UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 730

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

CULTURE, MEDIA AND SPORT COMMITTEE

BBC ANNUAL REPORT

TUESDAY 22 OCTOBER 2013

RT HON LORD PATTEN OF BARNES, LORD HALL OF BIRKENHEAD and ANNE BULFORD

Evidence heard in Public Questions 1 - 141

USE OF THE TRANSCRIPT

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1

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 22 October 2013

Members present:

Mr John Whittingdale (Chair) Mr Ben Bradshaw Conor Burns Tracey Crouch Philip Davies Paul Farrelly Mr John Leech Steve Rotheram Jim Sheridan Mr Gerry Sutcliffe

______

Examination of Witnesses

Witnesses: Rt Hon Lord Patten of Barnes, Chairman of the BBC Trust, Lord Hall of Birkenhead, Director-General, BBC, and Anne Bulford, Managing Director, Operations and Finance, BBC, gave evidence.

Q1 Chair: Good morning everyone and welcome to the annual session of the Select Committee at which we examine the BBC’s annual report and accounts. I would like to welcome the Chairman of the BBC Trust, Lord Patten, and the Director-General, Lord Hall, as well as the Managing Director for Operations and Finance, Anne Bulford. Lord Patten, since we had our last session on the annual report and accounts, it is fair to say that the BBC has not had a good year. You, yourself, have said in the annual report that the BBC has seriously let down itself and the licence fee payers. That has led to some questions about the way in which the BBC is governed, but yesterday, as you may have seen, we had a debate in Parliament on the BBC and Tessa Jowell said, “It is not the present model of governance that is flawed but the failure of individuals within that to make the right decisions and to intervene sufficiently early.” Do you think she is right? Lord Patten of Barnes: Yes. I think it is a bit of a snare and a delusion that is part of the BBC DNA, to say whenever anything goes wrong that it is the governance that has gone wrong. The governance is debated and reorganised with some regularity. I think four issues have really concerned us over the last year; I think tomorrow is the anniversary of George Entwistle’s appearance in front of this Select Committee, which had consequences. First of all, there have been the difficulties over Savile and the report by Nick Pollard, which, while demonstrating that the main charge made against the BBC was not correct, did point to some pretty shambolic handling of the whole imbroglio. Nobody in their right mind could regard Nick Pollard’s report as a whitewash. Secondly, there was the very bad—related to that—editorial judgment on Newsnight about Lord McAlpine. Thirdly, there has been the uncovering of the way in which severance 2 payments were managed going way back to the time when there was a Board of Governors. I am very pleased that the Director-General has acted on that so quickly. Finally, there has been—which is still to be examined with a report by PwC coming out shortly—the pulling of the DMI initiative, which I hope we can come to later, at considerable cost to the licence fee payers in the BBC. I hope—you would expect me to say this—that we can spend the next year focusing on the quality of what the BBC produces in terms of television programmes and radio programmes and online services, and that we can ensure that the trust in the BBC, which still exists in pretty substantial quantities, continues to be rebuilt and that the BBC, as an institution, enjoys the trust of people around the country. If that happens I suspect that arguments about governance will seem less important over the next year or two, or that is my hope. It has been a bad year but, at the same time, some good things have happened, in terms of programming—the Olympics just over a year ago, being the most notable of those. Speaking for myself and for my colleagues in the Trust—you will not get always the sort of mutual admiration stuff from me—I think we are very pleased that we have in Tony Hall an outstanding Director-General and that he has been appointing some very good members of a team in which we have considerable confidence. We are aware of how much is expected of the BBC and we have to deliver.

Q2 Chair: I think Tessa Jowell yesterday, who did create the Trust model of governance, was defending the model by saying that it was individuals within the Trust who had failed. You, as Chairman of the Trust, are ultimately responsible. Do you accept that criticism? Lord Patten of Barnes: I have been criticised quite a bit for things that happened before I became Chairman of the Trust. I found myself in the PAC in a long discussion about the payoff that Mark Byford received when he left the BBC, which was before my time. I have not— Chair: But you have been Chairman of the Trust this last year. Lord Patten of Barnes: Sorry, yes, I would defend the record over the last year. I do think that people would say that we made the wrong choice of Director-General, but I have to say it was unanimous when we made it. I don’t seem to recall anybody saying we had made the wrong choice. Unfortunately, George was overwhelmed by events but he was a very decent broadcaster and programme maker. Can I just add one point? When I became Chairman of the Trust, having read the Charter and looked at the role of the Trust, I certainly didn’t expect that people would think I was running the personnel department in the BBC. The description of the Trust in the Charter couldn’t be clearer. One of the things that the Director-General and I want to do—and I hope we will have put in place before Christmas—is an even clearer set of distinctions between the role of the Trust and what the executive does. But it has never been the job of the Trust to run the BBC. It is an old issue in political science; we tend to get blamed for everything that has gone wrong, whether or not we are responsible for it, but that is life and at 69 I am beyond all human ambition.

Q3 Jim Sheridan: Lord Patten, when I first came on to this Committee some years ago at these sessions we talked mainly about the product. Nowadays we don’t talk about the product. In the last year or so we have been talking mainly about the Trust and, indeed, the senior management. I do believe that the general public still believes in the BBC, but it is running very, very close to the wire. When do you think we can go back to talking about the actual product and not about the problems surrounding the management of the BBC? Lord Patten of Barnes: I hope that we will start doing that from pretty well now on, but we still have to cope with the consequences of things that went wrong in the past. We are 3 dealing and we will go on dealing with severance pay because there is still a PAC report to come out on that, which will point out quite properly what went wrong from 2006 onwards and even before 2006. We have the PwC report on DMI. There will be the report by a distinguished former judge on the BBC’s behaviour in the light entertainment field during the 1960s and 1970s. Each time that sort of thing comes out, people will be talking about that rather than how much they enjoyed Strictly Come Dancing and I think that is unfortunate but that is life. Two things have really surprised me in this job. The first is how little political pressure the BBC is under, to be candid, though I do note in passing that this is the 16th time in a year that the BBC has appeared in front of a Select Committee and Lord Reith would be spinning in his grave. Secondly, I— Chair: I think that Lord Reith would be spinning about what has been going on in the BBC rather than the number of Select Committee appearances. Lord Patten of Barnes: He might be spinning about Strictly Come Dancing as well perhaps, particularly at those who are not wearing dinner jackets. Secondly, I have, on the other hand, been very surprised by the astonishing amount of attention that the affairs of the BBC get in the rest of the media, sometimes for reasons that we can all understand, but when I look at the press cuttings in the morning I am amazed at how much the BBC features and I wish Syria featured rather more.

Q4 Jim Sheridan: I think Susanna Reid is doing a good job for the BBC on Strictly and, hopefully, she will continue to do that. But can I ask you seriously about morale within the BBC? In terms of Select Committees, at the last one—the Public Accounts Committee— the BBC did not come out of it very well at all. Lord Patten of Barnes: No. Since I was present at the car crash, perhaps I can say something about that. Obviously, it is dangerous to get into a Match of the Day after-the-game analysis each time one appears in front of a House of Commons Committee, but it wasn’t a glorious day for the BBC, nor was it meant to be a glorious day for the BBC. I don’t think it was perhaps the best configuration for having a discussion about the relationship between the role of a strategic authority and the executive in dealing with pay. One or two of us found ourselves answering questions about events that happened—and certainly in my case—before I became Chairman of the Trust. But out of it has come a policy that I think is wholly defensible and I pay tribute to the Director-General for doing that. I just want to make one other point that does not in any way excuse the way in which for years severance payments have been handled. In the two periods covered by the KPMG and the NAO—six and a half, seven years—the BBC overspent on severance payments, over contract about £3.8 million. Inexcusable. The £3.8 million, however, is a lot less than the figures we are going to be talking about with DMI and £3.8 million is about what other television networks would pay for televising the first half of a premiership football game. It is inexcusable and showed bad management but, nevertheless, I think one should keep it in context.

Q5 Jim Sheridan: Could I just ask Lord Hall the question about morale and, in particular, about the alleged bullying and significant claims of alleged bullying at the BBC? Are they true and have you taken any steps to deal with them? Lord Hall of Birkenhead: Yes. Let me answer, if I might, Mr Chairman, the morale point. I wanted to do four things, in fact when I last talked to you four or five months ago, I said I was doing four things. One was building a team, and I can tell you that the team I have I am extremely proud of. But also they themselves are contributing to a sense of dialogue with the staff, getting out there and meeting the staff. I said I wanted to spend at least a day, 4 myself, out and around the corporation, and I am doing that. I have been to all sorts of places. I won’t bore you, but it has been fantastic meeting the teams. What I have seen from meeting the teams is a real sense of pride in the BBC. Of course, people are depressed about what has gone on over the last year, but they have a real sense of energy and people doing their best for a corporation they are immensely proud of. They are right to be proud of what they are doing. The third thing, as you know, has been to try and work with the Chairman to clear out some of the things that we both think are wrong. But the fourth thing is to give a sense of direction, and I guess we will come on to that. That is why I have made two speeches in the last fortnight, one on the direction of the BBC and the other one about the BBC and the creative industries because I think that is really important. Those speeches, I am told, have given some clarity to the staff and have gone down well. We are on course, I hope, to begin to see morale rising in the corporation. The staff who work phenomenally hard deserve that. On bullying and harassment, we have been working very hard on that with the key members of the team. In fact, we are—forgive me for bringing along one thing to wave—this week opening our first ever bullying and harassment support line and these posters are going up around the corporation—if you are interested I will send them around to you. That will allow people to say if they think that they are being bullied or harassed. We are trying to deliver results on all the cases that come either to me or to the team as quick as we can. What we have done since we last spoke is to implement the Dinah Rose recommendations for mediation, because if we can hit some of these issues early and don’t allow them to fester, I think that is much, much better. In some cases, that is kind of working. Ensuring that when somebody has an issue to do with harassment or bullying it is heard by someone in a different division of the BBC because I think one of the things that came out to me from the Dinah Rose report was that sense of, “I have a problem, but I need to take it somewhere else where I can get an impartial hearing for this”. That is really important. We have had over 200 discussions in teams about what a good workplace should be like and we are also doing things like exit interviews as well, making sure that we learn from anything that people are telling us about the workplace. But I think this helpline is the latest example of what I want to do, to show them that we have a workplace where people feel valued, people feel they are not bullied or harassed and they want to come into work to deliver their best.

Q6 Jim Sheridan: I think the question that people want to know is, if people are found guilty of bullying or harassment, will they still be at the BBC? Lord Hall of Birkenhead: No. We have carried out a number of disciplinary hearings and in at least one case that person is no longer working for the BBC.

Q7 Mr Bradshaw: I just wondered whether you think, given that the BBC has just had its worst year, that the annual report could have been a bit more contrite. I suppose that is for Lord Patten really. Lord Patten of Barnes: It has been a bad year, but I do not know whether it has been the worst ever year. I can think of, looking back, some pretty bad years with some wounding arguments with Governments and others, even going back to the general strike. But you are quite right, it hasn’t been a good year. I don’t think we underdid the contrition and, given that we had had buckets of contrition to consume after Pollard and other things, we certainly didn’t have as much to brag about as I would have liked.

Q8 Mr Bradshaw: Lord Hall, how much have you been able to change the culture that Pollard described so vividly? 5

Lord Hall of Birkenhead: I think the new team is working together really well. We are not afraid of disagreements, yet we also know we have to run the place together. I made a speech two weeks ago on the future of the BBC. What has been interesting is working with the team over the last six months, pulling together ideas, discussing our ideas, working out what we want to do, where we need to make compromises, where we need to work together. I think it has worked very well. There are some difficult areas between television, radio, how they work with future media, how they work with news and I have to say the conversations have been very, very constructive. Mishal Husain is now presenting the Today programme. I think she is doing absolutely brilliantly. That was a very constructive discussion between those in radio and those in news. I am encouraging but, to be honest with you, I don’t need to encourage because I think people are running with it, with the sense of discussing, arguing and then agreeing on what we want to do. I am pleased with the way the team is working. I think it is also working to bring in a mixture of those people who have been in the BBC for a long time and people who have either come back to the BBC or have come from outside the BBC. I think seeing how others see the culture in which you operate is of real benefit.

Q9 Mr Bradshaw: Just referring back to the dossier that Jim mentioned that we had been sent by the NUJ. It alleged, for example, that there are three senior news managers who are the subject of multiple bullying complaints; that a member of staff, a whistleblower, sent you an e-mail several months ago that has not been responded to. It does feel as if there is still a hornet’s nest in there that has not been properly addressed. Lord Hall of Birkenhead: Yes, I don’t think there is a hornet’s nest. I think there are issues to be addressed. As you will remember, when we called for evidence last autumn the BBC asked for staff and other members, people who had left the BBC, to come forward with any evidence of bullying or harassment and the NUJ came up with a document, which I think was about 109 pages, which they submitted in confidence to Dinah Rose. Our conversation with them then was about the things that you have alleged or drawn to our attention; what are the things that we can pursue and follow? Three cases of that have come to a conclusion. One case has led to a disciplinary and also an apology. Another case is still going on at the moment, but I hope to get a conclusion very shortly. On the case of the person who wrote to me some time in July, I have apologised to that person completely. We cocked up there. We didn’t handle it properly. I will take the blame—I run the shop—but we are now dealing with it.

Q10 Mr Bradshaw: In your recent speeches you have announced lots of new things that the BBC wants to do, which is great. But part of the problem, as I see it—going back to the Newsnight fiasco—was that Newsnight was being asked to do ever more with less money. Their frontline journalists were not being listened to by senior managers, which is why it got into the problem it did. By constantly asking BBC staff to produce more with less money, without saying what the BBC is going to stop doing, is there not the danger that pressure you are putting people on to deliver more for less will result in repeats of the sort of problems that we have seen? Lord Hall of Birkenhead: Yes, I am very aware of that. As I go around the country, as I go around bits of the BBC in London too, it is uppermost in my mind when I talk to people. I think what Newsnight is demonstrating at the moment is something that, in a way, we all know, which is that good leadership makes a difference to anything. I think what Ian Katz is demonstrating with the Newsnight team over the last month and more since he arrived, is what a difference someone can make who is editorially running with the team, helping the team to think imaginatively about the coverage. 6

It is interesting in a joined-up BBC way that Newsnight has broken some stories that then end up on Today the next morning. People used to tell me, “Oh, Newsnight will never talk to Today and Today will not talk to them” and all that. They are, and they are collaborating in that way, which I think is wholly good. But the drive I think that the new editor is bringing is exactly what I had hoped for and he is not finished yet with the process of reform on Newsnight. But I think that leadership is important.

