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We went out to consultation about these funds and the principle on which we should work. These are not public funds; these are private resources in banks and building societies. Of course we have to go in with a light touch. The noble Lord, Lord Newby, emphasised that and I remember the noble Lord, Lord Shutt, mentioning it in connection with who owns the banks and, therefore, how much they will participate. Of course, we have to go for the best and most consensual model, because this is a voluntary scheme and we want the maximum participation by the holders, the organisations that have dormant accounts. The noble Lord, Lord Tope, is a persuasive and articulate member of a number of bodies as well as of your Lordships' House, but I defy him to go to the banks and building societies and say, “I think the Labour Government have exactly the right model and you could add your resources to the local partnerships, which distribute public money locally”. That is not quite how we envisage the world working.

I understand the criticism, although I do not accept it, about the Big Lottery Fund being high on costs. It is not high on costs; it produces good figures on costs and on its distribution. It has the great advantage that not only is it a national organisation but it has regional offices and is represented in all the nations of the United Kingdom. It has a structure on to which we can latch, intelligently, the distribution of other funds, which are not public funds any more than the lottery proceeds themselves are government resources. We can put on to the Big Lottery Fund a distribution mechanism, which is all that we are doing.

In Committee, there will be many questions about the efficacy of the Big Lottery Fund and I have not the slightest doubt that we will have lively exchanges

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on that matter. It is part and parcel of the main theme behind this legislation, which is to create not a state bureaucracy, or even an arm of a state bureaucracy, but a voluntary participative scheme to do good in the community by the distribution of resources and with the maximum amount of participation. That is why nearly every one of the structures that we have in place with regard to the Bill—of course, I shall listen to strong criticism of them in Committee—has a basis in considerable public support following the consultation process on the way in which the Bill should be created.

I have heard the noble Baroness, Lady Noakes, the noble Lord, Lord Newby, and others say that the Bill is too limited in the number of financial institutions to which it addresses its objectives. The answer is that we are delighted with the progress that we have made and with having on board the two biggest financial institutions, in terms of their spread across the United Kingdom. There are more challenges regarding insurance policies and other financial institutions compared with the bodies that we have approached at present. I hear what noble Lords say: we should leave the door open. That is a debate to which I shall listen with great care. The Government believe that, on the whole, permissive legislation that offers up the hope and optimism of the future being fulfilled, rather than closing down everything within the narrow parameters of the year in which we are operating, is an advantage. So I shall listen to the points that are made on that. Effectively, a deal had to be struck and arrangements had to be made for a voluntary, light-touch scheme. That is why this scheme has certain limits to its ambition.

I have been asked a range of detailed questions. There are two advantages to winding up at Second Reading. First, people hope that you do not continue for too long in any case. Secondly, I can offer the reply that where I invariably fail is in never having produced a satisfactory reply for the noble Baroness, Lady Noakes—so I am not going to succeed this evening. My great advantage is that I will be able to make fuller replies when we meet in Committee in the not-too-distant future.

I have not the slightest doubt that several important points will be made in Committee, or that, from the original concept of what could be achieved by resources that currently benefit no one, we have the basis of a light-touch, voluntarily committed scheme. It can achieve a great deal through a distribution mechanism that has already stood the test of distributing funds for the lottery. I want to reassure the noble Viscount, Lord Astor, that we will not be returning to debates about where resources for the Olympics go, or anything else to do with the Big Lottery Fund. I trust that I will be able to reassure the Committee that these resources are channelled in a specific, controlled direction for the objectives that will eventually be identified in the legislation.

On Question, Bill read a second time, and committed to a Grand Committee.

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BBC: Chairmanship (Communications Committee Report)

7.51 pm

Lord Fowler rose to move, That this House takes note of the report of the Communications Committee on The Chairmanship of the BBC (First Report, Session 2006-07, HL Paper 171).

The noble Lord said: My Lords, I shall give the Minister time to pick up his new script. It would be quite unfair of me to say that we are moving from dormant bank accounts to the dormant Department for Culture, Media and Sport, but we are certainly moving.

