Examination of Witnesses (Questions 1-19)|
TUESDAY 22 JANUARY 2002
1. Ladies and gentlemen, I would like to welcome
you here today at the first session of this inquiry. I would like
to wish you a happy new year and I would like to welcome Mr Davies
on his first appearance before this Committee as Chairman of the
BBC. I understand that Mr Davies would like to make a short opening
statement and of course we are very happy to hear that.
(Mr Davies) Chairman, thank you very
much. I am joined today by the Director-General Greg Dyke, the
Director of Radio, Jenny Abramsky, and the Director of Public
Policy, Caroline Thomson. Chairman, I hope that the relationship
between this Committee and the BBC this Parliament will be friendly
and fruitful. I am aware there have sometimes been difficulties
between our two organisations in the past but I want to assure
you and the Committee that I do regard our appearances before
you as a core part of the BBC's accountability to Parliament and
that is very important for us. I think, Chairman, you would be
quite surprised if I said I agreed with every single word of your
speech on the BBC in the House last Monday.
2. But I would have been gratified!
(Mr Davies) There were one or two issues of detail,
such as the privatisation of the BBC, the abolition of the Charter
and the abolition of the Governors, with which I think there are
nuances of difference between us. But on one issue I agree with
you completely and that is that no-one at the BBC should displayand
I quote you"the kind of arrogance" to which you
say BBC chairmen are all too prone. I hope the BBC will state
its case clearly and forcibly before this Committee but without
a trace of arrogance. I also largely agree with youand
I quote you againin saying that "the BBC should be
regulated in the same way as every other broadcaster in this country".
You may be surprised to hear that. In fact, if anything, it should
be regulated rather more robustly, given its unique access to
the licence fee. But I do think you underestimate the degree to
which the Government's White Paper would already deliver a level
playing field between the BBC and other organisations. In the
case of economic regulation, basic standards and quotas (Tiers
1 and 2) the BBC will be treated just like any other broadcaster
and will be fully within OFCOM's remit. We think that is only
right and proper and we welcome this change. On the remaining
area, which is the delivery of the public service objectives of
different broadcasters, we also think that the differences between
the White Paper treatment of private broadcasters and the BBC
are much less than is often claimed in the debate. Both the BBC
and ITV and other private sector broadcasters will in this area
be largely self-regulated. The backstop powers for ITV will go
to OFCOM and the backstop powers with regard to the BBC will go
to the Secretary of State. But in our view that is a correct,
but rather small, difference where the backstop powers lie. We
believe the Secretary of State and Parliament, with this Committee
no doubt playing a central role, are very well suited to make
judgments about the public service remit of the BBC. OFCOM, which
is a body designed mainly to deliver light-touch regulation in
the private sector might, we think, struggle to discharge this
particular function adequately. But of course we look forward
to working alongside OFCOM and indeed under its jurisdiction in
many other respects. Thank you.
Chairman: Thank you very much indeed,
Mr Davies. It is good of you to set out that stall for us. I wonder
to what extent the Secretary of State is aware of your views taking
into account her answer to the questions yesterday. But that is
a rather provocative remark.
3. Thank you, Chairman. Can I just preface my
remarks by saying a sort of thank you to everybody whom you employ
on behalf of the licence payers in my constituency, who I think
have for a long time had a love affair with the BBC and I think
that will continue. BBC2-W in Wales is an enormous successa
bit of a tendency for having rather second-rate comedy programmes
on a Friday night but otherwise a success. And a specific thank
you to Jenny Abramsky for Deadringers, which I think is
the funniest thing I have heard for many years. Can I ask a question
of Mr Dyke. What on earth is the point of the Governors? They
always seem to be supernumerary members of the board of management.
If you cannot get a member of the board of management to an event,
you get a member of the board of governors. Today we have all
of you together; there seems to be no distinction between board
of management and board of governors. Why bother having them at
(Mr Dyke) I am not sure that is a question for me.
I am not sure that it is not actually a question for the Chairman
of the Governors. There is clearly a distinction between what
the Governors do and what the management do. It is pretty obvious:
the management of the BBC are professionals in a particular field
and the Governors are there to represent the public interest.