Q11 Mr Bradshaw: In strategic terms though, how are you going to carry on squaring the circle of doing more for less without stopping doing anything? Lord Hall of Birkenhead: We set a target—when I made my speech two weeks ago— of finding by the year 2016 another £100 million. Anne, myself and the Director of Strategy, James Purnell, are going to spend the next three months immersing ourselves in the budgets of every single division and every single part of the BBC with two aims. One is to look at the pressure points but also at ways in which we may want to move money from one priority to another. That must be part of a discussion with the people concerned. I can’t just do that by fear. Secondly, carrying on what I think is an important part of my work—and the more I talk to people in the organisation I have to deliver on this—we have to simplify the way we work. I have made a statement, and will announce this shortly, that we want to get rid of a whole number of boards and simplify the way we work. I am also looking critically and sceptically at layers of management, but also, if this doesn’t sound too odd, at sideways management, by which I mean people who are questioning and not adding value to the process of getting great programmes and services on to the air. I can only approach that by saying I want to go into the way everybody is spending their money in detail and work out the sort of compromises or things we have to stop doing to do others. In that speech I could have said, “You know what, we’ll work out what money we have and then we’ll decide what we’re going to do”, but I felt that after last year or so the BBC needed something that said, “That is where we think we want to be. When it comes to decisions about, do we spend money on that or do we spend money on that, we are now clear this is how we are going to spend our money”. Whatever money any of us can take in saving one bit of the organisation goes towards the aims I put out. I am looking forward to making those things happen. There are going to be a lot of difficult decisions, but I am confident we can do something very exciting in the next three years with the BBC.

Q12 Philip Davies: Lord Patten, you have mentioned the Pollard report on a number of occasions already today, which I believe cost the licence fee payer around £3 million, give or take—a ballpark figure. I presume that both you and Lord Hall have several newspaper articles saying that a person described as a source close to the Pollard review has admitted that it was a mistake to exclude some of Helen Boaden’s evidence that was given to that report. I take it you have seen those reports. Lord Patten of Barnes: Yes, but, more than that, I have received a letter from one of your colleagues in the House of Commons, Rob Wilson. I think it is one of 64 communications that the Trust and the executive received from Mr Wilson over the last year in which he drew attention to that. We obviously thought it was sufficiently important to put it to Nick Pollard himself, and we have also suggested that Mr Wilson should see and talk to Nick Pollard about it, which seemed to us to be the obvious first thing to do.

Q13 Philip Davies: You commissioned the report and we know that— Lord Patten of Barnes: The executive commissioned the report. 7

Philip Davies: Yes, absolutely. In his report he said that he had no reason to doubt Mark Thompson’s claim that he learned no specifics of the Newsnight investigation. We now know that Nick Pollard has said that it does not reflect particularly well on him that he overlooked Helen Boaden’s evidence. He said, “I am in a slightly uneasy position about this.” He is saying it was a mistake to have missed out that part of the evidence in his report. What have you done to put that right? Lord Patten of Barnes: First of all, we established an independent inquiry. If we had set up an internal inquiry— Philip Davies: You paid for it, so it is not entirely independent. Lord Patten of Barnes: Yes, yes. We could have taken a can around I suppose, but we were obviously going to have to pay for it. I don’t know whether you are suggesting anybody else should pay for it. We established the inquiry. Nobody reading that written inquiry and knowing Mr Pollard’s background could think it was other than thorough and independent. It would be bizarre if I was to try to rewrite it now. Mr Pollard has made clear—and I imagine would make clear to anybody who talked to him—that nothing that has happened or nothing that has been said suggests to him that he should in any way change his report. You might remember that the main burden of that report was that the BBC had not dropped a Newsnight investigation in order to preserve its Christmas schedule in 2011/2012.

Q14 Philip Davies: You are asking us to accept fully everything that is in the Pollard report without any qualification, is that your— Lord Patten of Barnes: I am saying that Nick Pollard did a report that was well received and well regarded, not least because it was so blisteringly honest about some of the failures in the BBC. Philip Davies: We should accept that report as it is. Lord Patten of Barnes: I have no reason to suppose that we shouldn’t accept that report.

Q15 Philip Davies: Okay. Lord Hall, do you think the same thing? Do you think we should accept that report as it is and that there is no reason to doubt Mark Thompson’s claim that he learned no specifics of the Newsnight investigation. Do you think we should accept that unquestionably? Lord Hall of Birkenhead: Nick Pollard has been clear that the difference of opinion there is that it has not led to any material change in his conclusions. My aim over the last six months has been to implement and change the culture in the way that he suggests; that is my task.

Q16 Philip Davies: In which case we can only come to the conclusion that you believe, both of you, that Helen Boaden, who I believe is paid around £340,000 a year as a senior director of the BBC, was lying to the Pollard Inquiry. Lord Hall of Birkenhead: I think it is perfectly possible that both people are saying very different things but coming to very different conclusions. Mr Davies, my task has been, first, to see whether Nick Pollard is changing his conclusions because of this. He is not. Secondly, it has been to get on with changing the culture that led to the errors and the mistakes that he described very well—but were woeful for the BBC—in his report.

Q17 Philip Davies: You think Helen Boaden was telling the truth, that she told Mark Thompson that? 8

Lord Hall of Birkenhead: I think it is perfectly possible that both are telling the truth. What I am saying to you is that it is time to move on from that, to look at the conclusions of the Pollard report and to make sure those are implemented, and that is what I am doing.

Q18 Philip Davies: You say we should be moving on but, of course, Helen Boaden has a very senior position in your organisation, so it begs the question, if she is telling the truth as to what has happened, what she knew about Jimmy Savile’s dodgy past by the time the tribute programme was put out on the BBC that Christmas. Lord Patten of Barnes: But the question surely is, Mr Davies—and I understand your concern—does Mr Pollard think that anything that has been said to him should make him change the terms of his report? His view is quite clearly that nothing has happened to change it.

Q19 Philip Davies: He has made it clear that he made a mistake by not putting that evidence into his report. He has made that clear and you are proposing to do nothing about it. Either Helen Boaden was telling the truth or she was not telling the truth. It seems to me that if she was telling the truth it begs further questions about what she knew at the time that programme was produced, why she did not make it clear to people that that programme should not go out—unless she was taking absolutely no interest in what was being put out by the BBC, even though she claimed she knew at the time these things. If you are happy that Helen Boaden is telling the truth that she told Mark Thompson about this at the time, then it begs questions what on earth she was doing allowing that programme to go out without kicking up such a big fuss that people were fully aware. This is somebody who is paid £340,000 now by the BBC as a senior director of the BBC. Have you not questioned her about why she did not kick up a big enough fuss that Mark Thompson absolutely knew about this at the time? Lord Hall of Birkenhead: Pollard has been absolutely clear recently in an e-mail that this does not affect—this issue that you are raising, and quite properly raise—any conclusion he made in his report about what needs to change in the BBC. What I am interested in now is working on those conclusions and getting the right culture in BBC news and I think what James Harding is doing is utterly brilliant and first rate to make sure that these sorts of things don’t happen in the future. The question that was asked earlier of me was whether the team was functioning properly. The answer to that is yes. That strikes me as a more material point than going back into this history.

Q20 Philip Davies: We will come on to that in a second. But what I want to know is, are you happy that you have, as a senior director of the BBC, somebody who is—it is one of two things, it cannot be anything else—either lying to the Pollard Review about what she told Mark Thompson or telling the truth about the Pollard Review and in a cavalier way allowed a programme about Jimmy Savile to go ahead even though she knew full well about his activities and had made the Director-General aware of them? Neither of them seems to be a particularly good position for her to be in. Are you happy for that person to be a senior director of the BBC? Lord Hall of Birkenhead: I am very confident in Helen and her abilities. But did you not repeat what I said to you earlier, Mr Davies, which is what I believe, that it is perfectly possible for two people to have different views of something and for both to think they are right? Goodness knows, I know all sorts of different occasions when that happens in families and elsewhere. I go back. What really matters to me and should matter to our licence fee payers and to the BBC is, whether this affects the conclusions of the Pollard report? No. Are we 9 implementing what Pollard thinks we should be implementing in terms of BBC news and the culture of the organisation? Yes. Philip Davies: It does affect the Pollard Review because it calls into question his conclusions. Lord Hall of Birkenhead: Not according to Mr Pollard; it does not. Philip Davies: Well, it does. But we have found out that you are happy that Helen Boaden was telling the truth, that she did know about this, that she told Mark Thompson and that still those programmes were allowed to go out. We have at least clarified that. Now, you say that everything is working and— Lord Hall of Birkenhead: I do not think we have clarified that. I think those are your words. They are not my words. Philip Davies: We have clarified that. There is no alternative if you bother to look into it. Lord Hall of Birkenhead: No. You are wrong.

Q21 Philip Davies: Anyway, in answer to Mr Bradshaw you are saying that you are more interested in what is happening now and everything is absolutely fine. Lord Hall of Birkenhead: No. I have not said it is absolutely fine. I said the team is working well. Philip Davies: The team is working well and everything is going great. Lord Hall of Birkenhead: Well, it is. Philip Davies: We are all delighted to hear that. So can you perhaps tell us then about the story in the Telegraph about the Panorama programme on Comic Relief, which has been shelved apparently because—I am quoting what they say—“a string of BBC executives ruled themselves out of making decisions about it”. Lord Hall of Birkenhead: A thing I learnt when I was last in the BBC—Director of News or Chief Executive of news and current affairs; the title kept on changing, but it was the same job—under John Birt, was that when you have a programme that is controversial, and right to be controversial, making big claims and right to be making big claims about things—I am second to none in backing investigative journalism—you should not set a transmission date. You should absolutely ensure there is proper time for proper processes to be gone through with lawyers, occasionally with the Director of News, very occasionally with the Director-General. That is a proper process, and I have worked that and I know it works. That is exactly what is happening with this programme.

Q22 Philip Davies: So there is no string of BBC executives who have ruled themselves out of making decisions about the programme. Lord Hall of Birkenhead: Well, there is me and the Director of News, and the Director of News has obviously talked to me a lot about this. He is examining the programme. Let’s see where we get to. But there is no string of BBC executives working on this particular programme. No.

Q23 Philip Davies: So is this programme going to be shown? Lord Hall of Birkenhead: I do not know yet. Philip Davies: Well, you are editor-in-chief. Lord Hall of Birkenhead: I said that I do not know yet because my job is to enable programmes to take place. I very much hope this programme will be transmitted. But I do not know yet what the substance of the allegations that have been made are and if they are right or wrong. 10

You would not expect me to say, would you, Mr Davies, that I will simply publish anything that comes along without making sure it has gone through proper procedures and checks? I cannot do that. No. But my aim is to get programmes on the air and, as I said to you, I believe strongly in the BBC’s ability to carry out investigative journalism and I would like us to do more.

Q24 Philip Davies: So if you are satisfied that everything in this programme is accurate, it will be broadcast. Is that basically what you are saying? Lord Hall of Birkenhead: Yes.

Q25 Philip Davies: I am hoping, Mr Chairman, to catch your eye again later, but one final thing on this section. Your preparations for the World War I commemoration: I wondered how important that was for the BBC. Lord Hall of Birkenhead: I spoke about this last week. Since I arrived six months ago, I have thought this was something I want to make sure we get right and I hope we are getting it right, but I look forward to hearing what you say about our preparations. I feel it is one of those areas where the BBC needs to do it right by a whole load of different constituencies and perspectives. For those who know a huge amount about World War I, we have big history programmes that describe the debate about World War I, its causes and so on. Likewise for people who nothing about World War I because they have never met anybody who was in World War I, it is important that we do our job to educate and inform them about it. The third point is to catch moments of national commemoration and ensure that those are really well covered in a proper and sensitive way. I am always open to ideas. One further point. We are working with the Imperial War Museum and one of the things that you will see in the director-generalship from me is the BBC working with partners outside. I learnt this during the cultural festival in the Olympics; you can do so much more if you work with people. The BBC acts as an enabler, as a partner, and that is what we are doing in this case as well. So I hope that what we will do will inform as well as educate and also commemorate in the right way.

Q26 Philip Davies: Do you think it is suitable that the person you have put in charge of all of the World War I coverage is the person who is not trusted with news output on Radio 5 Live and lost his job because he could not be trusted in a news job? Lord Hall of Birkenhead: He lost his job and was moved before I came. All I can say about Adrian van Klaveren is that he is doing a brilliant job, with the rest of the team, on the World War I commemoration, and let us judge people by what they do. Philip Davies: He was judged by what he did, was he not? That is why he lost his job. Lord Hall of Birkenhead: If I can just finish the point, Mr Davies. Last week there was a brilliant and moving film showing the things that we will be doing. That has been under Adrian’s leadership, working very closely with television, radio and online, and he is acquitting himself very well.

Q27 Philip Davies: But you do not trust him to run news. He was not trusted by the BBC to run news, was he? He was sacked from his job. Lord Hall of Birkenhead: It predates me. He was moved sideways into this job. I have come in and I am looking at people and seeing how they are operating now and what they are delivering now. If people are not delivering now, it is a different matter. But if they are delivering for me, I am content.

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Q28 Mr Bradshaw: Going back to the Panorama Comic Relief programme if I may, Mr Chairman, does it concern you that journalists involved in this programme clearly felt that they needed to talk to someone outside the BBC? It has been leaked to the press. That would seem to suggest that they still have this concern, maybe in the aftermath of Savile, that BBC news management is not very fast, it is too cautious. Do you not think there are worrying parallels here with what happened over Savile? Lord Hall of Birkenhead: Yes. I don’t know about the parallels. I think this is a much clearer story here that if established, and I hope it will be transmitted, is a proper story to tell. I don’t like people leaking but people leak and what do you do? But what people will see with James Harding, with me and with others in the current affairs area—I have been strengthening the current affairs area over the last six months—is that we want to make programmes happen, but we also want to make sure that they pass the test of being proper, being properly researched, backed up by facts and legally okay. I go back. I did a lot of programmes like this in my time in the BBC previously under John Birt. We did all sorts of really difficult stories, but what we needed from the journalists was—it could be a week, it could be a fortnight, could be three weeks, it could be even longer—to work through the implications of what they were saying. Once they have done that, they will have my complete support.

