in both Houses who would like to get involved in the process at
an earlier stage, in the sifting process, I do not think that
is a particularly fruitful way forward but I fundamentally believe
that a job such as this should be looked at and signed off by
the relevant select committees.
Q446 Baroness Bonham-Carter of Yarnbury:
You said at the beginning of your evidence that you thought this
new system would lead to the same people in a different room.
Do you think that it has?
Mr Swire: It is a rather good question. It is
very early days. Clearly the new Chairman is not a BBC figure.
Clearly three of the Trust are ex-governors. Michael Grade, when
he gave evidence to your Lordships, was clear on this matter.
He was asked whether or not he thought that three was too many.
He said, and I hope I am not misquoting him, that he thought three
was barely enough, and that it was important that the BBC had
some continuity at that time—which is interesting, coming
from him. The fact is that it is a very good Trust board. It is
a very good non-executive board for the BBC—the non-Trust
board, as it were. They do have some good people there. However,
I think that it is too early to say, first, whether the Trust
is working; secondly, whether its relationship with the Director-General
and his board is working properly. As I said at the beginning,
it has not been challenged at all. It has not had to decide whose
side it is on: whether it is on the side of the BBC or on the
side of the licence fee payer, which I would contend is its prime
role. Interestingly enough, I did get one quote out. When she
did the press release on Jam, Chitra Bharucha's opening sentence
was, "The BBC exists only to serve the public". If you
contrast that with what Michael Grade said when he appeared before
you, he said, "The BBC's interests are to get as much money
as possible, to spend it in the way that the executive would like
to spend it". Those two are irreconcilable statements, I
would suggest. The real test of the Trust is as a champion of
the licence fee payer. The BBC is in a unique position. It has
been guaranteed an income of £3 billion a year for the next
six or seven years. That is an eye-wateringly large amount of
money, particularly when you are discussing it with other broadcasters
who are feeling the pinch. When the Director-General talks about
making some savings here and there, it is incumbent on him to
make some savings within the BBC. He was asked about the move
to Salford and I was interested that the Director-General said
that, if anything, there would be job gains rather than job losses.
That is interesting, because I think that quite a lot of people
will not move to Salford—which is probably good news for
Manchester, because it means that he will be recruiting more people
in Manchester. I did raise with him in a meeting last week that
I hoped he was sanguine about the fact that the BBC's sports team
were due to move to Salford in 2012, when the London Olympics
were taking place down here! I have always been very nervous about
the BBC. I think that the BBC is now in a difficult position,
funded as it is by a licence fee payer. The BBC, with a rapidly
changing technological world, has to respond to that. In a sense,
it has to be a pioneer in that. It has invested huge amounts of
money, for instance, in its website. At the end of the day, however,
the BBC must not be allowed to become an economic octopus. By
that I mean that the BBC's tentacles should not go into areas
and squeeze out private endeavours. That of course, to an extent,
is what happened over the Jam situation. I was interested that
Lady Howe asked about the suspension of the Jam service. The figure
that Jam was going to cost the BBC was about £125 million,
and the amount of money they have already spent on it is in the
region of £70 or £80 million or thereabouts. That is
a significant amount of money. It is also my understanding that
about 200 people who were involved in that project have been laid
off by the BBC. I think that it is now a real challenge for the
Trust: perhaps the Trust's biggest challenge to date, given the
situation in Europe over competition law and so forth; given the
very real outcry by individual providers, small companies, to
the educational establishment—none of whom, I understand,
complained to the BBC, ironically enough. This is a challenge
for the BBC Trust and the BBC Trust has a responsibility to the
licence fee payer to ensure that the BBC is spending its money
wisely and properly. Equally, however, it has a responsibility
to ensure that the BBC is not becoming an economic octopus. That
is why I argue the whole way through that every part of the BBC
should be subject to the National Audit Office. It seemed to me
that it was quite extraordinary that, when we had all the figures
for the licence fee, great chunks were blacked out. It was a ridiculous
document to read; you could not tell what it was. Going back to
the question about Michael Grade leaving the BBC before the financial
settlement had been reached, it is even more curious when you
think that there was I, in the other place, debating the licence
fee and, of the people involved in the discussion, I was probably
the only person who had absolutely no idea on what those figures
had been based. The secretary of state presumably did; the Director-General
certainly did; and the new Chief Executive of ITV did, because
Michael Grade had been involved in every aspect of those negotiations.
That, in itself, was a most obscure and curious position to be
in.
Q447 Baroness Howe of Idlicote:
It was clearly a very cosy arrangement that was arrived at and,
as you say, there you were, the only one who did not know. I have
two things. A tiny bit on Jam, because presumably all this money
that had already been spent is now pretty well down the drain,
so that is a loss. Although a more slimmed-down version of what
was proposed would have been useful, not least considering the
fact that Britain is probably failing its children in its education
system rather more than continental countries and others. That
is merely a passing point. What I would really like to ask you
about is the whole business of the non-compete clause, which I
think you have heard discussed. This really has become quite an
issue. These are of course Privy Council-type appointments and
"old boy agreements", shall we say, about how these
things work. Are we in a different world today? Do you think there
should be, at this sort of level of appointment, not just an understanding
of honourable behaviour but something like a non-compete clause
written in?
Mr Swire: On the first point about Jam, I do
not want to second-guess what the Trust will finally decide. The
honest truth is that I do not know how much of the money they
have already expended will be lost, even if they come up with
an alternative or a watered-down version, however you want to
describe it. However, 200 people have been laid off. That in itself
must be a non-recoverable cost factor of some description. In
respect of gardening leave or a non-compete clause, I think it
was extraordinary that there was a sort of assumption, and that
is all there was, with Michael Grade. I think that the new proposal
is of something in the region of three months. Given the fact
that the Charter renewal took as long as it did, that would not
even cover the period of a Charter renewal discussion. I would
like the secretary of state to look again at at least six months.
It seems to me that it is extraordinary that somebody, armed with
the knowledge—and I am in no way seeking to cast aspersions
on Michael Grade, I am sure he is absolutely upright in every
way and would never be tempted to disclose information that he
had as a result of having been at the BBC, and in fact he has
made that very clear—but it is extraordinary that somebody
can literally go one day and then appear with a commercial rival
the next day, without any kind of cooling-off period at all. There
is a cooling-off period now even for ex-ministers before they
go into the private sector, particularly if it is into
the private sector, or even the public sector, connected to the
ministerial portfolio that they have held. If Michael Grade had
been subject to those rules, he would clearly not have been able
to go straight to ITV. I think that he was very clear on that.
He made it clear to your Lordships that, had there been such a
clause initially in his contract, he would never have taken the
job in the first place. In the words of a famous lady, "He
would say that, wouldn't he?". I think that he would have
done. Frankly, if somebody is not going to take a job of this
importance, which is one of the top jobs in broadcasting or the
public sector, because they are put off by a non-compete clause,
I would argue that they should seriously reconsider their motives
for letting their name go forward in the first place.
Q448 Lord Maxton:
There is a large amount of movement between the commercial sector
to the BBC. Do you know if the same sorts of clauses are operated
by ITV and the commercial companies in relation to their being
employed by the BBC?
Mr Swire: I would imagine that was up to the
individual commercial company. They would all presumably have
their own rules and regulations. There is not one across the board.
Chairman: We can do some investigation
on that. I do not think that it is a very important point. There
are no other questions. Mr Swire, thank you very much indeed.
I apologise for keeping you waiting, but your evidence is very
important and we are grateful to you for giving it in the very
clear way that you have.
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