22.  The title of the Green Paper "A strong BBC, independent of government" proposes the criterion by which the Government's recommendations should be judged. Research shows that the BBC plays a uniquely important role in informing the British public. 85 per cent of participants in MORI's quantitative research agreed that "the BBC has an important role in keeping the public informed about what is going on in the UK".[16] For this reason it is vital that the BBC is impartial and is safeguarded from political pressure.

23.  There have been occasions when individuals inside the BBC seem to have equated the BBC's independence with a lack of accountability to any external body. We reject this claim; the BBC can be both independent and accountable. We therefore bring forward proposals for improving the BBC's accountability but without compromising its editorial and journalistic independence.

24.  We recognise that a broadcaster of news and current events programmes will experience some level of political pressure. John Humphrys, one of the presenters of BBC Radio 4's Today Programme, told us that politicians try to negotiate before an interview and suggest that particular topics should be off limits. But he told us "I do not find anything improper in that at all" (Q 174). In the same way, Gavyn Davies, Chairman of the BBC from 2001 to 2004, stated that "In normal times pressure, insofar as it existed was with regular meetings with MPs or with government ministers. It never bothered me in the slightest; I took that as part of the process of gathering informed opinion about the impartiality of the BBC's output" (Q 357).

25.  This kind of day-to-day exchange between BBC journalists and politicians is not radically different from the pressures experienced by newspapers and other broadcasters. But there is a fundamental difference between the Government's relationship with the BBC and its relationship with say ITN, Sky News or the national press. In respect of the BBC, and only the BBC, the Government has direct powers: to set the level of BBC funding, to appoint those in charge and to define the BBC's remit in the Charter and Agreement. The Government's possession of such powers has led the BBC to fear serious political pressure. If the BBC is genuinely to be independent of Government then arrangements which minimise opportunities for Government to bring improper pressure to bear on the BBC are required in each of these areas of potential influence.

26.  The political independence of the BBC was bought sharply into public focus by the BBC's reporting of the Iraq war, the events surrounding the tragic death of Dr David Kelly in July 2003 and the subsequent inquiry by Lord Hutton. These events have been well documented and will not be revisited here. But they are relevant to our inquiry because they suggest that the BBC's current constitutional and funding arrangements are not sufficiently robust to prevent unease within the BBC about its future should it upset the Government of the day.

27.  During the period of Lord Hutton's inquiry and the events which preceded it, the BBC feared that its political independence was at risk. This fear was experienced by staff up to the Chairman and Director-General. Gavyn Davies told us that he felt that the BBC was put under pressure to cover the war in Iraq in a way that he did not think was fair (Q 358). He believed that the Government had considered using its powers over the BBC to punish the BBC for its coverage of the war: "there were substantial press reports which we believed were correctly reported saying that the Government would change the governance of the BBC… and change the funding of the BBC as a result of what happened that summer" (Q 370). Gavyn Davies resigned, at least in part, because he did not think it would be feasible for him to remain Chairman of the BBC and successfully negotiate the new Charter (Q 371).

28.  There is a further point. The central importance of the BBC's independence should not mask another issue raised by Lord Hutton's inquiry—that of improving the accuracy of BBC reporting. Andrew Gilligan testified to Lord Hutton that he had not reported accurately in all respects and said "I do regard those words as imperfect and I should not have said them".[17] We believe measures for securing accuracy, and the prompt correction of the errors that will inevitably occur in reporting, can be achieved by improved management, governance and regulatory arrangements that do not compromise independence. We return to these issues in chapter four where we make recommendations about the most appropriate bodies to discharge each of these distinct responsibilities. We do not believe the Government's proposals are the best available both to secure the BBC's independence and to foster accuracy in its reporting.

29.  We also believe that the BBC should adhere to the standards of conduct demanded of other public bodies, and that this can be done without jeopardising its independence. Indeed its independence may thereby be strengthened. We therefore recommend that the BBC should take measures to ensure that the Nolan principles of standards in public life are strictly observed throughout the BBC. Those responsible for BBC programming should stand down from reporting on an issue if they have a direct conflict of interest. They should be required to publicly declare relevant interests that could be reasonably perceived to influence their reporting. The issue of the Freedom of Information Act 2000 and the BBC has been raised and we will consider this is our next report.