Q29 Mr Bradshaw: If you wait too long is there not the danger that ITV will nick it, as they did with Savile and win all the RTS awards as a result? Lord Hall of Birkenhead: I take the point completely. You want to move quickly. We are moving as quickly as we can. Yes. Lord Patten of Barnes: Drawing another parallel, it is perhaps a pity that rather more attention was not given to checking facts in the case of the McAlpine report on Newsnight. So it is a balance that one has to strike.

Q30 Conor Burns: Can I just briefly return to Philip Davies’ line of questioning around Mark Thompson, Helen Boaden and Pollard? Lord Hall, you are absolutely right that two people can hold conflicting views and both believe they are right. Indeed you could argue that is the premise of how we operate here in Parliament. Are you not moderately intellectually curious to establish the facts of who was right; of who knew what? Lord Hall of Birkenhead: My belief is that is exactly what has happened. Two people are holding different versions of events in their minds. I am curious. I have asked questions. That is my conclusion. But as I said to Mr Davies, Mr Burns, it is important for the staff and for licence fee payers that we move on from this and convince people that we are aiming to get a culture that is different. On Mr Davies’ point, that will take time.

Q31 Conor Burns: I totally understand your determination to move on from it. I totally understand your desire to fulfil your mandate, which was to come in, draw a line, redirect, refocus the BBC on its primary mission and mandate. But as part of moving on, is it not necessary first to confront the reality of what happened? I am not necessarily asking you to agree with it, but can you understand why some people look at it and say there are unresolved questions? Here was a very senior lady working on the news output—maybe somebody needed to take more accountability than was taken. She was moved sideways and no one was really held accountable for the damage of what happened. 12

Lord Hall of Birkenhead: I understand the perspective you are putting and thank you for also understanding mine of wanting to move forward. A Director-General lost his job. The head of news programmes lost his job. The editor of Newsnight, in a different case admittedly, lost his job. The organisation has been through a really gruelling year. So thank you for understanding my perspective, which is that I think Helen Boaden is doing a good job in radio. I wanted to use her skills and talent in the new organisation and I very much want to move on culturally—I hope we are—to implement the things that Pollard pointed out and the difficult things that we have to do to make sure we have a proper culture in the BBC.

Q32 Conor Burns: You know from our many conversations that I am a big BBC fan, which puts me in a minority among my Thatcherite Conservative colleagues, but you can understand that this will never truly go away until we know what the then Director-General knew. If he was told by Helen Boaden what her lawyers allege he was told, that leaves a very serious question. As much as you want to move on, people are going to remain curious about that for a long time to come. Lord Hall of Birkenhead: That is as may be. I set a lot of store by Nick Pollard and his independence of mind and the fact that he has said on a number of occasions now, “This does not affect materially my conclusions”. That is what I am building my case for change in the BBC on.

Q33 Conor Burns: I think we can accept that it does not affect his conclusions, but people will still want to know what the truth was. People were so repulsed by what emerged about Savile, and it was such a pivotal moment for the BBC, that people are going to remain curious until the facts are fully known, are they not? Lord Hall of Birkenhead: I do not have much more to say. Maybe it is just a difference of opinion here. I can understand people being fascinated by this stuff. From my perspective, I think I have said it. I want us to learn; I want us to change; I want us to move on.

Q34 Mr Bradshaw: Lord Patten, do you think it is appropriate for senior BBC managers to have second jobs? Lord Patten of Barnes: It depends what the second jobs are.

Q35 Mr Bradshaw: What about John Linwood, who we may come on to later, who was responsible for the digital media initiative while doing another job? Lord Patten of Barnes: It would depend what the other job was and it would depend on whether there was a conflict of interest. It is primarily a responsibility for the executive, but I do not think it is impossible to think of another job that somebody could do. Acting for a charity would be one example. I do not think that in the Trust unit there is anybody who has a second job. Some of my trustees of course have other occupations, but they are all declared in their interests.

Q36 Mr Bradshaw: Lord Hall, what is your view? Lisa Opie, who apparently earns more than £200,000 as controller of Business, Knowledge and Daytime, is also running a café business. Lord Hall of Birkenhead: Yes. She is a shareholder in the café business and her blogging about it was daft. What matters is that her manager has ensured, is ensuring, that she is concentrating on the day job, which she is. My position on this is that I think it is good within reason for people in the BBC, as in other organisations, to go and do things outside the BBC, especially things that are unpaid and 13 charitable. That is why I have hung on to two charitable positions myself. I think it really is important and not only is it important from the point of view of the community and society more broadly, but people bring things back into the BBC perspectives of what life is like outside. That is phenomenally important for it. But there are restrictions. Any second job has to be agreed by the line manager—that must be proper—and there are restrictions on the number of second jobs you can do and indeed the amount of hours you can spend doing them.

Q37 Mr Bradshaw: Do you accept that the vast majority of hardworking BBC employees will think it is extraordinary that someone with the responsibility of John Linwood had time, while messing up what he was supposed to be doing for the BBC, to do another job? Lord Hall of Birkenhead: It is for the line manager to decide whether the person’s job is so pressured, so vital, that they should not do anything outside. Although you can have guidelines that suggest one or two are appropriate, it also depends crucially on the decision by the line manager.

Q38 Mr Bradshaw: But you do not think it is a matter of principle that when someone is doing such an important job for the BBC, not just him but others who have other jobs and are paid so much money, the licence fee payer and other BBC staff should expect them to be doing that job full time? Lord Hall of Birkenhead: It is difficult, Mr Bradshaw. There are cases where the BBC, the licence fee payer, the organisation, could benefit by having someone doing something outside. It depends completely on what that job might be, the amount of time involved in it, is it paid or not paid. I think it is an ad hominem or ad feminam thing that you look at it case by case and see. One of the things that strikes me about the BBC, which is full of really talented and brilliant people, is that the more people can get outside and see life outside, the better. When you go round local radio and regional television stations, you see people doing it all the time. Or when you wander round the arts department or science department in New Broadcasting House, you see people are doing that. Another way of doing that is to go and work for a charity or some other organisation. Lord Patten of Barnes: It has been known in other parts of the public sector, whether sensibly or not is a nice question, for senior civil servants to become non-executive directors of commercial companies, I think sometimes leading to their leaving the civil service. It is really a question of individual cases, but I understand why you are anxious about it, particularly in the case you mention.

Q39 Paul Farrelly: I want to come on to remuneration and pay. Lord Hall, with respect, as the new Director-General of the BBC, in answer to Mr Bradshaw’s question—this is about the culture of the BBC and there have been a lot of things that you have talked about where the culture is wrong—you could have struck a much firmer tone and said quite firmly, “If you are paid £250,000 by the BBC, we expect you to work full-time for the BBC, as in any other organisation”. But you have not. Lord Hall of Birkenhead: No, I have not, Mr Farrelly, for the reason I said. I was careful to say that it depends on the person; it depends on the job. I think people can learn a lot by being a non-exec on a charity or some other organisation that they then bring back into the BBC. That sort of fluidity and porousness between the BBC and other organisations is a very good thing. So that is why I have said what I said. I have been quite firm in the opposite direction.

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Q40 Paul Farrelly: We are not talking about people being school governors or non- executives of charities here. We are talking about people earning money from other jobs outside the BBC when they are being paid a small fortune by anybody else’s standards for working for the BBC. Your line, frankly, does not really strike me as the firm hand of government or governance. Lord Hall of Birkenhead: It is firm because it depends entirely on the job and it depends on who. It also depends on that job not taking dominance over the things they do in their day job. I go back. I really do think there are benefits to people seeing what life is like outside the BBC, adding whatever things they can bring to outside organisations but also bringing back into the organisation, too. I think we just disagree. I want the BBC to be much more fluid and porous and for it not to be an isolationist BBC but something where people do move in and move out and contribute in all sorts of ways to the broader culture in which we live.

Q41 Paul Farrelly: Can I turn back to what you told the Committee in April this year—that you were introducing a cap of £150,000 on severance payments or 12 months’ salary, whichever was the lower? The National Audit Office report has subsequently said that would apply to 15 senior managers who have already negotiated redundancies. Lord Hall of Birkenhead: What I said to you all last April was that there were cases where all the paperwork, all the agreements with the 15 people—down to 11, I think, when I came to you—were shut cases and we would make sure that all those cases were dealt with by 1 September. That happened. Those people have now left. Now the cap is applying, as I said it would do, from 1 September.

Q42 Paul Farrelly: Just so there are no more nasties that impinge on the reputation of the BBC, could I ask whether every manager, every employee who might have a different contractual entitlement agreed to your new policy? Lord Hall of Birkenhead: No. About 20 people have not agreed of about the 300-odd who need to agree.

Q43 Paul Farrelly: Twenty? How senior are those people or how junior? Lord Hall of Birkenhead: At all different positions within the organisation, but the cap is being applied. The cap is very real so I am afraid those people, if they were to face redundancy, would come under the cap.

Q44 Paul Farrelly: Would you impose it regardless? Lord Hall of Birkenhead: Yes.

Q45 Paul Farrelly: I go back to a point that I have raised many times in these sessions; the culture of chiefs and Indians—self-rewarding chiefs and a lot of Indians—that has been going on for quite some time at the BBC. In the intervening months we have learned that the generous culture in terms of management payoffs was down to custom and practice that had been allowed to take root at the BBC—something that was difficult to challenge, in the words of one executive. Lord Patten, who in your opinion bears the prime responsibility for allowing that culture to take root? Lord Patten of Barnes: The executive over the years—a point made by, I think, James Purnell in a very early television interview on this whole business. One reason why I was so interested in the KPMG report, which dealt with the three and a half years before the NAO report, was that it showed that this was culture and practice 15 that went right back to a previous era in the BBC. I think it was slack and wrong, not least in the way that business cases were dealt with only after terms had been agreed and the fact that it was often difficult to pin down who had been responsible for making this or that decision. It just was not how a professional organisation should operate. There are two other issues. First of all, undoubtedly sometimes you would be right to pay over contract in order to move somebody out quickly if there was a threat of legal action; if there were personal circumstances. You can understand that case arising. But, secondly, I think this Committee—I think you yourself because you have put questions to me in the past on it—felt that it was not just paying over contract, it was what contract entitled people to that was excessive. I think the Director-General has dealt with both those points admirably clearly. I wish that had not been an issue that we had to deal with.

Q46 Paul Farrelly: When you say the executive previously, in your opinion would the buck stop on the desk of the Director-General? Chair: Lord Patten, just before you answer that, our huge audience outside is apparently having some difficulty hearing you. Is it possible for you both to speak up slightly? Lord Patten of Barnes: For the millions who are hanging on to every one of Lord Hall’s words, I would be delighted to speak louder and project ourselves. The question was? Paul Farrelly: Would the buck very loudly have stopped with the Director-General? Lord Patten of Barnes: Just now Lord Hall was saying that the buck stopped with him on issues, so yes, I think that is true.

Q47 Paul Farrelly: So Mark Thompson bears a lot of responsibility? Lord Patten of Barnes: I am sure that he would want to explain to you why decisions had been taken that have subsequently been criticised, but I do not want to spend my time pointing fingers at people. Paul Farrelly: There has been quite a lot of that. Lord Patten of Barnes: There has been quite a lot of that.

Q48 Paul Farrelly: In response to the Public Accounts Committee in September, in this very unedifying dispute between you and Mark Thompson, joined in by Anthony Fry, about who was telling the truth, you referred to an answer that Mark Thompson gave to me in 2011 about Mark Byford’s payoff. I looked at that again and I can say that my comment afterwards, when asked, was that it was disappointingly very short of the truth. Do you consider Mark Thompson’s answer about the Byford payoff in that question to have been full and frank? Lord Patten of Barnes: I think that his answer defined “contractual” in a way that is different from the way in which the NAO defined it, and that was a point made very diplomatically by Anthony Fry when he talked about a disjuncture between the NAO and what he and others had been told. It was certainly true that there was a difference between what the NAO thought a contract was and what that reply to you suggested it was. It was about a case that happened before I became chairman, which meant that my ability to talk knowledgeably about it was somewhat constrained, but I had heard the then Director-General’s reply to you at the time and assumed that that was as it was.

Q49 Paul Farrelly: When you appeared in April this year, I asked about two other payoffs, one to Caroline Thomson and one to John Smith. Regarding Caroline Thomson, you said that that was what people were contractually entitled to. That was your understanding. Lord Patten of Barnes: I think that is a point made in the NAO report. 16

Q50 Paul Farrelly: In a follow-up note afterwards, we were told that Caroline Thomson received her contractual entitlement to 12 months’ redundancy and 12 months’ pay in lieu of notice. Are you satisfied that is accurate? Lord Patten of Barnes: I believe that to be accurate. I also believe it to have been a large amount of money. Paul Farrelly: She was quite willing to work her notice. It comes back to what you were talking about, making some very generous contracts, as well as over-contract payments. Lord Patten of Barnes: Yes. Paul Farrelly: You think that sort of contract is over generous. Lord Patten of Barnes: Yes. I am glad that the Director-General has made that clear. Can I just add a very obvious point that we need to come back to from time to time? If we were dealing with a media organisation that was not paid by the licence fee, those sorts of contracts would be being written and being paid out perhaps in even more generous terms. I think I have said to this Committee before, or maybe to the PAC, that one of the problems over the years is that the BBC found itself competing for talent with not just ITV, Channel 4 and Sky but a lot of indies, and people unfortunately got stars in their eyes.

