TUESDAY 23 FEBRUARY 1999

MR MARK BYFORD, MS CAROLINE THOMSON and MR ANDREW HIND

  80.  Why were you taken off?
  (Ms Thomson)  Because of changes in the government and regulations there which we are now addressing.

  81.  Is the Foreign Office addressing them as well?
  (Ms Thomson)  The Foreign Office is helping us address that. That is an example of where it is helpful to have Foreign Office involvement. I will happily come back to you with figures on broadcasting there.
  (Mr Byford)  My understanding from a survey in 1996 that in Azerbaijan we had a seven per cent reach and in Kazakhstan four per cent, Uzbekistan three per cent, Georgia two per cent and Kurdistan one per cent. It is difficult to do market research there, but we are committed to doing it. That was from a survey in 1996.

  82.  Many of the young people in the small republics are very anxious to acquire fluency in English. The Germans, of course, would want them to listen to their programmes. Are you satisfied with the resources that you are putting in to these small countries?
  (Mr Byford)  We are certainly pleased that we were able to develop over the last few years in what is a critical area for us by extending our language portfolio. We also recognise that it is an important area for the future and we shall be looking at it continually and reviewing it to ensure that we are able to reach the very audiences of which you are talking.

  83.  I would like to come back to several things that you have said. On funding you have said that you are content, yet, if I understand the figures from the FCO in the memorandum to us, the funding that you will be receiving at the date of the next general election—assuming that it is in either the year 2000/01 or 2001/02—the funding that you will be receiving then will be less than you were receiving in 1996/97. Why are you not complaining about that?
  (Mr Byford)  I do not think I said that I am content with it. I said that at the time of the settlement we welcomed the reverse in the decline in funding in real terms. We recognise that it is a settlement for three years and that we must make it work in the most effective manner for the World Service. I have also said today that a World Service that faces massive challenges around in terms of competition and delivery, needs a strong financial base on which to go forward. In terms of our position in 2001, we shall have a funding settlement of £177.7 million and in 1995/96 we would have had less.

  84.  Is that £177 million an actual or a real term amount?
  (Mr Hind)  It is a cash figure.

  85.  If you look at the FCO memorandum, it shows a decline by 2000/01 in real terms, £165.5 million compared with £167.8 million in real terms in 1996/97. I think "blip" is the word that politicians like when things go up for a short while and then go down again. I do not understand why you are not complaining about the continuing decline in your financial resources.
  (Mr Hind)  Can I add something here? I think Mr Byford said earlier that there is a distinction in those numbers between the operating element and the capital element. What is happening from 1996/97 through to 2001/02 is that the operating grant, the core grant is increasing in cash terms from £135 million to £151 million. By our calculations that is broadly staying steady in real terms. The reason that we are not complaining about that is, as Mr Byford said, that that has given us the opportunity to re-prioritise and invest in some areas and make reductions in other areas. We think that is a reasonable settlement. We have concerns—you are right to point it out—about the capital element of the grant which is declining. The capital element has declined from 1995/96, when it was £25 million through to £16 million now, and £16 million through the CSR period. We intend to open discussions with the Foreign Office over the course of the next year or so about the level of funding that we believe that we shall need for capital investment in the three years beyond the current CSR. We have signalled concerns about our ability to fund our ongoing maintenance of overseas transmitters, particularly from capital.

  86.  So you are not content with your funding. Can I move on? On your language service cut, were your original plans referred to the FCO for their comments?
  (Mr Byford)  We have been in discussions over the last few months with the FCO. The formal proposition of closing the German service went to them just before Christmas.

  87.  But your overall plans were submitted to the FCO?
  (Mr Byford)  Our overall plan was submitted to the FCO, yes.

  88.  What was their reply?
  (Mr Byford)  We were in discussions with them about the German service and our other plans for improved value but it was generated very much by ourselves.

  89.  Have your decisions differed from your original proposals put to the FCO?
  (Mr Byford)  No, the plan that we submitted to the FCO is the plan that we as a team agreed together and which was accepted by the FCO.

  90.  They have accepted it in total without any changes?
  (Mr Byford)  Yes.

  91.  Can I move you on to opinion formers. Throughout the documentation we get and again this morning "opinion formers" seems to be the favourite phrase. Is that a policy requirement that FCO gave you?
  (Mr Byford)  No, it was wholly generated by ourselves and again to complement the discussions with Mr Heath this plan is not about saying opinion formers are everything and let's move the audience to reaching them; it is about recognising that the world is a world of differences in terms of not just geography but in terms of broadcasting environments and in terms of the audiences we want to reach and there is nothing wrong, in my view, in saying that in key areas of the world there are certain groups of audience that we must focus on reaching and in other areas all different groups. In many areas of the world which have been our heartland audiences it is not just opinion formers that we want to reach but a general audience that have come to the World Service in the past, are there today and will be there in the future.

  92.  Because it seems to me that all the discussions that one has about the World Service are about World Service radio and nothing takes place in terms of discussions about television, and yet the very people who are more likely to watch television rather than listen to radio to help form their opinions are these opinion formers. How convinced are you that the radio broadcasts are the best way to get to these opinion formers?
  (Mr Byford)  Well, we are convinced that in the developed world (and what we mean by that is where there is a plethora of broadcasting delivery mechanisms available to those audiences) opinion formers and decision makers come to the World Service because of its reputation, its quality, its expertise, its global agenda. We are absolutely confident that we will still be able to reach that audience. We also recognise, and it is really important to emphasise this so the Committee is not left with any impression that we are only interested in focusing on decision makers, that in those areas of the world where there is less choice and less broadcasting delivery mechanisms available radio is a critical mechanism. For instance, I was in India in the first weeks of January where one may talk about an explosion of choice of television in major conurbations but in the major rural areas radio is critical. And the World Service has a heartland there that we want to maintain.

