House of Commons Culture, Media and Sport Committee

BBC Annual Report 2012-13

Oral and written evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Chairman, BBC Trust, Lord Hall of Birkenhead, Director- General, BBC and Anne Bulford, Managing Director, Operations and Finance, BBC

Ordered by The House of Commons to be printed on 22 October 2013

HC 730-i Published on 9 May 2014 by authority of the House of Commons London: The Stationery Office Limited £9.50 The Culture, Media and Sport Committee

The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies.

Current membership Mr John Whittingdale OBE MP (Conservative, Maldon)(Chair) Rt Hon. Ben Bradshaw MP (Labour, Exeter) Angie Bray MP (Conservative, Ealing Central and Acton) Conor BurnsMP (Conservative, Bournemouth West) Tracey Crouch MP (Conservative,Chatham and Aylesford) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Steve Rotheram MP (Labour, Liverpool, Walton) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South)

The following members were also a member of the committee during the parliament: David Cairns MP (Labour, Inverclyde) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative,Folkestone and Hythe) Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Mr Tom Watson MP (Labour, West Bromwich East)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume.

The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some of the written evidence are available in a printed volume.

Additional written evidence is published on the internet only.

Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Grahame Danby (Second Clerk), Kevin Candy (Inquiry Manager), Hannah Wentworth (Senior Committee Assistant), Keely Bishop (Committee Assistant) and Jessica Bridges-Palmer (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected]

List of witnesses

Tuesday, 22 October 2013 Page

Rt Hon Lord Patten of Barnes, Chairman, BBC Trust, Lord Hall of Birkenhead, Director-General, and Anne Bulford, Managing Director, Operations and Finance, BBC Ev 1

cobber Pack: U PL: COE1 [SO] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 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 Mr John Leech Conor Burns Steve Rotheram Tracey Crouch Jim Sheridan Philip Davies Mr Gerry Sutcliffe Paul Farrelly ______

