BBC Royal Charter

– in the House of Lords at 11:07 am on 9th December 2005.

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Photo of Lord Fowler Lord Fowler Conservative 11:07 am, 9th December 2005

rose to move, That this House takes note of the First Report of the Select Committee on the Review of the BBC's Royal Charter (First Report, HL Paper 50).

Photo of Lord Fowler Lord Fowler Conservative

My Lords, we are grateful for the advisory points that the Minister has made.

The most recent Friday debate that I took part in as a Back Bencher was in the other place, where three or four of us, including the much-missed Lord Carlisle, turned up to debate official secrets. So perhaps I may say first that it is good to see so many noble Lords here and so many speakers on the list. It bears some witness to the importance of this House and to the importance of the BBC and the media industry.

The Select Committee was established just before the Government published their Green Paper on the future of the BBC and much, but not all, of our inquiry was focused on the Government's proposals in that Green Paper. Throughout our inquiry we met twice a week to take evidence. We conducted visits to Bristol, Wales and Germany. We were particularly well received in Germany, although that may have had something to do with the fact that the Germans had received the impression that the noble Baroness, Lady Bonham-Carter, was the star of the countless movies made by her cousin Helena Bonham-Carter. We were just very happy to travel on the Bonham-Carter family coat tails.

I am grateful to all members of the committee for their hard work on this report. Perhaps I may single out the noble Baroness, Lady Howe of Idlicote, whose persistence resulted in the committee being established. I am grateful for the quite exceptional support we received from our official team—Chloe Mawson, Peter Hill-Jones and our adviser Richard Collins—and last but not least I am grateful to all the witnesses who gave evidence to us. We had working journalists such as John Humphrys, Nick Robinson and Adam Boulton as well as the chairmen and chief executives of not only the BBC but, for example, ITV, Channels 4 and 5, and BSkyB.

I do not claim they all agreed with our proposals, although there was substantial agreement on one point: the value and high reputation of the BBC. That is perhaps the starting point. The BBC is the cornerstone of broadcasting in the United Kingdom. The committee approached its task from a position of admiring the standards of the BBC and wishing to preserve them. Perhaps I may put this gently: that has not always been the starting point of parliamentary committees like ours.

We think it is fundamentally important that the BBC's standards of fair, balanced reporting should be maintained and, although obviously there are errors, we note that the public rating for the reliability of the BBC is very high. That applies to television, radio and, I should add, the BBC World Service. I remember as a reporter myself in the Middle East war in 1967 being in Beirut and watching American reporters desperately trying to tune into the World Service to try to find out what was actually happening. Some 35 years later, my stepson covered the Iraq war and found the same situation—reporters relied on the World Service for accurate news of what was happening. Much has changed in the past 35 years, but the World Service's reputation remains very high. There is one other reason why the BBC is important. Thanks to the Communications Act 2003, ITV could be taken into foreign ownership, perhaps American, and its programme character changed. The BBC and Channel 4 are the only broadcasters who must remain under national ownership, with all that means for the production industry.

The title of the Government's Green Paper was A strong BBC, independent of government, and in choosing that title the Government proposed the criterion by which their proposals should be judged. In practice, our view was that the Government's proposals do not reduce the BBC's vulnerability to political pressure and, in particular, the pressure of government.

When I talk of "government", I mean governments of both parties. I served with two Conservative Prime Ministers—my noble friend Lady Thatcher and John Major. Neither was what I would call an outright supporter of the BBC. At a dinner of the Cabinet to mark her 10 years in power, I remember my noble friend Lady Thatcher remarking, "If I was ever tempted to say anything nice about the BBC, Denis soon persuaded me out of it"—not that she was tempted very often. I say in parenthesis that we are all delighted that she is now out of hospital.

Noble Lords:

Hear, hear.

Photo of Lord Fowler Lord Fowler Conservative

My Lords, in the 1992 election campaign after a particularly fierce altercation with the BBC, I also remember John Major rounding on me and saying, "You won't be able to hold me back for ever on this"—a remark that I did not take as a declaration of undying devotion to the corporation.

On the other side, we had Harold Wilson saying that if the BBC did not mend its ways, the government would see that it did. Coming very much up to date in the events surrounding the inquiry of the noble and learned Lord, Lord Hutton, the former chairman of the BBC, Gavyn Davies, said in evidence to us that he believed the newspaper reports to be correct when they were saying that,

"the Government would change the governance of the BBC . . . and change the funding of the BBC" as a result of the BBC's actions. I do not want to argue about whether he was right or wrong; I simply assert that the chairman of the BBC believed that to be the case.

Frankly, we can take it that all governments want to influence the BBC, which is not greatly different from wanting to influence the press. But there is perhaps one difference. Governments do not own the press, and you might say that they do not own the BBC either. But they do control the levers of power over the BBC. Governments determine the terms of the Royal Charter and, even more importantly, the more detailed agreement between the Secretary of State and the BBC. Government appoint those who are responsible for the running of the BBC, and government set the level of the licence fee without any outside, open and independent verification. Taken together, that amounts not so much to influence but to the potential for real power, and that power comes from the fact that the BBC is established by Royal Charter.

I am not sure that every parliamentarian, let alone the public, knows what that means in practice. After a Green Paper and a White Paper, we expect a Bill, which will be scrutinised by both Houses of Parliament before becoming an Act. That is simply not the case with the BBC. The Government decide. Provided that the BBC and the Government—in practice, the Secretary of State and the chairman—agree, it is a done deal.

The Secretary of State was quite frank when she gave evidence to us. She defended the charter process on the basis that it had always been done that way and said that her paper was a mixture of proposals for discussion and decisions that had already been taken—a mixture of Green Paper and White Paper. To use her description, it was a pistachio ripple—a particularly nasty ice cream which is neither one thing nor another. That sums up one of our main areas of disagreement—the proposals on the governance of the BBC. Those show not only our disagreement on the detail but also the inability of anyone to do anything about it.

Again, in précis, the Government want a BBC trust with a non-executive chairman to take over from the governors and then a management board beneath that, which also, oddly, will have non-executives sitting on it and could be chaired by another non-executive chairman. There are few, if any, examples of non-executives sitting on management boards in outside industry. Indeed, it is difficult to see how non-executives would have the time or availability to sit on an executive board, which, almost by definition, meets more frequently than the main board. But that is the proposal. That is what the Government want to do. What the Government do not want is any increased outside regulation of BBC activities.

Our proposals, on the other hand, are for a BBC board headed by the chairman of the BBC; a management committee headed by the director-general but without non-executives; and an increased role for Ofcom in the area of content regulation and competition. I could argue this at length; suffice it to say that our reservations on the Government's proposals are echoed by a whole range of outside bodies, committees and individuals. Sadly, this is not a matter for discussion. The proposals on governance have been criticised but they are the white part of the pistachio ripple. The decision is taken.

It is for reasons such as this that we propose an important change regarding the BBC. The committee felt strongly that the process for agreeing the BBC's constitution should be open, transparent and not in the hands of one political party. For that reason, we recommended that the BBC's mandate and structure should be defined in statute and not by Royal Charter. The passage of any Act through Parliament is more democratic, more independent and more transparent. It provides for all-party involvement and protects the BBC from the pressures exerted by one political party. The House of Commons is the only forum that can claim to represent all licence fee payers. Certainly we do not want continual interference and change, but we do want increased accountability to the licence fee payer. We should remember that the Culture, Media and Sport Select Committee of the House of Commons came to exactly the same conclusion. So the committees of both Houses are saying the same thing here.

Accountability to the licence fee payer is fundamental. For let us remember that we are dealing with a corporation with an annual income of £3 billion provided by the public—and provided predominantly through the licence fee. That is a vast sum and, as a result, we looked at the basis of the licence fee. We recognise that it is a regressive charge but we came to the conclusion—here we agree with the Government—that the licence fee is the best, or certainly the least worst, way of funding the BBC. To do so through general taxation would place even more power in the hands of government. Changing to advertising would obviously change the whole character of the BBC and that is not supported in the public surveys.

But the licence fee system also imposes conditions on the BBC. We believe that the process whereby the fee is decided should be as open as possible and we certainly believe that the BBC should achieve the very maximum of value for the money received. The public already pay £126.50 a year. The BBC has now proposed to the Government that this should be increased by RPI plus 2.3 per cent, or even RPI plus 2.8 per cent. Even on the basis of RPI plus 2.3 per cent, that would mean a licence fee in 2013 of £150.50 in—I emphasise—today's prices. Making allowance for the estimated increase in the RPI, the figure would be £181.50.

We should be frank. That scale of increase is too high and should be reduced. We see no reason why increases should automatically be on the basis of RPI plus. We see two areas where reductions in costs can be achieved. The first is in the hands of the Government. The Government are proposing that the costs of digital switchover, over the next few years, should be borne by the licence fee payer. They are also making the BBC responsible for giving special help to those who may be unable to afford the personal cost of digital switchover. We do not deny that there will be costs from the switchover, but believe that these costs should be borne by the general taxpayer. The case for helping the vulnerable should come from the budget of the Department for Work and Pensions. In a sense, that case in unanswerable.

The Government will also be gaining receipts from the sale of the analogue spectrum. We may be going from analogue to digital, but that does not mean that analogue will be worthless. The frequencies are a potentially valuable asset, which can be used for mobile and cordless phones, for example. Estimates of value vary, but most are in the range of between £1 billion and £2 billion. As it stands, the Treasury takes the receipts and licence fee payer bears the costs.

The BBC itself needs to make stronger efforts to contain costs, however. A prime example is the proposed move of the sports and children's programmes to Manchester. We support that move. It is an imaginative thing to do. Frankly, however, we find it incredible that the move will cost an extra £50 million a year, with a payback in 25 years. The BBC does itself no favours in putting forward figures of that kind. Work is now taking place to review and reduce them, but it points to a major defect as far as the licence fee payer is concerned. There is no outside, independent, open check of the figures being put forward. The National Audit Office, which already does such valuable work—not least in relation to the World Service—should have its role expanded, so that it can do the value-for-money audits it chooses to, and check on the components on the BBC's bid for licence fee increases. It should look at the costs, and at any increase in income that might come from an increase in the total number of licence fee payers.

In passing, I hope that, at long last, the Government might make some decision on decriminalising the non-payment of the licence fee, an issue which has now dragged on for year after year.

The BBC is protective of its autonomy, and I understand why that should be the case. Equally, however, it has to take into account how public expectations have changed. As in other areas of life, the public expect, for example, their complaints to be dealt with fairly, and for it to be demonstrated that they have been dealt with fairly. In this regard, the present position is utterly confused. If a member of the public is offended by a programme—or even the prospect of a programme—he or she can complain to either Ofcom or the BBC. Thus there were many complaints about "Jerry Springer the Opera"—so many that I even switched it on myself to look. Frankly, it was a very tedious piece of television, but please do not write to me on that point.

In contrast, complaints on accuracy and impartiality are dealt with by the BBC alone. We propose that complaints should first go to the BBC, but those who are dissatisfied can appeal to Ofcom, just as Ofcom operates now for commercial broadcasters. I do not regard that as unnecessary interference in the affairs of the BBC, but simply as ensuring an independent check for the public who finance the corporation.

As I said at the beginning, the committee came to this inquiry as admirers of the BBC. I can well believe that, having listened to what I have said, one reaction inside the corporation might be "If these are our friends, save us from our enemies". That, I think, would be a mistake. This committee wants to see a strong BBC, independent of government. But we also want to see a BBC which is accountable to, and serves, the public who finance it. Our report is about getting that balance right.

I have sought to summarise some, but only some, of our proposals. Even given the very hard work that the committee put in—it has worked extremely hard—there were areas that we were unable to cover before we had to publish our report. I was grateful, therefore, to the House for agreeing to extend our timetable—indeed, the life of our Select Committee—until spring next year. That will enable us to publish a second report on issues such as the BBC's proposed move to Manchester, the World Service and broadcasting of sport and religion, each one an important subject in itself.

Finally, the media—broadcasting, press and the new media—are vastly important. The standards and ownership of the media potentially affect all our lives. It is right that owners, broadcasters and journalists should be put under scrutiny in the same way that the best of the media put politics, business and the rest under scrutiny.

This House is particularly well qualified to carry out that task. It has the experience. There are men and women here who are uniquely qualified and, inevitably, there is rather more experience here than in the other place. This House also has independence. We are not seeking the support of a particular media organisation for our cause. We do not woo the press, the BBC, or anybody else. In the main, I think, we are not seeking quick headlines. That independence could be put to good use in the public interest. There is a strong case for having a permanent Select Committee of this House examining media affairs. There is an opportunity for us to take a step forward here. I hope that opportunity will not be missed.

That, of course, is a matter not for the Government but for this House to decide. I simply hope that the work of our Select Committee is of sufficient standard to show what can be done and that it will add to the case for the kind of permanent committee that I am advocating. I beg to move.

Moved, That this House takes note of the First Report of the Select Committee on the Review of the BBC's Royal Charter (First Report, HL Paper 50).—(Lord Fowler.)

Photo of Lord Judd Lord Judd Labour 11:28 am, 9th December 2005

My Lords, I am sure that the whole House is deeply grateful to the noble Lord, Lord Fowler, and his colleagues for the excellent work of the Select Committee. I am also grateful to the noble Lord for the way in which he has introduced his report today.

When speaking about the BBC, I find it difficult to avoid superlatives. It is a priceless national asset. It is part of the profile of the United Kingdom at its best. At its best, it represents the kind of civilised Britain in which we all want to live. If we say that, it is perhaps not remiss at this juncture to pay warm tribute to all the personnel and staff who, over a long and distinguished history, have achieved this reputation.

The BBC must obviously be jealous of its standards and record. That is why there was inevitably anxiety as to how it would come through the "Hutton wobble", and whether its resolute independence and quality would remain unscathed. Understandably, there were indications of some loss of nerve. It seems that on the whole, however, everything is back on track.

The quality of available information, of analysis and constructively critical intellectual—in its widest sense—stimulation, is central to the sustainability and effectiveness of open democracy. Indeed, it is the lifeblood of democracy. In the increasingly complex context of globalisation, with the tendency to remoteness of so much decision-making and the consequent danger of a growing sense of disempowerment, this becomes more important than ever. The BBC has established a key standard-setting leadership role in responding to this challenge. It is a role that must never be undermined or jeopardised by internal institutional politics, by unsuitable governance and management structures, or by external pressures.

The same arguments apply to the role of the BBC in the struggle to sustain and enhance the quality of our national cultural life and, indeed, the fundamental values which make our society one in which it is good to live. The story of the media as a whole in this respect has always been complicated. On the one hand, there are the commercial realities; on the other, there is the historic duty to sustain democracy. I am sure that I am not alone in reflecting that too much of the media have been drifting down the road towards becoming just another commercial commodity. Too much of the media have become part of the prevailing mores—if that is not to demean the word—of knowing the immediate price of everything but the value and long-term costs of all too little.

Of course the Select Committee is right to call for a wide range of programmes. Exclusivity would compound, not meet, the dangers to which I have referred and outreach and accessibility therefore matter. Programmes should be lively and fun and not unnecessarily dull. But an underlying concern in the Reith tradition of engaging listeners in citizenship should be constant. The BBC must never be part of the cynical trend towards confusing consumerism with citizenship. It must avoid a neurotic preoccupation with ratings, which could too easily drag it into the downward spiral of popularism and dumbing-down. Its public service commitment should, I believe—and here I have a slightly different emphasis from the Select Committee— remain the jewel in a sparkling crown.

I have referred to globalisation. Recent educational work by the BBC in linking schools and communities here with those in Africa and the wider world has been an outstanding example of an imaginative approach. Perhaps at this point I might add that, for me, quality in life includes the style of our human activity and of our personal relations and interaction. We are all distressed by yobbery in our national life. Courtesy and sensitivity can, in my view, enhance, not detract, from the quality of critical probing and analysis. The BBC has an immense contribution to make in this respect.

Reference has been made to the World Service. It is interesting to note those among my friends who listen to the World Service in the United Kingdom because of the quality of what they find there. That is an important tribute to the World Service. It is a challenge to the domestic programmes. Perhaps like others in the House, when I speak of the World Service I have a sense of nostalgia. I grew up in an internationally minded family and a vivid picture of the service stays with me. I remember as a young boy during the war sitting with my father late at night—it was almost a treat—listening to all the national anthems being played one after the other as broadcasting closed down. What the BBC then meant to the cause of freedom and to the survival of values that we all treasure cannot be overestimated. That is a tremendously important inheritance for the overseas service.