The idea that somehow they are the same is just not the case.
Quite often, if we wish to make significant moves at the BBC,
we have to persuade the Governors of that and they do not always
agree. But there is a distinction, as in any other organisation
in which I have ever been involved, between the board and the
management, and in this case that board is also the regulator
in certain areas. I find it quite difficult to answer the question
because it seems to me it is pretty obvious.
4. Is that not why the BBC ended up seeming
to be an organisation that regulates itself because the secretary
to the board of management is secretary to the board of governors,
financed/resourced by exactly the same organisation. There is
no sense of independence of the board of governors, is there?
(Mr Dyke) I will ask Gavyn to join in because, as
I say, I am a paid employee of the BBC, I am not one of the Governors
and therefore that is for the Governors. Perhaps the BBC is in
the end the responsibility of the Governors. The secretary being
secretary of both is an administrative function: it acts to make
sure that the right papers go to the right places at the right
times and the rest of it. But in terms of the running of the organisation
there is a very real distinction. The organisation is run by the
Director General and his management team. We are answerable in
what we do to the board of governors.
5. Could I interveneand obviously I will
return the questionfollowing up. Mr Davies, I was about
to address my remark to you. It has been decided that you are
eminently well qualified to be the Chairman of the BBC. You went
through the Nolan procedure. As I understand it you were the unanimous
choice of the interviewing committee, therefore, whatever controversy
may have been aroused in one way or another, nobody can deny that
you are eminently well qualified to be the Chairman of the BBC.
On the other hand, I would be interested, following up on what
Mr Bryant has said, to ask if you can explain how people who are
appointed as Governors are qualified to be in charge of this country's
most important communications organisation and one of the world's
most important communications organisations in a very, very competitive
(Mr Davies) Chairman, the Governors are appointed
nowadays in exactly the same way as I was; in other words there
is a Nolan panel and it is freely advertised and locally advertised
and anybody can apply, and the Nolan panel makes a recommendation
to the Secretary of State and she makes the final decision. So
I think the selection of governors actually has improved enormously
as a process in the last several years. I know, Chairman, that
you have said in the past that the Governors are "essentially
a bunch of amateurs"and that is another quote from
a recent speechbut I think there is some strength actually
in having people who are not from the industry and are not experts
in the industry, performing the role of Governors. The experts
in broadcasting are on the executive board of the BBC and they
have a responsibility to operate the services. Actually on a day-to-day
basis they run the BBC; the Governors on a day-to-basis do not
and should not. What the Governors do is represent the public
interest and I think it is, if anything, a strength that they
come from a wide variety of backgrounds and are not solely taken
from the broadcasting industry.
6. I do not see what difference you make by
your existence. The Dearing Report in 1947 or 1948 recommended
that the board of governors should be separated, should be separately
financed and resourced and should have a separate secretariat,
and it seems to me that would give you a greater freedom from
the managerial responsibility of the BBC to exercise that public
(Mr Davies) We have actually, Mr Bryantyou
may be pleased to hear thisin the last two or three months
looked quite closely at the internal functioning of the board
of governors and the executive board, including the role of the
secretary's office. We are not yet in a position to announce changes
to our customer practice, however we are eager to delineate more
clearly what it is that the Governors do and the roles that they
fulfil and what it is that the Executive does and the role that
the Executive fulfil. I hope that within a month or so we will
have come to conclusions, as the entire BBC will have come to
conclusions, that will have been ratified by the Governors and
we can make an announcement. We are certainly thinking Mr Bryant
about exactly the subjects that you raise.
7. I see in your submission that you say, "BBC1
remains the television flagship channel, delivering the quintessential
public service aimmaking the good popular and the popular
good"which is an oldI am not sure whether it
is "Reithean" but somewhere round about therephrase
(Mr Dyke) Later, I think.
8. which I indeed wrote into many
speeches that were used by previous chairmen of the BBC. Is that
what you understand to be public service broadcasting: making
the good popular and the popular good?
