TUESDAY 2 NOVEMBER 2004

DEPARTMENT FOR CULTURE, MEDIA AND SPORT

  Q620  Mr Doran: It is still a tiny part of the £80 million that we spend on films.

  Tessa Jowell: I absolutely agree with you. You will know that we wrote a specific requirement in relation to film into the Communications Act during its committee stage. No; much of the analogy applies to film that applies to the independent sector and independent programme makers more generally.

  Q621  Mr Doran: The second issue is on regional broadcasting. You will be familiar with the phase two document which Ofcom produced on the public  service broadcasting requirement. Regional broadcasting is something that every politician takes an interest in. The only interpretation I could make of the Ofcom position—I understand it is a consultation document—is that it seemed to suggest that in the new digital era the Channel 3 companies are going to find it almost impossible and financially unattractive to continue with a regional requirement and that that should therefore be shunted on to the BBC. Including some other areas, in the Ofcom view we should be moving towards a worthy BBC which deals with the programmes that are not commercial and that no-one else should be dealing with. I know I am probably exaggerating their view and they would be horrified at the way I am presenting it, but it is certainly the way it came across to me and I would be interested to know what you, the department, has to say on that general approach to broadcasting.

  Lord McIntosh of Haringey: We rely on the very tough provisions in the Communications Act which cover not just regional production but also programming directed at people in nations and regions. Ofcom, of course, is free to express its own view about commercial trends but, as we have public service broadcasting obligations as laid down by section 264 of the Communications Act, they are very tough and they are still minimal as far as we are concerned.

  Q622  John Thurso: Secretary of State, I would like principally to ask you some more about governance within the BBC but before I do that can I ask one question with regard to the licence fee? All of the mood music seems to be that the default position, as you have described, it is probably where we are going. Will you be able to look at how the licence fee, if that is what comes in, is operated, and particularly with regard to one area we have already accepted that it is a bit of a regressive charge and we give it to people over 75 free? Two groups of people, it strikes me, do rather badly out of the licence fee. One is service people, who very often have a home where they pay for a licence fee but it is a long way from the barracks where they live, so service people now are having to pay a separate licence fee in their barracks which is a multi-occupation building. A similar thing is for students, or indeed staff working in the catering industry, who live in hostels and have multi-occupation buildings where they are required to pay a licence fee for one room almost. Would you consider looking at those to see if there is some way in which there could be a multi-use licence that could cover them because that is clearly an area where probably a lot of work is done for unpaid licence fees and it is probably quite expensive?

  Tessa Jowell: I know, Chairman, that John Thurso will be aware first of all what a difficult area this is. We have great difficulty in reaching a fair solution for people living in sheltered accommodation, for instance, but yes, of course we will look as we draw up the proposals at any area where the present system appears to be an inequitable one. I was interested in the Ofcom research that they published as part of their part two report. It was a public consultation on the licence fee where, contrary to expectation, people appeared by a majority to recognise that the licence fee is a regressive tax but not to mind the fact that it is a regressive tax because it was seen as paying for something that was not a core essential of everyday life. I think the regressive nature of the licence fee is not necessarily its greatest threat and certainly if there are very specific instances of unfair treatment then of course we will look at those.

  Q623  John Thurso: Particularly the service personnel.

  Tessa Jowell: I have certainly had representations about that point.

  Q624  John Thurso: At the outset you said there were a great many things that you were still looking into, which is absolutely right and proper for an open review, but recently there seem to be reports that quite a lot of things have become a kind of done deal. I was particularly interested to read the article in The Independent of 18 October, which stated, "The BBC is close to a historic deal that will protect its licence fee, its basic structure and its institutional future, complete with a new Royal Charter to run for another 10 years. The decision is all but taken and a comprehensive deal is now clearly there to be struck."

  Lord McIntosh of Haringey: Why are we here?

  Q625  John Thurso: That was my question.

  Tessa Jowell: That is excellent journalism but the another 10 years. The decision is all but taken and deal has yet been done; that is absolutely ridiculous. There is a process which I have been at great pains to set out and ensure is a process which is trusted because it is a transparent process. The point which  we are at is in focusing on the specific recommendations that we will make in the green paper and to what extent we have a mixture of in effect white paper decisions as opposed to proposals for further consultation. That is the point where we are at the moment but I think it is absolutely right to say that the areas that the debate coalesces around, which will be no surprise to you, are governance, funding, scale and purpose and some of the issues that you have touched on in relation to the future: the BBC's role in what is an environment of very rapidly changing technology.