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 I hope—you would expect me to say this—that we the annual session of the Select Committee at which can spend the next year focusing on the quality of we examine the BBC’s annual report and accounts. I what the BBC produces in terms of television would like to welcome the Chairman of the BBC programmes and radio programmes and online Trust, Lord Patten, and the Director-General, Lord services, and that we can ensure that the trust in the Hall, as well as the Managing Director for Operations BBC, which still exists in pretty substantial quantities, and Finance, Anne Bulford. Lord Patten, since we had continues to be rebuilt and that the BBC, as an our last session on the annual report and accounts, it institution, enjoys the trust of people around the is fair to say that the BBC has not had a good year. country. You, yourself, have said in the annual report that the If that happens I suspect that arguments about BBC has seriously let down itself and the licence fee governance will seem less important over the next payers. That has led to some questions about the way year or two, or that is my hope. It has been a bad year in which the BBC is governed, but yesterday, as you but, at the same time, some good things have may have seen, we had a debate in Parliament on the happened, in terms of programming—the Olympics BBC and Tessa Jowell said, “It is not the present just over a year ago, being the most notable of those. model of governance that is flawed but the failure of Speaking for myself and for my colleagues in the individuals within that to make the right decisions and Trust—you will not get always the sort of mutual to intervene sufficiently early.” Do you think she is admiration stuff from me—I think we are very pleased right? that we have in Tony Hall an outstanding Director- Lord Patten of Barnes: Yes. I think it is a bit of a General and that he has been appointing some very snare and a delusion that is part of the BBC DNA, good members of a team in which we have to say whenever anything goes wrong that it is the considerable confidence. We are aware of how much governance that has gone wrong. The governance is is expected of the BBC and we have to deliver. 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 Q2 Chair: I think Tessa Jowell yesterday, who did Entwistle’s appearance in front of this Select create the Trust model of governance, was defending Committee, which had consequences. First of all, the model by saying that it was individuals within the there have been the difficulties over Savile and the Trust who had failed. You, as Chairman of the Trust, report by Nick Pollard, which, while demonstrating are ultimately responsible. Do you accept that that the main charge made against the BBC was not criticism? correct, did point to some pretty shambolic handling Lord Patten of Barnes: I have been criticised quite a of the whole imbroglio. Nobody in their right mind bit for things that happened before I became Chairman could regard Nick Pollard’s report as a whitewash. of the Trust. I found myself in the PAC in a long Secondly, there was the very bad—related to that— discussion about the payoff that Mark Byford received editorial judgment on Newsnight about Lord when he left the BBC, which was before my time. I McAlpine. Thirdly, there has been the uncovering of have not— the way in which severance payments were managed Chair: But you have been Chairman of the Trust this going way back to the time when there was a Board last year. of Governors. I am very pleased that the Director- Lord Patten of Barnes: Sorry, yes, I would defend General has acted on that so quickly. Finally, there has the record over the last year. I do think that people been—which is still to be examined with a report by would say that we made the wrong choice of Director- PwC coming out shortly—the pulling of the DMI General, but I have to say it was unanimous when we initiative, which I hope we can come to later, at made it. I don’t seem to recall anybody saying we had considerable cost to the licence fee payers in the BBC. made the wrong choice. Unfortunately, George was cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 2 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford overwhelmed by events but he was a very decent Q4 Jim Sheridan: I think Susanna Reid is doing a broadcaster and programme maker. good job for the BBC on Strictly and, hopefully, she Can I just add one point? When I became Chairman will continue to do that. But can I ask you seriously of the Trust, having read the Charter and looked at the about morale within the BBC? In terms of Select role of the Trust, I certainly didn’t expect that people Committees, at the last one—the Public Accounts would think I was running the personnel department Committee—the BBC did not come out of it very well in the BBC. The description of the Trust in the Charter at all. couldn’t be clearer. One of the things that the Lord Patten of Barnes: No. Since I was present at Director-General and I want to do—and I hope we the car crash, perhaps I can say something about that. will have put in place before Christmas—is an even Obviously, it is dangerous to get into a Match of the clearer set of distinctions between the role of the Trust Day after-the-game analysis each time one appears in and what the executive does. But it has never been the front of a House of Commons Committee, but it job of the Trust to run the BBC. It is an old issue in wasn’t a glorious day for the BBC, nor was it meant political science; we tend to get blamed for everything to be a glorious day for the BBC. I don’t think it was that has gone wrong, whether or not we are perhaps the best configuration for having a discussion responsible for it, but that is life and at 69 I am about the relationship between the role of a strategic authority and the executive in dealing with pay. One beyond all human ambition. or two of us found ourselves answering questions about events that happened—and certainly in my Q3 Jim Sheridan: Lord Patten, when I first came on case—before I became Chairman of the Trust. But out to this Committee some years ago at these sessions of it has come a policy that I think is wholly we talked mainly about the product. Nowadays we defensible and I pay tribute to the Director-General don’t talk about the product. In the last year or so we for doing that. have been talking mainly about the Trust and, indeed, I just want to make one other point that does not in the senior management. I do believe that the general any way excuse the way in which for years severance public still believes in the BBC, but it is running very, payments have been handled. In the two periods very close to the wire. When do you think we can go covered by the KPMG and the NAO—six and a half, back to talking about the actual product and not about seven years—the BBC overspent on severance the problems surrounding the management of the payments, over contract about £3.8 million. BBC? Inexcusable. The £3.8 million, however, is a lot less Lord Patten of Barnes: I hope that we will start doing than the figures we are going to be talking about with that from pretty well now on, but we still have to cope DMI and £3.8 million is about what other television with the consequences of things that went wrong in networks would pay for televising the first half of a the past. We are dealing and we will go on dealing premiership football game. It is inexcusable and with severance pay because there is still a PAC report showed bad management but, nevertheless, I think one to come out on that, which will point out quite should keep it in context. properly what went wrong from 2006 onwards and even before 2006. We have the PwC report on DMI. Q5 Jim Sheridan: Could I just ask Lord Hall the There will be the report by a distinguished former question about morale and, in particular, about the judge on the BBC’s behaviour in the light alleged bullying and significant claims of alleged entertainment field during the 1960s and 1970s. bullying at the BBC? Are they true and have you Each time that sort of thing comes out, people will be taken any steps to deal with them? talking about that rather than how much they enjoyed Lord Hall of Birkenhead: Yes. Let me answer, if I Strictly Come Dancing and I think that is unfortunate might, Mr Chairman, the morale point. I wanted to do but that is life. Two things have really surprised me in four things, in fact when I last talked to you four or this job. The first is how little political pressure the five months ago, I said I was doing four things. One BBC is under, to be candid, though I do note in was building a team, and I can tell you that the team passing that this is the 16th time in a year that the I have I am extremely proud of. But also they BBC has appeared in front of a Select Committee and themselves are contributing to a sense of dialogue Lord Reith would be spinning in his grave. Secondly, with the staff, getting out there and meeting the staff. I said I wanted to spend at least a day, myself, out and I— around the corporation, and I am doing that. I have Chair: I think that Lord Reith would be spinning been to all sorts of places. I won’t bore you, but it has about what has been going on in the BBC rather than been fantastic meeting the teams. What I have seen the number of Select Committee appearances. from meeting the teams is a real sense of pride in the Lord Patten of Barnes: He might be spinning about BBC. Of course, people are depressed about what has Strictly Come Dancing as well perhaps, particularly at gone on over the last year, but they have a real sense those who are not wearing dinner jackets. Secondly, I of energy and people doing their best for a corporation have, on the other hand, been very surprised by the they are immensely proud of. They are right to be astonishing amount of attention that the affairs of the proud of what they are doing. BBC get in the rest of the media, sometimes for The third thing, as you know, has been to try and work reasons that we can all understand, but when I look at with the Chairman to clear out some of the things that the press cuttings in the morning I am amazed at how we both think are wrong. But the fourth thing is to much the BBC features and I wish Syria featured give a sense of direction, and I guess we will come rather more. on to that. That is why I have made two speeches in cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 3