(Mr Davies) I think it is one element of public service
broadcasting, but at the beginning of the memorandum there are
probably around two pages that define public service broadcasting
in the best way that we can. Those two pages have been built on
previous evidence to this Committee which Christopher Bland gave
I think last year. We do not, Mr Bryant, have a new definition
of public service broadcasting to bring to you today. This is
something that has been literally crawled over . . . well, not
literally. It has been crawled over by an enormous number of people
and I think the definition at the beginning of the memorandum
is as good as we can manage.
9. My own instinct is that whilst politicians
tend to talk about public service broadcasting meaning Shakespeare,
Schiller and Shostakovich and work their way down from that, most
of my constituents when they talk about what they get out of the
licence fee think about EastEnders and programmes with
vets in them and work their way up. Where would you place yourself
in that spectrum?
(Mr Davies) I think the list of things that we are
looking for from programmes, which includes concepts such as universal
access; real quality; distinctiveness; range and diversity; doing
things the market is not alone doing; encouraging our national
culture and creativity; providing for independence and impartiality;
these things are qualities that can apply to programmes of many
different types and of many different genres. In my mind, they
do not only apply to Shakespeare and Schiller but they can also
apply to EastEnders. So I would like to see this series
of objectives fulfilled in most of the broadcasting that we do.
Something that I think people tend to forget is that every household
in this country pays £109 presently for the BBC. We do have
to deliver value for money to those households as well as hopefully
widening their horizons and opening opportunities to them which
they otherwise would not get. I am resistant to picking either
end of your spectrum. I think at both ends of the spectrum we
should be delivering this kind of quality.
10. Do you think the Secretary of State or OFCOM
should decide on your propositions for new services in the future?
(Mr Davies) We are happy with the current White Paper
proposal which is that the Secretary of State should decideI
think, Caroline, after taking advice from OFCOM.
(Ms Thomson) Yes, that is right.
(Mr Davies) That seems to us a good, sensible way
11. Would you be unhappy if it changed?
(Mr Davies) Well, I think we have got the good, sensible
12. Just on that last exchange, before I call
Mr Fabricant: a Labour Member of Parliament, a new Labour Member
of Parliament, said to me last night that so far as he could work
out the only arts programme on BBC1 in the past year was Rolf
Harris. The fear that I have got is that not only have you been
shifting serious programming on from BBC1 to BBC2, but you are
now shifting serious programming over from BBC2 to BBC Knowledge.
While of course you have a duty to carry out the remit referred
to so eloquently by Mr Bryant, it is very important indeedand
I hope you will accept thisthat you offer the highest quality
programmes on your main stream channels as well as your niche
(Mr Davies) Chairman, I absolutely agree. Can I ask
the Director-General to comment on this.
(Mr Dyke) I agree, I do not think we should be shifting
from BBC1 and BBC2 onto Knowledge. Actually one of the conditions
of BBC4 is that we do not do that. That is one of the conditions
laid down by the Secretary of State. We have recently gone through
our whole art policy and taken a new arts policy to the Government
and said, "This is what we are trying to achieve." I
do not think any of us would sit here and say we have been through
one of the best times for arts; however I would say that if you
look at the record in the last three or four years on science
and on history, it is outstanding. Creative departments have good
times and poor times. They always do. What we have in our policy
is a commitment to a minimum of 230 hours of arts programming
on BBC1 and BBC2, of which a minimum is 23 hours on BBC1 and 192
on BBC2. There are two points you are referring to, it seems to
me. One is Rolf on Art. I do not think we should be at all sniffy
about that. We are very proud of it. Six million people sat and
watched a proper exposition and discussion about serious painters.
It is probably the highest rated arts programme of all times.
Surely that is one of our roles. One of our roles is not to provide
arts only for those who are interested, for the artistic elite;
it is to provide arts programming which tries to bring people
to the arts and what it is about. Secondly, we did move Omnibusalthough
we still do Omnibus Special on BBC1 (we did one just before
Christmas on J K Rowling which I think got 5.5 million viewers)from
well out, playing at 11-11.15 at night on BBC1, to playing at
nine o'clock on BBC2 and actually the audiences have gone up.