  Q626  John Thurso: You mentioned governance there and I personally think that is one of the most important elements of this. You talked about a sharper definition for the function of the BBC but I think there needs also to be sharper definition within the governance, which clearly failed earlier in the year. The BBC itself, when I asked this question of the Chairman, set out what they are doing voluntarily and they clearly recognise themselves that much needs to be done. Voluntary solutions, however, tend to be towards the minimum end of the scale rather than necessarily where one might want them to be. At the core it seems to me there are these two conflicting functions, one of being the champion of guarding the BBC's independence, of championing what it does, and the other of being the regulator of it. What thoughts are the department having with regard to how much should be enshrined in the Charter relative to governance, actually taking what the BBC is doing voluntarily and putting it into the Charter and what consideration of perhaps even taking it a bit further?

  Tessa Jowell: As you rightly say, the BBC have recognised the unsustainability—it is a strong word to use but I mean unsustainability—of this dual function. There are, as you say, two roles, if not more. There is the non-executive role, if you like; there is the broader governance role, but there is also the regulatory role. This is the topic of Terry Burns's most recent seminar, is it not?

  Lord McIntosh of Haringey: And the one at the end of November.

  Tessa Jowell: Yes. The work on this in preparing the advice on options is not yet complete but I think that, just as the BBC has made very welcome moves to achieve this separation, it is fair to say that we would not regard the status quo as an option that would be acceptable or sustainable for the next Charter review. That said, this is very much a discussion and a conversation which is in train at the moment, so have we reached firm conclusions? No, we have not yet reached firm conclusions. Does that mean that we do not know what the alternatives are? We have a very good idea about a range of alternatives. Obviously, these need to be developed by discussion, they need to be tested and by the time we get to the green paper we will be in a position either to set out options with a preference or to invite further discussion and reaction to a scaled-down range of options. As a postscript to that, the area that we are most keen to address is how you strengthen the relationship between the public, to whom the BBC belongs and who pay for it, and the BBC as an institution.

  Q627  John Thurso: Can you confirm that any future changes when the Charter is proposed will be debated by both Houses of Parliament although the standing order requiring that was repealed in 1997?

  Tessa Jowell: For the reasons I have given I am not in a position to give a binding guarantee on that for ever. I think that in principle that is a good approach and I welcome the fact that we will have at the beginning of next year a Lords committee on Charter review sitting. That will obviously assist the   process. I have always said that scrutiny, consultation, exposing proposals which are in the early stages of development to wider debate is a good thing. It is an extraordinarily difficult thing to do in government, believe me, but just because it is difficult does not mean we should not continue to try and do it.

  Q628  John Thurso: As it is a one-in-ten-year opportunity it would be a good thing if Parliament could have that once-in-ten-years debate.

  Lord McIntosh of Haringey: We have said that parliamentary scrutiny will be no less than in the last Charter review.

  Chairman: One area that we have not dealt with but which is absolutely fundamental to the future of the BBC (in whatever form) is governance. The BBC is governed in the way that it was 77 years ago when it was set up. The events of last year, which this committee has not considered and will not consider as such, nevertheless demonstrated the utter inadequacy of the Board of Governors as a system of governance of the BBC. The Board of Governors consists almost totally, if not totally, of people with no experience or knowledge of the media and that included the Chairman until he resigned a while ago. How is it possible for this country's most important and internationally renowned broadcasting organisation to have as those in charge of it, both as its champions and, irreconcilably, as those to whom it is accountable, the group of people who are chosen on the basis of tokenism, whether it is gender tokenism, ethnic tokenism, class tokenism, regional tokenism or in some other way? Is it not really time now, 77 years later, for the BBC to be run in a professional way and is it not also time that there were a form of accountability by the BBC run by people who knew what they were about and also who were independent of the running of the BBC?

  Chris Bryant: Do you mean there are too many posh ladies, Chairman?