The Government's proposals

30.  The stated aim of the Government's proposals is to ensure that no Government, of any political persuasion, will have the power to compromise the political independence of the BBC. However, while the Green Paper shifts some powers from the Secretary of State to the proposed BBC Trust, the Government will retain the three crucial holds over the BBC referred to in para 25: it, and it alone, will continue to determine the terms of the Royal Charter and accompanying Agreement between the Secretary of State and the BBC; it will continue to appoint those responsible for the BBC; and it will continue to set the level of the licence fee. It will do all of these without adequate parliamentary scrutiny or meaningful debate.

31.  It is not for this Committee to determine whether or not the Government actually did, or would bring improper pressure to bear on the BBC over its coverage of the Iraq war. The point is that outside as well as within the BBC the established funding and governance arrangements were perceived as making the BBC vulnerable to such pressure. Of course, this perception of the BBC's vulnerability is not a new issue. Prime Ministerial hostility to the BBC has a long history, as we noted in para 9.

32.  Whether Gavyn Davies's fears were well founded is something we may never know. He does not think that the Green Paper's proposals represent a Government desire to punish the BBC. But both he, and his Director-General Greg Dyke, wondered whether the Government's proposals would be have been different had they not resigned (Q 371). That the Chairman and Director-General of the BBC were worried about the Government's ability to bring improper pressure to bear on the BBC suggests that its editorial independence needs strengthening. Accordingly, the core of our proposals is a strengthening of the BBC's editorial independence. And this is our most important ground for dissatisfaction with the Government's proposals. We do not believe that the Government's proposals in the Green Paper will reduce the BBC's vulnerability to political pressure. We therefore recommend that the Government adopt our recommendations so as to secure a strong BBC, truly independent of Government.

The constitution of the BBC: Charter or Statute?

33.  We believe it is vital that the process for agreeing the constitution of the BBC is open, transparent and not in the hands of any one political party. Unfortunately the process for agreeing a Royal Charter satisfies none of these criteria. Although, during this Charter Review, there has been public consultation, an independent report and two parliamentary Select Committee inquiries, the fact is the Government do not have to listen to anyone and can draw up the new Charter and Agreement as they please—indeed this is what they seem to be doing.[18] Even if the Charter and Agreement are put to a vote in the House of Commons (something the Secretary of State said was a matter for the Whips (Q 1805)) there would still not be proper parliamentary scrutiny in the way that there would be if the BBC were established by statute. In our view there should be proper parliamentary scrutiny and that scrutiny should involve both Houses of Parliament.

34.  We propose therefore that the BBC should be placed on a statutory basis by Act of Parliament. Such an Act could provide for periodic reviews of BBC services, involving public consultation, and be tied in with Ofcom's quinquennial reviews of Public Service Broadcasting. It could also provide for a periodic review of licence fee funding.

35.  There are several grounds for proposing that the BBC be established by Act of Parliament. First, establishment by Royal Charter is an arcane and little understood procedure. Second, the passage of an Act through Parliament is a more transparent and democratic route than agreeing a Royal Charter through the Privy Council. Third, a statute can more explicitly enshrine the BBC's editorial independence and provide for long term certainty and transparency over the BBC's basic terms of reference. We received evidence supporting the replacement of the Royal Charter by an Act of Parliament from the Campaign for Press and Broadcasting Freedom (p 478) and the Commercial Radio Companies Association (p 330).

36.  However, Michael Grade, the Chairman of the BBC, was against establishing the BBC by statute. He believed that "The Charter allows the BBC to be one step removed from a vote in both Houses" (Q 57). The Government have also argued that if the BBC was a statutory body it might be more open to Government intervention. They suggest that if the BBC were established by statute there would be no guarantee of its long term existence or independence because legislation would be subject to repeal or repeated amendment.[19]

37.  Tessa Jowell defended the status quo on the grounds it had been the constitutional basis for the BBC for the last 80 years (Q 1809). However, the Satellite and Cable Broadcasters Group stated in its evidence that "the Royal Charter and Agreement are anachronisms that do not reflect recent reforms in other areas of public life and publicly funded institutions. The appropriate way for the BBC to be re-established, and given long-term security with independence from Government, is as a statutory corporation like the UK's other principal public service broadcaster Channel 4" (p 235).