Last week, I received a wonderfully double-edged recognition of our work. It was at the premiere of the new and vastly enjoyable film “Cranford”. The Evening Standard diary reported that there was a glittering attendance: Judi Dench and Eileen Atkins, and from the world of politics Neil Kinnock and Geoffrey Howe. It added that Norman Fowler was also there, presumably because he was chairman of the House of Lords Communications Committee. So there we are. The Liaison Committee will be pleased to note that, after a certain amount of constructive debate, the Communications Committee has now been well and truly established in the BBC’s mind as a successor to the BBC Charter committee, and established with a wide and experienced membership, many of whom served on the original BBC committee and whom I thank for all their effort and commitment.

Indeed, I am glad to say at the outset that the Government have now accepted one of the principal recommendations of the BBC committee, which should be noted. When we reported on the charter, we stressed the importance of the BBC World Service, which has great influence throughout the world. We welcomed the proposal by the BBC to start an Arabic language television service, but we were strongly critical of the inadequate funding offered by the Government which allowed only a 12-hour service. We could not see how such a service could compete with the already established 24-hour broadcasters—Al-Jazeera and the rest—although, for very little extra cost, the BBC could also offer a 24-hour Arabic language service. I strongly welcome the Government's decision to make more funds available so that a proper 24-hour Arabic language service can now be provided. I congratulate the Minister on that, and will not embarrass him by quoting the reasons he consistently gave us for why this eminently sensible step was entirely impossible and unnecessary. The important thing is that it has been done. We hope that, whatever may have been the initial response to our report on the chairmanship of the BBC, in the end Ministers will agree with all our proposals here as well.

In part, this inquiry was provoked by the sudden resignation of Michael Grade as chairman of the BBC and his just as sudden transfer to the executive chairmanship of ITV. The BBC had already lost one chairman quite recently and here was another, this time not only resigning but switching to the BBC’s direct competitor. I remember the response of the

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Minister—who is replying to this debate—when the point was put to him in this House. His response was:

I doubt if the Minister can say with a straight face that this was the immediate reaction in the Department for Culture, Media and Sport when the news first came through. I doubt that Tessa Jowell did a little jig to celebrate the free and successful working of the market. It seems altogether more likely that there was a collective chewing of the carpet at the totally unexpected departure of a chairman who everyone thought would serve a full term, not least to see through the new governance arrangements for the BBC he had agreed and to work through the consequences of the new licence fee settlement.

As our report makes clear, we recommended that the chairman of the new BBC Trust should be subject to a six-month notice period. We thought it absurd that the BBC could be left virtually without notice in this potentially vulnerable position. The Government's response was that the charter provided only very limited powers for setting terms relating to the chairman’s employment; although it is perhaps relevant to point out that the Government could have taken such powers in the charter that they have only recently provided for the BBC.

Nevertheless, I welcome the statement in the Government’s response that, in the absence of legal power to make such provision, they accept the need to establish a clear understanding between the department, the BBC and the chairman about the requirements of the role, including the expected length of term of appointment. The understanding on the length of term of appointment for the current chairman, as in the Government’s response, was set out in writing and will be for future appointees. That is a sensible step forward. I also welcome what the BBC Trust said about a non-compete clause. We proposed six months; the BBC Trust said in effect that the current non-compete clause in the trust’s code of practice is for three months, introduced voluntarily by the trust earlier in 2007 following Michael Grade’s departure. Legal advice at the time was that the enforceability of any non-compete over three months was doubtful. We obviously accept that advice and welcome the steps that have been taken.

I am not going to describe in a short speech each and every recommendation that we made. In the process of appointing a chairman, we have tried to set down a procedure that would make the selection as open, transparent and independent of government as possible. We proposed, for example, that the chairman of the independent selection panel should no longer be a civil servant who, by definition, works to a Minister. We proposed that the Secretary of State’s powers to make the final choice should be more limited than at present. Perhaps not surprisingly, Ministers are entirely happy with the present position, given their power, so we will have to wait for change there.