  Q629  Chairman: If I had meant that I would have said it, Chris.

  Tessa Jowell: Chairman, I do not want to repeat the answer I have given to John Thurso on this but I hope that the answer I have given you gives you a flavour of our thinking to date. It is thinking which is currently in the course of development and we will spend much of the next three or four months looking at precisely the kinds of questions that you have addressed. We look forward to your committee's report, as ever, for a number of reasons but I will be particularly interested to see what you conclude on  governance. Just on the membership of the governors, you will know that there is now more broadcasting expertise represented on the Board of Governors. I think the way you characterise it is a very interesting one. Accountability needs to be clearer, I think that the whole arrangement needs to be more transparent, but my very particular concern is about a stronger sense of connection between the governance and regulation of the BBC and the people who fund it. There should be a line of accountability that keeps the BBC honest and keeps it true to the purposes and functions that it has for which the licence fee is paid.

  Q630  Chairman: Whatever form of governance or executive control for the BBC arises from this Charter review, and there has been a view put forward that particularly with the kind of experience that the new Chairman of the BBC has this could work very well, namely, that there should be an executive chairman and a Board of Governors and the Director General—excellent person as he is—turned into a chief executive, is the government considering seriously whether this form of governance is now appropriate with the BBC competing in a way it has never had to do before against an array of other broadcasters with it being a big business, an international business, and nobody (at least I would not) would quarrel with that? Is this something which could be regarded as fundamental that the government is considering seriously rather than just saying, "Oh well, we might as well go on as we are"?

  Tessa Jowell: Yes, it is, and, as I have said already, I see this as probably the most fundamental area for reform arising from the Charter review.

  Q631  Chairman: Linked to that, the Charter is going to expire at the end of December 2006. The BBC has been governed by a Royal Charter since 1927. We have got another public sector broadcasting organisation, Channel 4, which is not governed by a Charter. It is embedded in a Communications Act. Whereas the BBC, curiously, has got no clear remit in its Charter, Channel 4 has got a statutory remit and if it fails in adhering to that remit—and there is some discussion now as to whether it is adhering to it—then there is an external regulator which can hold it to account or which can, if need be, fine it, and indeed there has been a very severe reproof of Channel 4 quite recently. Without saying whether an external regulator ought to be Ofcom, as it is with Channel 4, has the government considered or will the government be considering whether it might be more appropriate for the BBC in future to be governed by a Communications Act with a statutory remit in an act in the way it is for Channel 4, and although Chris Bryant has made the point that the Charter review gives an opportunity for reviewing the extent to which the BBC is adhering to its objectives, Communications Acts, which are more frequent than Charter review, could provide the same opportunity? Is the government wedded to the idea of a new Charter or is it looking at the possibility of continuing the BBC as a permanent institution in a different way?

  Tessa Jowell: The balance of analysis and the balance of discussion to date have been within the context of a renewed Charter rather than putting the BBC constitutionally on a different footing that would establish a closer accountability to Parliament rather than to an external regulator. The parliamentary relationship, you are right to point out, is an ambiguous one and John Thurso's question about the nature of parliamentary scrutiny I think underlines that. I would mislead you, however, if I said that we had given detailed consideration to a structure for the BBC that moved it out of its constitution by Royal Charter. That said, I go back to the point I made about the overhaul of governance, and of course, just because there is a Royal Charter it does not mean that there cannot be an external regulator. It is not precluded in any way by the Charter relationship of itself.

  Q632  Chairman: But the government in no way whatsoever has a hands-on relationship with Channel 4.

  Tessa Jowell: No.

  Q633  Chairman: Channel 4's remit can be reconsidered when the Communications Bill is brought forward. Its accountability can be reconsidered. Nobody can say that the statutory basis for Channel 4 has meant that Channel 4 is less independent than the BBC; far from it. There is a huge temptation for government—and I do not mean necessarily this government; I mean any government—to try to find ways of meddling in the operations of the BBC. Leon Brittan did it in the Zircon affair. Anthony Eden did it in terms of coverage of the Suez war. If the BBC has this peculiar and, some might say, anomalous relationship with the government and Parliament, it can be argued that governments of any political persuasion have a far greater temptation to meddle one way or another with the BBC than with Channel 4, to meddle with which no government has ever attempted. It would seem to me that it would be a very serious error if the government were simply to operate on the basis, whatever conclusion it came to, that it was utterly wedded to a Royal Charter as a way of continuing the BBC because an opportunity might be lost to set the BBC on a new independent path.

