Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
My Lords, I start by declaring an interest as a governor of the BBC. As such, my desire today is to listen to the great range of expertise in your Lordships' House, including to those on whom, I hope, the BBC governors can count as candid friends.
But I also hope that your Lordships will allow me to make three brief points. The first is a personal tribute from one whose years of journalism were conducted from the safety of an office desk. At a time when our thoughts are with our Armed Forces, we are also reminded that the job of war correspondent is dangerous, as well as difficult. It is also an essential part of the apparatus of a free democracy. Technology has not made warfare or communication free from personal risk.
Secondly, in welcoming the creation of a single economic regulator and the appointment of its excellent chairman, I must make clear my view that the remit should cover the BBC. Economic regulation, which is essentially concerned with the way in which organisations compete, must embrace all of them. I make a distinction between that and the BBC's public service responsibilities, which, as the noble Baroness, Lady Howe of Idlicote, rightly said, are greater—not less—than those of other broadcasters. It is the governors' job to monitor and maintain that part of the BBC's role.
My third point is about that system of independent governance. I declare a specific interest, as a member of the audit committee of independent governors of the BBC. As members of other boards have discovered, the authority of the audit committee over the management of an organisation is crucial to good governance. Authority over the audit process is critical, as are the board's right to appoint external, independent auditors and the responsibility of those auditors to the audit committee.
I am concerned, therefore, at the suggestion that the right to appoint independent and external auditors might be taken away from the governors. We must be clear: that would be the effect of putting in the National Audit Office instead. The NAO would not, and could not, be accountable to the audit committee of the governors. It would not, and could not, take instructions from the audit committee, whose authority over the audit process and the management would be severed. I am advised that it would create a line of accountability from the director-general of the BBC to the Permanent Secretary of the Department for Culture, Media and Sport. That would be a significant change in the governance of the BBC.
I have the greatest respect for the NAO and the work that it does in investigating whether government departments deliver government policy cost-effectively. But the BBC is not a government department, and I am anxious that, even with the best of intentions, your Lordships should not push it further under the wing of Whitehall. Moreover, the BBC needs a range of expertise in its external auditors that the NAO does not, and could not, have. Indeed, the NAO might have to call on such expertise, possibly from the auditors that we use at present. In passing, I would add that Sir Robert Smith, the Government's chosen expert on audit, has joined the BBC audit committee and has given me permission to say that he shares my concerns.
I do not claim perfection for the BBC's system of governance, by any means. I believe and hope that, at charter renewal, the checks and balances of independent governance will be thoroughly evaluated. That will be the proper moment to consider the big step of bringing the BBC within the ambit of the NAO, should that be your Lordships' view. In the mean time, I point out that an independent review of the BBC's financial reporting was carried out for the DCMS in 2000, and that there was a review of its fair trading arrangements in 2001. There is, however, still more that the BBC could do to publish information on how value for money is assessed. With the chairman of the audit committee, I have recently been involved in leading some work on that for the governors. If he were here, I could assure my noble friend Lord Crickhowell that some elbow-jogging would not be unwelcome. Perhaps we can return to that in Committee.
I hope that I have not tried the House's patience by raising the point at so early a stage. It is up to Parliament to decide whether, at charter renewal, it wants to overhaul the BBC's governance. Meanwhile, in building up a strong audit committee, I believe that we are not only following best practice but strengthening the hand of the governors. I ask noble Lords, in considering the Bill, not to chop off that hand at the wrist.