In fact the audiences for Omnibus on BBC2 are 60 per cent
higher than the South Bank Show on ITV. On a point Miss
Kirkbride was making in something I read this week, the days when
you could hammock programming have gone, they have disappeared.
You cannot force people to watch programmes they do not want to
watch any more. What is certainly clear is that Omnibus
on BBC2 is more successful than Omnibus was on BBC1 in
the slot it was played. But I think you will see over the next
18 months a commitment to arts that is perhaps more so than you
have seen in the last couple of years. I think the opportunities
have come with BBC4and, again, remember 50 per cent of
the population will be able to receive BBC4 as of now, when it
starts, and that percentage presumably will increase as digital
grows. The point of BBC4 is a schedule that actually is unashamedly
aimed at a particular audience, therefore we will see most of
The Proms on television for the first time ever. The advantage
is that we have five orchestras, we record a lot of material for
regions that in future will go both into the regions and BBC4.
The opportunity is to make more things available. We are alsoand
Jenny will probably talk about it in a bit more depth because
she has seen it in operation over the weekendat the Barbican
trying to do clever and innovative things with the coverage of
(Ms Abramsky) We launched what was a joint venture
with the Barbican on Sunday as part of the John Adams Festival
Weekend at the Barbican, where we have put in new digitally operated
and remote controlled cameras that will enable us to broadcast
live from the Barbican Concert Hall, the Barbican Theatre, the
Barbican Cinema, the Barbican foyer. That alone is going to get
12 extra programmes, for instance, of concerts onto BBC4 a year
but it will also enable us to do a lot of other things, including
theatre, which we have not been able to do on television at a
significant reduction in cost and this is going to mean a real
increase in the concerts and the amount of live music we will
be able to do on BBC television. We will also be able to do things
on BBC2 and are planning with the Barbican as a result to do things
on BBC2. As a result of this, we are talking now with other institutions
to try to get access to places and get performance live on television
in a way we have never been able to do before.
(Mr Dyke) I was on Friday evening in Wales talking
to the orchestra there and saying this could be the most exciting
period in the history of the orchestras because suddenly you have
the means to put it on to television as well as on to radio. It
could be a very exciting time and they seemed very enthusiastic.
13. May I join Christopher Bryant in saying
how much I, and I am sure my constituents too, enjoy the work
of all the staff at the BBC and the programme output. I travel
from time to time and see what is happening in other public service
broadcasters funded by the licence fee and the sheer volume of
output, given the resources you have, I think exceeds many other
broadcasters. Certainly in the past, when I worked in the industry,
I was always struck by the fact that the BBC television studios,
for example, let alone the BBC radio studios, were constantly
being used. When you visit other public service broadcasters funded
by the licence fee abroad, often the studios are empty and not
in use. I certainly endorse the line stated earlier that £109
is very good value for money. May I ask Gavyn Davies. He attempted
to give a definition of public service broadcasting which is explained
more fully in his submission or the Corporation's submission.
Would you say you are the only British public service broadcaster?
(Mr Davies) Definitely not, Mr Fabricant, no. In fact
I think there is another one sitting right behind me.
14. Only one other.
(Mr Davies) No. "Another" one is sitting
behind me. No. I think that there are elements of public service
broadcasting in most private sector broadcasters, and in some,
such as Channel 4, arguably they have the same commitment to public
service broadcasting as the BBC does. I think the BBC is special,
both through its scale and scope, through its objectives and through
its funding, and that gives a special responsibility on the BBC
and on its Governors and on its Executive which is actually more
intense, in my opinion, than it is for most other broadcasters.
15. Public service broadcasting is a mixed output
and can be funded in many different ways. At the moment the BBC
is funded by the licence fee. Criticism that has been levelled
against the BBC is a lack of transparency at times about how it
spends its money, even though the BBC do public accounts and do
attempt to be transparent, and it has often been said that the
BBC uses licence fee money to support commercial ventures. A recent
example of this, it might be arguedand I am not sure this
is totally the caseis the excellent film Iris. People
have said, "Look, it is getting a lot of publicity on the
BBC. Of course it has just won an award, which demonstrates the
value of the movie, but at the end of the day it is a BBC movie
and it has got a lot publicity both in the Radio Times
and the BBC publications and on BBC mainstream channels and that
is unfair." How would you respond to that?