In recognising that the BBC service has such an incredible contribution to make, we must also recognise that there are limits to the resources. But I do not believe that too many resources can be made available for the World Service. We must beware of robbing Peter to pay Paul. I understand that it is necessary to establish priorities, but I worry when I see programmes for parts of Europe, for example, closed down in order to finance an Arab service. It may be that the number of listeners in Europe is not so large, but the quality and significance of those listeners to the future of democracy in those societies is most important. The closing down of that service is a sad development. In other words, we would be foolish and highly irresponsible to stint resources for the World Service.

The Select Committee underlined the importance of television in the World Service and I agree with it. However, if there is to be an increased emphasis on television in its role, it must be of the same quality as that established in radio. That means adequate resourses, rather than just a race to ensure that everyone is being covered. I am not sure that the quality of its television role is of the same standard as that achieved in analysis and so forth in radio.

I want briefly to mention local radio. It has an invaluable contribution to make in strengthening local communities. It has an important part to play in public service. In the part of Cumbria where I live, Radio Cumbria was indispensable during the severe flooding last winter. But I also believe that in this age of globalisation and impersonal decision-making, it has a special challenge to relate the international issues and decisions to the local community in ways that it can understand. Thereby, it will help to keep alive participation and faith in democracy.

To guarantee all this, the BBC needs confidence in its robust and transparent independence. It needs the highest possible calibre of leadership at all levels. It needs generous resources—quality does not come cheaply. The licence fee is indispensable, but the Select Committee has raised important possibilities about future finances. It needs accountability for quality, coupled with convincing arrangements for effective accountability for the best possible and most cost-effective use of the available resources. Value for money must be transparent. Clear-cut management systems are also essential. Oversight and systems for accountability should not be confused with involvement and meddling in management. Towards all this, I find the Select Committee's recommendations extremely helpful and thought-provoking. I am confident that my friends in government will feel able to take them very seriously.

Photo of Lord McNally Lord McNally Leader In the House of Lords, Leader, House of Lords, Liberal Democrat Leader in the House of Lords 11:38 am, 9th December 2005

My Lords, I welcome the committee's report. I associate myself with the tribute that the noble Lord, Lord Fowler, paid to the noble Baroness, Lady Howe of Idlicote. It was only the noble Baroness making a thorough nuisance of herself—at which she is very good—which persuaded a reluctant government and House authority to set up the committee. I supported its establishment and its continuance, and I supported the noble Lord, Lord Fowler, as its chairman. His outstanding speech in introducing today's debate, the robust independence of the committee under his chairmanship, and the quality of its work as evidenced by the report before us, make me feel fully vindicated. I also associate myself with his call for an oversight committee to become permanent.

I do not agree with everything in the report, nor would I expect to. The work of such committees is not to bring final answers on tablets of stone, but to test proposals, stimulate debate and allow outside interests a platform for their ideas and evidence. The reports and evidence will fulfil all these functions.

I start by reminding the House of the wise words of the noble Lord, Lord Sheldon, when he said that the BBC was one of the great gifts bequeathed by the 20th century to the 21st. The BBC has been one of the great forces for good in our democracy and our culture and in terms of our social cohesiveness. It has been a template for how we speak to each other and, as the noble Lord, Lord Judd, reminded us, how we speak to the world.

My late predecessor as Leader of the Liberal Democrats in this House, Lord Jenkins of Hillhead, used, in another context, to talk of responsibility as "like carrying a very precious vase across a highly polished floor". I feel the same about the BBC Charter review process.

In my final words to this House at the conclusion of the passage of the Communications Bill, I said that,

"the next stage of this matter—the defence of the BBC and the BBC Charter—is a battle that has to be won".—[Hansard, 8/07/03; col. 259.]

I still believe that we are in a battle for the future of the BBC. I do so because of the strange reluctance of this Government to take pride in the BBC as one of the resounding success stories of public enterprise; I do so because there are massive commercial interests, for whom a weakened and marginal BBC is a major objective; and I do so because there still seem to be politicians in both Labour and Conservative Parties who see Charter review as an opportunity to clip the BBC's wings and settle a few old scores.

I have time to cover only two or three aspects of the report today. So, let me start with the licence fee. There will always be an element of the politics of the souk about the licence fee settlement, but I support the committee's central recommendation in paragraph 299 that,

"the system of funding . . . until 2017 should be through a licence fee".

I am not sure that there is a need for an interim review. If, as the committee recommends, such a review awaits the completion of analogue switch-off, we are then so close to 2017 that it would be far better simply to start work on a post-2017 settlement. We will be told that rapid changes in technology will demand earlier action, but it is the ferment and turbulence caused by technology change which requires a stable BBC as the iron pole around which our public service broadcasting can set standards of quality and integrity in our communications industries.

On the other aspect of BBC funding—its commercial activity—the corporation finds itself in a classic Catch-22 situation. The noble Lord, Lord Smith of Finsbury, when Secretary of State, urged the BBC to maximise its revenue. When, in response, the BBC sharpened up its commercial act, there were immediate squeals of unfair competition. We on these Benches have long argued for greater transparency and separation of accountability in the BBC commercial operations. My noble friend Lord Sharman was instrumental in devising a formula which allowed the Public Accounts Committee some oversight of these matters. We support the committee's recommendation that,

"the BBC fair trading commitment be reformed to ensure that it is clear and transparent and has the confidence of the wider industry".

However, I repeat the Gypsies' warning that I have given in every debate since the paving Bill that established Ofcom: I believe that Ofcom's involvement in the BBC should be kept to a minimum. Ofcom is an economic regulator. It is a very good economic regulator. It is very eager to make the various markets under its control work effectively. What is not in Ofcom's DNA is an understanding that for over 80 years the British people, through their Parliament, have willed a distortion of the market.

Mr Rupert Murdoch has said that public service broadcasting is "a definition of market failure". He is certainly right that public service broadcasting operates to different criteria than the market dictates—just look at the schedules of Sky One and BBC1 to see the proof of that. We are saying to commercial operators that we know ours is a distorted market, and you must come into our market knowing that that is the case. That is what we want because we believe that those distortions deliver public goods which the market is incapable of delivering.

An economic regulator such as Ofcom is not programmed to defend the public interest by market distortion. That is precisely why Mr James Murdoch has argued recently that Ofcom should oversee the BBC. The BBC would then be subject to a "whine a week" from commercial competitors, who have the resources and the lawyers to entangle both Ofcom and the BBC in intimidating and stultifying competition complaints.

At this point let me also make my usual disclaimer about Mr Rupert Murdoch. I have no hostility towards Mr Rupert Murdoch at all. Indeed, if I was a News International shareholder, I would be delighted at the robust way he defends my interest. What concerns me is whether Ministers defend the public interest with the same vigour as Mr Murdoch defends his shareholder interest.

So, let us have a little test. I wonder if the Minister at the end of the debate could list the number of times the Prime Minister or the Chancellor have met Mr Murdoch or other senior executives of News International in the year coming to an end? Or, if he cannot tell us at the end of this debate, could he put a note in the Library? I have to tell the House that No. 10 have not been very forthcoming to my noble friend Lord Avebury when he asked a similar question. But, as the great John Junor used to say in the glory days of the Sunday Express,

"I think that we should be told".

I make one final point. The committee has already visited Manchester, and, as the noble Lord, Lord Fowler, said, that will be the subject of its next report. I believe that the BBC should stop using the move of certain departments to Manchester as a bargaining chip and make a full-hearted commitment regardless of the shape of the final settlement. The contribution that the ITV Granada already makes to the north-west's economy is significant. By an immediate and wholehearted commitment to the region, the BBC could be a catalyst for all the creative industries in the north of England, impacting on Leeds and Liverpool as well as Manchester; and such a wholehearted commitment will win the BBC far more friends than the game of poker it is playing at the moment.

My noble friend Lady Bonham-Carter will deal with whether there is a better way of dealing with the BBC than by Royal Charter. I believe that she and the committee are probably right in saying that there is; and I look forward to her contribution.

In the mean time, I welcome this report as a thorough and stimulating contribution to the charter debate. For more than 80 years the BBC has served this country well. Its system of governance may need some overhaul, but I think that the committee is right to warn against superficially glitzy solutions which have within them the seeds of future conflict. A robust system of governance is important, because I believe that history will increasingly see the Hutton report as a na-ve whitewash, which totally underestimated the need to protect the BBC from hostile political manipulation. That is why we will examine the much delayed White Paper, not only in terms of the Government's commitment to defend the BBC against vested commercial interests, but also in fulfilling its Green Paper commitment to "a strong BBC, independent of government".

All political life is transitory. Even David Cameron will be future past one day. But in each political life there come one or two decisions which transcend any short-term politics. I would have been proud to have been part of that 1924-29 Parliament which saw the establishment of the BBC. We are now carrying the vase it created across a very shiny floor. It is our duty not to let it slip in the months ahead.

Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench 11:48 am, 9th December 2005

My Lords, I thank the noble Lord, Lord McNally, for his comments about my nuisance value and the noble Lord, Lord Fowler, for his kind comments about my rather more inspirational role in getting the committee set up. I particularly want to thank the noble Lord, Lord Fowler, for his excellent, knowledgeable and always good-humoured chairmanship. This was my initiation into Select Committee work in your Lordships' House. I am grateful for the experience, which has given me a wider insight into broadcasting media history, achievements and future prospects than I had enjoyed, even while chairing the Broadcasting Standards Commission.

That experience has further convinced me of the crucial role of the BBC, not just in our own national economic, educational and cultural life, but in its important role internationally. In the UK, as noble Lords know, the BBC is admired and respected by the vast majority of citizens as the benchmark for quality public service broadcasting, while abroad its World Service, which people have called the jewel in the BBC's crown—I certainly agree—is renowned for its accuracy, editorial independence and expertise. We must not forget that all that reflects superbly on how Britain is perceived. But no one thinks the BBC is perfect. To anyone reading our report's criticism of aspects of current or past strategies, quite apart from what our chairman has already said, that is abundantly clear. Commercial broadcasters have some legitimate grounds for complaint and the BBC has acknowledged that a fundamental review of many areas of its activities is needed.

However, in the midst of that unprecedented and still-accelerating period of change, it is vital that we do not between us all make demands on the BBC that will inhibit the corporation's ability to adapt and to continue to exploit for the public good those and other challenges that may occur. Let us not forget either that viewers and listeners are increasingly able to access the material they want via a wide range of devices, including computers and phones, and set their own viewing and listening into their own personal time frame. The effect of that on advertising and much more is still to be seen.

Above all, during this next period of licence fee, the BBC must be allowed to retain enough intellectual and operational independence to develop the plans that it has already outlined for many more partnerships. Perhaps its most imaginative initiative is its plans for a WOCC—window of creative competition. I am sure that noble Lords will watch with considerable interest the rollout of how those valuable BBC archives are used. But at an equally important, practical level are plans for sharing programme-making premises—"creative production hubs", as ITV's Charles Allen has called them—with other broadcasters and independent programme-makers throughout the regions, thereby reducing overhead costs for all concerned.

The BBC should be given credit for its many plans and arrangements—some already well under way—to add even greater public value to its public service broadcasting output, especially in its education and information services, but also in its entertainment services, which, our report stresses, must provide for the whole range of listeners' and viewers' tastes. An excellent recent example of that category is the widespread interest that the excellent programme "Strictly Come Dancing" has achieved.

Returning to the BBC's educational services, we should never forget its supremely important partnership with the Open University, which has enriched so many citizens' lives. Building on that in wider partnerships will enable much more to be achieved.

More problematic areas include the major and vexed question of how the BBC should be governed and regulated in future, which the noble Lord, Lord Fowler, so ably and amply addressed. It must be admitted that the various attempts to work out a more accountable system for the BBC than that proposed in the Green Paper—that includes our own—indicate a general unease with the DCMS/BBC model. Whether or not the Government are prepared to make any changes to their preferred model—surely some are necessary—in today's world, where trust in all organisations has declined, demands for greater public accountability and transparency in how public money is spent have multiplied, even for revered national institutions such as the BBC. I agree with all the comments made about money.

I want to concentrate my remaining remarks on two issues. The first is how complaints from the public on programme content are dealt with. The BBC governors, in an attempt to give better value to licence fee payers, have already set up a more independent internal complaints procedure. That kind of approach is seen as the appropriate first step for dealing with complaints of programme content, whether from BBC or commercial broadcasters, within Ofcom's preferred light-touch content regulation. However, for complaints to the BBC in areas that remain its sole responsibility, today's licence fee payers expect a far more transparently independent and external appeals process.

It has been suggested that an additional regulator with responsibility for that and other purposes should be appointed. Equally, there is growing concern about the setting-up of ever more costly regulators. So, as noble Lords have seen, we have concluded that Ofcom, despite the fact that it is widely perceived as an economic regulator, should take on responsibility for adjudicating on the same range of appeals about BBC programmes as it does for other terrestrial broadcasters. But our report emphasises at paragraph 108 the crucial condition that that could be the solution only if Ofcom's current content board were significantly strengthened and made transparently more accountable to licence fee payers by becoming a semi-autonomous body along the lines of its consumer panel. As noble Lords know, the consumer panel operates at arm's length from Ofcom, has an independent budget and staff, makes independent reports, and has already made a significant contribution to Ofcom's work under the chairmanship of Colette Bowe.

There is another reason why that condition is important. Those who took part in the passage of the Communications Act 2003 will recall that the content board was a last-minute add-on after vigorous concern was expressed on both sides of the House that the citizen, as opposed to the consumer interest, would not otherwise be adequately safeguarded. It is essential that that last-minute add-on should now be given the same transparent, independent status as Ofcom's consumer panel and be seen to take seriously the views and concerns of licence fee payers. I hope that the Government will accept the logic of that. It would also, incidentally, give considerably more added value to the citizen if they had access to more detail of how concerns about privacy and fairness, and the timing of programmes—the all-important watershed convention—are processed, or indeed whether enough quality public service broadcasting children's programmes are being made and transmitted, an issue that, in my day at the Broadcasting Standards Commission, required detailed monitoring.

One experience while chairman of the Broadcasting Standards Commission stands out in my mind. At one gathering of the Royal Television Society's biannual Cambridge conference, I was one of a panel of broadcasters and other media people asked to comment on complaints from the public on taste and decency, and violence, that the Broadcasting Standards Commission had upheld. The audience or delegates—all media people—were issued with voting papers and almost unanimously disagreed with our upheld verdicts. But they did not know, and neither did we, that a poll had been taken of a random sample of passers-by—all non-broadcasters—who overwhelmingly disagreed with the professionals and agreed with the commission's original findings. I tell that story to remind us that it is all too easy for professionals to lose touch with what is acceptable to the viewer and listener.

The second issue is the need for far greater presence and involvement in the nations and regions. The BBC has accepted that, and it looks as though Manchester will be the main beneficiary. The right reverend Prelate the Bishop of Manchester will talk about that much later.

Above all, I am glad that most of those who have contributed their views to the Government on this year's charter review, including our Select Committee, have backed a further 10 years' funding via the licence fee, albeit with a review half way through. It is surely impossible to envisage the changes, challenges and opportunities that will occur during the period of digital switchover, including the possibility already mentioned by the noble Lord, Lord Fowler, that some of the UK's terrestrial commercial channels will be acquired by foreign broadcasters.

The value to us all of having the BBC as "an anchorage of sanity"—accountable, yes, but adequately funded to continue its many unique leadership roles during this period—will not just benefit this country's media future but is likely to be of considerable value to the global communications scene as well. I hope that your Lordships will forgive me if I end by saying that I very much support the idea that has been put forward that a permanent communications Select Committee should now be set up.

Photo of Lord Peston Lord Peston Labour 12:01 pm, 9th December 2005

My Lords, I, too, start by thanking our chairman, the noble Lord, Lord Fowler. Those of us who have had the privilege of chairing committees in your Lordships' House know how immensely difficult it is in particular to get an agreed report. In my judgment he has pulled off a miracle, at least this time, in getting a totally agreed report. I for one take the Green Paper at its face value despite what the Secretary of State says and despite the remarks that it is all a stitch-up. Whether the Government like it or not, they are going to get full scrutiny of the Green Paper, and we would expect in your Lordships' House to get a positive response to the valid criticisms that we make.

As others have said, the BBC is world-class. I know of no other UK institution held in such high esteem in the rest of the world—literally no other. However, I agree, particularly with the noble Baroness, Lady Howe, that that does not mean that it is perfect or above criticism—in fact, quite the contrary. What makes it worthy of criticism is the fact that it is so good. If it was complete rubbish why would we waste our time on it?