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford the last fortnight, one on the direction of the BBC and Q8 Mr Bradshaw: Lord Hall, how much have you the other one about the BBC and the creative been able to change the culture that Pollard described industries because I think that is really important. so vividly? Those speeches, I am told, have given some clarity to Lord Hall of Birkenhead: I think the new team is the staff and have gone down well. We are on course, working together really well. We are not afraid of I hope, to begin to see morale rising in the disagreements, yet we also know we have to run the corporation. The staff who work phenomenally hard place together. I made a speech two weeks ago on the deserve that. future of the BBC. What has been interesting is On bullying and harassment, we have been working working with the team over the last six months, very hard on that with the key members of the team. pulling together ideas, discussing our ideas, working In fact, we are—forgive me for bringing along one out what we want to do, where we need to make thing to wave—this week opening our first ever compromises, where we need to work together. I think bullying and harassment support line and these posters it has worked very well. There are some difficult areas between television, radio, how they work with future are going up around the corporation—if you are media, how they work with news and I have to say interested I will send them around to you. That will the conversations have been very, very constructive. allow people to say if they think that they are being Mishal Husain is now presenting the Today bullied or harassed. We are trying to deliver results on programme. I think she is doing absolutely brilliantly. all the cases that come either to me or to the team as That was a very constructive discussion between those quick as we can. in radio and those in news. I am encouraging but, to What we have done since we last spoke is to be honest with you, I don’t need to encourage because implement the Dinah Rose recommendations for I think people are running with it, with the sense of mediation, because if we can hit some of these issues discussing, arguing and then agreeing on what we early and don’t allow them to fester, I think that is want to do. I am pleased with the way the team is much, much better. In some cases, that is kind of working. I think it is also working to bring in a working. Ensuring that when somebody has an issue mixture of those people who have been in the BBC to do with harassment or bullying it is heard by for a long time and people who have either come back someone in a different division of the BBC because I to the BBC or have come from outside the BBC. I think one of the things that came out to me from the think seeing how others see the culture in which you Dinah Rose report was that sense of, “I have a operate is of real benefit. problem, but I need to take it somewhere else where I can get an impartial hearing for this”. That is really Q9 Mr Bradshaw: Just referring back to the dossier important. that Jim mentioned that we had been sent by the NUJ. We have had over 200 discussions in teams about It alleged, for example, that there are three senior what a good workplace should be like and we are also news managers who are the subject of multiple doing things like exit interviews as well, making sure bullying complaints; that a member of staff, a that we learn from anything that people are telling us whistleblower, sent you an e-mail several months ago about the workplace. But I think this helpline is the that has not been responded to. It does feel as if there latest example of what I want to do, to show them that is still a hornet’s nest in there that has not been we have a workplace where people feel valued, people properly addressed. feel they are not bullied or harassed and they want to Lord Hall of Birkenhead: Yes, I don’t think there is come into work to deliver their best. a hornet’s nest. I think there are issues to be addressed. As you will remember, when we called for evidence Q6 Jim Sheridan: I think the question that people last autumn the BBC asked for staff and other want to know is, if people are found guilty of bullying members, people who had left the BBC, to come or harassment, will they still be at the BBC? forward with any evidence of bullying or harassment and the NUJ came up with a document, which I think Lord Hall of Birkenhead: No. We have carried out a was about 109 pages, which they submitted in number of disciplinary hearings and in at least one confidence to Dinah Rose. case that person is no longer working for the BBC. Our conversation with them then was about the things that you have alleged or drawn to our attention; what Q7 Mr Bradshaw: I just wondered whether you are the things that we can pursue and follow? Three think, given that the BBC has just had its worst year, cases of that have come to a conclusion. One case has that the annual report could have been a bit more led to a disciplinary and also an apology. Another case contrite. I suppose that is for Lord Patten really. is still going on at the moment, but I hope to get a Lord Patten of Barnes: It has been a bad year, but I conclusion very shortly. On the case of the person who do not know whether it has been the worst ever year. wrote to me some time in July, I have apologised to I can think of, looking back, some pretty bad years that person completely. We cocked up there. We didn’t with some wounding arguments with Governments handle it properly. I will take the blame—I run the and others, even going back to the general strike. But shop—but we are now dealing with it. you are quite right, it hasn’t been a good year. I don’t think we underdid the contrition and, given that we Q10 Mr Bradshaw: In your recent speeches you had had buckets of contrition to consume after Pollard have announced lots of new things that the BBC wants and other things, we certainly didn’t have as much to to do, which is great. But part of the problem, as I brag about as I would have liked. see it—going back to the Newsnight fiasco—was that cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 4 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Newsnight