  Tessa Jowell: I can assure you that we will look at all the available options for strengthening the independence of the BBC. I have said on many occasions that we want to see as a result of this Charter review a BBC which is strong and independent of government. In discussions we had very recently we commissioned further work on ways in which the independence of the BBC might be underpinned. I do not feel that there is a problem in having diversity in our broadcasting ecology of forms of governance, forms of regulation and forms of statutory constitution. The BBC is different from Channel 4 in many respects, not least in terms of scale, and also purpose, but securing the BBC's independence, securing a greater degree of accountability and a greater degree of transparency in the way the BBC operates and its availability to its shareholders, is a major objective for me in this Charter review.

  Q634  Michael Fabricant: I just want to pursue one point. Regardless of whether there is a Charter or whether there is a BBC Act or whatever, your predecessor, Chris Smith, used to argue strongly—and I am not attacking Chris Smith in any way, by the way—that the BBC's current position should not be changed with regard to external regulators, and then when he stopped being Secretary of State he took an alternate view, which is perfectly legitimate and in my view very understandable. Given that the Broadcasting Act, when that came out, was almost out of date within six months, and given that since the Communications Act there has been a whole series of events which the Chairman has mentioned, do you not think that despite the fact that there was argument during the committee stage for Ofcom or  some other external regulator to have some additional control over the BBC—partly to protect the BBC, I might add, because being its own judge and jury is not always a good thing—have you given some thought to that? It would need a change in the law, I know, and there may not be time available to do that, but do you think that the Communications Act is as up to date now as it was 18 months ago when it was first drafted?

  Tessa Jowell: The short answer is yes, I do. You are well aware of the extent to which the BBC is subject to Ofcom and (a point which is often forgotten) is subject to dual regulation rather than simply the regulation by the Governors.

  Q635  Michael Fabricant: In certain areas though.

  Tessa Jowell: In certain areas, absolutely. I hope I have made clear to you this morning that none of the options for regulation, and indeed none of the options for securing the strength and independence of the BBC, has been shut down. We are looking across a very wide range. As I say, when we come to publish the green paper either that range will have been reduced to a narrower range of options or we may by then be sufficiently certain. This will be one of the biggest decisions about the future of the BBC taken for many Charters. I cannot think of another Charter that took a decision of such profound importance for the BBC. We may well want further consultation in a green paper before reaching a conclusion on that. I would only say—and it links to the Chairman's point about the regulation of the BBC by Ofcom—that I do think that there are benefits in broadcasting of plural regulation and, secondly, I think that another objective of this Charter review is to define the distinctiveness of the BBC being a broadcaster which is unlike any of the other broadcasters, even its close siblings.

  Mr Hawkins: Secretary of State, you have said that you are particularly interested in what this committee may have to say in due course about governance and you gave what I would regard as a very constructive response to the Chairman's recent questions. I just wanted to ask you—and I have no idea what our committee is going to recommend; we have not, of course, started discussing the nature or content of the report or anything—if our report were to contain the kind of radical suggestion about moving completely away, not only on governance issues but on the whole concept of the licence fee, taking account of some of the views expressed recently, for example, by David Elstein's committee, would you take that equally seriously if that were to form part of our thinking?

  Michael Fabricant: Or would the shredding machines be used?

  Q636  Chairman: Order, Michael, order.

  Tessa Jowell: I have always treated the recommendations of this committee with seriousness and great respect. Of course, I am not sure when you expect to publish your report, Chairman, but certainly from our point of view the sooner the better in order that we can have the benefit of your view and the very extensive analysis of the market and discussion that you have been involved with, not only here but also internationally. Of course we will give very serious consideration not just to the proposals but also the argument that you mount in support of the proposals that you have made.

  Q637  Chairman: With regard to publication of our report, we hope to be able to publish it before the House adjourns for the Christmas recess.

  Tessa Jowell: Oh, good.

  Chairman: Thank you very much.