I also confess to an earlier error on my part. When ITV was first proposed some 50 years ago, like most economists I took the standard economists' view that there had to be two consequences; one would be a general decline in standards and the other would be a decline in diversity. I will not go into a lengthy explanation of why that economic analysis turned out to be mistaken, but I will simply say that I certainly was mistaken. There has not in my judgment been a general decline in standards, and there has not been a general diminution in diversity. One reason for that is the BBC itself, but it would be wrong in such a debate not to note that ITV and Channel 4 have for many years offered programmes of a very high standard and with a strong public service content. I hope that they will continue to do so. I personally believe that ITV in particular would still find it profitable to meet a public service standard on these matters rather than think that it is costing it too much money.

However, that is still not the same thing as being a public service broadcaster, which is what the BBC is to its core. It is vital that, no matter what happens in the area of technical advance, we ensure the BBC's survival largely in its present form. The committee said—and was entirely right, as others have said—that for that purpose we must retain the licence fee. I am aware of its regressive nature, as the noble Lord, Lord McNally, and others have pointed out, but policies could be devised to mitigate that to a greater extent than we do at present. In broad terms, however, the licence fee was a concept of genius and without it we would not have public service broadcasting. It should every so often be re-examined, but I for one—since it is my professional business to think about these things—cannot come up with a better way of achieving the ends that we have in mind. The costs of collection and enforcement are absurdly large, and something must be done about avoiding that waste.

I go on to the whole question of complaints. As a public service broadcaster, the BBC must almost ex definitione be the body primarily responsible for maintaining standards. That is what we mean when we say, "You are a public service broadcaster". It follows logically that additional regulation must be the last resort and not something that we rush into. In connection with that, first-class broadcasting of any kind in any area will certainly please many, but it is inevitably going to offend some people. There will always be the complainers. My personal view, wearing my professorial hat, is that I would dismiss most complainers out of hand, especially when it is clear that so many complaints have been orchestrated. But we no longer live in the sort of world where from above you can just say, "I am sorry—you are just talking rubbish". We are not allowed to do that any more, so we must have complaints procedures.

I always remind people of the standard cliché that all television sets and all radios sets have switch-off buttons. Remotes do not always work, but mostly they do, and you can switch off there. I would not dream of watching "Strictly Come Dancing", for example, but if that is what others want, they can watch it. I simply do not switch it on. That seems to me the nature of the world that we largely ought to live in, and that we should not give in to the complainers. Nevertheless, we have got to have a responsive procedure of some sort. I believe, perhaps even faute de mieux, following the noble Baroness, Lady Howe, that unless we set up yet another regulatory body, Ofcom seems as good a way of doing it as any.

My next comment—if I am still within time—is on the whole question of value for money of the licence fee. The licence fee payers themselves must manage their resources efficiently and make hard choices. If they choose to do one thing they cannot do another; that is what we all do in our lives. The BBC cannot remotely be excused from that. It, too, must always be under great pressure to be efficient. Therefore, I very much follow what our committee said and what our chairman has said—that at the most extreme an RPI adjustment would be acceptable, but that really cost-minus pressures to increase efficiency are probably an additional force that ought to be at work here. When ITV came to give evidence only this week, it pointed out something that I did not know, which is that the licence fee is per household. If therefore the number of households rises, which is now a sociological commonplace, the BBC gets pro rata a great deal more money. I am not pushing for more one-parent households, but the more households that there are, the more income the BBC will get.

My last comment is on political pressure and criticism of the Government. A vital task in a free society is scrutiny of what government does. That is also the justification for the existence of your Lordships' House. Our report shows clearly that that can be done without political bias. When I talk about criticism of the Government, I suppose that the Opposition too must be subject to scrutiny. I hope that they will not think that I am being too arrogant when I say that scrutinising the Opposition is a much less important function than scrutinising the Government. I therefore think it is simply a logical error to say that the BBC is biased because it is always scrutinising the Government. That is like saying that all of your Lordships' committees are biased against the Government because they scrutinise them and offer criticisms. That is what the committees are there for. If one of them said, "We have looked at this subject and everything that the Government are doing is perfect", we would assume that the committee had not done its job rather than that it was unbiased. So the Government have to accept that the issue of bias does not arise simply because the Government are being criticised. At least that is my interpretation of what a free society is about. The BBC, despite the pressures, has achieved the kind of unbiased independence that may look biased to others but which is really so admired in the rest of the world.

I come lastly to the point about the permanent committee. As I think I have amply demonstrated, what we are talking about is not really my subject, and if there were to be a permanent committee, I would not wish to be a member of it. Therefore, I can say totally objectively that this committee has demonstrated overwhelmingly the value of such a permanent committee and the great contribution that your Lordships could make to broader scrutiny of the media in general.

Photo of Lord King of Bridgwater Lord King of Bridgwater Conservative 12:10 pm, 9th December 2005

My Lords, I join the noble Lord, Lord Peston, in paying tribute to the committee. I have not served on another Select Committee for a long time, if ever—I cannot remember if I have been on one before—but serving on this one has been a most impressive experience. I pay tribute to my noble friend Lord Fowler for the way in which he chaired the committee and for the extremely well written report—his previous experience may have played its part—which was extremely well spoken to in this debate. It has given the attention to this issue that the importance of the BBC deserves. I join all noble Lords who have spoken in recognising that in the BBC we have a most precious national asset.

The Government, who at the moment exercise total power over this matter, have a very heavy responsibility to make sure that they do not take any steps that might damage the significance, importance and value of the BBC to our country and, as the noble Lord, Lord Judd, said, to the world. When the committee visited Germany, we asked for critical comments about the BBC. The Germans always started by apologising and saying, "You must remember, they set us up". Public broadcasting in Germany recognises very clearly, and is conscious of the debt that it owes to, the traditions and quality of the BBC, which it admires very much.

Of course, our purpose is not simply to be cheerleaders. We have a duty to scrutinise. It would take too much time to repeat what my noble friend Lord Fowler said. The BBC cannot be above criticism; it must accept fair scrutiny; it must respect the fact that criticism comes from friends and admirers who want to see success continue; and it must not simply believe that it will always continue without criticism. The licence fee involves a difficult judgment. With the increasing number of channels and choice that exists in broadcasting, there are bound to be questions as to why people who never watch the BBC should be required to pay that fee. Yet, as the noble Lord, Lord Peston, said, it is an invention of genius. I think that there is universal recognition that there is no effective alternative and that the licence fee should stay.

But at what level should the fee be set? We are allowed to anticipate, even if the evidence has not been published. The Times has published the comment made by Mr Charles Allen, the ITV chief executive, who said:

"If the BBC got anywhere near the increase they are asking for, it would be ridiculous".

I shall not enter into the judgment on that. The answer has to be independent scrutiny, so that the BBC has a validation for requests of that kind. It should not be considered a threat. I was chairman of the oversight committee of the intelligence services, which had exactly the same thought: "We can't possibly have these people overseeing us". Ultimately, MI5, MI6 and GCHQ began to appreciate that outside validation and oversight is a strength and not a threat when it is approached in the right way and you have confidence in the representations that you make. When the BBC faces major challenges and major calls and demands on its finance, outside validation is essential.

If I have a criticism of the committee's work so far, it is that in certain respects we were technologically challenged. We were undoubtedly helped by the presence of the noble Lord, Lord Maxton, who reminded us of the amazing developments that are around—a number of which some of us had never heard of. There is no question that we realised that we face a sea of new opportunities and challenges of quite extraordinary dimensions and that an explosion of variety now exists. My noble friend Lord Fowler referred to our great experience. Many of us, but not all, are of the older generation who are challenged by a number of these developments.

We established, particularly from the evidence that we took in Bristol, that there are real uncertainties about the changeover from analogue to digital. There is a lot of discussion about averages—what the average coverage will be; what the average is that exists under analogue; and what the average will be under digital. But within those averages is an enormous number of people in different places, many of whom are elderly and vulnerable, who may find real difficulties, may feel completely lost and fear that they may lose a very valuable source of communication. For all the surge of broadband that seems to be moving forward, there are real problems coming.

On one issue there was fundamental disagreement and, most disappointingly, I do not agree with what my noble friend Lord Fowler said in his speech, although I know why he said it and he may be right; namely, that the decision is taken on the governance of the BBC. This cross-party, cross-experience committee—everybody—thinks that the Government are going the wrong way and are not being sufficiently careful to protect the prospects of the BBC or to recognise the strength of the BBC, which could be a very damaging decision. The reality is that we have found no one who agrees with the Government, except for people in the Government.

I re-read the evidence of Michael Grade, the newly appointed BBC chairman; he said that it was,

"not the route we would have chosen . . . I think we can make it work".

I missed this at the time, but I have just re-read that he also said:

"There are lots of people with theories on how the BBC should be run, quite often from people who have never actually run anything".

I noted down, "quote DCMS". When one looks at how these things originate, who produces them? Conscientious officials, many of whom have never run anything in their lives, put forward a proposal, get the rolling power of the Government behind it with their majority votes and persuade busy Ministers who are occupied with other things and may not have been closely involved on the subject before. Suddenly we find that that is what we have got.

I think that Charles I would have been proud of Secretary of State Tessa Jowell's staunch proposal to keep Parliament out of it—stick to the divine right of Kings or Secretaries of State. The idea that it is best done by Queen in Council and Privy Council is an outrageous proposition. Our definition in the report is not quite right. It gives the impression that Privy Council is a pretty active body. It states that,

"only Ministers of the democratically elected Government of the day participate in its policy work".

I did not know that the Privy Council had any policy work. It continues:

"Its day to day business is transacted by those of Her Majesty's Ministers".

What is the day-to-day business of the Privy Council? It meets once a month standing in front of the Queen, nodding properly. I do not think that I am breaking the oath of a Privy Counsellor in disclosing the terrible secrets of the Privy Council. It is a perfect cover for a government to do exactly what they like, which is why we are having this debate. There will be no other parliamentary process. This is our only opportunity to get this point across. There is sad evidence, including Sir Christopher Bland saying that he disagreed with what the Government were doing, that the battle is lost. Even my revered chairman has said that he thinks that the decision is taken. I hope that we can still fight this issue. There is not a single person—neither of the past two chairmen of the BBC—who believes that it is right. The reality is that this proposition emerged at the worst possible time. It emerged in the chaos that existed during the worst spat between the Government and the BBC. Something had to be done and "here comes a proposition".

I do not want to be misunderstood, and there is no criticism of the individual concerned, but it concerns me as a former member of the Nolan committee, and I wonder whether I am the only person who is worried that officials move from the DCMS, which put forward the proposals, into jobs in the new structure at the BBC. There is an issue of integrity of government here and I say to Ministers very seriously that it needs to be looked at very clearly.

We are going forward with a structure that no one from whom we took evidence believed to be the best—the current BBC chairman said that it was not the one that he would have chosen—and that those who have brought any outside experience of trying to run another organisation do not believe will work. We are going to have two chairmen of the BBC, so who will identify who is really responsible? There will be a supervisory board, but it will be part regulator, part supervisor and a real muddle. I hope that that awful pistachio ripple will be promptly melted down and that we will get back to a clear structure of governance. I hope that this national asset that we all value so much is not exposed to some temporary new management arrangement that could be absolutely disastrous. I warn the Government very clearly that we will watch this very carefully. If they do not change the plan and it goes forward like this, on their own heads be it. It is a recipe for conflict and for real trouble in the future.

Photo of Lord Holme of Cheltenham Lord Holme of Cheltenham Liberal Democrat 12:21 pm, 9th December 2005

My Lords, I join the tributes that have been paid to the noble Lord, Lord Fowler. It is true that we would not have had an agreed report without his shrewd and genial chairmanship. I am most grateful for it, and for the way he introduced the debate today. I should declare an interest as a former chairman, following the noble Baroness, Lady Howe, of the Broadcasting Standards Commission and as an adviser to ntl.

I do not think my speech can compare with the splendid fighting speech of the noble Lord, Lord King, but, like other noble Lords, I look forward to the Government's response to this debate because I think that the notion that we have a done deal is absolutely deplorable. I think that for two reasons; first, because I believe that the committee is right and the Government are wrong and, secondly, but just as importantly, because that is not the way that things should be done in this parliamentary democracy. It is for Parliament to arrive at a proper resolution that the Government, if they are sensible, respect and will think about again.

Why are we right? First, because we make a proper division between regulation, governance and management, and I urge it on noble Lords who think about issues of governance. If those three streams run together, as is proposed in the present arrangements, it will be a recipe for bad outcomes. Secondly—here I disagree with my noble friend Lord McNally about Ofcom; fortunately in the Liberal Democrats disagreeing with your leader is not a hanging offence, or, at least, I hope that it is not—it seems that in its relatively short life Ofcom has reached maturity and is operating well and making good decisions. I remind noble Lords that Ofcom is not an economic regulator; Ofcom is a broadcasting regulator—indeed, it is a communications regulator. That was discussed at length in your Lordships' House and we quite specifically identified that Ofcom had a duty to us as citizens and not just as consumers. What is more, as the noble Baroness, Lady Howe, reminded us, we put in a content board. If Ofcom is to play the role of last resort—and it is a role of last resort, as the noble Lord, Lord Peston, said—it is extremely important that that pillar, if you like, of the content board in Ofcom is strengthened in the way that the noble Baroness described. If that condition is met, I think that it is far better that that ultimate regulation happens in a regulatory body and that the BBC is responsible for its own governance and the executive of the BBC is allowed to get on with managing it. Then we have a model that has some chance of working.

In the light of the Government's attitude so far, we are all the more right to go for a statute rather than a Royal Charter. But if that is the case, it puts a heavy responsibility on Parliament. We all know that the disadvantage of Parliament being the body of accountability and the body that discusses the statute is that it is not immune from fits of moral panic, and we do not want our great BBC exposed to the dangerous dogs effect. So how do we effectively insulate Parliament? One of the ways is to establish the sort of committee that has been recommended by one or two noble Lords in this debate.

I shall spend my remaining time talking about the sustainability of the BBC as we look ahead in this entirely new and rapidly changing world of communications. Like the noble Lord, Lord Judd, I am a child of the BBC age. During the war, I remember listening to the news—which was "the news" and not "the BBC news"—and asking my grandfather, "What's on the news when there isn't a war on?". I am giving away my age, but I remember "Norman and Henry Bones"—in which I think the Shakespearian tradition of girls being played by boys was reversed with one of the boy detectives being played by a girl—and "Dick Barton: Special Agent". They were an important part of my childhood. We have all seen the BBC evolving over the decades from Reithian paternalism to Dykeian populism. We have seen great changes in the BBC in our lifetime but, on the whole, they have been the changes necessary to adjust to the age. So I am speaking from enormous personal affection for, and dependence on, the BBC. I want it to thrive and survive in this new global market of digitisation, technical innovation, convergence and unprecedented competition. What does it take to make the BBC survive?

In my view, several attributes are needed for sustainability. First, we must have a leaner BBC. The BBC is still in many ways not just a great broadcaster, but also a great bureaucracy. In many ways, it has mirrored the Whitehall departments that have tried to interfere with it over the years and has created a matching bureaucracy. We must see a shift in the BBC to an inflation-minus model for bureaucratic costs and, to the extent that we tilt the budget of the BBC, it must be towards its output and production, not towards its bureaucracy. We need a business model that works for the BBC in this new competitive age because, beyond the licence fee, into the misty future, it is quite clear that for the BBC to be a successful organisation, it must be as lean as any commercial organisation in performing its functions.

Secondly, we need more focus in the BBC's programming. One of the interesting things about the transition, which the noble Lord referred to, from the monopoly of the BBC to the duopoly of BBC and ITV in the 1950s and 1960s, was that the BBC felt obliged to be universalist and to check off competition wherever it popped up. Therefore, we had masterly schedulers in the 1960s and 1970s in the shape of people such as Brian Wenham and Michael Grade himself who knew exactly how to fight across the schedule and make sure that the new commercial interests were kept at bay in the interests of preserving a large BBC audience. From that, we have produced a BBC that feels that it has to do everything in every genre and on every platform and has to be everywhere. I do not believe that that is the right decision for the BBC. I think that the BBC has to produce high-quality programmes that are the best in their class and focus its efforts more closely.

Thirdly, the BBC needs to look at the emerging global market. There is an enormous demand for high quality, English-language broadcasting. The demand is almost infinite. The BBC has made some efforts, but it has not made enough effort or the right effort. Many people have said that maybe the BBC should at some point in the future morph into more of a global publisher of high-quality programming, but if we are to do that, we must take full advantage of the demand from all over the world for high-quality English-language content. In that context, I yield to no one in my admiration for the World Service; we are now looking at the question of whether the Arabic channel should be paid for by cutting valued services in other languages.