was being asked to do ever more with less BBC needed something that said, “That is where we money. Their frontline journalists were not being think we want to be. When it comes to decisions listened to by senior managers, which is why it got about, do we spend money on that or do we spend into the problem it did. By constantly asking BBC money on that, we are now clear this is how we are staff to produce more with less money, without saying going to spend our money”. Whatever money any of what the BBC is going to stop doing, is there not the us can take in saving one bit of the organisation goes danger that pressure you are putting people on to towards the aims I put out. I am looking forward to deliver more for less will result in repeats of the sort making those things happen. There are going to be a of problems that we have seen? lot of difficult decisions, but I am confident we can Lord Hall of Birkenhead: Yes, I am very aware of do something very exciting in the next three years that. As I go around the country, as I go around bits with the BBC. of the BBC in London too, it is uppermost in my mind when I talk to people. I think what Newsnight is Q12 Philip Davies: Lord Patten, you have mentioned demonstrating at the moment is something that, in a the Pollard report on a number of occasions already way, we all know, which is that good leadership today, which I believe cost the licence fee payer makes a difference to anything. I think what Ian Katz around £3 million, give or take—a ballpark figure. I is demonstrating with the Newsnight team over the presume that both you and Lord Hall have several last month and more since he arrived, is what a newspaper articles saying that a person described as a difference someone can make who is editorially source close to the Pollard review has admitted that it running with the team, helping the team to think was a mistake to exclude some of Helen Boaden’s imaginatively about the coverage. evidence that was given to that report. I take it you It is interesting in a joined-up BBC way that have seen those reports. Newsnight has broken some stories that then end up Lord Patten of Barnes: Yes, but, more than that, I on Today the next morning. People used to tell me, have received a letter from one of your colleagues in “Oh, Newsnight will never talk to Today and Today the House of Commons, Rob Wilson. I think it is one will not talk to them” and all that. They are, and they of 64 communications that the Trust and the executive are collaborating in that way, which I think is wholly received from Mr Wilson over the last year in which good. But the drive I think that the new editor is he drew attention to that. We obviously thought it was bringing is exactly what I had hoped for and he is not sufficiently important to put it to Nick Pollard himself, finished yet with the process of reform on Newsnight. and we have also suggested that Mr Wilson should But I think that leadership is important. see and talk to Nick Pollard about it, which seemed to us to be the obvious first thing to do. Q11 Mr Bradshaw: In strategic terms though, how are you going to carry on squaring the circle of doing Q13 Philip Davies: You commissioned the report more for less without stopping doing anything? and we know that— Lord Hall of Birkenhead: We set a target—when I Lord Patten of Barnes: The executive commissioned made my speech two weeks ago—of finding by the the report. year 2016 another £100 million. Anne, myself and the Philip Davies: Yes, absolutely. In his report he said Director of Strategy, James Purnell, are going to spend that he had no reason to doubt Mark Thompson’s the next three months immersing ourselves in the claim that he learned no specifics of the Newsnight budgets of every single division and every single part investigation. We now know that Nick Pollard has of the BBC with two aims. One is to look at the said that it does not reflect particularly well on him pressure points but also at ways in which we may that he overlooked Helen Boaden’s evidence. He said, want to move money from one priority to another. “I am in a slightly uneasy position about this.” He is That must be part of a discussion with the people saying it was a mistake to have missed out that part concerned. I can’t just do that by fear. of the evidence in his report. What have you done to Secondly, carrying on what I think is an important part put that right? of my work—and the more I talk to people in the Lord Patten of Barnes: First of all, we established an organisation I have to deliver on this—we have to independent inquiry. If we had set up an internal simplify the way we work. I have made a statement, inquiry— and will announce this shortly, that we want to get rid Philip Davies: You paid for it, so it is not entirely of a whole number of boards and simplify the way we independent. work. I am also looking critically and sceptically at Lord Patten of Barnes: Yes, yes. We could have taken layers of management, but also, if this doesn’t sound a can around I suppose, but we were obviously going too odd, at sideways management, by which I mean to have to pay for it. I don’t know whether you are people who are questioning and not adding value to suggesting anybody else should pay for it. We the process of getting great programmes and services established the inquiry. Nobody reading that written on to the air. inquiry and knowing Mr Pollard’s background could I can only approach that by saying I want to go into think it was other than thorough and independent. It the way everybody is spending their money in detail would be bizarre if I was to try to rewrite it now. Mr and work out the sort of compromises or things we Pollard has made clear—and I imagine would make have to stop doing to do others. In that speech I could clear to anybody who talked to him—that nothing that have said, “You know what, we’ll work out what has happened or nothing that has been said suggests money we have and then we’ll decide what we’re to him that he should in any way change his report. going to do”, but I felt that after last year or so the You might remember that the main burden of that cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 5