Q51 Paul Farrelly: What were the reasons for John Smith’s departure? Why did John Smith leave? Lord Patten of Barnes: You would have to explore that with the then acting Director- General, Tim Davie, or his predecessor. I think John Smith had presided over a period in which Worldwide had seen its revenues and profits grow substantially, but I think that there were questions about how Worldwide fitted in to the BBC’s overall strategy. I felt one thing extremely strongly, and I made this clear almost as soon as I had become the chairman of the BBC Trust. I did not think it made any sense to prepare Worldwide like a fattened calf to be flogged off in the marketplace. I thought that would have been extremely bad business anyway and that the licence fee payer deserved a lot better than that. I know that not everybody agreed with me.

Q52 Paul Farrelly: Regarding George Entwistle and the departures at the time of his brief appointment, have you added up the total amount in payoffs that can be put down to George Entwistle’s brief tenure? Lord Patten of Barnes: No. I think the principle one is George Entwistle’s own payoff. We have explored that on a number of occasions and I have yet to hear anybody demolish Baker & McKenzie’s arguments about why we paid him off.

Q53 Paul Farrelly: I am making a different point. But we will follow up with a question. Can I ask about just one final departure? Mark Thompson: we learned that he was paid some money—I think £102,000 was the figure quoted—and he paid it back. Is that correct? Lord Patten of Barnes: If you mean he was given six months’ notice, but left at the beginning of November to start work in New York and therefore did not complete his six months’ notice, then I guess that would account for saying he had paid something back. But I can’t remember whether he had already been paid that money. Paul Farrelly: Ms Bulford, you wanted to come in then. Could you tell us? Anne Bulford: I am only aware of two repayments. One was from John Smith, who was paid in lieu of notice and because he started a new role within that period, he voluntarily paid back some money. The other is Roly Keating. 17

Paul Farrelly: Right. But not Mark Thompson? Anne Bulford: I am not aware of it, but the chairman’s analysis in terms of the time of Mark Thompson’s departure may be right. I am not aware of a receipt back from Mark. Lord Patten of Barnes: Mark Thompson, let me absolutely clear, did not get a penny more than he was contractually entitled to, and I use “contract” in this case as you would understand it and as I understand it.

Q54 Paul Farrelly: There have been reports that he has paid back some money. Lord Patten of Barnes: I do not think anything was paid back. But if it was, it would have been two months of his six-month entitlement, which would not have been paid to him because he had left and gone off to work in New York.

Q55 Paul Farrelly: Could we follow up with the merit on that because if he was working his notice you would expect him to be paid his monthly salary? If he was not, and he was given six months or whatever as a lump sum, then you could understand why there might be a repayment. It goes back to the culture at the BBC. I think it is quite important. Lord Patten of Barnes: I just want to repeat that he was not paid any more, not a sou more, than he was entitled to. Paul Farrelly: But if you could let us have a note, that would be very helpful. Lord Hall of Birkenhead: Could I make a point about it now, which might be helpful to you? One of the changes we have brought about since last April is that Anne and I sit on a senior management remuneration committee, which now looks at both increases in pay or changes of jobs that we are creating but also looks at people who are leaving the BBC. That is something I feel very strongly about. We sit on all those cases above £75,000 and we review them to make sure they fit within what I say. Paul Farrelly: I want to come to your remuneration committee in a moment, but I have had quite a long time. I have a few more questions, Chair, but I want to let other people in. Chair: All right, Paul. We can come back to you.

Q56 Mr Leech: I want to ask a question in relation to senior management salaries. The annual report shows there has been a 30% decrease in the number of senior staff and a 31% decrease in terms of salary levels. But the table also shows that salaries over £250,000, the number of staff between 2009/2010 and the number of staff in 2012/2013 is the same number. So while there has been a significant decrease in the number of senior staff on the lower pay grades, the number of staff on the higher pay grades has stayed the same within that period, although it has gone up and then back down again. Has the actual cost in very senior salaries gone down or gone up in that period? Lord Hall of Birkenhead: I can’t break it down other than to say what you have just said, which is that the pay bill for senior managers has gone down. We have a target of reducing that number still further at all levels of senior management by 2015. The senior management numbers at the moment are 445 and by 2015 we aim to bring that down to 415. I am absolutely on to the issue you are raising. I think it is a proper one. At what level are those senior managers being—

Q57 Mr Leech: But given there has been a 30% decrease in the overall number of senior managers, and these salaries exclude members of the Executive Board, you would have expected at least a small drop-off in the overall number of very senior salaries. But that does 18 not seem to have happened so far. The expectation would be that by 2015, that would be the case. Lord Hall of Birkenhead: I would hope that we can cut down at all levels of pay, Mr Leech, as you are suggesting. The process for that is as I described earlier. I shall be going through all our budgets over the next three months. I do want a simpler, slimmer BBC with the appropriate number of senior managers. Might I just say that I think it really is important we get the right people in the right place to manage the organisation? Something I said in my speech 10 days ago was that managers should see themselves as enablers, as people who can make things happen and not people who stop things happening. I think that is a really important thing, and I see so many managers who are well equipped for that, I really do.

Q58 Jim Sheridan: Lord Hall, in a previous life, when I worked in the private sector, the company that I worked for had a reputation for misusing consultants and indeed managers were described as just lazy. That was the case until they brought in a new chief executive who gathered senior managers together and told them in no uncertain terms that if he had to bring in a consultant, then the managers would go: he was not paying twice. Is that a strategy that you should have adopted? Lord Hall of Birkenhead: I want to reduce the amount of money that we pay on consultants, I really do. I think we are just over £10 million in this year and I would like to reduce that further. But in answer to your point, there are some areas where consultants can add something to your thinking. They can bring a sense of how other people have tackled challenges. I brought in McKinsey to help with the simplification of the BBC. I gave them tasks to do and a deadline and they have now gone. They have done their job and moved off. I think that sort of control, i.e. bringing people in for a point, is important. But I am not an easy ride when it comes to consultants. Jim Sheridan: I have to say it does concentrate the minds of managers when they are told, “If we bring in a consultant, you are getting the sack”. Lord Hall of Birkenhead: I can see that would concentrate the mind amazingly. I do think consultants, properly chosen but run very tightly, can really add value. I also think there is something implicit in what you are saying, too, which is right, that often managers properly led have the right answers and right solutions. But they need to be enabled to make decisions and to solve problems themselves. That is really important. So in answer to your question, I want to see the amount of money we spend on consultants for strategic reasons reducing.

Q59 Jim Sheridan: One of the curses and one of the constant criticisms of the BBC is the cronyism. I think you have already referred to McKinsey and you appointed Suzanne Heywood, who is the wife of the Cabinet Secretary, and so on. She is also a partner in McKinsey—I am just reading this from the script—who was appointed on a £600,000 contract after a competition process. We also have Godric Smith, Tony Blair’s official spokesperson, the former head of government communications. He was given a contract of £100,000 by our own James Purnell who joined the BBC. Then we have Mr Smith’s public relations agency, which was founded in April 2013. His agency was hired without any formal tender whatsoever. Do you understand people’s cynicism about cronyism and using former political links to give people positions in the BBC? Lord Hall of Birkenhead: Of course I do and you are raising an important issue here. I will take it bit by bit. 19

On McKinsey there was a process. I was only involved at the very end, and I withdrew to the very end because I wanted others to take the decision because I happen to know Suzanne Heywood. We worked together at the Royal Opera House. But neither can I say, Mr Sheridan, that because I know somebody, they cannot come and work for the BBC. Godric Smith was a different issue. I think people were trying to say I knew Godric. Alas, I did not know Godric before he came to work for us. But his role, which I think an organisation like the BBC needs, is to have somebody who is outside the organisation challenging us, but in a helpful sort of way, on how we come across; what we are saying; can we do this better; should we respond here, and all of that. He is doing a job. I do not know how long it will go on for, but as I said to you I shall watch all these contracts very carefully and the Suzanne Heywood, McKinsey one, they have done their job. It was not just her. It was a whole team of McKinsey people came in. They did their job and they have now gone. To my mind that is important, with consultants, because otherwise consultants can— and they do a wonderful job—ease their way into an organisation and it can be very difficult to get rid of them. I was very clear with McKinsey that there was a specific time scale. What is interesting is that the perspectives they brought were of other organisations who had been through the sort of depressing things that we have been through but also organisations where there is a sense of who is responsible, which I want to bring to the organisation, where we are clear about who is responsible for making decisions and doing things. They have been very helpful in helping us move towards that sort of culture.

Q60 Jim Sheridan: It goes back to the first point I raise with you in terms of morale. Employees have some difficulty when they lose their job because the company or the corporation has to save money and then they bring in what looks like close friends or allies and pay them whacks of money. The work force says this is wrong; this is morally wrong. Why are you doing it? Lord Hall of Birkenhead: I am really very sensitive to that. When I meet people, when I go round the corporation, I completely understand the way they are thinking. We have some very honest discussions, as you can imagine, with BBC people, about a whole range of things. I relish that. I enjoy that. So it is up to me to be able to demonstrate to people that things will change. So to my mind the task for me is, having spent money with McKinsey on simplifying the organisation, getting rid of boards and bringing more accountability, is to demonstrate to the staff, to licence fee payers and to yourselves, that that was money well spent. Now, give me some months and I hope I can demonstrate that to you before I next come before you.

Q61 Chair: Can we move on to one or two of the less successful BBC initiatives lately? First of all, I have here a press release from November last year declaring, “BBC Studios and Post Production today announced it will open a standalone post production facility in the heart of Soho”. Anna Mallet, the chief executive said, “This move forms a key part of our future plans”. I then have a press release of August of this year, seven months later. “BBC Studios and Post Production will leave their post-production facility in central London next January, only a year after it moved in”. Anna Mallett was quoted as saying, “Despite best efforts post production in its present current form is not proving to be commercially viable for BBC Studios and Post Production”. Why did you feel the need to open a post production facility in Soho in the first place when Soho is full of post production facilities? Secondly, why did it fail so badly? 20

Anne Bulford: This is linked to the period of refurbishment of Television Centre, so Studios and Post Production have been running a facility there for the benefit of in-house and other programme makers for some time. When the studios closed and the facilities moved out through the period of refurbishment—they do not go back in until 2015—as I understand it, work was done to look very carefully at what studio facilities we were going to need through that transition period and also what additional post production facilities might be useful. That resulted in Studios and Post Production taking three studios at Elstree through this period, including one where Strictly Come Dancing is now housed. Demand was also identified to set up a facility in Post and to hold on to the key talent that was there. A few months into that it became clear that that demand simply was not going to come through and I think the management team are to be commended in saying, “We have made a mistake”, stopping it and cutting it off quickly. But that is the sequence of events.

Q62 Chair: But is this not an example of where the BBC moved into an area which is very, very well catered for by some of the most professional and skilled companies in the world and ended up losing rather a lot of money as a result? Anne Bulford: It is certainly true that post production is a highly competitive market. As I understand it, it was not a move into an area. It was moving what had been a facility in Television Centre into premises in the West End, on the understanding that there was a business need and a business requirement there for it. As it turned out, that was not sufficient to sustain that and so they stopped it quickly.

Q63 Chair: Can I move on to the biggest failure, which as Lord Patten rightly observed, makes the severance payments pale into insignificance; the failure of the Digital Media Initiative? When you eventually pulled the plug on it, the bill for DMI had reached nearly £100 million, but alarm bells had been rung considerably earlier than that. Would you like to tell us how it was that it was allowed to reach such a level of loss and why you did not take action earlier? Lord Patten of Barnes: The full story will, I hope, be available shortly, because we asked PwC to review the whole wretched business and we will publish their report as soon as it comes out. Let me describe it from the Trust’s point of view. The Digital Media Initiative, you will remember, began with Siemens being responsible for it, and then it was taken in- house by the BBC. This was before my time. The PAC was interested in it and I think in the spring, maybe slightly earlier, February 2011, the PAC discussed it with the then Director- General and Director of Technology and Anthony Grant. Assurances were given about the roll-out of the initiative across the BBC. I can’t remember the exact words, but that was by and large what was said. I think at the time Anthony Fry said that he continued to worry about it despite these assurances. I think he said that to the PAC, who expressed themselves very pleased with what they had heard, understandably. In the Trust’s Finance Committee every quarter we look at big projects and the risk involved in big projects. In June-July last year suddenly the Digital Initiative came up with a red warning. At the same time we had a whistleblower write to us and in interviewing one of the candidates for the Director-General post one or two things were said about the Digital Initiative that caused us unease. So, in the July 2012 Trust meeting we asked a series of pretty searching questions about an initiative that we were starting to be told was behind time and losing money. We received the reply to those questions in autumn and were so alarmed by what we heard that we asked the executive to stop any further spending on the initiative. We wrote to the PAC, told the NAO what we were doing and asked Accenture to review the whole project while no more money was spent on it. The report by Accenture was on the Director-General’s 21 desk when he arrived in spring of this year and his decision straight away, I am pleased to say, was to pull the project. It is true, of course, that there have been other calamities in the public sector with these projects, but this should not have happened in the BBC, which has always prided itself on being, among other things, a very good engineering company. So, it is a pretty lamentable story, but the ins and outs, the trail of e-mails of who said what to whom, of what happened at individual meetings or was agreed at individual meetings will be fully exposed in the PwC report.

Q64 Chair: Whose fault do you think it was that it was allowed to reach this position? Lord Patten of Barnes: I do not want to prejudge what PwC says, but the management of a project like this is an issue for the executive of the BBC. We look every quarter at big projects to check on what is happening with them, and that is as it should be, but the Trust does not manage individual projects. We do not manage the move to Salford or the move into New Broadcasting House or something like the Digital Initiative. We check that they are done competently. In Salford, as you know, while there were some arguments about some overpayments, by and large it was a project that went extremely well, below cost and ahead of time and without any impact on the services. But the Digital Initiative is a pretty good horror story and I do think that Anthony Fry, who has been tracking this all along, has been shown to be right.

Q65 Chair: Therefore ultimate responsibility lies with Mark Thompson. Lord Patten of Barnes: Ultimate responsibility lies with the executive. The Charter and straightforward common sense makes clear what is executive and what is strategic and if, when I applied for this job I had been told that one of my functions would be to manage large digital projects, I would have said, “I think that is for somebody else to do”. That is not my gig.