All that comes under the rubric of something called public diplomacy. I am very unsure about the notion of public diplomacy. I am sure that the Government know all about it but, to me, it suggests a lot of distinguished old coves with stars and garters on exchanging gossip over the gold-wrapped chocolate. That is just a personal impression. To the extent that the World Service has a public goal, it must be to spread the values, culture and civilisation of this great country around the world and, in the process, produce revenue that can help the British licence payer.

Finally, the BBC needs to be more politically independent in the context of accountability. Freedom implies responsibility, and the BBC, in striving for independence, needs not just to produce its current affairs and news in the context of debate and a theatrical adverseness. We get enough of that in our politics already. We need from the BBC a greater attempt to encourage civic understanding. We certainly need to remove the pressure points that the Government use on the BBC: the appointment of the chairman; the renewal of the charter; and the licensing of new services. Our report deals with all three.

If we can have a leaner BBC, a more focused BBC, a more globally exploitative BBC and a more politically independent BBC, it will have a sustainable future not just for the whole of this century but in the next one as well.

Photo of The Bishop of Manchester The Bishop of Manchester Bishop 12:31 pm, 9th December 2005

My Lords, I readily add my voice to the views already expressed about the excellent chairmanship of the noble Lord, Lord Fowler, and about the noble Baroness, Lady Howe, who ran with perseverance the race that was set before her. The committee and the Government clearly agree that the BBC is a national treasure and, as the noble Lord, Lord Peston, said, has rightly earned world renown; and that maintaining such a reputation requires a BBC that is strong, independent, and well able to take advantage of the rapid changes in the media world, continuing advances in technology and the increasingly competitive communications environment.

It is enormously important that the Government, in seeking to enhance and develop the BBC's role and governance, does not—as the noble Lord, Lord Holme, put it, by producing the wrong recipe or, as the noble Lord, Lord King, put it, by going the wrong way—diminish the corporation's ability to deliver. It would be a tragedy if, in trying to make the BBC better, the Government ended up making it worse.

Evidence of the BBC's ability to remain a world leader in broadcasting is measurable in several easily quantifiable ways, but that ability ought also to be assessed in terms of values, to use the word used by the noble Lord, Lord Holme. I mean values such as inclusion, cohesion and other principles that should still shape the role of the chief public service broadcaster.

It is an irony that, so soon after the first ever definition of public service broadcasting was enshrined in the Communications Act 2003, there should in several quarters be questions about its purpose and prophecies about its demise. However, as we approach digital switchover and the prospect of vast numbers of dedicated channels—not to mention the explosion, as the noble Lord, Lord King, put it, of online communication—the role of the BBC as public service broadcaster, providing programmes across the range, becomes more not less important.

I hope that the Government will continue to insist that the BBC is not the only public service broadcaster and to recognise that its delivery will be enhanced by a healthy balance of competition and complementarity between different broadcasters with a public service remit. Of course, the BBC in particular exists to serve all citizens, all licence fee payers—to provide something for everyone. The Government will need to give careful attention to those who are economically, geographically, educationally and socially on the margins so that they are not excluded from the digital revolution by stealth, accident or design, and especially not because of low income. If not, we will end up with a disfranchised underclass.

As the noble Lord, Lord Fowler, said, decriminalisation of licence fee default is long overdue, but a host of further problems lurk round the corner over how many elderly and disabled people, including those with learning and sensory difficulties, will be able to benefit from the digital switchover. Even for the general population, it is desirable not to have to rely on a child to find a programme that they want to watch. As noble Lords have said, if the funding for the switchover were to come from the Government, rather than the licence fee payer, there might be better flexibility in dealing effectively with some of those genuine difficulties.

There is a phrase that has long been common usage in the Church about the need to do things "decently and in order". I have to say that that is not quite as easy as it used to be, but if that is true of the Church, how much more it will be so for the broadcasting environment. It is clear, not least because of the growing impact of the Internet, that control and regulation of content will become much more difficult. That prospect makes even more unsatisfactory the weak position of the content board, as it is at present. As the noble Baroness, Lady Howe, rightly said, if the content board is to become effective, it needs to be given the kind of significance that the consumer panel has. I endorse the importance of strengthening the content board, as the noble Lord, Lord Holme, said. When we consider the relationship between Ofcom and the BBC, we must recognise that there is some honing to do of Ofcom's role vis à vis the internal organisation of the BBC. However, it will be utterly important to remember that the prime duty is to safeguard the interests of the licence fee payers.

Alongside the vast technological changes that are already altering the broadcasting ecology, there is a cultural shift that, in its way, is equally significant and which will have its impact on programme making in the coming years. That is the way in which a complex mixture of the breakdown in our society of authority, trust and control; the increasing importance of personal narrative; and 9/11, 7 July and other world events, along with other factors, have created a climate of inquiry. Films about the meaning of life and programmes that probe life's value are now on the agenda in a way that they have rarely been before.

I do not want to pre-empt the second part of the committee's report, but the point would be relevant anyway. The BBC, in exercising its responsibility to reflect our nation as it is—with, for example, a huge increase in young people of all faiths and of no faith taking religious studies GCSE—will need to provide well informed, probing broadcasting about issues of belief and of non-belief in order that we may learn and gain from different viewpoints, understand each other better and perpetuate that spirit of tolerance which has characterised our nation at its best and is the only effective counter to the extremes of fundamentalist and unthinking faith and non-faith that will, I fear, sprout on many a dedicated channel.

Broadcasters, and especially the BBC, have the opportunity, as the noble Lord, Lord McNally, emphasised, to promote cohesion. Broadcasting therefore ought to reflect society as it is and not some artificial construct or segment of it. I know from my experience of Manchester's different faith and non-faith communities how important knowledge and understanding are to good relationships. In fact, they are vital when we face community tragedy or anger and need to hold together peacefully. At the same time, as the Archbishop of York has pertinently said, it is important that, not least through our broadcasters, we celebrate our British identity and its Christian heritage as a means of healthy but not uncritical self-understanding. Television, especially, has a major role in that. As EB White famously said:

"I believe television is going to be the test of the modern world, and that in this new opportunity to see beyond the range of our own vision, we shall discover either a new and unbearable disturbance of the general peace or a saving radiance in the sky. We shall stand or fall by television".

Noble Lords will not be surprised to know that, as Bishop of Manchester, I think that the BBC's idea of a Manchester move is excellent. It will further aid regeneration in the north. The Northwest Regional Development Agency is utterly committed to it, and in any case it is important that broadcasting is not dominated by London and by what is sometimes called the metropolitan mindset. The "shared hub" idea with ITV and the independents is a wonderful opportunity, even though it has to be said that the BBC does not always appear to have a good reputation within the industry when it comes to sharing. There is also a danger of the window of creative competition feeding the big independents and not benefiting the smaller, regional ones. The initial financial projections on the Manchester move seem very high and, as noble Lords have said, need rigorous examination. I agree with the noble Lord, Lord McNally; Mancunians do not like being used as bargaining chips.

In the light of the revolutionary and exciting changes ahead for all broadcasting, including online and other areas of communication, I too hope that the Government will give serious consideration to the proposals already made across the House for establishing with a much wider brief a permanent Select Committee.

Photo of Lord Maxton Lord Maxton Labour 12:41 pm, 9th December 2005

My Lords, I join in thanking the noble Lord, Lord Fowler, for his chairmanship of the committee. It was polite, always tolerant, and he took account of everyone else's views. He may not consider it a great compliment, but having served on the Select Committee for Culture, Media and Sport in the other place, I can say that his chairmanship compared very favourably with that of the chairman down there. If I have one minor complaint, it is only that at least on the Culture, Media and Sport Select Committee in the other place we went to Hollywood, Seattle, New York and Sydney. This committee visited Bristol, Cardiff, Manchester and Belfast.

What is surprising both in terms of this debate, the Green Paper, our report and the report of the committee down there, and of every witness who appeared before us, is that no one has suggested that the charter of the BBC should not be renewed and that the licence should remain as its major financial means. That is a compliment to the BBC because it is one of the world's greatest broadcasters. It must continue independent of government and commercial pressures, funded by a licence fee.

The BBC is not perfect. While I agree with my noble friend Lord Peston that it is not biased, in its news coverage it sometimes presents a rather cynical and ill-informed view of the political process that does nothing to help democracy in this country and, indeed, probably contributes to the low turnout in elections. Perhaps I may say in passing that if we are to achieve an open, free and democratic society, those who report and influence the political process should be subject to the same rules as politicians and public officials. That applies particularly to the BBC which, after all, is funded by public money. The Nolan rules on the declaration of interests should apply to all those who work in the news-gathering and reporting process in the BBC and, just like everyone else employed in the public sector, should be subject to freedom of information legislation.

Colleagues on the committee will not be entirely surprised if I do not follow them down the route of looking at the governance of the BBC. We have basically agreed that it is to continue. Ten years ago when I served on the committee down there, we did not hold the same unanimous opinion; people did think the BBC should change. So what we now have to look at is what the BBC will be doing in the new, changing technological world and whether we are going to renew its charter again in another 10 years. That is a question we already have to start asking.

The report makes it clear that it is difficult to predict what the shape of the broadcasting and communications industry will be 10 years from now, but we can make reasoned guesses based on the present state of technology. If we go back 20 years, there was no digital television and no Internet—well, the CIA and the US Army had it, but no one else did. We had only a very limited number of analogue TV channels and few radio stations. Even 10 years ago the Internet was slow, limited and almost entirely restricted to a very few geeks like myself. Sky had started, but still had only a small percentage of the population as subscribers. Today, as we renew the charter, we have a choice of multiple television channels—if we subscribe, of course; and even those who buy only one box still get multiple channels—and many radio stations.

But we are already moving on to the next stage. We are moving from the world of multiple channels to the world of multiple choice, and there is a considerable difference between them. Personal video recorders like Sky+ and other even more sophisticated boxes allow subscribers to record large numbers of programmes and watch them when they wish and, if they have wireless technology in their houses, where they wish. Some can even be programmed to eliminate advertisements and to record programmes or even types of programmes with only one command. If you are a "Coronation Street" fan, you can set your machine to record every single episode that is ever put out, and then watch them where and when you want. Someone like me can record rugby not just on one channel but wherever it is broadcast across the whole range of channels. As a cable subscriber, I was recently offered the ability to watch BBC programmes at any time during the seven days after they are first broadcast, and to watch whole series like "Bleak House" at any time I want. I can fast forward, pause and replay at will, as if I was playing a DVD or a video.

The rollout of broadband Internet services is happening far faster than anyone predicted. Only two years ago BT rolled out its first one-megabyte service. The size of the broadband increases almost month on month. Twelve months ago I was receiving two-megabyte broadband from my cable company; it is now 10 megabytes for the same price. In South Korea and Japan, most television and radio is provided down broadband cable at up to a 50-megabyte width. Those of us with Internet access have for several years been able to listen to streamed radio stations from around the world. Television will soon be doing the same thing; indeed, the BBC itself already does some of that. And for those who say, "I do not want to watch television on a computer screen", let me say that it can be transferred to a television set or you can do it through your computer on to the set. In London, in some ways the most interesting development is Home Choice, which offers a package of TV on demand, including all the standard channels plus all sorts of other programmes, broadband Internet and a telephone service, all delivered down a standard BT telephone line.

We are also witnessing a revolution in devices that we can hold in our hands and carry in our pockets. I have an iPod, so I can listen to my music wherever I like. iPods will soon have video on them and will be able to record programmes. To be honest, we also have much more sophisticated devices than those, which we call mobile phones. They can be used for that purpose as well, if we wish.

No one knows what the next big breakthrough in terms of technological advance will be, but happen it will. Therefore I am surprised that no one seems to be asking about the role of the BBC in all this. In my last minute or so, I shall set out briefly what I think it should be. First, the BBC will have to continue in its traditional role of providing high-quality television for the normal, scheduled channels, although scheduling will eventually disappear altogether.

Secondly, it must be allowed to develop streaming services on the Internet. The BBC has a superb, innovative website and it must be allowed to stream its programmes—both radio and television—and make its tremendous archive available as well. That is one of its major roles. It will not only be the people in this country watching; everyone around the world will be able to watch it.

Thirdly, and perhaps most importantly, the BBC will become a producer and commissioner of high-quality programmes and a whole range of dramas which will be available for sale around the world. This will have an enormous impact, not only for the BBC's income but as a platform that other BBC media companies—and, indeed, other British companies—will be able to exploit for their own purposes.

In my view, the switchover from analogue to digital is being carried out by the Government with a technology that is out of date now and will be even more out of date by 2012. This is not the right way to do it. This will leave many people with an extremely limited television service that does not carry high definition and will not be interactive.

I shall finish now because I am aware of the timescale and that other people wish to speak. I hope the Government will look again at this issue, particularly with regard to the telephone. It would be cheaper to provide the few people who do not have a telephone with a free telephone line rather than go down the road of digital terrestrial television. I urge my Front Bench colleagues to think again on that matter.

Photo of Baroness Buscombe Baroness Buscombe Spokespersons In the Lords, Education 12:52 pm, 9th December 2005

My Lords, I very much welcome the report from the Select Committee chaired by my noble friend Lord Fowler. It has produced some constructive proposals that, if implemented by the Government, would introduce more transparency and rigour into the reforms to the governance and regulation of the BBC. It is a clear analysis based on a significant amount of evidence from a vast array of companies and individuals.

I intend to focus my contribution today on the big broadcasting picture: the BBC's role and position in the wider market place. This is crucially important because we cannot look at the BBC in isolation. The BBC is strong because its competition is strong. The broadcasting ecology in the UK, with the BBC funded by the licence fee, on the one hand, and commercial broadcasters by entirely separate sources of revenue—advertising and subscription—on the other, has been an excellent model that has delivered strong competition, quality and pluralism. It is essential that we make sure that this balance in the broadcasting ecology is maintained in the decade leading towards and beyond digital switchover.

Part of this is about carefully defining the BBC's public purposes and its place in the broadcasting mix; part of it must also be about the level of funding the BBC requires to achieve its public purposes. This must be assessed against the resources available to the rest of the market place. Only by achieving a balance between the two can we guarantee true competition and plurality of services. There has been considerable debate about the first, but not yet about the second.

I genuinely believe that great strides have been made, in the Green Paper and by the BBC itself, to propose ways in which the BBC can be more accountable and transparent. Service licences to establish clear remits for all BBC services are vital so that everyone is clear about the purposes and boundaries of each and so that the performance of each can be clearly measured. I believe service licences must apply to all existing services, as well as the BBC's new services—from its planned new, highly localised TV and "Where I Live" website services to the wide range of activities that sit within its online remit; from its Creative Archive and mobile phone services to programme downloads such as MyBBCPlayer. I find it odd that the BBC proposes that these should go through the public value test but do not need their own service licence because they would all be grouped under the online remit.

There has been widespread concern in recent years about the extent to which the BBC has been able to roll out large-scale services funded by the licence fee, with different media operators—from broadcast, to online, to local newspapers—all expressing concerns about the potentially damaging market impact and the threat to pluralism and competition. Consequently, an externalised market impact assessment must be, to my mind, a core and fundamental part of the approvals procedure for new services and should extend to significant changes to existing services. I am nervous about the extent to which the proposed BBC trust could disregard it in favour of the "public interest", and I think that if a market assessment indicates that the launch of a new service will risk stifling a new market, then that new service should not be launched.

Incidentally, with regard to the proposed trust and reform of governance of the BBC, I have nothing to add to the brilliant remarks of my noble friend Lord King. I associate myself entirely with them. It is clearly a done deal—although, if one looks at the Secretary of State's response to Question 1826 in the evidence, it is clear that even she has not quite worked it out and is looking for help as to how it can work in practice.

As regards funding, in principle I support the BBC being funded by the licence fee over the next decade, but I am totally against the licence fee payer paying for switchover for all the reasons stated by the committee. In addition, this is an extremely important political game that the Government are playing. Switchover is not an easy, popular policy, particularly among older voters, so how convenient it will be when things go wrong—as they will with a project of this magnitude—for the Government to say, "Oh, it is out of our hands. It is the responsibility of the BBC. It is paying for it". Please, BBC, if you are listening, do not forget Hutton; do not be used to fund and therefore— they will say—manage government policy. I thought you wanted to be truly independent.

There has been extensive debate and consultation focusing on the terms of Charter renewal. I welcome that. However, in contrast, there has been a marked lack of public debate and consultation about what level the licence fee should be set at. Before the last licence fee settlement, the Davies panel was convened to take evidence and conducted an extensive public inquiry on the future funding of the BBC. It made an assessment of the BBC's funding needs in the context of the wider market place and, to me, this is crucially important. This time the BBC has made its bid publicly but the Government appear to be considering it and negotiating with the BBC behind closed doors.