However, there is one point where I think the Government should look at policy immediately. The members of the committee all remember a rather embarrassing moment in our evidence-taking when Mr Woodward—who I remember as my director of communications at Conservative Central Office but

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appeared before us as broadcasting Minister of the current Government—declined to answer some questions before he had checked back with headquarters whether this was allowed. Eventually it was agreed that he was allowed to answer, but it poses the question of whether other information was being withheld. I say that because under the Freedom of Information Act the department has now provided copies of the Civil Service submission to the Secretary of State on whom to appoint as chairman of the BBC Trust, including how the appointment was to be handled and announced. I observe that those documents were never offered to the committee, and it would be an enormous pity if departments were not to offer maximum information to parliamentary Select Committees. I suggest that the fundamental recommendations in this report are to deal with the role of the chairman and the role of Parliament.

On the role of the chairman, I suspect that there is still a great deal of public confusion because Sir Michael Lyons is not the chairman of the BBC, but chairman of the BBC Trust. “Chairman of the BBC” is now only an honorary title and Sir Michael is not chairman in the way that that has previously been understood at the BBC. Very substantially he is a regulator: his stated aim is to represent the licence fee payer. The question then becomes who is representing the BBC. At the time of the faked phone-ins, we thought that the director-general looked an isolated figure when he was trying to explain what had gone wrong. Of course, I do not believe for a moment that the BBC chairman or any other chairman should be there to defend the indefensible, but he should be there to advise and support and to tell management when he thinks that things are going wrong. That is what happens in the best companies in the private sector. It is what good governance is all about.

However, it is also the case that a corporation such as the BBC has legitimate interests that need to be expressed. For example, there is a gathering debate on whether the licence fee should be top-sliced for purposes apart from those of the BBC and for other companies. It is entirely legitimate and expected for the BBC to enter that debate and argue against top-slicing. We would expect it. It has already had £600 million sliced off the licence fee to support social spending on helping people in need with the digital switchover, yet curiously when the question of top-slicing the licence fee was put to Sir Michael Lyons at a recent meeting I was at, his reply was to the effect that he was keeping an open mind on the issue. I can think of no chairman in the past giving such a reply. They would quite legitimately put the case for the BBC, against, I have to say, some very organised opposition organisations which, for one reason or another, argue in favour of top-slicing.

I emphasise this not in any way as a personal criticism of Sir Michael. He has certainly impressed me, and not just because he lives in my old constituency of Sutton Coldfield. It is a criticism of the structure of the job he has been given. I would much prefer him to be chairman of a regular board jointly responsible with the executive for the success of the BBC. If I am allowed a personal aside, I see that the Commons committee has come out in favour

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in principle of top-slicing the licence fee. In the now famous words of the noble Lord, Lord West¸ I need to be convinced of the case, and I may not be converted quite as quickly as the noble Lord.

My final point concerns the role of Parliament. We had hoped that the Government would agree that the chairman of the BBC Trust should be one of the appointments which could be scrutinised by a parliamentary Joint Committee which would focus simply on his qualifications and aptitude for the job. Predictably, the Government rejected that. I say “predictably” because, as we say in our report, there is a democratic deficit concerning the BBC. This is a point on which the committees in the Commons and the Lords speak as one. Although the public are providing more than £3 billion a year through the licence fee, they have very limited power through Parliament to change anything. Parliament—particularly the Commons—is the only body that can claim to represent the public, yet the new charter of the BBC, including the new arrangements for the chairmanship, was not subject to approval by Parliament. It was a deal between the BBC and the Department for Culture, Media and Sport. It is virtually the same with the licence fee; it does not need a debate in either House and proceeds by negative resolution, which means that even if there is a debate Parliament has only the choice of accepting or rejecting it. There is no power to amend; for example, there is no power not to accept that the £600 million of social spending should come from the licence fee.

I know that there are those in the BBC who are wary of any parliamentary check. To them I say that if the £600 million funding for targeted help with the switchover had been put in legislation that Parliament could have amended, my judgment is that it would have been amended. How can you say that free television licences are social spending to come from the Exchequer but that helping old people with digital switchover is not? It is logically unsustainable. In the same way, there would have been a fierce debate on the charter provisions relating to the role of chairman of the BBC, and I am by no means certain that that would have got through either.