Q66 Paul Farrelly: The Chair is asking questions of Lord Patten. Could Lord Hall answer the same questions? Lord Hall of Birkenhead: There is a process going on at the moment, number one, so I do not want to comment on a person who was holding a responsible position at the time. Secondly, as the Chairman said, I am looking forward to reading the PwC report. I think let us go on the evidence of people who are looking at this to find out what has happened. All I can add is I came in, I read the report, as the Chairman said. I also went out deliberately to Perivale to look at the archives there and what they were making of what was going on. A great group of people, but it is clear to me that the DMI initiative was going nowhere. The decision was whether to completely write this down, to be frank, or to say there is still some value left in it. I felt strongly we should write it completely down to zero, as indeed did Anthony Fry and the Trust. If we can write back some value over the next couple of years, fine, but what I thought would be appalling was to carry on with this project hoping that something would come right from it. One lesson I would say of this is that it comes back to a culture of responsibility, ensuring that someone is clearly in charge. The other two bits of learning, I would say, before we get onto the PwC report, would be that these big projects need to be broken down into ways they can be managed properly and appropriately. Thirdly, you need to listen to what the staff are saying about these sorts of projects, because I have met a lot of people who said, “We knew that was not going anywhere, but we dared not say anything”. 22

This poses a big issue for me. That is, you have to have an organisation and a culture more broadly, where people feel they can say, “This is not working. Now what do we do or shall we go for a cheaper solution outside?” You need to have a culture that encourages that and not, “There is a mistake. You are to blame. Fail. Hang somebody.” I think we need to pull back. People have been saying to me, “We knew this was going nowhere and we knew there were solutions we could have bought off the shelf to various bits of that”. We need to ensure that that culture is the one we have. But let us see what PwC say.

Q67 Chair: Are you saying that you do not think anybody should suffer for a £100 million loss of licence fee payers’ money? Lord Hall of Birkenhead: No, I am not saying that at all. What I am saying is there is a process going on at the moment and I do not want to comment on that because it is a legal process. Chair: Someone may lose their job as a result of this? Lord Hall of Birkenhead: It is a legal process going on at the moment and I would, if you do not mind, just like to leave it there. I am saying that people should be responsible and be held responsible, but I am also saying that you have to have a culture where people who are in responsible positions are also listening to what people are saying. People should not feel afraid to come and say, “The emperor has no clothes”.

Q68 Paul Farrelly: Is the culture still going to be, “We are just going to wait for the management consultants to bring back another report before I as chief executive take a decision”? Lord Hall of Birkenhead: Not at all. We are already looking at projects that Anne is taking the lead on and how we can run those in a clearer and more responsible way. I am saying that on DMI I look forward to hearing what PwC says, but I have given you some of my own conclusions from talking to people and going round the organisation.

Q69 Paul Farrelly: When we looked at BBC’s commercial operations in 2009, we were scathing about the price that was paid for Lonely Planet and the rationale for the business that it was. Hordes of BBC executives led by the Finance Director came in and told us it was absolutely wonderful. It had been signed off, it was commercially a fantastic deal and the BBC had been transparent, none of which was the case. Now we see that Lonely Planet has suffered a pretty predictable fate. Could I ask, was the sale of Lonely Planet signed off by the Trust, Lord Patten, under the new rules? Lord Patten of Barnes: I can’t remember the year.

Q70 Paul Farrelly: No. The disposal, that was signed off by the Trust? Lord Patten of Barnes: Yes. Paul Farrelly: I do not have the BBC Worldwide report and accounts with me so I do not know— Lord Patten of Barnes: We agreed to the sale with, broadly speaking, the argument that it was the best we were likely to be able to manage in difficult circumstances.

Q71 Paul Farrelly: Can you tell us what exactly was sold? Anne Bulford: As I understand it we acquired Lonely Planet as a trading entity and we sold out of that whole business, so it was this subsidiary that was sold.

Q72 Paul Farrelly: So you sold the subsidiary? Anne Bulford: I believe so. 23

Q73 Paul Farrelly: Was there any cash in the subsidiary? Anne Bulford: I do not know. I would have to check back on that. Paul Farrelly: Could you come back with the terms of the deal? Anne Bulford: Yes. The accounting looks very odd because you will see in the report and accounts that the accounting shows a book profit because of the exchange. The position was that there was an £80 million cash loss through the course of the business.

Q74 Paul Farrelly: I have seen that, but I would like to see what was sold, if you can provide me with details, whether there was any cash in the business when it was sold. Anne Bulford: Certainly. Lord Hall of Birkenhead: Could I add one point that may be useful? One of the things we are doing is bringing Worldwide and the planning for Worldwide alongside the public service part of the Corporation. So, decisions are shared between the public service and the commercial operation under Tim Davie, and the Executive Board is taking responsibility both for the public service side and also the Worldwide commercial side, because I think on decisions such as this it really is important that the whole of the BBC is making the decision, not just a part of the BBC with their co-operation.

Q75 Paul Farrelly: One final question. You said earlier regarding the departure of John Smith that there was a sense that BBC Worldwide was being fattened up like a calf for sale. That is quite new to us. Can you tell us a bit more about it? Lord Patten of Barnes: That was my feeling when I became Chairman of the Trust. But maybe I was wrong. I was clear that BBC Worldwide should be, as it were, a commercial arm of the BBC rather than the BBC being the public service arm of BBC Worldwide. I think that is a point well understood by the Director-General and Tim Davie, who will do an outstanding job. It has to be said that when John Smith was Chief Executive he did increase the revenues and profits very considerably. But I want to see a BBC Worldwide that is selling the best of the BBC and others throughout the world and is able, as a result, to invest back in making good BBC content.

Q76 Paul Farrelly: You would both resist any pressure or any internal or external agenda to sell off BBC Worldwide? Lord Patten of Barnes: Yes, absolutely. Let me make a very obvious point. If you sell off BBC Worldwide, BBC Worldwide loses one of its main commercial attractions, its ability to showcase the best of the BBC, because no state aid policy— Paul Farrelly: The yes is sufficient. Lord Patten of Barnes: Yes.

Q77 Mr Sutcliffe: Thank you, Chair. I start off with congratulations for the Bollywood Carmen production in Bradford that I thought was fantastic and showed Bradford in a good light, so thank you very much for that. I want to talk about the governance role. Lord Patten, you wrote to the Secretary of State in September following the PAC and NAO debacle, if you like, to say that you highlighted potential problems in the relationship between the Trust and the executive. What is your view now? What work are you carrying out to try to disseminate information about the roles of the Trust and the executive? Lord Patten of Barnes: We are still having meetings about this, but I hope we will be able to set out clearly before Christmas the results of our joint work, and I hope that that will achieve three things. First of all, I hope it will match in the Trust what Tony Hall is doing with the executive, which is to strip out some unnecessary layers. 24

Secondly, I hope it will clarify exactly what the Trust is responsible for and exactly what the executive is responsible for, and do that in part by greater openness and transparency than we have at the moment. This has not been agreed yet, but I think some of what we do should be in public. I do not think it will be “hold the front page” but I think it will be quite important. Thirdly, if I can just add the other point, I think it raises questions that Tony and I, the Director-General and I, have been asking about the role of the non-executive directors and exactly how that should be seen. Those are the particulars. I have to say that my predecessor, Michael Lyons, wrote to the then Secretary of State for Culture, Media and Sport about some of these matters in the summer of his departure, perhaps the summer before his departure, but did not make any impact.

Q78 Mr Sutcliffe: In the debate yesterday a colleague raised the issue of whether we should, as a Select Committee, scrutinise both together or whether we should have two separate sessions. What is your view on that? The public view is that there is no difference. I accept that there is, but the perception is that you are very close. In particular when crises come around, you are forced together even more. Lord Patten of Barnes: I, of course, treasure every moment I spend with the Director- General and the Managing Director of Finance. If those are in your company as well they are particularly precious. I realise why somebody made the point, but I think we should be capable of performing a regulatory and governance function without being thought to be subject to executive capture. One reason why, and I know not everybody agrees with it, the Board of Governors was disposed of was because people were worried that it was subject to executive capture.

Q79 Mr Sutcliffe: What is the role of Nicholas Crowe? What does Nicholas Crowe do? Lord Patten of Barnes: He is the sort of permanent secretary of the Trust, a very experienced former civil servant and he runs the Trust unit that has about just over 64 people in it and a budget of £11.9 million, of which £3 million goes straight to Ofcom in fees.

Q80 Mr Sutcliffe: Has he had a view about the proximity of the Trust and the executive? Lord Patten of Barnes: Yes, and I suspect that because this is part of a very distinguished public service career, he feels even more frustrated than I do or the trustees do about the difficulty of getting across exactly what our role is and how we have been doing it. The service reviews, the service licences, the interventions over things like children’s broadcasting and local radio and Radio 6, and the constant pressure on pay and remuneration, all those things have been part of the Trust’s record that nobody takes very much notice of. I am too old to moan that life is not fair, but I think it is more difficult if you have been in the trenches doing the digging sometimes to accept some of the criticism.

Q81 Mr Sutcliffe: This review you are carrying out will lead to the thought patterns for 2016 when we get to the end of the current Charter. Will there be some recommendations that perhaps we will be able to look at and discuss and consult on? Lord Patten of Barnes: What we want to do is make a difference now. The Charter review process will doubtless be within the intellectual infrastructure set by the Government, this Committee and others. In the course of that, I guess governance will feature, but the most important issue is, however, the future of the BBC itself and the licence fee, but that is for another day. 25

Q82 Mr Sutcliffe: You are hoping to do something now that will hopefully include not a separation but a difference between the roles that will be transparent to people, so that we will not have a situation where you have to become the cheerleader for the BBC and also the regulator for the BBC. Lord Patten of Barnes: Greater clarity. I do not think that there is any great harm, when the BBC does things spectacularly well, to cheer. But we are a regulator. In this whole debate I have been very interested in the honest responses of Ofcom and the excellent officials who run Ofcom, who have pointed out very clearly that they could, of course, regulate the BBC, but they cannot perform a governance function in the BBC. At the moment Ofcom regulates Channel 4, but it does not decide how much people in Channel 4 are paid or whether they should be paid more or less. When people talk rather loosely about the present model not being right they are not quite so convincing when it comes to alternatives. Mr Sutcliffe: Lord Hall, have you anything to add in terms of the relationship between the Trust and the executive? Lord Hall of Birkenhead: Yes. I think we have a chance here, for the next three years or so, to bring clarity, to have a simpler relationship where we are focusing on key decisions we need to make, and also where we can strip out areas or functions that we just do not think are adding value. I always think with all organisations and relationships it is a bit like pipes in a hard water area. They accrete lime scale over time. This is a good chance to go straight back to what we want to achieve and do together. That is one point. The other point is giving the executive clarity about what it is there to do, and that also means with the non-execs taking responsibility for decisions. In answer to your question earlier about the debate yesterday, it could be that in future you do not want to see me, but you want to see some of the non-execs on the Executive Board because in the end, as the Chairman has been saying, we have executive responsibility for spending the money, for ensuring we are creative, for ensuring we are doing great work, and the non-execs are part of that.

Q83 Chair: On the issue of governance, the Secretary of State told the House of Commons yesterday that the BBC has already agreed in principle to changes to its relationship with the National Audit Office. Can you confirm that in future the NAO will have unfettered access to the BBC? Lord Patten of Barnes: It depends what you mean by unfettered. Chair: That they can go where they choose to go without seeking the permission of the BBC. Lord Patten of Barnes: With a proviso, and we are discussing this with the Secretary of State. I do not think it is a controversial issue. We do not think the NAO should involve itself in editorial matters, and that is pretty important. I have not had personally, though others do have this concern, an ideological concern about the NAO. I was interested that Gavin Davis, a former chairman of the BBC, said he used to have an ideological objection to the NAO having access, but in practice he did not feel that any more. I am much the same. I think our relationship with the NAO is pretty good. I think they do very competent work, but we had worries in the past about interventions in editorial areas and we had concerns that there might be occasional ambulance chasing. But I hope that will not happen. We are trying to clarify the editorial point at the moment and I hope that will lead to a smooth running relationship with the NAO.

Q84 Chair: Nobody would suggest that the NAO should have any role in questioning editorial matters. 26

Lord Patten of Barnes: You say no one would suggest. Chair: It is written into the agreement between the NAO and the BBC. The Secretary of State said very clearly yesterday that will not change. Lord Patten of Barnes: Indeed it is.

Q85 Chair: But that does not mean that at the moment the NAO has the complete freedom to examine financial matters that it would like. It is subject to delay, for instance, before it is able to look at various matters. Lord Patten of Barnes: Three months.

Q86 Chair: Why should there be a three month delay? Lord Patten of Barnes: I hope that will be resolved satisfactorily. Chair: Good. The NAO, as long as they keep out of editorial matters, will be able to go where they choose without the BBC having the power to say, “No, you cannot go there”. Lord Patten of Barnes: Yes.

Q87 Paul Farrelly: Just on governance, some things are for the Trust, some things are not for the Trust. I am concerned about how the non-executive directors of the BBC fit in with this. You had six and you now have four. Are you replacing the other two who have left? Lord Hall of Birkenhead: We are going to replace non-execs when we are through this process that the Chairman has outlined. They have a really important role. Firstly, they run the Audit Committee. I think that is really key. The Executive Remuneration Committee is also chaired and dominated by non-executives. Paul Farrelly: We can see that, but I think we should take you up on your invitation. I think you have a senior non-executive director. Lord Hall of Birkenhead: Indeed. Paul Farrelly: I think there is a spare chair there for next time and it would be interesting—it is now a “her”—to ask her and get a feel for the level of challenge by the non- executive directors to the Executive Board. Lord Hall of Birkenhead: I think that would be very interesting, yes.

Q88 Paul Farrelly: Your Remuneration Committee is being rejigged. It was last year comprised of three non-executives plus the Director-General plus the Director of Business Operations. Was that Caroline Thomson previously? Lord Hall of Birkenhead: I am not sure. Paul Farrelly: We can ask you later. Also a person who was called the Director of Reward; do you know who was the Director of Reward? Lord Hall of Birkenhead: I have no idea who the Director of Reward was.

Q89 Paul Farrelly: Is there still a Director of Reward? Lord Hall of Birkenhead: Well, as you have correctly observed, it is run by the non- executives now. That is proper. Paul Farrelly: I am going to come onto it now. Lord Hall of Birkenhead: Okay, yes.