I am pleased that the committee has challenged the inflation-busting licence fee hike except in exceptional circumstances. I do not believe the BBC has yet adequately demonstrated its case for such an increase. Indeed I question whether it should have an above-RPI increase at all.

The BBC has embarked on extensive efficiency savings, and that is to be welcomed, but I am not convinced that in its calculations it has taken full account of the potential savings it could make over the next licence fee period and the additional revenue it could capture from household growth. Perhaps the licence fee should fall in real terms over the period.

Secondly, there needs to be more transparency and debate about the BBC's figures, which seem to be based on predicted rising costs for existing services and an assumption that it will be going ahead with all its plans for new services, a number of which still have to be approved. Last time round was at a time of commercial buoyancy, with rising advertising and the dotcom boom, and the licence fee was in part set at a level that would enable the BBC to compete. An advertising recession followed, creating strains in the broadcasting ecology as the advertising-funded broadcasters struggled to maintain revenue equality with the newly cash-rich BBC. The situation is now reversed, with greater commercial competition, a tough advertising market and uncertainties about the longer-term effectiveness of advertising as an important revenue stream for commercial broadcasters.

So, by the end of period, it looks as if the BBC, with its proposals, would receive more money through the licence fee than the total TV advertising revenue for all TV channels. That is rather more than a distortion. It could have very damaging consequences for other broadcasters, with knock-on damaging effects for consumers in terms of choice and plurality. A BBC with this kind of income, combined with reduced outgoings, will cause unacceptable distortions across the entire market. Add to that the BBC's continued disregard for the terms of its own fair trading commitment—advertising BBC books immediately after "The Archers" on Radio 4 last week being a classic and all-too-familiar example—the potential for distortion cannot be overstated. There should now be a public inquiry about the level of the licence fee so that it is pegged at the level needed to fund the BBC's services. The Government should also bring forward and prioritise their review of the rest of the market. The Green Paper envisages that that would take place towards switchover, but that is much, much too late.

I am disappointed that the committee has not come up with any firm proposals for the future of Channel 4, suggesting that its position should be kept under review. We must not wait until the channel is in a weakened position before taking action. Perhaps in its second report the committee will consider tangible support mechanisms to underpin its future, bearing in mind that its competitors are busy positioning themselves via consolidation for the increasingly competitive environment of the newly converged world.

In conclusion, the Government should address the issue of financing across the PSB spectrum earlier rather than later. The commercial sector has played and continues to play an important role in providing choice to the British public and delivering public service programmes and other services in addition to what the BBC can offer. We need to explore, well before 2011, how this very beneficial situation can continue after switchover.

Photo of Baroness Bonham-Carter of Yarnbury Baroness Bonham-Carter of Yarnbury Spokesperson in the Lords, Culture, Media & Sport 1:01 pm, 9th December 2005

My Lords, I add my thanks to the noble Lord, Lord Fowler, for the expert way in which he guided the committee through the various stages that led to this report. As he said, it was a bit of a forced march, but we emerged with our tempers intact. For me, a relative newcomer to this House, it has been a fascinating and formative experience.

This charter review comes at a critical time for the BBC and for broadcasting as a whole, because of past events—the fallout from Hutton exposed flaws in the way the BBC was governed and in its relationship with the Government—and because of the events that are unfolding so rapidly, by which I mean the digital revolution. Along with all who have spoken so far, I want a strong, independent and securely funded BBC, equipped to meet the challenge of the digital age.

I must declare an interest. I worked at the BBC for 10 exciting years and am presently an associate of an independent production company. Consequently, I know the BBC as an insider and an outsider. It is clear to me that one of the problems of the recent past has been a certain inability of some inside the BBC to see it as those outside do. Over this period, it has expanded its activities greatly, creating a world-class website and setting up new digital channels as well as diversifying, as my noble friend Lord Holme and the noble Baroness, Lady Buscombe, said, into areas in which its involvement is questionable.

The BBC has been described by one of its former executives, Tim Gardam, in an image taken from Walt Disney's "The Jungle Book", as,

"like a well meaning herd of elephants, stomping through the jungle, trumpeting its achievements, each executive holding onto the tail of the one in front. They are undoubtedly a force for good, but unfortunately can be oblivious to what might get crushed under their enormous feet".

The process leading up to charter renewal has seen a daintier BBC emerge, more akin to the dancing hippos in "Fantasia"—a BBC happy for a public value test to be applied to all proposals for new services, and for new services to have a clearly defined remit set out in a service licence. This is to be welcomed, but it is essential that it is fairly administered and, as stated in our report, there should be a right of appeal to ensure that in the years ahead, in a world of multiple media platforms, and away from the pressures exerted by charter renewal, the BBC does not slip back into old stomping habits.

Another area in which the BBC has suggested reform of itself is in its relationship with the independent sector. Content, by which I mean programmes, is going to be all-important in a world of multiple channels. The licence fee must be used to finance the best ideas and the best talent to provide this content. That is why the BBC's suggestion of a window of creative competition is so important. As the Director-General, Mark Thompson, said:

"You can't reorganise the BBC without at least one new acronym, so this is the famous WOCC".

It will mean that on top of the 25 per cent of programming the BBC is required to commission from independent companies, there will now be a further 25 per cent for which indies and in-house producers can compete.

First, while accepting the need to maintain a strong and confident in-house production capacity at the BBC, it must be seen to honour the WOCC. Commissioning must be separated from production, and the process must be transparent.

Secondly, the programmes commissioned from the independent sector must reflect range, diversity, cost and regional variety. It cannot be an opportunity for the BBC simply to cosy up to a few London-based "super-indies". That would defeat the object and potentially harm Channel 4, whose source of programming comes solely from the independent sector.

Mark Thompson says that he believes,

"that what will stand out in this extraordinary, unfolding world is content: exceptional, distinct, valuable content".

I believe he is right and that the BBC, working and competing with the independent production community across the UK—where talent abounds—will achieve that. However, whatever the talent, the multi-channel landscape of the digital future, as the noble Lord, Lord Maxton—the committee's techno-wonk—said, the future poses particular challenges to the role of public service broadcasting. The BBC is the cornerstone, but it must not become a monopoly supplier. As the noble Baroness, Lady Buscombe, said, it is vital that Channel 4 is not left to flounder for lack of finance. Top-slicing of the licence fee is not the answer. It would compromise Channel 4's unique independence and the BBC's unique link with the British public. At the moment, Channel 4 has guaranteed access to the analogue spectrum; in the future, it will need free-to-air digital terrestrial capacity. The Government need to seriously consider allocating spectrum to Channel 4.

The committee's report is entitled The Review of the BBC's Royal Charter, but it concludes that the charter, and how it is agreed, is outdated and that the BBC should be placed on a statutory basis by Act of Parliament. Many noble Lords have already been eloquent on the matter, but I would like to add a few thoughts.

During this charter review, there has been public consultation, an independent report and two Select Committees. The Government do not have to listen to any of their recommendations. As the noble Lord, Lord Fowler, said, the Green Paper was a pistachio ripple paper. In other words, what we said on certain matters, including governance, will not even be considered. As the noble Lord, Lord King, said, Parliament is not involved. This, the Government argue, means less political interference. Does that mean less political interference than the party of government having total control over the charter and the related agreement? I simply do not understand that logic.

The BBC likes the fact that the charter is for a fixed term, allowing it to plan for the long term. It fears the intrusion of amending legislation. But would it not be perfectly possible for an Act to contain a clause, agreed by all parties, to ensure that it expires every 10 years, making it statutory for the Act to come before Parliament every decade—in other words, a sunset clause?

The present Government are well disposed towards the BBC, but there is no guarantee that that will always be the case. The future is full of pitfalls for public service broadcasting as defending the BBC becomes potentially more difficult.

Despite the great expertise of the noble Lord, Lord Birt, on this subject, the Government did not allow him to give evidence to us. However, I agree very much with something he said in his McTaggart lecture this summer:

"Over and beyond its inherent value, public service broadcasting has made a major contribution to the success story which is modern Britain".

It can continue to do so with the BBC at its heart.

Photo of Baroness O'Neill of Bengarve Baroness O'Neill of Bengarve Crossbench 1:11 pm, 9th December 2005

My Lords, I too wish to add my thanks to our chairman, the noble Lord, Lord Fowler. Your Lordships' House is full of people who are rather experienced at taking the chair. The Select Committee was a class act and it was a speedy act; that is to say, we came on the scene rather late in the day. A great deal was already in the public domain in the way of proposals for charter renewal or alternatives to charter renewal at the point when the Select Committee began its inquiry. The issues were of course complex.

Looking at the range of positions taken, I find remarkable the high degree of agreement there nevertheless was about the objectives. We did not dispute any of the widely held objectives. We thought throughout that the quality of the BBC, including the accuracy of its reporting, must be preserved; that accountability to the licence fee payer must be strong, indeed stronger; that independence from government and from commercial interests must be secured and maintained; that the corporate strength of the BBC must not be used to undermine commercial broadcasters or small, independent producers. Moreover, we were well aware, although not all of us were techno-wonks, that these objectives would have to be met through the period of digital transition and beyond.

As the House has heard, we concluded that these objectives would not be best achieved by implementing the proposals set out in the March 2005 Green Paper, Review of the BBC's Royal Charter. A strong BBC, independent of government. We did not of course disagree with the idea of a strong BBC independent of government; it was the assumption that the renewal of a Royal Charter was the highway to that objective that we came to query.

I shall comment today only on the relative roles of governance and regulation. Other noble Lords have said a great deal on other aspects of these matters. I do not underestimate the importance of strong management or the thought that strong management also includes strong financial disciplines. Broadly speaking, we thought of governance as particular to institutions, where those with responsibility for governance are charged with holding those who manage to account. For an institution as large and as influential as the BBC, governance is a very large task, commensurate with its complexity. We noted that the BBC had already taken steps to strengthen the role of the governors, indeed to change the name, and to consolidate their independence from management. We noted also the Government's proposal, but we thought that more could be done. In particular, we thought that the governors or the trust or the board, whatever it comes to be called, had to take greater responsibility for ensuring not only the BBC's independence from government, but the standards of its work. That may seem obvious, but we were all too well aware that the Hutton report centred on allegations of BBC inaccuracy, to which the then governors had responded by defending the BBC's independence, but without taking steps to check the accuracy of the disputed matter. Their focus was always on independence and not on accuracy. We concluded that measures for securing accuracy, including the prompt correction of mistakes that inevitably occur in reporting, need not in any way compromise independence.

We have put forward various proposals for strengthening governance so as to combine independence and accuracy. They are hardly novel. Central to what we recommend is that the BBC bind itself to the same standards of process and conduct as have been introduced elsewhere in public life, and that these be central to its governance and through its governance to its management. I give two illustrations.

We propose that the selection panel that appoints the Chairman and board members of the BBC have a majority of non-political members and be chaired by a non-political member who is not a civil servant; that it work to the Nolan principles which are ordinarily understood and respected now; and that it recommend a short list of one to the Prime Minister. That number is important.

Secondly, we recommend that the BBC seek to ensure that the Nolan principles for conduct in public life are strictly observed within the BBC. Those responsible for BBC programming should stand down from making a programme or a report wherever they have a direct, financial conflict of interest. They should be required publicly to declare their relevant interests. A website would make that easy. They should have the same standards for recognising conflict of interest—namely, that an interest would reasonably be perceived as influencing their reporting and programme making—as the rest of us are required to observe in public life. These are nowadays the routine disciplines of public life. We saw no case for thinking that influential programme makers, managers or journalists should continue to be exempt from them, least of all in the BBC.

Complaints about the BBC are another matter. At present, the responsibility for adjudicating complaints is divided a little awkwardly between Ofcom and the BBC. This needs clarification. As in other areas of life, it is entirely reasonable to provide a way of appealing those complaints that are not resolved to the satisfaction of the complainant to a more independent body. The choice of Ofcom is simply to avoid the needless multiplication of regulators. It is essentially a minor adjudicative matter.

However, we concluded that ensuring the accuracy of the BBC's reporting is and must remain a central governance issue, and not become a regulatory issue. Regulators cannot ensure accuracy and they cannot monitor output for accuracy on a day-to-day basis. Ofcom will not become Reuters. Even a marriage of Ofcom and Reuters could not carry the task. More broadly, quality is a governance issue and not a regulatory issue, because regulators cannot ensure quality or monitor quality on a day-to-day basis. The distinction is that complaints affect individuals—it is part of consumer protection to provide a complaints procedure. Ofcom is well placed to take that on. But good broadcasting that is of a high quality and accurate, is a public good which is not secured by a complaints procedure.

Noble Lords will have detected a slight area of uncertainty in some of the comments of members of the committee about the role of Ofcom in so-called "content regulation"—we should always keep scare quotes around the phrase "content regulation". We agreed that if Ofcom develops a stronger content board—that is very much for the future—it might be able to take on a stronger role as a so-called "content regulator" for BBC television and radio, parallel to the role it takes with respect to other public service broadcasters. However, the type of content regulation assigned to Ofcom by the Communications Act 2003 is quite limited. It is more concerned with policing a limited number of prohibitions and ensuring that broadcasting broadly fits certain defined public service broadcasting quotas and commitments than with quality or even accuracy of content within those quotas. Although Ofcom has explained that it will,

"examine issues where the citizen interest extends beyond the consumer interest"— and I hope that it will do so—the forms of content regulation that it will then be equipped to take on will not in any way reduce the need for the BBC to treat quality and accuracy as fundamental matters of governance. Ofcom's additional competence for so-called "content regulation" with respect to the BBC would still lie within the competences assigned by the Communications Act, and those in charge of the BBC would therefore still have the primary, central and fundamental responsibility.

It has been curious to conduct this inquiry while knowing that it is widely said that the Government have already reached conclusions on the most fundamental matters. I can only hope that they will also listen to the arguments that we have put forward.

Photo of Baroness Gibson of Market Rasen Baroness Gibson of Market Rasen Labour 1:20 pm, 9th December 2005

My Lords, I begin by thanking the noble Lord, Lord Fowler, for chairing the Select Committee in a most efficient but relaxed manner. I have thoroughly enjoyed working with him and other colleagues on the committee. I had not had the pleasure of working with him before, but I would not hesitate to do so again.

It has been a learning curve for me as I have listened to the BBC itself, its friends and its competitors giving us evidence and, on occasion, advice. I have always been a keen supporter of the BBC in its entirety, and I have previously spoken in its support in this House. My belief in the BBC has been reinforced as we have taken our evidence. The BBC seeks to inform, educate and entertain, and it succeeds. As has already been said, it is a great part of our culture. We should be justifiably proud of it—and we are, as today's speeches show.

Our aim during this review is to decide whether the Government's Green Paper proposals will deliver a strong BBC, independent of government. Our first conclusions are the proposals in this report, and I join with others in hoping the Government will treat them seriously. I agree with much in the Green paper, but there are some issues with which I disagree, as does the committee. I want to confine my remarks to the proposals relating to the board of governors, the BBC Chairman, the complaints procedure, and, finally, the effect of change on BBC staff.

I will start with the need for clarity about the role of the board of governors. I do not support the proposals in the Green Paper, outlined so clearly by the noble Lord, Lord Fowler. I believe that these proposals would be both confusing and unwieldy, and I am not alone. Respected witnesses who gave evidence to us enhanced this view. The noble Lord, Lord Burns, highly respected for his knowledge of governance, did not believe the proposals go far enough in relation to the separation between governance and regulation. I agree. Sir Christopher Bland described the proposals as,

"an uneasy compromise between a regulatory body and a two-tier kind of governance, as in Germany".

I agree. I totally support the committee's proposals for two clearly distinct bodies, and I am sorry that, even before we have finished our review, the Government seem to be indicating that they will stick to the Green Paper proposals. I ask them most sincerely to think again.

In the same way and for the same reasons, I do not accept the proposals in the Green Paper relating to two chairmen of the BBC. There would be obvious problems with this proposal. For example, to whom would the chief executive report? If there were conflicts between the two chairmen, who would adjudicate? Michael Grade and Sir Christopher Bland, both knowledgeable and expert witnesses, talked of the proposals as "a recipe for conflict" and spoke of "two chairmen raising difficulties". Again, I support the report's proposals for one chairman of the BBC board, with a majority of non-executive members on that board. This would sit above a BBC management committee chaired by the Director-General and consisting of senior executives. Such a format would be clear and uncomplicated in comparison with the Green Paper.