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford report was that the BBC had not dropped a Newsnight Q19 Philip Davies: He has made it clear that he investigation in order to preserve its Christmas made a mistake by not putting that evidence into his schedule in 2011/2012. report. He has made that clear and you are proposing to do nothing about it. Either Helen Boaden was Q14 Philip Davies: You are asking us to accept fully telling the truth or she was not telling the truth. It everything that is in the Pollard report without any seems to me that if she was telling the truth it begs qualification, is that your— further questions about what she knew at the time that Lord Patten of Barnes: I am saying that Nick Pollard programme was produced, why she did not make it did a report that was well received and well regarded, clear to people that that programme should not go not least because it was so blisteringly honest about out—unless she was taking absolutely no interest in some of the failures in the BBC. what was being put out by the BBC, even though she Philip Davies: We should accept that report as it is. claimed she knew at the time these things. If you are Lord Patten of Barnes: I have no reason to suppose happy that Helen Boaden is telling the truth that she that we shouldn’t accept that report. told Mark Thompson about this at the time, then it begs questions what on earth she was doing allowing Q15 Philip Davies: Okay. Lord Hall, do you think that programme to go out without kicking up such a the same thing? Do you think we should accept that big fuss that people were fully aware. This is report as it is and that there is no reason to doubt somebody who is paid £340,000 now by the BBC as Mark Thompson’s claim that he learned no specifics a senior director of the BBC. Have you not questioned of the Newsnight investigation. Do you think we her about why she did not kick up a big enough fuss should accept that unquestionably? that Mark Thompson absolutely knew about this at Lord Hall of Birkenhead: Nick Pollard has been clear the time? that the difference of opinion there is that it has not Lord Hall of Birkenhead: Pollard has been absolutely led to any material change in his conclusions. My aim clear recently in an e-mail that this does not affect— over the last six months has been to implement and this issue that you are raising, and quite properly change the culture in the way that he suggests; that is raise—any conclusion he made in his report about my task. what needs to change in the BBC. What I am interested in now is working on those conclusions and Q16 Philip Davies: In which case we can only come getting the right culture in BBC news and I think what to the conclusion that you believe, both of you, that James Harding is doing is utterly brilliant and first rate Helen Boaden, who I believe is paid around £340,000 to make sure that these sorts of things don’t happen a year as a senior director of the BBC, was lying to in the future. The question that was asked earlier of the Pollard Inquiry. me was whether the team was functioning properly. Lord Hall of Birkenhead: I think it is perfectly The answer to that is yes. That strikes me as a more possible that both people are saying very different material point than going back into this history. things but coming to very different conclusions. Mr Davies, my task has been, first, to see whether Nick Q20 Philip Davies: We will come on to that in a Pollard is changing his conclusions because of this. second. But what I want to know is, are you happy He is not. Secondly, it has been to get on with that you have, as a senior director of the BBC, changing the culture that led to the errors and the somebody who is—it is one of two things, it cannot mistakes that he described very well—but were be anything else—either lying to the Pollard Review woeful for the BBC—in his report. about what she told Mark Thompson or telling the truth about the Pollard Review and in a cavalier way Q17 Philip Davies: You think Helen Boaden was allowed a programme about Jimmy Savile to go ahead telling the truth, that she told Mark Thompson that? even though she knew full well about his activities Lord Hall of Birkenhead: I think it is perfectly and had made the Director-General aware of them? possible that both are telling the truth. What I am Neither of them seems to be a particularly good saying to you is that it is time to move on from that, position for her to be in. Are you happy for that person to look at the conclusions of the Pollard report and to to be a senior director of the BBC? make sure those are implemented, and that is what I Lord Hall of Birkenhead: I am very confident in am doing. Helen and her abilities. But did you not repeat what I said to you earlier, Mr Davies, which is what I believe, Q18 Philip Davies: You say we should be moving that it is perfectly possible for two people to have on but, of course, Helen Boaden has a very senior different views of something and for both to think position in your organisation, so it begs the question, they are right? Goodness knows, I know all sorts of if she is telling the truth as to what has happened, different occasions when that happens in families what she knew about Jimmy Savile’s dodgy past by and elsewhere. the time the tribute programme was put out on the I go back. What really matters to me and should BBC that Christmas. matter to our licence fee payers and to the BBC is, Lord Patten of Barnes: But the question surely is, whether this affects the conclusions of the Pollard Mr Davies—and I understand your concern—does Mr report? No. Are we implementing what Pollard thinks Pollard think that anything that has been said to him we should be implementing in terms of BBC news should make him change the terms of his report? His and the culture of the organisation? Yes. view is quite clearly that nothing has happened to Philip Davies: It does affect the Pollard Review change it. because it calls into question his conclusions. cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 6 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Lord Hall of Birkenhead: Not according to Mr transmitted. But I do not know yet what the substance Pollard; it does not. of the allegations that have been made are and if they Philip Davies: Well, it does. But we have found out are right or wrong. that you are happy that Helen Boaden was telling the You would not expect me to say, would you, Mr truth, that she did know about this, that she told Mark Davies, that I will simply publish anything that comes Thompson and that still those programmes were along without making sure it has gone through proper allowed to go out. We have at least clarified that. procedures and checks? I cannot do that. No. But my Now, you say that everything is working and— aim is to get programmes on the air and, as I said to Lord Hall of Birkenhead: I do not think we have you, I believe strongly in the BBC’s ability to carry clarified that. I think those are your words. They are out investigative journalism and I would like us to not my words. do more. Philip Davies: We have clarified that. There is no alternative if you bother to look into it. Q24 Philip Davies: So if you are satisfied that Lord Hall of Birkenhead: No. You are wrong. everything in this programme is accurate, it will be broadcast. Is that basically what you are saying? Q21 Philip Davies: Anyway, in answer to Mr Lord Hall of Birkenhead: Yes. Bradshaw you are saying that you are more interested in what is happening now and everything is Q25 Philip Davies: I am hoping, Mr Chairman, to absolutely fine. catch your eye again later, but one final thing on this Lord Hall of Birkenhead: No. I have not said it is section. Your preparations for the World War I absolutely fine. I said the team is working well. commemoration: I wondered how important that was Philip Davies: The team is working well and for the BBC. everything is going great. Lord Hall of Birkenhead: I spoke about this last Lord Hall of Birkenhead: Well, it is. week. Since I arrived six months ago, I have thought Philip Davies: We are all delighted to hear that. So this was something I want to make sure we get right can you perhaps tell us then about the story in the and I hope we are getting it right, but I look forward Telegraph about the Panorama programme on Comic to hearing what you say about our preparations. Relief, which has been shelved apparently because— I feel it is one of those areas where the BBC needs to I am quoting what they say—“a string of BBC do it right by a whole load of different constituencies executives ruled themselves out of making decisions and perspectives. For those who know a huge amount about it”. about World War I, we have big history programmes Lord Hall of Birkenhead: A thing I learnt when I was that describe the debate about World War I, its causes last in the BBC—Director of News or Chief Executive and so on. Likewise for people who nothing about of news and current affairs; the title kept on changing, World War I because they have never met anybody but it was the same job—under John Birt, was that who was in World War I, it is important that we do when you have a programme that is controversial, and our job to educate and inform them about it. The third right to be controversial, making big claims and right point is to catch moments of national commemoration to be making big claims about things—I am second and ensure that those are really well covered in a to none in backing investigative journalism—you proper and sensitive way. I am always open to ideas. should not set a transmission date. You should One further point. We are working with the Imperial absolutely ensure there is proper time for proper War Museum and one of the things that you will see processes to be gone through with lawyers, in the director-generalship from me is the BBC occasionally with the Director of News, very working with partners outside. I learnt this during the occasionally with the Director-General. That is a cultural festival in the Olympics; you can do so much proper process, and I have worked that and I know it more if you work with people. The BBC acts as an works. That is exactly what is happening with this enabler, as a partner, and that is what we are doing in programme. this case as well. So I hope that what we will do will inform as well as educate and also commemorate in Q22 Philip Davies: So there is no string of BBC the right way. executives who have ruled themselves out of making decisions about the programme. Q26 Philip Davies: Do you think it is suitable that Lord Hall of Birkenhead: Well, there is me and the the person you have put in charge of all of the World Director of News, and the Director of News has War I coverage is the person who is not trusted with obviously talked to me a lot about this. He is news output on Radio 5 Live and lost his job because examining the programme. Let’s see where we get to. he could not be trusted in a news job? But there is no string of BBC executives working on Lord Hall of Birkenhead: He lost his job and was this particular programme. No. moved before I came. All I can say about Adrian van Klaveren is that he is doing a brilliant job, with the Q23 Philip Davies: So is this programme going to rest of the team, on the World War I commemoration, be shown? and let us judge people by what they do. Lord Hall of Birkenhead: I do not know yet. Philip Davies: He was judged by what he did, was he Philip Davies: Well, you are editor-in-chief. not? That is why he lost his job. Lord Hall of Birkenhead: I said that I do not know Lord Hall of Birkenhead: If I can just finish the point, yet because my job is to enable programmes to take Mr Davies. Last week there was a brilliant and place. I very much hope this programme will be moving film showing the things that we will be doing. cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 7