Q90 Paul Farrelly: I am just looking at the changes. There were three non- executives previously, plus the DG, Director of Business Operations and a person called a Director of Reward. Can you shed any light? 27

Anne Bulford: We now have a person from HR who brings the material and is in a position to answer detailed questions whose title I believe is Head of Reward. I think we are confusing— Paul Farrelly: We will follow up. We will follow up. Anne Bulford: We need to check whether we are talking about members or attendees who are providing information. Paul Farrelly: We will follow up as to what titles people were given. Anne Bulford: Thank you.

Q91 Paul Farrelly: Now you have rejigged it, there are three non-executives and the Director of HR and the Director of Employment may attend. Lord Hall of Birkenhead: Yes.

Q92 Paul Farrelly: Does that mean that Lucy Adams still attends the Remuneration Committee? Lord Hall of Birkenhead: She does, yes.

Q93 Paul Farrelly: She does, okay. Lucy Adams was someone I also mentioned in April as to what her role in facilitating this culture had been. In the meantime, Lucy Adams became news herself, somewhat controversially, and is now leaving. I notice that immediately on the appointment of George Entwistle she was appointed to the Executive Board, having stepped down at the end of March 2011. That conveniently meant, or maybe I am reading it too cynically, that she was not on the Executive Board at the time of the 2011/2012 accounts and therefore, her remuneration of £320,000 was not up there in lights compared with George Entwistle’s, who was running the TV side, which was about £270,000, so £50,000 less than the Director of Personnel. This time around, she is now on the board at £320,000 and Danny Cohen, who has taken over George Entwistle’s old job, his remuneration is £320,000, the same as Lucy Adams, and £50,000 more than George Entwistle was earning. Can you explain why he is being paid that much more than George Entwistle was? Lord Hall of Birkenhead: I cannot tell you why George Entwistle was paid what he was paid as Director of Television. What I can tell you is, in paying Danny Cohen what I thought was the right rate for the job—he has a huge job—an enormous amount rests on his shoulders. I have a huge amount of faith in him and that seemed to be the appropriate salary for him. It went through the non-executive directors. They quizzed me about it and then they said that was okay.

Q94 Paul Farrelly: Cynics might possibly say you cannot possibly have a Director of Television on the Executive Board being seen to be paid less than the Director of HR. The question that cynics might ask is: to what extent are Lucy Adams’ pay, terms and conditions, which seem very generous, responsible still for inflating BBC executive remuneration? Lord Hall of Birkenhead: Well, I hope I have been clear that, because I chair the senior management RemCo and also attend that meeting, I decide the people who are put forward—as in Danny Cohen—obviously with advice. Lucy Adams will be leaving at the end of this financial year and I will seek to employ someone at a lower rate, taking the point that Mr Leech made earlier on.

Q95 Paul Farrelly: The final question: do you know of any other big broadcasting operation where the head of HR is paid more than the director of the main broadcasting function? 28

Lord Hall of Birkenhead: I do not have a specialist degree in what other pay rates are out there. I have inherited what I have inherited. I think Danny is paid appropriately and, when I come to replace the Director of HR, I will seek to do that at a lower rate.

Q96 Tracey Crouch: I want to ask a few questions on DQF and their impact on local services, but if I may, Lord Hall, I will just start with your comments at the Edinburgh Festival, where you set out a reported ambitious vision focused on 50% of local stations having a woman presenting high-profile breakfast shows? What progress has been made on that thus far? Lord Hall of Birkenhead: That was only a few weeks ago. It is something I will be monitoring very carefully over the coming months. I want to get to that for one very simple reason. It is not right that there are not more women in high-profile positions at the moment on that morning show on local radio stations. Also, I have always believed in the importance of local radio as a conduit through to network radio, television and so on. So this felt to me to be an important start on getting more women in prominent places on our screens and on our radio.

Q97 Tracey Crouch: Do you have a time frame in mind for when you would like to see this? Lord Hall of Birkenhead: Yes, I think I said by 2015. Tracey Crouch: All right, so 18 months or so. Lord Hall of Birkenhead: Yes.

Q98 Tracey Crouch: Do you think it will have an impact on childcare or home lives to do the breakfast show in particular, which can be quite difficult for some women? I know that you did recognise that in some of your own comments. Lord Hall of Birkenhead: We are going to have to work this through case by case, station by station. I am sure there will be all sorts of issue like that, but I want us to be a good employer. I want to see more women in prominent positions, both in front of camera and microphone, and behind scenes as well. This is one step on that route. Getting Mishal to move to the Today programme was another. I was delighted last week—or was it the week before— when four women were presenting the Today programme. I think it was a week last Thursday. I was pleased about that: all brilliant, good women.

Q99 Tracey Crouch: I have to say I am slightly disappointed, if I may confess, that when I did read the headline that you had set out an ambitious vision for BBC local radio that what was being reported was simply the diversity targets that you were hoping to achieve. I just wondered what else your vision for the future of local radio consists of? Lord Hall of Birkenhead: One of the really satisfying bits of the job over the last six months has been going around a whole range of local radio stations from Orkney, run by four brilliant people, to Devon to Kent to Lincolnshire. What we do in local radio is phenomenally important. It is really in touch with licence fee payers. It is really in touch with communities in a way that other parts of the BBC are not. I really do want to see in all sorts of ways local radio thrive in my time at the BBC. I think we need to look quite carefully, because whatever you do, whatever bit of money you put their way, you have to multiply it by 39, but I want to think through how we can build on what local radio does in communities. I will just give you one or two examples. One was from Radio Lincolnshire who, using a pot of money that the director who is in charge of all the English local radio stations holds, was able to put on a play half an hour long, which then toured round RAF bases or stations—I forget what you call them now—on 29

The Dam Busters and went to The Dam Busters anniversary event. It was put on with local students, working with the university, working with the RAF, working with all sorts of people in the community. No other organisation but the BBC and BBC Radio Lincolnshire would have had the sort of ambition to do that. By the way, it was phenomenally moving because you realise that the students who were doing it were the same age as all the crews that went off and dropped the bouncing bombs. If you go to Radio Merseyside, there you have the A Team, which is led by a person who is full time, but these are people who come in and volunteer. They take telephone calls and they take issues from Radio Merseyside, and begin responding to those issues, helping people directly; it may be fuel bills; it may be a whole raft of other things. This is what I have seen and lots more in my first six months. Talking with James Harding, I want to know where we take this and where we take this forward, because I think this is real public service. These people are doing brilliant jobs. With all the limitations we have with money—and we have limitations with money—this to my mind is a very direct, important service we are providing people with. Some of it is also examples of what the Prime Minister calls the Big Society.

Q100 Tracey Crouch: I think we would all agree about the value of local radio. Whenever there has been any debate in Parliament about the future of local radio services, people appreciate what it is that the BBC brings to their local community. Is it not the case that, as a consequence of DQF, the local services, both radio and TV, are being spread a bit too thinly and there is a danger that they are becoming more about news recycling rather than the examples that you give of going out there and seeking local content? Lord Hall of Birkenhead: Yes, I think there is a danger of that. I think the Trust stepped in, if I understand the history right, and cut back the cut that was proposed for local radio. I think, indeed, Parliament has had some say in that. What I am doing, to answer your question, is looking, with the Director of News, at what we want and how we think we can be ambitious with limited resources in local radio. I go back. I think there is a lot for us to do. There is also a lot for us to do in partnership with local newspapers or other local organisations in finding new ways of helping to give people information, but also as you say reflecting the quality of the arts—I would say that—culture and other things going on in communities. I have the same question—and again it is a money issue—with English regions as well. Increasingly the BBC is really significant and important in reporting what is happening in English regions to those English regions. I do not know what the consequence will be of what I am thinking, but that is an area I am very interested in and I think it is a very important area for the BBC.

Q101 Tracey Crouch: Do you think DQF went a bit too far in its cuts to news in particular? Lord Hall of Birkenhead: I do not know fully yet, but it is the question I have as I go through all the budgets in the next few months. I know we have to land the DQF savings by the Charter period, which is the end of 2016. There is no going back on that. There is no magic wand there. That may mean some more hard choices around the year 2016. We kind of know where we are going until about the end of 2015. It is 2016 where I have a lot of questions. I really think what we are doing in the English regions and what we are doing in local radio is important. There is another issue that just might interest you, which is around Birmingham. A lot of network production has gone from Birmingham. I was with the leader of the council in Birmingham last week and also with the person who is running the LEP there to talk about 30 what we can do together. I really believe that the BBC acting as a catalyst, working with other people, can often do things that are bigger than just if we work on our own. I want to work in those sorts of partnerships. It is what you see in Salford brilliantly, working with the local communities.

Q102 Tracey Crouch: I appreciate that you have to make the savings. You have to do so within a certain time limit. Do you think that your overall property and investment strategy is going to damage local services in the long term? For example, the Bradford studios have closed and people have had to go to Leeds. I was talking to another colleague this morning. The Mold studio is closed, which means that they therefore have to go to Salford. The Chatham studios, in my own constituency, are under threat, which means that the largest conurbation in Kent will no longer be served by local radio and TV studios. I can absolutely guarantee you that no one will go to Tunbridge Wells, because it is practically in Sussex. Is there not a question around the property strategy, which could have an impact on the quality of the content that is being delivered locally? Lord Hall of Birkenhead: I think you are on to something really important and it concerns me too. I completely agree. Tunbridge Wells to Chatham is a very long way. Likewise, when you look at somewhere like Merseyside, Chester is an important city. That area is really important too. How does that reflect back into the network? I was in Bradford for the Bollywood Carmen on BBC3, which was fabulous, but what a number of council leaders and others were saying to me there was that it was really great to have something that reflected this side of Bradford to us. Now, it is a bit hard to argue when you have moved your studio in Bradford and said we will do all of this from Leeds. These are questions that are open to me. I am concerned about the Bradford issue. I take the Chatham issue as well. I have no idea whether we can afford this yet, but I am with you. I think this is an area where we in modest ways need to make sure that where we base people allows them to reflect the communities we are seeking to serve. If you ask me, the biggest change I have seen— well, I have seen lots of changes since being away for 12 years—is the way in which our local role and our regional role has become more significant, not less.

Q103 Tracey Crouch: I would agree with that, but I fear that the future may look very different in terms of what you have just outlined being very much a hub and spoke model for delivering local content. It feels, with the closure of studios, particularly around my own county of Kent, that we are just going to have a hub. Therefore, the rest of the county, the north and west of the county, will have nothing. There will not be any good quality service for people to contribute to both TV and radio. That will only serve to dampen the content for the BBC. So will you save Chatham studios? Lord Hall of Birkenhead: I absolutely take the point. I want to say something and so does James Harding later in the year or early next year about news and about local. Our mission is finding the right way, within all the issues to do with savings we have to make, to give a greater spread of news, comment and other things from around the areas we are seeking to serve. To take your own example of Kent, I know damn well that Tunbridge Wells is one side of Kent, you can go to Chatham, you can go to look at the brilliant Turner Contemporary at Margate. This is a very big county and our job is to make sure we can cover those things properly. That equally applies to Lincolnshire, Merseyside, Devon and so on.

Q104 Tracey Crouch: One final question, do you think that the RAJAR figures have reflected any impact of DQF? Have they shown that DQF is creating a cut in listening? Lord Hall of Birkenhead: What the RAJAR figures show for me on local radio is the impact on the evening merger of programmes. I am not overly concerned about it to be honest 31 with you, if that is what you are asking me. On RAJAR figures and figures more generally, I am concerned about the speed with which audiences find other ways to content, especially young audiences. Tracey Crouch: Thank you.

Q105 Mr Leech: Yesterday, in the debate on the future of BBC, I and a couple of other Members remarked that the poll ratings for BBC were at levels that politicians could only really dream of, but the picture when you look at more of the detail is not necessarily stated so clearly. For instance, people in Wales seem far more satisfied with the BBC than people in Northern Ireland and Scotland. What are you doing to improve ratings in regions where the BBC is not so popular? Lord Hall of Birkenhead: It is a really interesting question. For me, what BBC North based in Salford demonstrates is what we want more of. A sense of place, of the non- metropolitan nature of news and all sorts of other things, is properly reflected. You see that in a markedly different share and reach for BBC services, because people in the North feel there is something there. Likewise, with Scotland and Northern Ireland, what is done nationally in Scotland and in Northern Ireland is really important and a vital part of what we are doing, but we are also kind of reflecting programmes back to the network. It was fabulous, for example, in Scotland to see the beautiful series Hebrides running first in Scotland and then across the network. That sense that things from Scotland are reflected back into the UK is very important. We are on a path here to do more from the nation’s communities and regions. It goes up and down a little bit every year, but the trend is in the right direction.

Q106 Mr Leech: The same results came out last year in relation to Northern Ireland and Scotland, but the percentage spend by the BBC on Northern Ireland and Scotland has actually gone down. Surely that is counterproductive. Lord Hall of Birkenhead: As I said, if you look at it year-on-year, things can go up and down a bit, but the trend is up and we have a direction to get more out of Scotland and Northern Ireland with specific targets. We will make sure we meet those. I think it is really important.

Q107 Mr Leech: Would you expect the overall trend in future years for spend on Scotland and Northern Ireland to increase as a proportion of BBC spend? Lord Hall of Birkenhead: Yes, we have specific targets of getting more spend from Scotland and Northern Ireland. Anne Bulford: Yes, the spend in Scotland dropped slightly in the year, mainly as a result of The Weakest Link. We are expecting that to go up towards 10% in the current year. Overall, as I understand it, we are aiming to have 50% of production outside London, with 17% in the nations, so we are on track to achieve that. Lord Patten of Barnes: Can I say something about the Welsh figures, which are, you are quite right, extraordinary and stand out in comparison with the others. I suspect that there are, among other features explaining that, the Welsh language and rugby football, both of which are, of course, prominent parts of the BBC’s offering in Wales and near the heart of Welsh culture.