I turn to the handling of complaints at the BBC. I know that the BBC complaints system has been reviewed already and that alterations have been made, and I welcome that. However, the Green Paper proposals could cause unnecessary complications. It is vital that, if complaints are made, they are dealt with quickly and openly. Only then will there be confidence in the system. To allow complaints to be made to both the BBC and Ofcom is not a helpful recipe for such confidence. Our belief is that the BBC should be able to answer all complaints against it in the first instance. If that does not bring satisfaction to the complainant, a single transparent and, above all, independent body should be available for complaints on BBC content and services to be appealed and finally adjudicated. Perhaps this could be Ofcom; I have a question mark over that. Again, the need for clarity in such a system is paramount.

Finally, as a former trade union official, I obviously have in mind the workers in the industry as we contemplate changes within the BBC. This applies in particular to the proposals relating to the BBC World Service and their effects upon staffing. The World Service is a flagship for the BBC, and highly respected around the world. The unions representing BBC workers recognise that as the political and cultural world changes, so must the World Service. It is therefore seen as logical, as the BBC put it in a letter to the committee last October,

"to review the non-English services in areas where the media marketplace is less developed, and where audiences have a greater need for impartial independent sources of news and information", such as the Middle East.

This will obviously affect the workforce. The BBC has pledged to support all staff facing redundancy as they search for alternative employment, and I understand they have agreed a compulsory redundancy package with the unions under the auspices of ACAS. However, there will be no compulsory redundancies until December 2006, and there will be what is described as:

"appropriate compensation for eligible staff".

As our review continues, so will the BBC's reorganisation of the World Service, and I hope the transition will be as painless as possible for those affected.

Photo of Lord Dubs Lord Dubs Labour 1:27 pm, 9th December 2005

My Lords, I welcome the Select Committee report. I join in the congratulations to its members, and above all to the noble Lord, Lord Fowler, as its chairman. It has given us much to think about, although I do not find myself in complete agreement with all of its recommendations. I certainly welcome the opening statement of commitment to the BBC, its importance and the respect for it worldwide. Although we are tempted to pat ourselves on the back a bit too much, the BBC is surely one of Britain's greatest institutions.

I want to say a word of thanks to the staff at the BBC, who always make themselves readily available to anyone in Parliament should we want to discuss issues. They have meetings here; it is easy to pick up the phone and have a word and get some clear answers; and Michael Grade and the governors put themselves out to make themselves as accountable as possible. They should be thanked for that.

It is obviously a view shared by everyone that the BBC's independence of government is essential. Its reputation would be seriously damaged if it were not seen to be independent. I have thought hard about the Select Committee's suggestion that it would be better if the BBC's remit were changed or reviewed, as it were, through legislation, rather than through the charter.

It is a point of balance. If this were to be done by legislation, it would be up to the Government to find legislative time for a Bill every 10 years or so. That might be the victim of general election timetables and so on, so there would be an element of uncertainty in the process of reviewing the BBC Charter. On the other hand, doing it the way it is done now gives us a lot of chance for debate, but not much opportunity to influence in detail and amend the way the system would work. So, on balance, I veer to the Select Committee's view that it would be better done by legislation, although I see some difficulties with that. There would have to be clear commitments from governments—and how can we get a commitment from a future government?—that they would stick to a timetable and not allow such renewal legislation to be the victim of other political considerations.

It is clear that the licence fee is the best and, at the moment, the only way of funding the BBC. I am always concerned when I hear voices suggesting otherwise—for example, that there should be some pay-as-you-view system. That would be dangerous for the BBC and would not be satisfactory. Those of us who believe in the position of the BBC and its high reputation maintain that the licence fee has enabled the BBC to establish itself and to do as well as it has done.

I have long believed that the setting of the licence fee should be a process independent of government. It makes no sense at all for the BBC to be vulnerable to political pressures, surely implied rather than explicit, but nevertheless political pressures which might influence the way in which the Government approach the setting of the fee. I am talking about all governments, not just the present Government. The process of setting the licence fee should be independent of government and open and transparent. I envisage something roughly comparable to the independent Monetary Policy Committee of the Bank of England. Such a committee would be in a position to consider representations by the BBC under various headings of expenditure—not just a global sum—and recommend whether the element of the licence fee that was appropriate to each heading was justified or should be a lesser sum. I concede that in exceptional circumstances the Government would have to have the last word on the size of the fee. If, for example, there was a major political row on the level of council tax, and the Government were taking steps to keep it down in a particular year, it would be a bit anomalous if an independent committee suggested a whopping big increase in the licence fee. But subject only to that proviso, I think the process should be independent.

I note the Select Committee's recommendation that the licence fee should be set by the NAO. That certainly goes a long way towards meeting the point I have just made. Before I comment further on the licence fee, I should say that I believe it would be proper for the NAO to scrutinise all BBC expenditure, and not just for it to have the more limited scrutiny powers proposed by Lord Scarman. Some time ago I talked to a former head of the GAO in Washington who said that he had the right to pursue the federal dollar wherever it went through whatever agency of government in whatever way. I believe that the NAO should also have such a responsibility with implications for BBC expenditure. I consider that would be proper. However, there would have to be a safeguard that the editorial independence of the BBC would not be prejudiced by such NAO investigations. But, all of that is not the same thing as setting the licence fee. The licence fee is not just a matter of financial efficiency and prudence but also involves judgments about programme content, likely audiences, the case for establishing new stations and so on. I am not certain whether the NAO is currently best equipped to undertake those wider functions. However, I concede that it is hard to envisage what other body would undertake this task. Setting up an entirely separate body would be ludicrous given all the staff who would be needed and so on, particularly as the work of setting the licence fee is not even across the year. It happens at intervals, not even annual intervals but every few years. It would be ridiculous to set up a separate body to do that. I go down the NAO path provided that its resources are strengthened to accommodate the need to deal with other matters than that of financial efficiency with which it is concerned at the moment.

I turn to BBC governance and Ofcom. Of course, we want good management and effective regulation. It was wrong that up to now governors were both regulators and had overall responsibility for the BBC. That involved a conflict of interest that was surely unacceptable. I believe that is agreed by everybody. The Select Committee wants Ofcom to regulate all of the BBC. The BBC is already regulated by Ofcom as regards a lot of content, going back to the Broadcasting Standards Commission's remit—the body I chaired for a time. Although I used to think that Ofcom should regulate all of the BBC, I have moved the other way; I share the view of the noble Lord, Lord McNally. Ofcom has done a great job. I congratulate it on the way it has dealt with its tasks. It has done that superbly well. It had a difficult bedding in which it handled extremely effectively. I give it full marks. But Ofcom is a regulator of the private sector. It is not easy to see how there can be a cross-over between regulating the private sector and regulating a body that is manifestly not a private sector body—which is what is so special about the BBC. That is too difficult a task to give Ofcom. I would prefer to have a structure—therefore, I go along with the Government rather than with the Select Committee—whereby the trust became in the main the regulatory body. I would not, of course, take away the present Ofcom functions regarding content regulation. I believe that would be a better way forward than the tripartite method suggested by the Select Committee. I say that because of Ofcom's success in dealing with the private sector. I believe it would be better to leave regulation to the governors as established by the trust and have a management structure as suggested by the Government rather than going down the Select Committee path.

Photo of Lord Gordon of Strathblane Lord Gordon of Strathblane Labour 1:35 pm, 9th December 2005

My Lords, I join your Lordships in welcoming the report and paying tribute to the chairmanship of the noble Lord, Lord Fowler. The committee has served the House well, not least in the way in which nine members of the committee have justified the committee's findings in today's debate. They have also remarkably addressed separate aspects so that, with the single exception of the justifiable tributes to the chairmanship of the noble Lord, Lord Fowler, there was very little repetition among them. Each one handled a different aspect, which has greatly enriched the quality of this debate. They have fully made the case—if, indeed, it needed to be made—that we need a permanent Select Committee on broadcasting and communications.

In a modern democracy the only encounter between the governed and the governing occurs in the media. It is vitally important that they do not become the weakest link in the democratic chain. We need a committee to look at that on a regular basis. I want to make four basic points, the first on governance. Throughout the passage of the Ofcom legislation I argued that the BBC should be fully under Ofcom and that Ofcom should be structured with that in mind. I concede that some changes would have to be made to Ofcom to ensure that it was capable of having the BBC as part of its remit. I adhere to the view expressed then that it is in the BBC's own interest that it is fully under Ofcom. To leave it partially excluded from Ofcom leads to an increasingly convoluted management system within the BBC which will impair the optimum delivery of BBC services on a day-to-day basis and still leave many people unhappy that the BBC somehow still remains judge and jury.

We should all remember that the BBC is already fully under Ofcom in respect of tiers one and two with the single and somewhat bizarre exception of impartiality for the Secretary of State. I never regard politicians as great guardians of impartiality but the Secretary of State is the guardian of impartiality in that regard. How can a Minister ever make up his mind on whether a new service should be sanctioned or refused without regard to the ecology of the whole broadcasting system, of which Parliament has decreed Ofcom as the guardian? The system I have mentioned makes sense for everyone concerned and then we can get on with the important distinction made by the noble Baroness, Lady O'Neill—all of the key issues are governance issues not regulatory issues, and those should be left with the BBC to enable it to go on doing the very good job it currently does.

The second point I want to make concerns the licence fee. It is refreshing that very few people have argued against the licence fee, however difficult it is to justify a universal imposte on people who may not use the BBC at all. It probably should be called the television licence fee, not the BBC licence fee. There might be a debate about that at some time. The quantum of the licence fee is another matter. I prefer the solution of a committee being set up on a periodic basis to look at the whole situation and come up with an answer. I, together with the noble Lord, Lord Lipsey, who is due to speak immediately after me, was a member of the Davies committee which did exactly that a few years ago.

It is worth remembering that the settlement that emerged was more generous than that proposed by the committee. The BBC licence fee was going to be "RPI-minus" for the past two years. Therefore, moving to "RPI-neutral" was a benefit in itself. Adding 1.5 per cent compounded the situation, in fact it was a somewhat over-generous settlement and has caused a degree of unnecessary dissatisfaction among the BBC's competitors in broadcasting.

The issue of the licence fee also relates to the scope of the BBC's services. There is difficulty with that because no one can criticise any of them in isolation, except that they impact on other people who are also trying to provide services. I adhere to the fundamental point that has been echoed by many noble Lords: public service is not the monopoly of the BBC. Indeed, we live at a point in time when, not only in broadcasting but throughout business, more and more people lay greater emphasis on corporate social responsibility. People are realising that doing good for the community you serve, as well as the customers you serve, is to your advantage in the long run. Therefore, in those circumstances we must be careful that we do not have a sort of "mission creep" from the BBC whereby the effort to provide public service starts not only in broadcasting but in various other ways, all entirely laudable, but that essentially prevent someone else doing that worthwhile job. So we must be careful of that.

The final issue that I want to raise was alluded to by my noble friend Lord Maxton. I would have liked the committee's report to expand on the section, "Building digital Britain", because I really do think that huge issues are raised by that. Until 1990 the transmitters were owned by the BBC and the Independent Broadcasting Authority. The independent television companies were not allowed by government to own the transmitters. It was felt that ownership of the transmitters was important. That changed in 1990 and they were privatised. The BBC's transmitters are now owned by Crown Castle, an American communications company. I do not know whether that is important. Incidentally, the BBC was allowed to keep the proceeds of that privatisation to help the digital switchover and I hope that that sum is accounted for when we consider what more might be required to achieve that.

My point about digital transmitters has two elements. First, does it matter who owns them? I am agnostic about that, but if it does not matter, there is a second question: is digital terrestrial transmission the best way forward? If in the days of Lord Reith in 1926 we had had broadband with its current capacity, satellite transmission and cable, would we have set up a network of digital terrestrial transmitters? I live in an area that is not remote but is outside the main conurbation of Glasgow. The cost of the transmitter that serves our area was huge. It benefits my household and a few others, but it was set up as part of the public service remit because, after all, universality of provision was a key ingredient of public service—that transmitters should reach everyone, no matter what the cost. We are huge beneficiaries of that in the part of the world that I come from in Scotland. The cost per head of transmission is high; but we now have other technologies. Is it right that we should ask the BBC, which is platform-neutral regarding the provision of its programmes, to support only one platform which is, arguably, the least effective one for the future? Finally, that could be the subject for the next inquiry of our Select Committee on broadcasting and communications.

Photo of Lord Lipsey Lord Lipsey Labour 1:44 pm, 9th December 2005

My Lords, I join those noble Lords who have complimented the noble Lord, Lord Fowler, and his team on their report. It certainly justifies the enormous effort that the noble Baroness, Lady Howe, made to get them set up. Since I shall, rather disobligingly, focus on an area where I am a bit chary of their recommendations, I should say that I agree with most of their report. In particular, I am delighted with their remarks on the National Audit Office and its freedom to check BBC projects for value for money. That door was pushed ajar during the debates in this House on the then Communications Bill and, if this report is accepted, it will at last be wide open.

Anyone who studies the BBC's traditional governance is struck by the illogicality of its functioning. The same body of men and women—until now, the governors—were responsible for being both the cheerleaders and the policemen of the BBC. I first studied these matters when I sat with my noble friend Lord Gordon of Strathblane on the Davies committee. We concluded that the position was "problematic", which I certainly did not feel to be an overstatement.

Things have moved on since then. Reforms of governance were introduced by Mr Davies himself during his chairmanship of the BBC; there were further changes in the run-up to the Green Paper; and now we have the Green Paper proposals. The noble Lord, Lord Fowler, has harsh things to say about those proposals, which introduce a degree of separation between governance and regulation but not full separation.

To balance the argument, because powerful arguments on this have been advanced, I want to make three brief points. First, to me—it may just be that I am not very clever—governance and regulation are not easily totally separated in the way that the report suggests. Today, we think more and more that good regulation, in the phrase of the great economist, John Kay, is about value-based and not rule-based regulation. But value-based regulation has to come from within a governance structure and permeate the organisation from there rather than being imposed from outside.

My second point concerns Ofcom. I echo the remarks of the noble Lord, Lord McNally, and my noble friend Lord Dubs on this and want to add a further point. Anyone who tries to follow Ofcom will see that it is deluged with paper, consultations and decisions, including very complex decisions in what we used to call the telecoms field. It is a stretched organisation, although I think that it has performed beyond most of our expectations. At this stage in its life, I rather doubt whether it would be a good idea to plonk the added responsibility of the BBC on its shoulders. I say that simply because BBC matters inevitably tend to dominate any organisation that is concerned with it. The BBC is always high-profile and highly contentious, and I am wary of diverting Ofcom down that path. Although, in giving evidence to the committee, the noble Lord, Lord Currie, gave a kind of nod to wanting the responsibility, from rereading his words I thought that it was a very half-hearted nod.

I turn to my final point. Human institutions are rarely wholly logical. Indeed, if they were, we should not be having this debate this afternoon. There are other virtues besides logic in institutional design, and long and successful performance is one of them. I do not go so far as to defend the present governance arrangements, let alone those that existed in 1999. If the Scott inquiry showed anything, it showed their inadequacies. But, equally, I am against swinging to the other extreme and starting again with a new design—even one with such penetrating intelligences behind it as the noble Lord, Lord Burns, and the noble Lords on the committee of the noble Lord, Lord Fowler.

The Green Paper conclusions have one virtue that should not be underestimated. Neither BBC conservatives nor BBC reformers like them all that much but mostly they think that they can live with them. They may not be for all time. But they seem to me to have rather more to offer for our time than the noble Lord, Lord Fowler, and his colleagues have so far conceded in this debate.

Photo of Lord Clement-Jones Lord Clement-Jones Spokesperson in the Lords, Culture, Media & Sport 1:50 pm, 9th December 2005

My Lords, I add my congratulations and thanks to the noble Lord, Lord Fowler. I can do that with even greater force at the end of a debate when he and his committee have elicited such a magnificent collection of lively speeches. It has been a fascinating debate, and an extremely well informed one. We should all feel extremely grateful to him.

Like the overwhelming majority of the public—and, clearly, the majority of noble Lords who have spoken today—I am a passionate but not uncritical supporter of the BBC. As we have heard, the BBC has, over the years, been at the forefront of quality broadcasting. It delivers a huge range of local and national quality services on radio, television and the Internet for the price of a licence fee, which all the polls show that the British public are very happy to pay.

Over the years, and particularly in recent times, the BBC has had to adjust to change. It has become rather skilled at adapting to change. It was first to encourage the use of computers in schools. More recently—as many noble Lords, particularly the noble Lord, Lord Maxton, have mentioned—it has promoted the whole range of technology, such as Freeview and the new digital channels, DAB radio, BBC online and, of course, more recently, podcasting and streaming. I am sure that everybody is getting to grips with the latter two in particular. We are now seeing a dramatic uptake in digital television, largely as a result of some very bold decisions made by the BBC.