The Government's answer, which is set out in their response, is that their public opinion research does not favour what they call in their response,

In truth, the research shows no support for government control over the future of the BBC either, but, of course, the Government are not reducing their powers accordingly. It is a pity that the department keeps on quoting that opinion research because, to be frank, it is hardly worth the paper that it was written on and would be worth even less if the issues were properly set out for the public. I simply observe that there might be those in the BBC today who would place more trust in Parliament than in Governments of any party.

I am very grateful to all those who gave evidence to the committee. I am very grateful to the committee, a number of members of which are here tonight. I welcome the movements to our point of view that have been initiated by the Government and the BBC

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Trust. However, I warn that confusion and some conflict remain on the role of the chairman of the BBC Trust. Above all, I believe that Parliament should be more involved with some of the important decisions affecting the BBC, such as the charter and the licence fee that raises more than £3 billion from the British public. I beg to move.

Moved, That this House takes note of the report of the Communications Committee on The Chairmanship of the BBC (First Report, Session 2006-07, HL Paper 171).—(Lord Fowler.)

8.08 pm

Baroness McIntosh of Hudnall: My Lords, I speak as a member of the Communications Committee, but as a new bug who is not speaking with the benefit of having been a member of the previous committee; I was highly privileged. I thank the noble Lord, Lord Fowler, our greatly esteemed chairman, for introducing the report so elegantly.

I do not want to detain the House long because I want to address only one issue in the report. In doing so, I intend to amplify a point already raised by the noble Lord, Lord Fowler. It relates to the first recommendation of the report which concerns the lack of clarity about the role of chairman of the BBC Trust. We noted that:

That is a rather curious form of words, in my estimation, but what it really means, as the report points out, is that the chairman of the BBC trust and the director-general, who chairs the executive board, can no longer stand together representing one organisation. The report observes at paragraph 7:

The committee spent quite a lot of time with a number of witnesses trying to figure out how that relationship worked or will work in practice. In particular, we were concerned to understand the implications of the trust’s primary responsibility to represent the interests of the licence fee payer. I think that it is fair to say that we were not a whole lot clearer at the end than we were at the beginning. Even Sir Michael Lyons, who gave us a generally robust and lucid account of his new responsibilities, when talking about the new governance arrangements, conceded that:

One can only agree with him.

The question at the heart of the matter is whether the trust, under the new arrangements, is or is not a de facto regulator. The then Minister, my right honourable friend Mr Woodward, Mr Ramsay, the civil servant who gave evidence with him, and Sir Michael Lyons himself all strove in various ways to convince us that it is not, but the way in which recent controversial events at the BBC have been handled suggests that the role of the trust in its affairs is closer to regulation than to anything else, as the report notes at paragraph 16.

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In the wake of the cataclysm that overtook the BBC after the Hutton report, it is no surprise that the Government and the BBC sought through the charter provisions to protect against any such disaster occurring again. I have no problem with that and accept that some change is inevitable. The question is whether what is now in place has created a new set of problems. In particular, I am concerned that, in the new order, the BBC is more vulnerable than it was before—in this respect, I agree with the noble Lord, Lord Fowler—because its sovereign body, the trust, has as its principal responsibility not the interests of the BBC but the interests of licence fee payers.

In their response to recommendation 1 of the report, which states:

the Government say:

I am tempted to say, pick the bones out of that.

My question to my noble friend is this. The BBC has been much in the spotlight since the committee's report was published. Is he satisfied that the new governance arrangements have stood up well to the challenges that they have faced? In carrying out its duty to represent the interests of licence fee payers, has the trust in fact been acting primarily as a regulator? If so, has that left the BBC itself—and the director-general in particular—without a robust champion?

8.13 pm

Baroness Howe of Idlicote: My Lords, it has been a great pleasure to continue my interest in media matters under the eyes and experienced chairmanship of the noble Lord, Lord Fowler: first, during the ad hoc Select Committee’s examination of the BBC charter review process; and, since then, on the reconvened Communications Select Committee, whose main current project concerns media ownership and the news.

The very fact that a number of members appointed to the Communications Select Committee had also served on the previous committee on the BBC charter meant that the committee was ideally placed, as an initial short project, to examine the unexpected and, in my mind, rather shocking resignation of the then chairman of the BBC, Michael Grade, and to help to identify possible lessons that might be learnt for future such appointments.

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