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

That has been under Adrian’s leadership, working Are you not moderately intellectually curious to very closely with television, radio and online, and he establish the facts of who was right; of who knew is acquitting himself very well. what? Lord Hall of Birkenhead: My belief is that is exactly Q27 Philip Davies: But you do not trust him to run what has happened. Two people are holding different news. He was not trusted by the BBC to run news, versions of events in their minds. I am curious. I have was he? He was sacked from his job. asked questions. That is my conclusion. But as I said Lord Hall of Birkenhead: It predates me. He was to Mr Davies, Mr Burns, it is important for the staff moved sideways into this job. I have come in and I and for licence fee payers that we move on from this am looking at people and seeing how they are and convince people that we are aiming to get a operating now and what they are delivering now. If culture that is different. On Mr Davies’ point, that will people are not delivering now, it is a different matter. take time. But if they are delivering for me, I am content. Q31 Conor Burns: I totally understand your Q28 Mr Bradshaw: Going back to the Panorama determination to move on from it. I totally understand Comic Relief programme if I may, Mr Chairman, does your desire to fulfil your mandate, which was to come it concern you that journalists involved in this in, draw a line, redirect, refocus the BBC on its programme clearly felt that they needed to talk to primary mission and mandate. someone outside the BBC? It has been leaked to the But as part of moving on, is it not necessary first to press. That would seem to suggest that they still have confront the reality of what happened? I am not this concern, maybe in the aftermath of Savile, that necessarily asking you to agree with it, but can you BBC news management is not very fast, it is too understand why some people look at it and say there are unresolved questions? Here was a very senior lady cautious. Do you not think there are worrying parallels working on the news output—maybe somebody here with what happened over Savile? needed to take more accountability than was taken. Lord Hall of Birkenhead: Yes. I don’t know about She was moved sideways and no one was really held the parallels. I think this is a much clearer story here accountable for the damage of what happened. that if established, and I hope it will be transmitted, is Lord Hall of Birkenhead: I understand the a proper story to tell. perspective you are putting and thank you for also I don’t like people leaking but people leak and what understanding mine of wanting to move forward. A do you do? But what people will see with James Director-General lost his job. The head of news Harding, with me and with others in the current affairs programmes lost his job. The editor of Newsnight,in area—I have been strengthening the current affairs a different case admittedly, lost his job. The area over the last six months—is that we want to make organisation has been through a really gruelling year. programmes happen, but we also want to make sure So thank you for understanding my perspective, which that they pass the test of being proper, being properly is that I think Helen Boaden is doing a good job in researched, backed up by facts and legally okay. radio. I wanted to use her skills and talent in the new I go back. I did a lot of programmes like this in my organisation and I very much want to move on time in the BBC previously under John Birt. We did culturally—I hope we are—to implement the things all sorts of really difficult stories, but what we needed that Pollard pointed out and the difficult things that from the journalists was—it could be a week, it could we have to do to make sure we have a proper culture be a fortnight, could be three weeks, it could be even in the BBC. longer—to work through the implications of what they were saying. Once they have done that, they will have Q32 Conor Burns: You know from our many my complete support. conversations that I am a big BBC fan, which puts me in a minority among my Thatcherite Conservative Q29 Mr Bradshaw: If you wait too long is there not colleagues, but you can understand that this will never the danger that ITV will nick it, as they did with truly go away until we know what the then Director- Savile and win all the RTS awards as a result? General knew. If he was told by Helen Boaden what Lord Hall of Birkenhead: I take the point completely. her lawyers allege he was told, that leaves a very You want to move quickly. We are moving as quickly serious question. As much as you want to move on, as we can. Yes. people are going to remain curious about that for a Lord Patten of Barnes: Drawing another parallel, it long time to come. is perhaps a pity that rather more attention was not Lord Hall of Birkenhead: That is as may be. I set a given to checking facts in the case of the McAlpine lot of store by Nick Pollard and his independence of report on Newsnight. So it is a balance that one has mind and the fact that he has said on a number of to strike. occasions now, “This does not affect materially my conclusions”. That is what I am building my case for Q30 Conor Burns: Can I just briefly return to Philip change in the BBC on. Davies’ line of questioning around Mark Thompson, Helen Boaden and Pollard? Q33 Conor Burns: I think we can accept that it does Lord Hall, you are absolutely right that two people not affect his conclusions, but people will still want can hold conflicting views and both believe they are to know what the truth was. People were so repulsed right. Indeed you could argue that is the premise of by what emerged about Savile, and it was such a how we operate here in Parliament. pivotal moment for the BBC, that people are going cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 8 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford to remain curious until the facts are fully known, are Q38 Mr Bradshaw: But you do not think it is a they not? matter of principle that when someone is doing such Lord Hall of Birkenhead: I do not have much more an important job for the BBC, not just him but others to say. Maybe it is just a difference of opinion here. I who have other jobs and are paid so much money, the can understand people being fascinated by this stuff. licence fee payer and other BBC staff should expect From my perspective, I think I have said it. I want us them to be doing that job full time? to learn; I want us to change; I want us to move on. Lord Hall of Birkenhead: It is difficult, Mr Bradshaw. There are cases where the BBC, the licence Q34 Mr Bradshaw: Lord Patten, do you think it is fee payer, the organisation, could benefit by having appropriate for senior BBC managers to have second someone doing something outside. It depends jobs? completely on what that job might be, the amount of Lord Patten of Barnes: It depends what the second time involved in it, is it paid or not paid. I think it is jobs are. an ad hominem or ad feminam thing that you look at it case by case and see. Q35 Mr Bradshaw: What about John Linwood, who One of the things that strikes me about the BBC, we may come on to later, who was responsible for the which is full of really talented and brilliant people, is digital media initiative while doing another job? that the more people can get outside and see life Lord Patten of Barnes: It would depend what the outside, the better. When you go round local radio and other job was and it would depend on whether there regional television stations, you see people doing it all was a conflict of interest. It is primarily a the time. Or when you wander round the arts responsibility for the executive, but I do not think it department or science department in New is impossible to think of another job that somebody Broadcasting House, you see people are doing that. could do. Acting for a charity would be one example. Another way of doing that is to go and work for a I do not think that in the Trust unit there is anybody charity or some other organisation. who has a second job. Some of my trustees of course Lord Patten of Barnes: It has been known in other have other occupations, but they are all declared in parts of the public sector, whether sensibly or not is a their interests. nice question, for senior civil servants to become non- executive directors of commercial companies, I think Q36 Mr Bradshaw: Lord Hall, what is your view? sometimes leading to their leaving the civil service. It Lisa Opie, who apparently earns more than £200,000 is really a question of individual cases, but I as controller of Business, Knowledge and Daytime, is understand why you are anxious about it, particularly also running a café business. in the case you mention. Lord Hall of Birkenhead: Yes. She is a shareholder in the café business and her blogging about it was Q39 Paul Farrelly: I want to come on to daft. What matters is that her manager has ensured, is remuneration and pay. Lord Hall, with respect, as the ensuring, that she is concentrating on the day job, new Director-General of the BBC, in answer to Mr which she is. Bradshaw’s question—this is about the culture of the My position on this is that I think it is good within BBC and there have been a lot of things that you have reason for people in the BBC, as in other talked about where the culture is wrong—you could organisations, to go and do things outside the BBC, have struck a much firmer tone and said quite firmly, especially things that are unpaid and charitable. That “If you are paid £250,000 by the BBC, we expect is why I have hung on to two charitable positions you to work full-time for the BBC, as in any other myself. I think it really is important and not only is it organisation”. But you have not. important from the point of view of the community Lord Hall of Birkenhead: No, I have not, Mr Farrelly, and society more broadly, but people bring things for the reason I said. I was careful to say that it back into the BBC perspectives of what life is like depends on the person; it depends on the job. I think outside. That is phenomenally important for it. But people can learn a lot by being a non-exec on a charity there are restrictions. Any second job has to be agreed or some other organisation that they then bring back by the line manager—that must be proper—and there into the BBC. That sort of fluidity and porousness are restrictions on the number of second jobs you can between the BBC and other organisations is a very do and indeed the amount of hours you can spend good thing. So that is why I have said what I said. I doing them. have been quite firm in the opposite direction.