Q108 Mr Leech: There is also evidence to suggest that black audiences are less happy with the BBC than white and Asian audiences. What is the BBC doing to tackle that, specifically to improve ratings among the black audiences? 32

Lord Hall of Birkenhead: Yes, I am not satisfied with our delivery in programmes that black audiences will find useful to them and they will want to watch. It is an area, as it is with some younger audiences too, that I want to see plans for how we will reach those audiences. Part of that is also, of course, making sure that we are employing people who can help us reach those audiences. That is why the employment targets we have are also vital, but it is not an area I am yet satisfied with.

Q109 Mr Leech: Can I also ask about BBC3. It reaches about 29% of its target audience. How does that compare with similar commercial broadcasters? Lord Hall of Birkenhead: E4, I think, is around about 20%. Sky One is about 10%. ITV2 is about 20%. In terms of digital services, it is out there.

Q110 Mr Leech: If you were to take away the BBC1 and BBC2 repeats that are put onto BBC3, what would your percentage reach then? If you took away those programmes that have actually been repeated? Lord Hall of Birkenhead: I see exactly what you are trying to get back to. I do not have those figures, but maybe I can get back to you with some suggestion of what it might be. I do think that the programming that we do for BBC3 is important, both the things we buy in, but also the things that we make. One of the areas that I sort of alluded to in my speech but I want to develop is how BBC3 and Radio 1 can work much more together; Radio 1 concentrating more on music, BBC3 concentrating on other genres. One of the bleeding obvious things that came up is that we have a news service on BBC3. We do not call it anything yet. We have Newsbeat on Radio 1. Why not take the Newsbeat brand and run that across the two? Both the controller of BBC3 and of Radio 1 have more work to do to see how, together, with these two, a channel and a station, we can reach out to our younger audiences with things that will bring them into what the BBC can deliver.

Q111 Mr Leech: One of the really interesting facts and figures was that only 47% of people thought the BBC provided programmes that no other broadcaster would make. Is that a positive or a negative? Lord Hall of Birkenhead: It is a really good question. I start off by saying, if you can get 47% of people to say, “Do you know what, the BBC is making distinctive programmes that no others will make”, that strikes me as an awful lot of people saying very good things about the BBC. In answer to the follow-up, which I guess you will come to, “Could that be higher?” I would love it to be higher. When you think of all the excitement around programmes such as Strictly Come Dancing on Saturday evening, through to the Bake Off tonight, through to a programme I was watching last night on Pussy Riot, an extraordinary programme on BBC4, or a programme about the Ottomans, then you turn on the radio and I listened last night to a programme about Italy now on Radio 4 at 8pm, you think, “This is extraordinary”. To my mind, 47% is a good figure, but I want to shift it higher. Mr Leech: I was not actually going to follow up my question with that. Lord Hall of Birkenhead: All right.

Q112 Mr Leech: Is this not also an indication that other commercial broadcasters are actually following the BBC rather than the other way around? Lord Hall of Birkenhead: I hope other broadcasters will follow us. I really do want us to be the one to follow. I think it is interesting, when you look across Europe, that in those areas that have a really strong and healthy public service broadcaster like the BBC, the 33 commercial sector is also very vibrant. It is good that we feed off each other, we do better because we are in competition. The people who benefit are the licence fee payers.

Q113 Mr Leech: There is currently some research being done, suggesting exactly what you have just said, which is as yet unpublished. When will we be likely to see that? Lord Hall of Birkenhead: I do not know, but I can find out when that can be published and we will make sure you see it first.

Q114 Mr Leech: On children’s TV, I have a bit of an obsession with the EPG. Can any of you tell me what channels CBeebies and CBBC are on Freeview? Lord Hall of Birkenhead: On Freeview, no, I am going to fail your test. Lord Patten of Barnes: Yes, I am afraid I am a bad grandfather. Lord Hall of Birkenhead: Yes, but I will say the app is doing extremely well and I am immensely proud of what Children’s does for us. I am also aware in taking on this job you are taking on something very precious, which is the amount of content that we make that no one else makes for that 0 to 10 market. It is really important.

Q115 Mr Leech: Three senior people are in front of the Committee, none of whom are able to tell me where on the EPG those channels are. Does that not suggest that moving all children’s TV on to channels that the average person does not know where to find is a potential problem in terms of getting the message across about children’s programmes? Lord Hall of Birkenhead: Okay, so I have failed your Freeview EPG test, but let me just give you two other facts. Newsround now is not on BBC1, but the figures for Newsround are growing. Likewise, with Blue Peter, the figures are growing, so these two channels are working and they are finding their audience. Now, I think the challenge is not BBC1, 2 and the two C channels. Actually, the challenge for us is this. I saw a bit of video that haunts me, which is a kid who has a magazine in his hand. It is a toddler sitting up and he is going like this with the magazine and then hitting it, then getting bored and just throwing the thing away. What we have to do with children’s is to make sure in an area where children especially are growing into different consumers of digital media, that we have things that are specifically BBC, good content to offer them. That is a big challenge. I know the team in Salford are well up for it.

Q116 Mr Leech: Finally, there is some evidence that we are not necessarily getting through to the post-CBBC young people. What are you doing to face that challenge to make sure that you are providing something for the next generation of adults who you want to watch BBC and access BBC productions, so that they stick with the BBC over the next 20, 30, 40 years? Lord Hall of Birkenhead: You are completely right and that means Children’s working with Radio 1, but also with BBC1 to see what programmes children 10 and onwards use. Some still stick with the C channels after that, but this is an area where we have tried having a channel especially for the over 10s. That did not work, as I understand, but this is an area where I think we do need to do more work on how, once you get to 10, you become a BBC consumer. Anne Bulford: Going back to the awareness of the channels—I do not have any children, so I do not know where they are, I am afraid, on Freeview— Mr Leech: Neither do I. No one does. Lord Patten of Barnes: My grandchildren do, I know. Anne Bulford: The children’s awareness of children’s channels and digital channels is very high and CBeebies and CBBC are the first place they go. So 0 to 6, 95% of them are 34 aware of it; 6 to 12, 89% for CBBC. So I think that is very encouraging. Where the channels are, how we cross-promote them, how we take people to those channels is what is important. Everything that Tony said about the way in which the app has built up and broken out, I think, shows that content is very sticky. Children love it and they find it and come to it.

Q117 Mr Leech: Do you have a view on whether or not all the BBC channels should be within the same range on the EPG, like on the Sky platform where the children’s channels are with other children’s channels? Anne Bulford: Yes, all broadcasters would like all their channels to be together at the top of the EPG and the way in which the rules work on the different platforms and the regulation that interacts with that is very complicated and hard to steer through. There are a lot of rules about where prominence comes, and how the lots move up and down.

Q118 Mr Leech: I suspect it is pretty unrealistic to expect BBC3 to be on channel 103. That is never going to happen, so they clearly could not be right next to each other, but would you see children’s BBC channels benefiting from being with other children’s channels or being with other BBC channels? Lord Hall of Birkenhead: In truth, you would want both, would you not? That is having your cake and eating it. I think what you are on to is a really big issue, an important issue, which is in a free-for-all how do you ensure there is prominence. You used the word. I am sure that is right. Prominence for the offerings of public service broadcasters like the BBC.

Q119 Mr Leech: Do you think that requires legislation? Lord Hall of Birkenhead: I think you ought to have a look at that and it is important that we ensure prominence of the services that we and others are offering. It is really important. I welcomed what the Secretary of State for Culture, Media and Sport said in Cambridge, which is that we should not be paying for retransmission on other services as well for public service broadcasters. That was a very helpful comment. Jim Sheridan: You should have called his bluff and said any number. He would not have known. Lord Hall of Birkenhead: I only realised that now. Tracey Crouch: It is 72 to 77. Lord Hall of Birkenhead: Is it? Tracey Crouch: Yes, one down from the news channel. Lord Hall of Birkenhead: Thank you.

Q120 Jim Sheridan: Anyway, if can just pick up the point, very briefly, that in Scotland obviously the revenue has dropped and the listening and viewing figures have dropped. Has any assessment been carried out by the local management in Scotland of the reasons why that has happened? Also, on BBC ALBA, is it washing its face? Is it making money? Lord Hall of Birkenhead: Yes, it is washing its face and doing a very good job. On the Scottish services, obviously I talk a lot with the Director of Scotland about referendum coverage, about the Games next year, and we have ambitious plans in Scotland for ensuring that not only does Scotland talk to Scotland, but Scotland talks to the nation and the UK.

Q121 Jim Sheridan: Can I just make a brief comment in terms of relevance to Scotland. I have raised this with your colleagues on a number of occasions. On programmes like the Marr programme or newspaper reviews, there is this constant pool of London luvvies 35 who are pulled in. They have no relevance whatsoever to anybody else. Why can we not get somebody perhaps that is struggling a bit, trying to get a business going, or someone who walks among the unwashed. You can do it with Question Time; you get a cross-section. But on the Marr programme, the first London luvvy who walks by gets dragged in and obviously they review the London papers. Then it is the London broadcasting company, with no relevance whatsoever to anybody else. Lord Hall of Birkenhead: Yes, I do not think it is quite any luvvy who happens to be passing who is pulled in, but there is a serious point and I take that. I do think that we need to do more to reflect what is going on right across the UK and voices from right across the UK in all our output. That is why I have been from afar—well, not that far, but from the Royal Opera House—completely behind what the BBC was doing in Salford. It applies exactly to Scotland. It applies to Northern Ireland. It applies to Wales. Also, it applies to the other English regions too. It is interesting. This is not about Scotland, but I will just give you this for instance. When I was in Lincolnshire, I described the Dam Busters thing, but what struck me there was the political reporter for Lincolnshire saying to me, “If you really want to understand the rise of UKIP, then you need to be out here, because it is about potholes in roads; it is about migration and so on”. I think, for us to be as ambitious as I want the Corporation to be, we have to be delivering content from right across the UK. Your point is the right one, which is that the voices we use when we broadcast should reflect the whole of the UK and different perspectives.

Q122 Mr Bradshaw: On that, it is often alleged that the BBC has a snobbery about English regional accents. I am originally from Norfolk and I now represent Devon. You do not hear very many people on the national BBC with strong Norfolk or Devonian accents. Lord Hall of Birkenhead: I think it does not matter what people sound like in terms of their accents. One of the great things about Britain, when you fly around Britain, is that you are suddenly aware of so many accents from different places and we want to make sure that is reflected on our airways. I take the point. I happen to think Merseyside accents are great. I would like to hear more. I think it is important that you reflect the diversity of the UK outside London. I do worry about this. It is the point Mr Sheridan was making. We have to guard against the metropolitan bias. I think it came out strongly in Stuart Prebble’s report when he was reviewing Europe, migration and religion—this notion that we should look beyond Westminster, beyond London, and seek to reflect things that are happening. If that comes with accents, that is fine by me. That, I think, is really important for us.

Q123 Paul Farrelly: John is determined to not go out on anything as boring as pensions, so he has called me before Philip. I will be very brief, John. Before I go on to pensions, can I ask one curiosity question about changes to the executive team. On future media, you had Ashley Highfield, who was the Director of Future Media and Technology. He commissioned the Digital Media Initiative and was also Chief Executive of Project Kangaroo. Most recently, you have James Purnell, described—this tickled me—in the accounts, “Previously Senior Producer at Rare Day and Advisor at Boston Consulting Group”. Full stop, nothing more. In the meantime, you had a chap called Ralph Rivera, who was on the Executive Board and is now not on the Executive Board. What has happened to Ralph Rivera? Lord Hall of Birkenhead: He is there and doing a fantastic job. He is an inspirational character and doing a great job leading future media.

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Q124 Paul Farrelly: Is he Director of Future Media? Lord Hall of Birkenhead: Yes, reporting into James Purnell. Paul Farrelly: He reports into James Purnell. Lord Hall of Birkenhead: Yes, because when I discovered or felt—and I think I may have talked a bit about this in April—that future media, strategy, policy, communications and something else, marketing, I think, were all reporting into the Director-General, I wanted to bring together a division that said, “How do we get this strategy? How do we communicate it? How do we market it? By the way, how do we then connect with future media and use that?” That is why James came in. Paul Farrelly: He is reporting to James Purnell, but presumably he is still being paid more than James Purnell—£309,000 last year. Lord Hall of Birkenhead: He is not paid more. Is he paid more? He is paid more than James Purnell. Paul Farrelly: That is the statement of pay there. Lord Hall of Birkenhead: That is right. Yes, but look, I said the same thing in answer to a previous question. I have people whose remuneration has been dealt with earlier. I am trying, as I bring people in, to lower the remuneration.

Q125 Paul Farrelly: Are there two people doing the job? Lord Hall of Birkenhead: No, James Purnell has come in to run these various divisions. I see the point you are making, yes. In that, we are looking for savings to show that overall the cost is coming down. Paul Farrelly: Okay, I am now satisfied that Ralph Rivera has not just disappeared. Lord Hall of Birkenhead: He has not disappeared. He is fighting fit, I am delighted to say.

Q126 Paul Farrelly: A rather big number, in the latest accounts, the deficit on the pension fund has gone from £1.17 billion to £1.7 billion. In 2010, there was a programme of remedial action because of the deficit then, which was at £1.13 billion. That was over 11 years. The deficit is now much greater, so what is the BBC proposing to do about the deficit now? Anne Bulford: The £1.7 billion accounting deficit this year has come about mostly as a result of movements in bond yields, so the underlying accrual rates reflecting the 2010 reforms, which Members of the Committee may recall resulted in a capping on future accrual to 1%, have come through and the investment returns are pretty good. The accounting deficit is a snapshot in time. The way in which the contributions are calculated and any deficit recovery plan that comes through are as a result of a triennial revaluation and we are in the process of undertaking one now. The valuation point that will also reflect the bond yields means that the valuation for the purposes of calculating contributions this year will go up and we anticipate having to put more money into the pension scheme for a second phase recovery to deal with that.

Q127 Paul Farrelly: When do you anticipate deciding that course of action? Anne Bulford: The statutory process for that requires us to have reached agreement with the pension trustees and settle all of that by June of next year. We are very hopeful that we will do that comfortably ahead of that and the range of assumptions that we see, leading to more money needing to go in, are built into our plans through to the end of the Charter period.