  93.  The last question I want to raise with you arises out of that. Having said that radio, particularly short wave radio, is critical, you are trying to find resources from your traditional activities to put into the Internet but the Internet will presumably not be available to those people who you feel so strongly about. Who is actually using the Internet service?
  (Mr Byford)  Who is using it today? Students, not just opinion formers and decision makers, but people at work across the world. Primarily today the strength of the Internet has been in America and Europe but it is expanding rapidly in areas of the Far East. We expect in India and in China, for instance, the take-up of the Internet in terms of overall growth to be expanding there more than anywhere in the world. In Africa, for instance, our audio offer will still be an extremely important core proposition, hence why I said to Mr Illsley that will be our core proposition for many years to come. But it will be complemented not replaced by a delivery mechanism which is available anywhere in the world to any person and therefore rather than just being restricted by geographic territory we can create communities of interest by language, for instance, across the world. Arabic speakers, wherever they are in the world, can come to the Internet and have the depth of text and audio services on demand as well. Do we say that is everything for the future? We do not. Do we say it is a fantastically exciting and strong opportunity for us to develop with care? We say yes, but not to replace it.

  94.  What do you anticipate to be the number of users the Internet will have in five years' time and ten years' time?
  (Mr Byford)  We expect in five years' time 300 million to be connected to the Internet around the world.

  95.  300 million using your Internet site?
  (Mr Byford)  300 million to be available but if you look at the chart we have submitted on page 6——

Mr Rowlands:  30 million from naught.

Chairman:  I would now like to have three quick-fire questions to wind up from Sir John Stanley, Mr Illsley and Mr Rowlands.

  96.  Mr Byford, given that your capital and operating expenditure are equally important can we just go back to the totality and I want to refer you to Annex J(i) of the Foreign Office's own memorandum to this Committee headed "BBC World Service: FCO Funding". What that unmistakably shows is that when your real terms total expenditure peaks in the financial year 1999-2000 it is still well below the levels achieved in the three financial years 1993-94, 1994-95 and 1995-96. It also shows that when we get to the end of the current five year period, which is the year 2001-2002, your expenditure in real terms is still below what it was in 1996-97. So is not the reality that at a time when the Government's public expenditure is rising in real terms over that five year period and when the Foreign Office's own expenditure is rising in real terms, the BBC World Service has got the short straw? It is ending up with real terms overall expenditure in 2001-2002 below what it was in 1996-97. I ask why have you not fought your corner harder? Is that not a concern of you?
  (Mr Byford)  Certainly what I would want to emphasise to the Committee is that the World Service will always fight its corner hard on getting a financial settlement in order for us to be able to achieve our goals. What that actually explains is that the declining funding that the World Service experienced through the early and mid 1990s means that the position, even though we have had a real terms increase in the settlement, still means at the end of it that we are in real terms worse off than we were at that position. Correct. When somebody earlier said Are you content? we recognise that we have got a settlement now for three years that we must make work for us and we recognise that it has reversed that decline in funding we experienced through the years.

  97.  Only for one year.
  (Mr Byford)  In the short term and therefore it has at least put us back to something we would wish. However, for the long term I hope I have demonstrated to the Committee as well that we have some very big challenges facing us in terms of competition, investment and we will need that money.

  98.  You referred to my colleague Norman Godman to the World Service facing an explosion in competition. Is it competition in terms of output and content and quality or is it competition in quality of Internet provision, FM provision and different delivery mechanisms?
  (Mr Byford)  It is an explosion of choice. In different areas of the world people are having new local services that they never had before delivered on better quality delivery mechanisms that they never experienced before. What are we? We are the best known, the most respected, the most trusted international broadcaster in the world. We can be complacent and say, "Wonderful position, it will always be that." We do not say that. We say, "It is a fantastic number one position to be in", and it is a position that has wholly developed from our editorial independence and on the inherent values that we have and whilst competition explodes around us those values, those constituents if you like, are absolutely non-negotiable, but we have to recognise that competition is changing, delivery mechanisms are changing, and the World Service must adapt as well to retain that strength.

  99.  You have said at various times during the course of this morning's evidence that you found Mr Tusa's article misleading. Given the weight and authority that is attributed to Mr Tusa whenever he writes articles about the World Service will you please provide us with a written detailed rebuttal of Mr Tusa's article?
  (Mr Byford)  Yes I will.1[3] I am quite happy to do that. I have said that I recognise that Mr Tusa during his tenure was a strong leader of the World Service but even in his tenure it was a World Service that had to adapt to change around it. I, too, want to lead a team that retains that strong position for the World Service, that has a very good strong financial framework around it, but which recognises the world changing around it.

  100.  We will have this detailed rebuttal?
  (Mr Byford)  Yes.

Chairman:  Mr Byford, Ms Thomson and Mr Hind, may we thank you for one of what we hope will be a series of very constructive meetings for the benefit of the World Service. Thank you.