Q37 Mr Bradshaw: Do you accept that the vast Q40 Paul Farrelly: We are not talking about people majority of hardworking BBC employees will think it being school governors or non-executives of charities is extraordinary that someone with the responsibility here. We are talking about people earning money from of John Linwood had time, while messing up what he other jobs outside the BBC when they are being paid was supposed to be doing for the BBC, to do another a small fortune by anybody else’s standards for job? working for the BBC. Your line, frankly, does not Lord Hall of Birkenhead: It is for the line manager really strike me as the firm hand of government or to decide whether the person’s job is so pressured, so governance. vital, that they should not do anything outside. Lord Hall of Birkenhead: It is firm because it Although you can have guidelines that suggest one or depends entirely on the job and it depends on who. It two are appropriate, it also depends crucially on the also depends on that job not taking dominance over decision by the line manager. the things they do in their day job. cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 9

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

I go back. I really do think there are benefits to people wrong, not least in the way that business cases were seeing what life is like outside the BBC, adding dealt with only after terms had been agreed and the whatever things they can bring to outside fact that it was often difficult to pin down who had organisations but also bringing back into the been responsible for making this or that decision. It organisation, too. I think we just disagree. I want the just was not how a professional organisation should BBC to be much more fluid and porous and for it not operate. to be an isolationist BBC but something where people There are two other issues. First of all, undoubtedly do move in and move out and contribute in all sorts sometimes you would be right to pay over contract in of ways to the broader culture in which we live. order to move somebody out quickly if there was a threat of legal action; if there were personal Q41 Paul Farrelly: Can I turn back to what you told circumstances. You can understand that case arising. the Committee in April this year—that you were But, secondly, I think this Committee—I think you introducing a cap of £150,000 on severance payments yourself because you have put questions to me in the or 12 months’ salary, whichever was the lower? The past on it—felt that it was not just paying over National Audit Office report has subsequently said contract, it was what contract entitled people to that that would apply to 15 senior managers who have was excessive. I think the Director-General has dealt already negotiated redundancies. with both those points admirably clearly. I wish that Lord Hall of Birkenhead: What I said to you all last had not been an issue that we had to deal with. April was that there were cases where all the paperwork, all the agreements with the 15 people— Q46 Paul Farrelly: When you say the executive down to 11, I think, when I came to you—were shut previously, in your opinion would the buck stop on cases and we would make sure that all those cases the desk of the Director-General? were dealt with by 1 September. That happened. Chair: Lord Patten, just before you answer that, our Those people have now left. Now the cap is applying, huge audience outside is apparently having some as I said it would do, from 1 September. difficulty hearing you. Is it possible for you both to speak up slightly? Q42 Paul Farrelly: Just so there are no more nasties Lord Patten of Barnes: For the millions who are that impinge on the reputation of the BBC, could I hanging on to every one of Lord Hall’s words, I would ask whether every manager, every employee who be delighted to speak louder and project ourselves. might have a different contractual entitlement agreed The question was? to your new policy? Paul Farrelly: Would the buck very loudly have Lord Hall of Birkenhead: No. About 20 people have stopped with the Director-General? not agreed of about the 300-odd who need to agree. Lord Patten of Barnes: Just now Lord Hall was saying that the buck stopped with him on issues, so Q43 Paul Farrelly: Twenty? How senior are those yes, I think that is true. people or how junior? Lord Hall of Birkenhead: At all different positions Q47 Paul Farrelly: So Mark Thompson bears a lot within the organisation, but the cap is being applied. of responsibility? The cap is very real so I am afraid those people, if Lord Patten of Barnes: I am sure that he would want they were to face redundancy, would come under the to explain to you why decisions had been taken that cap. have subsequently been criticised, but I do not want to spend my time pointing fingers at people. Q44 Paul Farrelly: Would you impose it regardless? Paul Farrelly: There has been quite a lot of that. Lord Hall of Birkenhead: Yes. Lord Patten of Barnes: There has been quite a lot of that. Q45 Paul Farrelly: I go back to a point that I have raised many times in these sessions; the culture of Q48 Paul Farrelly: In response to the Public chiefs and Indians—self-rewarding chiefs and a lot of Accounts Committee in September, in this very Indians—that has been going on for quite some time unedifying dispute between you and Mark Thompson, at the BBC. In the intervening months we have joined in by Anthony Fry, about who was telling the learned that the generous culture in terms of truth, you referred to an answer that Mark Thompson management payoffs was down to custom and practice gave to me in 2011 about Mark Byford’s payoff. I that had been allowed to take root at the BBC— looked at that again and I can say that my comment something that was difficult to challenge, in the words afterwards, when asked, was that it was of one executive. disappointingly very short of the truth. Lord Patten, who in your opinion bears the prime Do you consider Mark Thompson’s answer about the responsibility for allowing that culture to take root? Byford payoff in that question to have been full and Lord Patten of Barnes: The executive over the frank? years—a point made by, I think, James Purnell in a Lord Patten of Barnes: I think that his answer defined very early television interview on this whole business. “contractual” in a way that is different from the way One reason why I was so interested in the KPMG in which the NAO defined it, and that was a point report, which dealt with the three and a half years made very diplomatically by Anthony Fry when he before the NAO report, was that it showed that this talked about a disjuncture between the NAO and what was culture and practice that went right back to a he and others had been told. It was certainly true that previous era in the BBC. I think it was slack and there was a difference between what the NAO thought cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 10 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford a contract was and what that reply to you suggested have you added up the total amount in payoffs that it was. can be put down to George Entwistle’s brief tenure? It was about a case that happened before I became Lord Patten of Barnes: No. I think the principle one chairman, which meant that my ability to talk is George Entwistle’s own payoff. We have explored knowledgeably about it was somewhat constrained, that on a number of occasions and I have yet to hear but I had heard the then Director-General’s reply to anybody demolish Baker & McKenzie’s arguments you at the time and assumed that that was as it was. about why we paid him off.