Q128 Paul Farrelly: Is that likely to be popular with BBC staff? 37

Anne Bulford: I think BBC staff value their pensions very highly. We take the requirement to fund it properly very seriously. We are talking about dealing with the deficit that has arisen as a result of movements in bond markets. I do not think anybody relished taking money from content and programmes and putting it towards pensions, but that is where we find ourselves. That is what we need to do. Paul Farrelly: That is a common refrain at the BBC at the moment. Anne Bulford: Yes, the thing about pensions is that you have to look at them over a 30-year arc and we do these points in time. In common with many organisations, we find ourselves facing a pension valuation at a pretty unusual point in bond markets, but that is where we are. Paul Farrelly: Is it being urgently addressed now? Anne Bulford: It is, yes. Chair: We have one final set of questions.

Q129 Philip Davies: I just want to ask about impartiality at the BBC, one of my favourite subjects, as you will recall. I just wondered, Lord Hall, whether in your brief time at the BBC you have found it curious that the BBC purchases more copies of the Guardian than any other newspaper. Has that struck you as being in any way curious, given the respective readerships of all of the national papers? Lord Hall of Birkenhead: Two things: it does and what I am also curious about is the number of newspapers we buy.

Q130 Philip Davies: What do you propose to do about this imbalance in the papers? Lord Hall of Birkenhead: Now I know about it, the imbalance is one thing, but the numbers is another, so I will be looking to cut back on the number of papers that we use. I do think people need to read papers, but need to read a broad range of papers clearly.

Q131 Philip Davies: I was struck the other day when I was listening to the Today programme that in the news report about the Policy Exchange, it was described as the right- wing Policy Exchange. I had never known of it described as right-wing before. It might have been centre-right, but certainly not right-wing. Looking into it, it seems that I stumbled across a report by the Centre for Policy Studies, which monitored mentions of different organisations by the BBC. It mentioned how many times a sort of “health warning” was attached to different think tank reports. It was quite striking that any what you might call “right of centre” organisations often came with a health warning—“beware, do not really believe what this one says, because this is a right- wing organisation”, whether it is the Centre for Social Justice, the Institute for Economic Affairs—but the left of centre ones like Demos, Social Market Foundation were very rarely given any kind of health warning. What do you make of that? Lord Hall of Birkenhead: I would love to see the report. If you send it to me, I will give you detailed conclusions from it. Let me say one thing, which is that we should be careful with exactly what you are suggesting. We need to label think tanks and other reports clearly from whence they came. There is no doubt about that, whether they are left, right, centre or whatever; so a fair point.

Q132 Philip Davies: We know what your view is of the BBC because, when you came in, you decided you were short of Blairites at the BBC and went around recruiting a whole host of new ones. We know where you think the political leaning of the BBC is. Lord Hall of Birkenhead: New Blairites— 38

Philip Davies: I want to just run a few recent stories past you. We had over the weekend the issue of the BBC’s reporting of a report about benefit tourism. The BBC took a report commissioned by the European Commission—no doubt friends of Lord Patten— basically hook, line and sinker. In their quotes benefit tourism was described as “a canard, a myth”. Could you point to the 276-page report where it says in that report that benefit tourism was a canard and a myth, as the BBC described it, because I could not see it in the 276-page report. Lord Hall of Birkenhead: I am very, very happy to rely on Mark Easton’s judgment, who is a very fine journalist, that the words “canard” and “myth”, which is one of the links here, was actually used in the report. Let me make a broader point. Watching that item, which I think was about eighth or ninth down in the 10 o’clock news, they were reporting clearly on a report that had been produced by the European Commission. Both the Secretary of State and also the European Commission person were given a chance to express their views about it. I have to say, I thought the report was interesting and well constructed.

Q133 Philip Davies: Did it make it clear that the number of job-seeking EU migrants coming to the UK had increased by 73%, which was in the report? I did not see that on the BBC part of the report. Was that bit of the report there? Lord Hall of Birkenhead: No, it is a two and a half minute report and you know, Mr Davies, and I know that condensing into two and a half minutes means you have to leave out some stuff. Now, if you look at the debate that was on Newsnight, I think it was either the night before or the night afterwards, a lot of these issues were gone through and gone through very thoroughly. In the condensing job you have to do, which is difficult—you know this—to get a two minutes twenty something-or-other seconds piece on the 10 o’clock news, of course some things get left out. The report was proper and impartial. If I have any comment to make about impartiality, because I know it is something you are very hot on, quite rightly, it is that we should avoid group think. The report that Stuart Prebble came out with on impartiality some months ago was really good on that. We should look, as Mr Sheridan was saying, at getting a range of voices and examples from around the UK. I also think, to be honest with you, we should do more on Europe. This is clearly a vital issue and us reporting from Europe on Europe to the UK is an important bit of what we do.

Q134 Philip Davies: The BBC, for weeks and weeks and weeks, described what the Government call the Spare Room Subsidy as solely the Bedroom Tax. My understanding is it is clearly a political term. I do not know whether you consider a withdrawal of subsidy to be a tax. Do you consider a withdrawal of subsidy to be a tax generally? Lord Hall of Birkenhead: I absolutely want to make sure we get the terminology right and I think over the last few months or even longer, since I have been there, we have been getting it right.

Q135 Philip Davies: It took weeks of complaints, did it not, by the Government? It took a letter, I think, from the Secretary of State before the BBC, after weeks of this, finally accepted that it was a political term. Now that the BBC allowed it to gain so many legs, every time there is a report, it now refers to the so-called Bedroom Tax or what critics call the Bedroom Tax. It still cannot help itself, can it? Lord Hall of Birkenhead: We have to find ways of describing what are controversial measures and issues. You are damned if you do; you are damned if you don’t. Thank God we listened and we said, “Let’s change what we are doing”. That is the sort of BBC I thought you wanted. Philip Davies: It was after you had allowed the term to become current. 39

Lord Hall of Birkenhead: Maybe we should be responding quicker, but we responded, and I think that is important. There is obviously a dispute about this. Philip Davies: I am astonished, you see, because with the amount of stuff that you come out with, I would have thought that mistakes were inevitable, probably daily. I make dozens of mistakes every day. I think anyone who takes decisions makes mistakes. The BBC, given the volume of decisions it makes on a daily basis, I would imagine would make lots of mistakes. Lord Hall of Birkenhead: Did you read my speech two weeks ago? Philip Davies: Absolutely, unfortunately— Lord Hall of Birkenhead: Did you see the bit in there, Mr Davies, which said we should own up to mistakes quickly? That is right, is it not? Philip Davies: Absolutely, absolutely. Lord Hall of Birkenhead: That is right, is it not? Philip Davies: Yes, it certainly is. It is just very difficult to get the BBC to do it. Lord Hall of Birkenhead: Yes.

Q136 Philip Davies: It always says it should do it, but it never actually manages to do it. It did do on one particular thing. The Trust ruled—and this is one of the few ones that I can find where everyone is clear that a mistake was made—that the John Humphrys programme on welfare was shockingly biased. Do you stand by that? Lord Patten of Barnes: Can I ask you two questions? Philip Davies: No, I am asking you the questions. You forfeited the right to ask the questions when you lost your safe seat in Bath. If you had wanted to ask the questions on this Committee, then you may well have. I am asking you the questions. Lord Patten of Barnes: Oh my goodness me. Mr Davies, what a whopper. Can I just ask you have you read the report? Philip Davies: On? Lord Patten of Barnes: On the John Humphrys programme? Philip Davies: Absolutely I have, yes. Lord Patten of Barnes: Tell me where it criticised John Humphrys. Philip Davies: No, I am asking you the questions. It criticised the programme. Lord Patten of Barnes: It said that— Philip Davies: I am asking you if you stand by the fact that you think that programme was not balanced and fair. Lord Patten of Barnes: I think you suggested that it criticised John Humphrys. Philip Davies: Well, it is his programme. Lord Patten of Barnes: It did not criticise John Humphrys once. Philip Davies: It was his programme. Lord Patten of Barnes: What it actually said was there were some statistics that were not in the programme that would have made it a better programme if they had been in. On your earlier point, it is quite important when one is making these accusations to take account both of the specific and the general. On the specific, you referred to the CPS report earlier about think tanks. I think it was the same CPS report that described the IEA, the Institute of Economic Affairs, as being more left-wing than the Institute of Public Policy Research, which is what you and I would probably describe, both of us, as a left-leaning think tank. On the general point about impartiality, it is worth noting that in February, after Savile, when people were asked what organisation they most trusted when it came to news, 58% said the BBC. The next organisation that they mentioned was ITV on 14%. While it is always a struggle to be as impartial as you would like, I think we do a pretty good job as far as the public are concerned. 40

Philip Davies: I am sure the figures were even higher when you were party chairman complaining of the bias at the BBC. I do not recall you quoting those figures when you were complaining about it. Lord Patten of Barnes: No, I mean, our party chairmen do all sorts of things to earn their crust.

Q137 Philip Davies: If, Lord Hall, your premise is that you think that the BBC has work to do on ensuring its impartiality, that it does not always get things right and that it will be much quicker at trying to make sure that it responds to that and does things, I would say more power to your elbow. What I worry about is this complacency that we have at the BBC where it seems to think, despite what lots of people in the country think, that everything is fine and dandy, everything is hunky-dory, and that there is nothing really to do apart from more of the same and keep up the status quo. It is that complacency that I object to. Lord Hall of Birkenhead: I hate complacency. Let us get that clear. I like your description that, as you go about your work, you make lots of right decisions and lots of wrong decisions. I think that is very fair. The organisation, which is so broad and so big, is doing some fantastic work and having real resonance at work with the public. There are two things. We are always and should be searching after impartiality, new views, new perspectives on what we are doing. When we get things wrong, and we are bound to and I said this in my speech, let us not keep looking over our shoulder. Let us make decisions on the basis that we want to get things right, but when we get things wrong, and we are bound to, let us quickly own up to them, correct it with the viewers or listeners and move on. The third thing that strikes me coming back into the BBC that works well, are these reviews that we have just done, for example on Stuart Prebble and another one coming up looking at news. These give us a chance to stand back and say, “Are there things that broadly, over a year, two years or three years, we need to improve on?” I am not complacent. I am a million per cent behind the people who do a very good and hard job in the BBC News. As I say, we are bound to make mistakes. Own up. Move on.

Q138 Philip Davies: My final question then relates to Question Time, which you were good enough to look into following our session last time. Your reply was different to your predecessor’s. I was now told that the Question Time audience has the same proportion of Conservative and Labour supporters in it wherever the location is around the country. What is that proportion of each? Lord Hall of Birkenhead: 30% Labour; 30% Conservative; 10% Liberal Democrat; a further 10% that depending on where they are could be UKIP or another party; then there is roughly 5% depending on the location and 15% of “don’t knows”. I brought you a small present, which is the audience application form from a previous edition of BBC Question Time, with the sorts of questions we ask of people before they join the audience. Here it says, “What is your opinion of the situation in Afghanistan?” That was when Afghanistan was hot. Now it would be, in this week, something different. The questions include, “Are there two issues you would like to discuss in the current news? How old are you? Have you been on Question Time before? If there were a general election, what party would you vote for?” and so on. It shows the care that the producers take to ensure that we have an audience that is representative.

Q139 Philip Davies: Is that your view of it when you watch Question Time, that that looks like a representative audience to you? Lord Hall of Birkenhead: The thing you cannot predict, Mr Davies, is quite how audiences respond to Governments or to others. I know that through theatre. You can never be 41 absolutely certain the way people are going to respond. That, by the way, is the excitement of watching Question Time, and why it is such a brilliant and important programme.

Q140 Philip Davies: Any Questions?, recently, was from Ilkley. I know Ilkley. It is in the neighbouring constituency to me. I would love to have Ilkley in my constituency. It is the bastion of Conservatism. Lord Patten of Barnes: Make it even safer and we would all be delighted. Philip Davies: It is the bastion of Conservatism, Ilkley. I would be delighted to take it off Kris Hopkins’ hands if he ever wished me to do so. He would not, but I wish he would. The BBC at Any Questions? did a poll in the audience. Nobody had to express a view. It was literally put your hands up if you are in favour of the Government’s welfare reforms. Now, I do not know which opinion polls you look at, but if you look at any opinion poll about people in favour of the Government’s welfare reforms, there is a massive majority in favour. Now, in Ilkley, I can guarantee, if the majority of the country are in favour, Ilkley would be more. I was not there, but I heard Jonathan Dimbleby say that, on the basis of the show of hands, it was a massive majority against the Government’s welfare reforms. Does that indicate to you that you are doing a good job of getting a representative audience in these kinds of programmes. If not, what on earth are you going to do about it? Lord Hall of Birkenhead: I have described Question Time to you. The Any Questions? audience is rather different because of course people ask questions, but none the less it is an important gauge, no more than that, like an opinion poll is, of what people are thinking. I was much taken by, I think it was the Prime Minister, at Question Time some time over the last few weeks remarking on the fact that we had done a poll looking at exactly that: people’s thoughts about benefits and about changes and whether public services more broadly had suffered in all the cuts. He was genuinely surprised that the answer they got was that an awful lot of people were supportive of what was going on. I think that goes back to what our duty is. Our duty is to ask difficult questions, to counter consensual views, to think beyond the obvious or beyond the group think.

Q141 Philip Davies: Will you do more to make sure these audiences are representative and to make sure that the production companies are doing— Lord Hall of Birkenhead: Yes, yes, but please have a look at the Question Time. Philip Davies: I will do. I will give you the report I was referring to earlier. Lord Hall of Birkenhead: Thank you very much. This is Christmas early. Thank you very much, indeed. Jim Sheridan: Can you clarify if the Morning Star will now be part of the newspaper review? Lord Hall of Birkenhead: I will look into Morning Star as well. Chair: I think we have probably exhausted almost every topic. Can I congratulate the Director-General on his anticipation of Mr Davies’ line of questioning in coming prepared for it and thank all three of you for coming for such a long time. Lord Patten of Barnes: Can I just add a clarification in response to Mr Farrelly’s question. Mark Thompson did not repay £102,000 or whatever, because he was paid, as one would expect, month by month, and that went up until the beginning of November. Chair: We will have a series of questions in detail, which we may send to you in writing, so perhaps that is an area you might respond to when you come back to us. Thank you very much. Lord Patten of Barnes: Thank you very much indeed.