Does the governance and regulation of the BBC need to be changed?

The third City University and OurBeeb seminar on the future of the BBC was held on Thursday 26 March. This time, a real consensus began to emerge.

David Elstein
3 April 2015

Image: Tim Loudon

Five sessions in less than three hours is the format that has been used for these seminars. An invited audience of between 40 and 50 broadcasters, analysts, commentators, regulators, academics, students and journalists listened to – and then questioned – nine speakers, ending with a wrap-up from former broadcaster and regulator Stewart Purvis, of City University.

The thrust of the morning was to offer a corrective to the recommendation from the House of Commons Media Committee report (see my post on this) that the BBC Trust be replaced by a unitary board comprised of executives and non-executives in equal numbers.

Supplying the corrective were – unsurprisingly – former BBC Trust Chairman Sir Michael Lyons and Diane Coyle (whose term as Deputy Chairman of the Trust expires in April). Their view was supported by Jacquie Hughes of Brunel University (who has just published a report on the subject entitled “Broadcasting by Consent”) and by the historian of the BBC, Jean Seaton.

Their argument was simple: do not abandon the improvements in BBC governance that emerged from the 10 years of the Trust, just because the Trust structure proved to be deficient in terms of controlling the BBC Executive. That was the benefit derived – and price paid – by shifting the governing body of the BBC physically and structurally further away from the Executive than the old Board of Governors had been.

Richard Tait – who has served both as a Governor and on the Trust – partially endorsed this view, but conceded that the way in which the Trust had been established had done it no favours. Essentially, the then Secretary of State, Tessa Jowell, had ignored the recommendations of her own heavyweight expert panel, chaired by Lord Burns, and created a body “to represent the licence fee payer”, rather than serve as a cheerleader for the BBC.

In practice, this had created a degree of confusion. For instance – perhaps in deference to the wishes of Lord Grade, who had been Chairman of the Board of Governors and was due to become Chairman of the Trust on its inception (but then left the BBC in order to take over as Executive Chairman of ITV) – the Chairman of the Trust was allowed, under the terms of the BBC’s revised Charter, to call himself BBC Chairman.

This led to difficulties when the BBC was under fire, as with the Savile scandal, or the row over executive salaries. The public understandably looked to the “Chairman” to sort things out, yet the new Trust structure carefully kept the Trust members out of day-to-day BBC operations. The outcome was an embarrassing public row in front of the Commons Public Accounts Committee, with past and present members of the Trust arguing with past and present members of the Executive Committee as to who was primarily to blame (if anyone) for the widely-criticized executive pay-offs that had been implemented.

Against that, two features of the new system drew praise: much greater transparency, especially after the transfer of the BBC complaints system to the Trust, and better accountability, thanks to the service licence system initiated by Grade, whereby all BBC services are subjected to scrutiny, with reports and recommendations published by the Trust.

Sir Michael also made claim to have led the charge on reducing executive pay, even though the Trust as such is not responsible for day-to-day BBC operations. However, Steve Hewlett cited the PAC Committee hearing as decisive in demonstrating that the current governance structure had a deep fault line (a view shared by Richard Tait). But even Hewlett was wary about imposing another wholesale re-structuring on the BBC, ten years after the last.

Both Lyons and Coyle were at pains to point out that a recent speech by Rona Fairhead (the current Trust Chair), suggesting that there was a straight choice, in Charter review, between preserving the best of the Trust and moving to a unitary board, was not an indication that she had given up on the battle to save the Trust. Their view was that she had positioned the debate as being evenly balanced.

Lord Inglewood, a former Tory culture minister and most recently Chairman of the Lords Culture, Media and Sport Committee, added another useful corrective to current thinking. The notion, he said, that the Trust represented “the licence fee payer” was misleading: the BBC belonged to the nation, not to licence fee payers.

I took this point up in the session I shared with former BBC Chairman Sir Christopher Bland (chaired by Lis Howell). Given that 15% of all licence fees (those for the over-75s) were paid for by the Government, did that disqualify all those over-75s from having any interest or say in how the BBC was run? How about people who listened to BBC Radio (perfectly legally), but had no working TV set?  Had they no say in the BBC’s future? This “representing the licence fee payer” shibboleth did the Trust no good: the Trust needed to represent the nation as a whole, as Inglewood observed.