38.  Tessa Jowell cited licence fee payers' wish for clear independence of the BBC from Government and Parliament as a reason why the BBC should not be established by statute (Q 1807). She referred to research showing that only 9 per cent of people surveyed thought that the Government should be responsible for holding the BBC to account when things go wrong and just 4 per cent thought that Parliament should.[20] While we accept that these statistics do not show support for political involvement of any kind we fail to see how the Secretary of State can pray them in aid of continuing with the Royal Charter. Qualitative research showed that respondents were general unclear about the boundary between Parliament and the Government. Given that the Royal Charter is drafted by the Government, and therefore is not independent of Government, it seems strange that the Secretary of State would cite this research as evidence for continuing with a Royal Charter.

39.  In respect of its role towards the BBC the Privy Council is an instrument of Government. It has a ministerial president and only ministers of the Government of the day participate in the Privy Council's policy work. The Privy Council's own guidance shows that the terms of a Royal Charter are not formulated independently of Government. It states that "once incorporated by Royal Charter a body surrenders significant aspects of control of its internal affairs to the Privy Council. Amendments to Charters can be made only with the agreement of The Queen in Council, and amendments to the body's by-laws require the approval of the Council (though not normally of Her Majesty). This effectively means a significant degree of Government regulation of the affairs of the body" [our emphasis].[21]

40.  Given the large Government majorities that have been seen in the House of Commons it would be possible to argue that establishing the BBC by statute would not reduce Government control over the Corporation. However, legislation would have to pass through both Houses of Parliament and Governments do not always have an overall majority in both Houses. Moreover, the future of the BBC is an issue on which we believe many MPs would wish to decide for themselves, irrespective of their party whips.

41.  The House of Commons is the premier democratically elected forum in the United Kingdom and is the only forum that can claim to represent all licence fee payers. Allowing the democratically elected representatives of the people to be involved in defining the terms of the BBC's constitution would increase accountability to the licence fee payer. Proper Parliamentary scrutiny of Government proposals for the BBC means that Ministers would have to stand up and defend their plans in a public forum. This will increase the transparency and accountability of the BBC. The House of Lords should continue to have a full scrutiny role and we believe that a permanent House of Lords Select Committee on Broadcasting and Communications is vital to this scrutiny (see para 44).

42.  We do not accept that the current arrangements, whereby the Charter is renewed by agreement between the Government and the BBC, provide the most effective way to guarantee the public interest. We recommend that the BBC be established by statute so that its constitution is subject to parliamentary scrutiny. We note that the House of Commons Committee came to the same conclusion and we urge the Government to reconsider its proposal to persist with a Royal Charter. We believe that establishing the BBC by statute would better protect the BBC's political independence by reducing Government influence in favour of Parliamentary influence. Parliament is an all-party body directly accountable to the public. Discussions leading to decisions in Parliament are conducted publicly, whereas the Royal Charter process is open to possible political interference by the governing party which makes its final decisions behind closed doors. The BBC's independence of Government would be notably strengthened.

43.  It takes time to prepare legislation, and to find space in the Government's legislative programme, and therefore it may not be possible to have legislation in place by the time the current Royal Charter runs out in December 2006. We therefore recommend that a short interim Charter be granted to the BBC while legislation is being prepared. Meanwhile it is vital that Parliament continue to scrutinise any Government proposals for change to the BBC's Charter and Agreement. At present there is a curious position whereby the Government could amend the Charter without reference to Parliament but would have to get the approval of the House of Commons before amending the Agreement between the Secretary of State and the BBC (a document of lesser status than the Charter). This arrangement is curious for two reasons: first that only one of the two documents needs parliamentary approval before it can be amended and second that only the House of Commons has to give that approval. We recommend that it should not be possible to amend the Agreement between the BBC and the Secretary of State without approval of both Houses of Parliament. In addition, if it is necessary to grant another Charter while legislation is being prepared, the Government should undertake that the Charter will not be amended without the approval of both Houses of Parliament.

44.  Although this is a matter for the House of Lords Liaison Committee, in order to strengthen parliamentary scrutiny, we recommend that a permanent House of Lords Select Committee on Broadcasting and Communications should be established.

17   Report of the Inquiry into the Circumstances Surrounding the Death of Dr David Kelly C.M.G. by Lord Hutton, p. 165, para. 245. Back

18   It is important to note that since 1997 ad hoc arrangements have been made for the House of Commons to debate amendments to the BBC Agreement. Back

19   Department for Culture, Media and Sport, Review of the BBC's Royal Charter: A strong BBC, independent of government, March 2005, p. 57. Back

20   Department for Culture, Media and Sport, Review of the BBC's Royal Charter: What you said about the BBC, July 2004. Back

21   http://www.privy-council.org.uk/output/Page44.asp. Back