(Mr Davies) Mr Fabricant may I respond on transparency
and fair trading generally and then ask Greg to say whatever else
comes to mind. On transparency, I was responsible for a report
on the BBC about three years ago where I asked for greater transparency,
among other things, in the accounting of the BBC. The BBC has
made great efforts to improve its transparency. We have an absolute
responsibility to be as transparent as is consistent with running
a partly commercial enterprise and I would welcome any suggestions
you have for improving our accounting and financial transparency,
and I am sure we will look carefully and hopefully implement any
16. On that point, do you think that there is
any cross-subsidy? Because that is the main argument which is
made: cross-subsidy from the licence fee going into commercial
(Mr Davies) No, I honestly do not. The fair trading
framework that we have at the BBC is extremely, extremely rigorous,
imposed by the Governors and the Executive together actually through
a fair trading committee. We take enormous pains not to allow
licence fee funding to leak into or help or subsidise in any way
the commercial enterprise of the BBC. I think I am right in sayingand
Caroline will tell me if I am wrongthat there has actually
never been a successful challenge against our fair trading practice.
We do have some challenges occasionally and we have looked at
them very carefully, but we have never had one upheld against
us. So I would like to set your mind entirely at rest that this
is uppermost in our minds. If we make a mistake, it will be a
genuine mistake, but it will not be for lack of trying to get
this one right.
(Mr Dyke) In the years I had worked in the commercial
sector I had never once discussed the Office of Fair Trading and
at times that is all I discuss at the BBC. I think we are terribly
conscious of that suggestion and we make enormous efforts to ensure
that we separate the two. In terms of the films, when I got to
the BBC we were spending £10 million a year on the production
of cinema films but a disproportionate number were films that
actually the controllers of BBC1 and BBC2 did not then want to
play: they were what I would describe as "art movies".
The decision we took was that we would use the same £10 millionno
more, no less, we would use the same £10 millionbut
buy partnerships. We would try to produce British filmsand
that was the criteria: they must be Britishthat may also
be successful in the box office. We have been very lucky in the
last two years, we have had first Billy Elliott and now
Iris. The money we put in is the equivalent to what we
would buy at. You take your chances. We agree to put a certain
amount of money in for the equivalent of the licence fee for BBC
television. On some of the films that disappear without trace
it is probably a loss, but on something like Billy Elliott
or Iris it will be considerably cheaper than we would have
to buy it if we were buying it from an American distributor.
Michael Fabricant: If I may speed things
up a bit because I have another area of questioning and I know
other colleagues want to get in.
Chairman: Not too much, Michael, because
I am going to have to move on.
17. In that case, let me get on to another area
of questioning, if I may. You inherited a position where some
people working within the Corporation would say that more money
was being spent on ancillary activities rather than mainstream
broadcasting and indeed journalism activities. Firstly, may I
askand perhaps you can give me some quick answers: Is it
true that the BBC is the only United Kingdom broadcaster to have
a public affairs office in Brussels?
(Mr Davies) We certainly have a public affairs office
in Brussels. I do not know if others do. I believe Caroline can
(Ms Thomson) Yes, I think that is right. I think other
broadcasters sometimes retain consultants in Brussels. We do have
our own staff.
18. Back to the transparency issue. Do you state
in your accountsI do not believe you dothe amount
of money spent on corporate entertaining, both in the European
Union and here in the United Kingdom?
(Mr Davies) I do not think we do, Mr Fabricant. The
accounts of course comply with accounting requirements.
19. But you are not a PLC, you are paid by the
licence payer. Earlier on you said you would like to see great
transparency, so really the Companies Act should not be the minimum
criterion to use, surely.
(Mr Davies) No. I was going to say, we comply with
the best standards in the UK accounting profession, but, you are
quite right, the transparency should be greater than would be
applied to a private company. Whether we should go into detail
on specific items of expenditure of that type, I am less clear
in my mind, I must say.