My conclusion from listening to the sessions was that there was a way of combining all the viewpoints so far expressed. Sir Christopher had urged the creation of a unitary board, of the type he was familiar with from best City practice. I agreed with him that such a board was the best operational solution to running the BBC. Today, issues like whether or not to close BBC3 take more than a year to resolve - the Executive makes a proposal, and the Trust takes its time to hold a consultation and consider the responses, while the channel itself withers on the vine. A unitary board would argue the issue out between executives and non-executives, reach a conclusion, and then implement it. Efficiency and clarity required such a structure: in addition, a unitary combined board, with a non-executive Chairman, would eliminate the anomalous position of Lord Hall, who has been allowed to be his own Chairman on the Executive Committee, as well as Chief Executive (which is what he is, despite retention of the quaint label of Director General).

As for regulation, for all matters that required measurement and judgement - such as levels of spend outside the M25, volume of educational hours, fairness and impartiality - there was no reason to look any further than Ofcom. Indeed, placing measurement of BBC behaviour under the same scrutiny as that applied to all other broadcasters had obvious consumer merits. And Ofcom already carries out Market Impact Assessments for new BBC ventures, as well as having the regulatory status to knock back anti-competitive behaviour by the BBC.

But I felt that a third area of governance/regulation was needed: quality control – something Ofcom is not well-positioned to offer. The Trust, however, already has expertise in judging whether this or that BBC service is good of its kind, or represents good value for public money. It would be foolish to lose that functionality in a re-structuring of BBC governance. So even if a unitary board is established, with full responsibility for all BBC activity, and compliance with the Charter, there would be a virtue in retaining that part of the Trust which handles complaints in the first instance (with Ofcom as the backstop court of appeal), examines the quality of each BBC service, and offers opinions on relative value for money as between the BBC’s various activities.

Indeed, if the residual Trust body displayed perceptive judgement and sturdy independence, there would be a case for Ofcom to call in that expertise in judging the performance of our other publicly-owned broadcaster, Channel 4. Currently, Ofcom and Channel 4 negotiate an agreement covering various headings such as hours and expenditure devoted to non-London output. Whilst that is useful and necessary, it says nothing about quality. In theory, the Channel 4 board should be publishing objective findings on the performance of the various Channel 4 offerings, but it is hard to view such statements as meeting the tests of transparency and objectivity.

So the Trust could usefully mutate into an “Offqual”, and play part of the role envisaged by Lord Burns ten years ago in calling for the creation of a Public Service Broadcasting Trust. It would not actually dispense any money in its first incarnation, but would provide a visible, comprehensive and running account of the value for money provided by the two publicly-owned broadcasters who provide the great bulk – between them – of all the TV content that used to be called public service: arts, education, news, current affairs, religion and children’s.

Before 1992, and the introduction of franchise auctions, ITV companies were subject to annual reviews of their output by their regulator (the IBA and later the ITC). This ensured that none of the contractors could take their position for granted: judgement of performance was clear-eyed, public and consistent.

Today ITV still enjoys public assets (spectrum, prime slots on electronic programme guides, and so forth), but escapes the scrutiny to which it was once subject. Ofcom lacks the expertise (and the desire) to carry out such a function. That does not serve the public well.

If we recognize that the issues of BBC governance and regulation are threefold, we may obtain a better purchase on the issue. We need operational effectiveness at board level, whilst ensuring that full-time executives are accountable to well-informed non-executives. We need consistent regulatory oversight, judging breaches of rules across the broadcasting industry, and intervening to prevent anti-competitive abuse as well as consumer harm. And we need an expert body to judge quality, initially dealing with the BBC (including handling of complaints not resolved at first instance by BBC managers, and in turn subject to final judgement by Ofcom).

So we should preserve from the Trust that which the old structure failed to provide, and which a binary system (unitary board internally and Ofcom rules externally) could not itself provide. The answer is not to “reform or replace”, as Rona Fairhead implied, but to find the right structures for each of the governance functions we need to have in place. This final seminar certainly helped clear my mind.

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