I have been extremely fortunate in my career, in having had a grandstand view of—or close encounters with—many of the individuals who have played a key part in the development of the BBC over the past 15 years. In the mid-1980s, I worked at LWT with almost all those who had a major influence: the noble Lord, Lord Birt; Greg Dyke; and Michael Grade. There are many stories to tell about how they all got on within the same institution, which each of them successively has had such a big part in influencing.

Noble Lords, I think without exception, have today expressed their concern to retain the independence of the BBC. Implicitly or explicitly, the Hutton report and its aftermath are only too present in our minds. I hope the noble Lord, Lord Peston—I read some of his evidence—would agree that this has not been a rehash of the Iraq war, or anything of that sort. We need to keep the dangers of government interference and news bias at the forefront of our minds, however. We have had enough bad examples of this. My particular horror story is Fox News, whose viewers in the US, when surveyed, seem to live in a parallel universe. They believe that weapons of mass destruction have been found in Iraq. They believe that the US had the support of the rest of the world in invading Iraq, and that there were proven links between al-Qaeda and Saddam Hussein. That is quality news broadcasting we should beware of.

In that context, paragraph 26 of the report is important. It is worth repeating. It states that the events surrounding the death of David Kelly and the subsequent inquiry by the noble and learned Lord, Lord Hutton,

"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".

That is an important conclusion of the committee. Pressures on public service broadcasters will grow, so the governance and regulatory structures will be ever more important and need updating. The financing of the BBC must continue to guarantee independence.

The charter renewal process has given rise to some high quality reports, as we have heard today: the report of the noble Lord, Lord Burns, the independent adviser to the Government—I, too, am sorry that he has not managed to take part in today's debate—the BBC's response to the Green Paper; the Green Paper itself; and now, the icing on the cake, the Select Committee report.

We should be able to have a genuine debate on all the areas covered by the charter. Many noble Lords have expressed outrage about this. I share that outrage. It is unfortunate that the White Paper has been delayed, but it is doubly unfortunate that the Government have attempted to ring-fence parts of that debate, not least in the structure of governance and regulation. That is where the greatest debate lies and we should be able to deal with it at greatest length. Indeed, the committee probably did so.

Definition, demarcation, regulation and governance are vital. I agree with much of what was said by the noble Lord, Lord Lipsey, but I do not agree that it is not possible clearly to define what is meant by "governance". The committee managed that very well. Many noble Lords have made the point that we are talking not about dealing with day-to-day complaints in a regulatory body, but about a court of last resort, as mentioned by the noble Baroness, Lady O'Neill. We are talking about ensuring that commercial activities are operated competitively as regards market practices, fair trading and so on and that the BBC generally sticks to its overall remit under the charter.

The Government, in their Green Paper, postulated that those two functions of regulation and governance can be merged within the BBC trust and be the successor to the board of governors in taking over those roles. Despite that, the Government have decided that the issue has White Paper status and is not subject to change in the debate. I can add to the Select Committee a list of those who have disagreed with the Government. It includes the Government's own independent adviser, the noble Lord, Lord Burns, who believes that governance and regulation must be separated out; Sir Christopher Bland; and Greg Dyke, let alone those on these Benches.

In principle, the regulation of the BBC needs to be carried out separately from governance. It has been interesting hearing different sides of the argument and we disagree on who carries out that regulation. We believe that there should be a public service broadcasting regulator and others believe that there should be a separate BBC regulator. Of course, the committee believed that the overarching function should be carried out by Ofcom. I agree with the noble Lords, Lord Burns, Lord Dubs and Lord Lipsey, and my noble friend Lord McNally—this is strong testimony—that Ofcom is not the right body to carry that out. The testimony of the noble Lord, Lord Burns, was especially strong on that. The job that has to be done with the BBC is sufficiently different from the job Ofcom does with the commercial broadcasters that there is a strong case for having separate organisations. There should be a separate body. The noble Lord, Lord Burns, also believed that the Government's proposals did not go far enough in separating governance and regulation.

In the face of government unwillingness to debate the issue, it is hardly surprising that the Select Committee recommended that the charter should be replaced by an Act so that there would be some genuine parliamentary debate on the content of the licence. The proposition may not be wholly persuasive at this stage, but it definitely needs examination and discussion. The more that the Government try to close down debate, the more plausible will become the argument made by Select Committee for an Act of Parliament.

I fully understand the desire for a charter to provide certainty—indeed, we strongly support a 10-year licence for the BBC. However, I wonder whether the use of the Royal prerogative—that is what it is—without Parliament being able to debate the context of the charter, is appropriate in modern times. Perhaps in this House we have greater faith in parliamentary scrutiny than they do in the other place. On other aspects of governance proposals, Greg Dyke described the idea of an executive committee with a non-executive chairman and other non-executives as a recipe for warfare. With his experience in commercial life and in the BBC, that is strong testimony. Ultimately, it all seems to be set in stone and we all wait expectantly for the Minister to tell us whether that genuinely is the case.

On funding, we agree with the Government, as did the Select Committee, that we should continue with the licence fee. I am not sure that I would go so far as the noble Lord, Lord Peston, and talk about the concept of genius. It is as good as it gets, but I am not sure about the genius element. And it should not be top-sliced to pay for other public service broadcasting. There is the timing of the licence review issue. But, on any basis, we on these Benches believe that any new system should not come into place, even if agreed, until 2017.

However, with funding—a number of noble Lords have made this point—goes the need for public accountability. We agree with the idea of the NAO being responsible for securing that accountability for public funding. The noble Lord, Lord King, made that point extremely well. On the other hand, we on these Benches do not believe that it is fair or reasonable to expect the licence payer to pay for digital switchover. I thought that the noble Baroness, Lady Buscombe, made that point very well.

But, if you have a public service broadcast regulator and you have a situation where the BBC does not have a monopoly of public broadcasting, which is highly desirable—I am as big a fan of Channel 4 as I am of the BBC—you have to work out how we pay for it. If we have to subsidise other public service broadcasters, how do we go about that? We have had some suggestions of an enhanced licence fee, the top-sliced fee which I have said we are opposed to, and some, like Ofcom, have suggested the idea of a public service broadcaster. But for that to work means a new source of funding and, of course, we are not there yet. There is still great uncertainty about what source of funding that would be—is it sales of the analogue spectrum? Who knows, at this stage? We need to wrestle with that issue at a very early stage.

One very interesting thing—it often happens in debates like this where we are so taken up with certain aspects of the charter—is that we have not talked in great detail about what public service broadcasting is. I thought that the Green Paper, if I dare say it—it is one of the few really good things about the Green Paper—properly dealt with that. The definition of PSB in that was well set out, because you cannot win. Basically the BBC often gets berated for having too-high ratings, and in that case it is too popular and competing too heavily with ITV, or its ratings are too low and therefore it is not a popular channel in terms of public appreciation. It is either too highbrow or too popular. I might as well declare that I am a fan of "Strictly Come Dancing", along with a number of other noble Lords, and I think that that fits perfectly into the public service broadcasting remit.

A number of noble Lords have made important points about the commercial activities of the BBC. There is a borderline area between public service broadcasting and commercial activities—and ITN and a number of commercial broadcasters are extremely interested in where that divide comes. It is extremely important that the BBC should not be immune from competition law where it engages in commercial activities. So we support a continuing role for Ofcom on competition matters and a remit in that area, despite the fact that there would be a separate public service broadcaster. Greater definition will become increasingly important over the years with clips on mobile phones. Should the BBC be allowed to give its clips away, or will it be commercial and therefore others in the marketplace can compete properly?

This has been a fascinating debate. This is one of the most important aspects of British culture and of quality of life for people in this country. I hope that the debate continues and that, artificially, we do not find ourselves having that debate stifled by government.

Photo of Viscount Astor Viscount Astor Spokespersons In the Lords, The Family & Culture, Media & Sport 2:05 pm, 9th December 2005

My Lords, the report of the Select Committee, chaired by my noble friend Lord Fowler, is an impressive piece of work. His committee will go on to look at the role of the BBC with regard to the nations, the regions, the World Service and the broadcasting of religion and sport. We all look forward to its next report.

We can all agree with the remarks of the Secretary of State, Tessa Jowell, in her foreword to the Green Paper:

"Government recognises the enormous contribution that the BBC has made to British life and culture, both at home and abroad. We also agree with the majority of British people who want to see that contribution maintained into the multi-channel future".

She could have added that that contribution has been due to successive governments' generous funding.

I start from the premise that the BBC has never been properly accountable to Parliament. It should be accountable to Parliament rather than just to the Government. We have debates in this House on the charter and the agreement every time renewal comes up. The government of the day listen carefully and then equally carefully ignore all the views expressed in this House. The Commons have a debate and a vote—not on the charter, but on a minor broadcasting order required to implement the agreement. Although the BBC believes in accountability in theory, in practice it prefers to get as close to government as possible, believing that that is its best chance of a good outcome for the licence fee or for charter renewal.

However, under this Government the BBC has finally seen the light and now realises that getting too close to government can be dangerous. The fallout from the Iraq war clearly demonstrated the importance of political independence. As my noble friend's Select Committee report noted:

"Prime Ministerial hostility to the BBC has a long history".

I have always believed that the BBC should come fully, rather than partially, under Ofcom. It has much to gain and nothing to lose by being subject to proper regulation by a professional regulator, rather than relying on the whims of a particular Secretary of State. There is a view in the BBC that it is impossible to be independent unless the BBC is solely responsible to its governors. That shows a stunning lack of understanding about what happens in the real world. Public companies are subject to the Stock Exchange, fund managers to the Financial Services Authority, and there is an "of-something" for almost everything. The list is endless, but that does not make any of them less independent. The BBC should also remember that it is not the only public service broadcaster. Channel 4 and ITV also have a public service remit and are independent and accountable to Ofcom.

I want to make the BBC truly accountable to Parliament, independent of government and accountable to licence fee payers. So there is a case to be argued that the Royal Charter and agreement are outmoded and that the BBC should be set up by an Act of Parliament. Establishing the BBC by Royal Charter through the Privy Council gives ultimate power to the Government as they decide what goes into the charter and the agreement. As the Select Committee report notes, an Act of Parliament would be more democratic, independent and transparent, with all-party involvement rather than that of just one party. I issue just one caveat: an Act of Parliament should not be used to go beyond setting up the overall public service remit. Parliament would have to resist the temptation to be overprescriptive, otherwise we might find that we had encouraged censorship by the back door.

I agree with all noble Lords who spoke today that the licence fee is the best way to fund the BBC; it provides a stable and secure base. We should review the concept of the licence fee in the future but, as none of us knows how broadcasting will develop, it is pointless to speculate on that now. The fundamental reason is that none of us knows how we will receive in the future the multitude of programming out there. I am not sure now how I know what I want to watch; it comes through the ether. I might read about a programme or hear about it on the television or radio, and I am not terribly conscious whether what I want to watch is on the BBC, ITV or a satellite channel. I just tune in to or record the programme that I want to watch.

Developments in broadcasting, whether terrestrial television, cable, satellite, Internet or telephone, have taken away the power of the schedulers and given it to us, the viewers. A recent essay on broadcasting, The Shape of Things to Come, summed up well how the future will be:

"TV is about to come of age. Here at the start of the 21st century we are just reaching the point where television bursts its shackles and sets us all free. No longer will we sit passively on the sofa with nothing better to do than watch topless darts. We will snatch television from the grasp of the broadcasters and make it our own".

The Government have given the BBC the role of leading the introduction of digital television with the goal of analogue switch-off, which is right. I am less clear about the cost and effect on the licence fee. What is the Government's estimate of the costs of digital switchover? I am interested to know that. Does the Minister agree with the BBC's estimate of £1.2 billion for the cost of developing new digital services? We should consider the effect on other broadcasters and their viability after switch-off, particularly Channel 4. Does Channel 4 need to be given additional terrestrial digital capacity? It has a strong case. What is the Minister's estimate of the costs of developing digital services for Channel 4, Five and ITV? That is important. Ofcom has pointed out that it is important that the BBC does not become the only public service broadcaster.

I share the concerns that analogue switch-off should be funded solely by the licence fee. That requires more thought. I would like to hear from the Minister what the Government expect to make from the sale of the spectrum following its release once analogue broadcasting ceases. Is it the £1 billion or £2 billion referred to by my noble friend? What is the Government's justification of the Chancellor's proposed spectrum tax? Does this not just add to the cost of the licence fee? This is an important issue. Nearly 10 million homes do not have digital television and 2 million will need new aerials. Some households will not be able to receive terrestrial digital services and are not allowed to put up a satellite dish. What will be done to help them? What will they do? Many—pensioners, for example—will need help. Who will be responsible for seeing that they get it? Will the Minister give us an assurance that his department will take full responsibility for that policy?

The Select Committee was right to suggest that any increase in the licence fee should be assessed by the National Audit Office. Indeed, the BBC should come under the remit of the National Audit Office. In the past, the sponsoring department, DCMS, has had that role. Having been there on a previous occasion, I know that it does not have the experience, knowledge or resources to do that.

The Government's plan to have two chairmen for the BBC is totally muddled. There must be a clear separation between management and governance, but whatever the outcome the result must be simple so that it is understandable by all of us who pay the licence fee. I find those proposals not clear at all. Ofcom should have final responsibility for adjudicating on appeals arising from complaints, but it must be the job of the BBC to respond to all complaints in the first instance. That must be the sensible way to go forward. Ofcom's role would strengthen, not weaken, independence from the Government. It does not take away any of the BBC's responsibility for content.

If I have sounded critical of the BBC, I am not. I am a great supporter. But, as my noble friend Lord King noted, that should not prevent me or anyone else advocating change. I give one example, which is important but perhaps not the most important issue facing the BBC. The new head of BBC sport wants test cricket back on the restricted list. I find that bizarre. The BBC gave up broadcasting test cricket. It was taken on by Channel 4 and Sky, which enabled a very large sum of money to go into cricket in this country. The England and Wales Cricket Board was able to build its training centre at Loughborough. Those are the reasons why we did so well and reclaimed the Ashes—money and training. Now Channel 4 has dropped out and Sky continues. Suddenly cricket is popular and the BBC wants it back, but it is not prepared to pay the money. The English cricket board and other sporting bodies must have the freedom to decide how they want their sport to be broadcast—whether pay-to-view or free-to-air. The BBC did nothing to help English cricket and has no claim on its future.

Having said that and got that off my chest, I turn to what is really great and wonderful about the BBC. It is British broadcasting at its best—whether that is drama, news or current affairs. The World Service is renowned worldwide for its impartiality. The BBC should continue to offer the widest selection of programmes. I am glad that the concept of audience "reach" is now at least on an equal par as audience "share". The BBC develops the talent that enriches our cultural life. It is ours, and it cannot be owned by anybody else, as many noble Lords who have spoken in this debate have pointed out.

However, the arrival of digital services for television and radio and the arrival of broadband have opened up a whole new world. Content is, and will be, king; delivery mechanisms will become less important. Not only can we watch almost anything we want, but anybody else in the world can watch our television. It is not just the World Service that can be seen round the world from Timbuktu to Turkmenistan, but anybody in this country or abroad can now download a BBC news programme. One effect of this is that the BBC is now going to compete on the Internet with newspapers as well as other broadcasters. As my noble friend Lady Buscombe said, we need to consider the market impact and consider whether this remains a part of the core of the BBC or is just part of a commercial venture. The BBC's unregulated expansion of new online services has already affected commercial operators. Equally, we must ensure that the BBC has access to the broadcast platforms and to the electronic programme guides that it needs.

The Government still have to answer a crucial question about the future regulation of the BBC: as commercial broadcasting does more and produces more content, all made available to consumers in more ways, what should the BBC do? Should it do more or less? Today, almost every time that the commercial sector produces a new service, the BBC wants to be part of that new development. Earlier this year, the director-general was quoted as saying that digital media are erasing simple distinctions such as public service and commercial boundaries. He went on to advocate a new, online music download service on the BBC. So we should ask whether, as technological and programming possibilities become virtually limitless, it is right for the BBC's ambitions to be matching them. If the answer is yes, and the Government and the BBC seem to think so, what impact will it have on the commercial sector?

At some point, it may become a brake on investment. In other areas of capital-intensive businesses—for example, telecoms or airlines—as the commercial sector has expanded to meet the needs of consumers, and as more sophisticated on-demand services have become possible, the state-funded sector has gladly accepted the need to do less. This seems to be a fundamental question that the Government have yet to address: what do they want the BBC to do, and how far do they want the BBC to go? I shall be interested in the Minister's answer.

This has been an interesting debate. There are other recommendations in the Select Committee report that I have not had time to mention. We have many notable and interesting contributions. I was amused by what I think must have been a joke by the noble Lord, Lord McNally, when he said that he did not have an axe to grind about Rupert Murdoch. I note from the smiles on the Benches behind him that that was his joke of the day. Equally, I was amused by the noble Lord, Lord Peston, who said that, after 50 years, he finally recognised that competition in broadcasting improved it and did not make it worse.

Photo of Lord Peston Lord Peston Labour

My Lords, I can demonstrate without a shadow of doubt that, according to economics, competition in broadcasting must lower standards and remove diversity. My problem is that I was wrong. My difficulty is that I do not know why I was wrong.

Photo of Viscount Astor Viscount Astor Spokespersons In the Lords, The Family & Culture, Media & Sport

My Lords, I suspect that that is a dilemma faced by many economists teaching their subject when trends move rapidly in the opposite direction from that which they are promoting.

However, this has been an extremely interesting debate. One other point that I will remember is that, as the noble Baroness, Lady Bonham-Carter, pointed out, it is sad that the noble Lord, Lord Birt, is not in his place. It is extraordinary that the appearances in this House of a man who knows a lot about broadcasting are rarer than sightings of the white rhino. I shall leave it at that.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 2:20 pm, 9th December 2005

My Lords, this has been a most interesting and valuable debate. We owe a debt to the noble Lord, Lord Fowler, not just for his presentation of the report. I could almost address my reply only to his opening speech because he covered all the salient points brought to the fore in the report as challenges for the Government. He will forgive me if I do not do just that but also reply to other points that have been made in the debate. We owe him a great debt both for today and for his chairmanship of the committee, which has produced such a valuable report. I wish the committee well in its continuing work. If the committee continues for a very long time, to the distant day when I leave the Front Bench, I must declare an interest in membership of such a committee. I know that it does such valuable work and very much enjoyed a similar role in the other place a decade or so ago.

The committee set out to define areas where it was in conflict with the Government. All members of the committee who have participated in the debate have been generous enough to recognise that the Government have been involved in a long period of consultation on the renewal of the BBC charter. Prior to the Green Paper, we launched more than a year of widespread consultation. Ministers travelled up and down the country addressing and, more important, listening to public meetings while the Government considered the issues that confronted us. The Green Paper is a product of substantial consultation and research; I think that that has been recognised. What has been deplored today are certain aspects of the concrete within the flexible—I think that I shall drop the pistachio model for today; I am not sure that I will be able to follow that metaphor very far.

Let me emphasise aspects on which the Government take a strong line. Some of the issues that we debated today were debated with many of the same participants during the passage of the Communications Act, to which the noble Lord, Lord McNally, referred. To take the most obvious points within the framework of the Act, we considered the issues relating to the major broadcasting companies and the BBC and set up Ofcom. It is not surprising that the Government have some clear lines to draw on the role that Ofcom ought to play in relation to the BBC.

I take some solace in the fact that, although I was unable to detect division in the committee on that point—I know the skills of the noble Lord, Lord Fowler, in bringing committee conclusions into a coherent framework in which there is broad agreement—some noble Lords took the Government's position in the debate, such as the noble Lord, Lord McNally, and my noble friends Lord Dubs, Lord Lipsey and Lord Peston. I was on the brink of omitting my noble friend Lord Peston when he referred directly to economics and the fact that Ofcom was an economic regulator. There is a question about whether it is an appropriate body to regulate the BBC. The Government have taken a firm line on that from which we do not intend to budge. We had those debates two years ago. It is therefore unsurprising that we feel that we have argued the case at length in this House and in another place and have reached our conclusions. However, there are areas of flexibility. This debate is at a most apposite time and gives us a chance to respond. Arguments have been forcefully presented. The noble Lord, Lord Fowler, was supported by the noble Lord, Lord King, and, from the Front Bench, the noble Viscount, Lord Astor. All emphasised that the relationship between the BBC and Parliament was due for a change. We disagree. The charter and agreement have served us well for many years. We believe that the best way of giving the BBC the independence and stability that it needs is by renewing the Royal Charter for another 10 years.

Of course, the committee reached a different view in concluding that the BBC should be established by an Act of Parliament. We think that that would leave the BBC much more open to political intervention. Although noble Lords may argue that the legislation could be framed in such a way that it would obtain over a substantial period and that there would be no question of it being subject to change every year, it would be a brave Member at either end of the Palace of Westminster who would dare to foretell from where the challenges will come in the build-up of public pressure leading to the amendment of Acts of Parliament. The noble Lord, Lord Holme, mentioned the danger of the panic of the moment and said how unwise things could be done in haste. The central issue for the BBC is for it to maintain a distance from such immediate pressures, to which all governments can succumb. We see that there are various methods of putting pressure on the BBC. Our judgment is that an Act of Parliament and a legislative framework would occasion many more opportunities for that kind of pressure to emerge, to the detriment of the independence of the BBC.

That brings me to a point that I respect and with which I am in complete agreement with the committee, as one would have anticipated under the chairmanship of the noble Lord, Lord Fowler. We all agree on the broad objectives of the role of the BBC in our society. All sides recognise the value of the BBC and how its independence is crucial, and we want accountability, to which we are entitled. I say that because public money is involved on a huge scale with regard to the BBC. While it is true that those moneys are not the vote, the licence fee is a form of taxation on all our fellow citizens and the use of those resources demands accountability. We may interpret differently how that accountability might be developed, but we all recognise that we are working within the fairly well agreed parameters of the actual framework of the BBC. I would not want to emphasise any great difference between the Government and the committee except in the areas that I shall address in a moment.

Inevitably, the noble Lord, Lord Fowler, raised the issue of how the BBC should be governed by Acts of Parliament. He also considered the role of the BBC in the digital age, as did a number of other noble Lords. I am well aware that my noble friend Lord Maxton seems to have developed a particular role in the committee, given his undoubted enthusiasm for technological innovation, which no doubt has allowed him to play a significant and useful part in its work.

We believe that the BBC has a unique role among public service broadcasters, which means that we must ensure that all householders, especially the most vulnerable, have access to the benefits that digital television can bring. My noble friends Lord Maxton and Lord Gordon considered the technology that should be employed and said that we should keep an open mind on certain issues. We have that open mind. We are aware that the speed of technological change means that the BBC must have the framework and the flexibility to enable a quick-footed response to innovations. The committee is right to draw the matter to our attention. By definition, I cannot go into detail at present, but I assure your Lordships that we are engaging specialist experts to examine the position. We recognise the necessity of being open on those points.

The noble Lord, Lord Fowler, referred to the licence fee, which is the crucial link between the public and our responsibilities. The fact that the Government negotiate with the BBC to establish the licence fee emphasises the need to ensure value for money. The noble Lord is right: we would be reneging on our responsibilities as a government if we did not concern ourselves with the fact that value for money across the whole range of BBC activities must form an important part of the licence fee settlement. The debate and the experience and work of the Select Committee help to clarify our position on how value for money can be achieved.

Several noble Lords referred to the potential role of the National Audit Office. The BBC co-operates with the National Audit Office. There are no complaints from the National Audit Office about the openness of the BBC and its co-operation over a great deal of its work. So there is no difficulty there.

We have a difficulty with the proposals relating to Ofcom intrusion. However, the issues there have been addressed rather more in terms of content. Ofcom is in its early stages now, and noble Lords and the committee recognise that it could be strengthened by the development of its content board to play a more valuable role. We have been debating the issue for a considerable period of time, and the Government do not consider that Ofcom should fulfil that role.

Inevitably, the issue of the BBC World Service was raised, again with plaudits from all noble Lords who referred to it. My noble friend Lord Judd introduced the issue first. The World Service is an extremely valuable part of the BBC, and the Government subscribe to the plaudits given to it today. We recognise that, in many ways, the world's perspective of Britain is conveyed through the work of the World Service. We all wish to see an extension of the service and lament the circumstances in which the service is less extensive than we would like it to be, but the World Service, too, is constrained by resources. Issues have been raised about whether the BBC plans to develop an Arabic station. We continue to expect the BBC to plan against the reasonable expectation that questions on funding will be unremitting, so it has to balance such a development against its likely overall budget, which, by definition, cannot be limitless.

The noble Lord, Lord McNally, challenged me about discussions between No. 10 and Rupert Murdoch or anyone representing the Sky enterprises. He wanted detailed minutes, but he is not going to get that. He will recognise that there are relationships with all stakeholders who are concerned with television and radio transmissions. Broadcasting is such a crucial part of public life. It would be as surprising for the Government not to talk at times with broadcasters as for them not to talk to newspaper editors, owners, or even to one person who is both those things. I will not be able to give the noble Lord too much assurance on that point.

Photo of Lord McNally Lord McNally Leader In the House of Lords, Leader, House of Lords, Liberal Democrat Leader in the House of Lords

My Lords, does not the Minister feel thoroughly ashamed that a Government who came to power committed to freedom of information and ending the culture of secrecy in Whitehall cannot even provide a list of the times and dates when the Prime Minister saw the most powerful media magnate in the world?

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the noble Lord always criticises the progress on the freedom of information legislation, but he will know the enormous gains that are being reaped throughout the country by the extent to which we are able to implement it. From time to time, there are a few reservations when it comes to private interests. We have obligations to others who have certain rights, particularly if they are not British nationals over whom we have direct control. The noble Lord has to give us a little leeway and return to the generosity that we expect from him in such debates.

In her experienced way, the noble Baroness, Lady Howe, raised in the most forthright terms the manner in which the Ofcom board could be strengthened and play its part in relation to the BBC. The noble Baroness always expresses that argument forcefully when contributing to debates on broadcasting. She will know how we struggled to reach the judgment that we did in the Communications Act 2003. Of course, we listened carefully, but our judgment is unchanged on that point. That does not alter the fact that there is bound to be constant public debate on that.

The noble Lord, Lord King, introduced the concept of independent validation of the licence fee level. As we indicated in the Green Paper, we are working with independent advisers to help us assess the BBC's proposals. I am aware that the challenge can be made that they are difficult issues and that government resources may not extend totally to an easy and necessarily independent evaluation. That is why we are bringing in outsiders to help us. That is important in justifying the licence fee, particularly when, in the digital switchover age, it is destined to go up by a considerable margin. That was always anticipated. No one who is serious about this has not known that the resources necessary for the BBC during the switchover will have to be substantially greater than might otherwise have been the case.

Photo of Lord King of Bridgwater Lord King of Bridgwater Conservative

My Lords, this seems to have got disconnected from the NAO. I said that it was the perfect job for the NAO so that there would be some public credibility. Is the Minister now saying that some separate independent adviser will adjudicate on the licence fee and, if so, will that adjudication be published?

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I shall have to write to the noble Lord with the details. He has alighted on a point that we recognise as being of considerable significance, and we are addressing ourselves to it.

The right reverend Prelate the Bishop of Manchester identified another area in which the BBC could be expected to engage in additional costs: its regionalisation process. The process is extremely valuable to the credibility of the BBC and its role throughout the nation. There are costs involved in the exercise, but as the right reverend Prelate emphasised—he will not expect me to do anything other than wholeheartedly endorse his point—the move to Manchester of certain BBC facilities is greatly to be welcomed. We are prepared to ensure that the BBC is able to meet those costs.

I mentioned to the noble Lord, Lord Maxton, that we were addressing the technological changes and issues. They present great problems. That is why such reports, which emphasise the point, are valuable to us, but it is extremely difficult for us to be definitive at this stage. I am not sure that he was asking for that. Perhaps he was asking us to indicate that our mind is sufficiently open to the potential changes.

The noble Baroness, Lady Buscombe, emphasised the point about the fairness of the BBC's position and its fair trading commitment. That is another area that is not concrete as far as the Government are concerned, but one at which we want to look more carefully. We are aware of public anxiety about the issue. It needs to be addressed. We regard that as a green part of the Green Paper. I can assure her on that. I thank her for raising the issue today.

The noble Baroness, Lady Bonham-Carter, asked about the public value test and how one challenged the BBC on these matters. Any significant change to the services that the BBC offers should be subject to the public value test. We intend to ensure that it incorporates a market test assessment. That partly links to the point of noble Baroness, Lady Buscombe, as well. A great deal more work needs to be done in those areas too, but the debate has helped identify and highlight them. We are aware of the necessity for progress. We also agree that the WOCC commitment, to which the noble Baroness, Lady Bonham-Carter, referred, should deliver range and diversity when it is commissioning programmes for the BBC.

The noble Baroness, Lady O'Neill, emphasised the regulatory responsibility and presented a balanced judgment on the issues that we need to confront. We think that we have got the arrangements right, but such issues will always be a real challenge to all those who are concerned with the proper regulation of the BBC.

That brings me back to the most fundamental issue of all, which the noble Viscount, Lord Astor, raised and which the noble Lord, Lord Fowler, introduced in opening the debate: the structure of the BBC. We have reached our position on that. I want to end the canard that there is somehow a problem over the issue of two chairmen. We have not made sufficient progress on the matter; that is why it is set out in a Green Paper. It is our responsibility to define the relationship between the trust and the executive board more carefully and analytically. We do not anticipate that there will be a problem about the responsibilities of the two chairmen. I recognise that we have extra work to do in that area. That is why I am defending a Green Paper at this stage, and not legislation or a White Paper. If we get those arrangements right, the respective roles of the chairmen will become clear.

The noble Lord, Lord Clement-Jones, asked me the obvious question of how much of this is set in stone. Perhaps I have set too much in stone in my response today. He would like everything to be flexible, I am sure—that tends to be a besetting sin of his party on occasions—but I must make it clear that the principles are established. I would not underestimate the significant extra work that we have to do in these areas, but there are other areas that the Select Committee identified on which we have an open mind. We are grateful for the great deal of work that the committee has done. I pay tribute to it and its chair for introducing the debate.

Photo of Lord Fowler Lord Fowler Conservative 2:45 pm, 9th December 2005

My Lords, this has been a good debate. I have listened to virtually every word of it. Typically, I managed to miss the qualified compliment to me from the noble Lord, Lord Maxton—which, as it was the first time in a quarter of a century in either House that he had done that, I very much regret. I thank everyone for their contributions in what has been an outstanding debate. Virtually all the member of the committee spoke, and, from their quality, it can be shown how easy a committee it was to chair.

Some of the speeches have been spirited: my noble friends Lord King, Lady Buscombe and Lord Astor; the noble Baronesses, Lady Bonham-Carter and Lady Gibson, and the noble Lords, Lord McNally and Lord Holme. I hope the noble Lord, Lord Holme, can convert the noble Lord, Lord McNally—and indeed the noble Lord, Lord Clement-Jones—to his view that Ofcom is more than an economic regulator.

Some of the speeches have been skilled and thoughtful: the right reverend Prelate the Bishop of Manchester; the noble Baronesses, Lady O'Neill and Lady Howe; and the noble Lords, Lord Dubs and Lord Judd. I agree with what the noble Lord, Lord Judd, said about the World Service needing to ensure, if it goes to television, that the standards are just as good as radio. Some of the speeches have undoubtedly been independent and expert: the noble Lords, Lord Maxton, Lord Peston, Lord Gordon and Lord Lipsey.

So we have had the spirited, the thoughtful and the independent—and then we have had the Government's response. I do not wish to be unfair, and we realise how personally constrained the Minister is on announcing new policy. The best thing I can say about his speech is that he kept to the departmental line admirably. I am not sure, however, that it takes us much further. On the question of governance, I am sad to say it did not seem that there was much hope of a change of heart. I hope the very least the Minister will do is point out to the Secretary of State the predominant view in this debate, along with the predominant view on the licence fee and its size.

Frankly, though, this position is inherently satisfactory, and it will not be changed until Parliament is involved meaningfully in this process, as my noble friend Lord Astor said. That means no Royal Charter and doing without the wonderfully archaic Privy Council process, which camouflages the fact that it is decided by government: it should be done by statute and by Act of Parliament, with scrutiny by both Houses. That is the democratic and accountable way of doing it.

My noble friend Lady Buscombe said she regretted that we did not look in detail at Channel 4. We were set up to look at the BBC. We would like nothing better than to examine Channel 4, but we cannot do that until a permanent Select Committee has been set up. In that respect, I welcome what the noble Lord, Lord McNally, said, and actually, for the first time, what the noble Lord, Lord Davies, said. I regard that as a pledge on the part of the Government that they are in favour of this.

We go on to the second part of our BBC review, from sport to religious broadcasting. As the noble Lord, Lord Peston, said, there are one or two challenges in achieving an agreed report as far as that is concerned. In the mean time, I ask the House to take note of our first report.

On Question, Motion agreed to.