Q49 Paul Farrelly: When you appeared in April this Q53 Paul Farrelly: I am making a different point. year, I asked about two other payoffs, one to Caroline But we will follow up with a question. Thomson and one to John Smith. Regarding Caroline Can I ask about just one final departure? Mark Thomson, you said that that was what people were Thompson: we learned that he was paid some contractually entitled to. That was your understanding. money—I think £102,000 was the figure quoted—and Lord Patten of Barnes: I think that is a point made he paid it back. Is that correct? in the NAO report. Lord Patten of Barnes: If you mean he was given six months’ notice, but left at the beginning of November Q50 Paul Farrelly: In a follow-up note afterwards, to start work in New York and therefore did not we were told that Caroline Thomson received her complete his six months’ notice, then I guess that contractual entitlement to 12 months’ redundancy and would account for saying he had paid something back. 12 months’ pay in lieu of notice. Are you satisfied But I can’t remember whether he had already been that is accurate? paid that money. Lord Patten of Barnes: I believe that to be accurate. Paul Farrelly: Ms Bulford, you wanted to come in I also believe it to have been a large amount of money. then. Could you tell us? Anne Bulford: Paul Farrelly: She was quite willing to work her I am only aware of two repayments. One was from John Smith, who was paid in lieu of notice. It comes back to what you were talking about, notice and because he started a new role within that making some very generous contracts, as well as over- period, he voluntarily paid back some money. The contract payments. other is Roly Keating. Lord Patten of Barnes: Yes. Paul Farrelly: Right. But not Mark Thompson? Paul Farrelly: You think that sort of contract is over Anne Bulford: I am not aware of it, but the generous. chairman’s analysis in terms of the time of Mark Lord Patten of Barnes: Yes. I am glad that the Thompson’s departure may be right. I am not aware Director-General has made that clear. Can I just add a of a receipt back from Mark. very obvious point that we need to come back to from Lord Patten of Barnes: Mark Thompson, let me time to time? If we were dealing with a media absolutely clear, did not get a penny more than he was organisation that was not paid by the licence fee, those contractually entitled to, and I use “contract” in this sorts of contracts would be being written and being case as you would understand it and as I understand it. paid out perhaps in even more generous terms. I think I have said to this Committee before, or maybe to the Q54 Paul Farrelly: There have been reports that he PAC, that one of the problems over the years is that has paid back some money. the BBC found itself competing for talent with not Lord Patten of Barnes: I do not think anything was just ITV, Channel 4 and Sky but a lot of indies, and paid back. But if it was, it would have been two people unfortunately got stars in their eyes. months of his six-month entitlement, which would not have been paid to him because he had left and gone Q51 Paul Farrelly: What were the reasons for John off to work in New York. Smith’s departure? Why did John Smith leave? Lord Patten of Barnes: You would have to explore Q55 Paul Farrelly: Could we follow up with the that with the then acting Director-General, Tim Davie, merit on that because if he was working his notice or his predecessor. you would expect him to be paid his monthly salary? I think John Smith had presided over a period in If he was not, and he was given six months or which Worldwide had seen its revenues and profits whatever as a lump sum, then you could understand grow substantially, but I think that there were why there might be a repayment. It goes back to the questions about how Worldwide fitted in to the BBC’s culture at the BBC. I think it is quite important. overall strategy. Lord Patten of Barnes: I just want to repeat that he I felt one thing extremely strongly, and I made this was not paid any more, not a sou more, than he was clear almost as soon as I had become the chairman of entitled to. the BBC Trust. I did not think it made any sense to Paul Farrelly: But if you could let us have a note, prepare Worldwide like a fattened calf to be flogged that would be very helpful. off in the marketplace. I thought that would have been Lord Hall of Birkenhead: Could I make a point about extremely bad business anyway and that the licence it now, which might be helpful to you? fee payer deserved a lot better than that. I know that One of the changes we have brought about since last not everybody agreed with me. April is that Anne and I sit on a senior management remuneration committee, which now looks at both Q52 Paul Farrelly: Regarding George Entwistle and increases in pay or changes of jobs that we are the departures at the time of his brief appointment, creating but also looks at people who are leaving the cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 11

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

BBC. That is something I feel very strongly about. not paying twice. Is that a strategy that you should We sit on all those cases above £75,000 and we review have adopted? them to make sure they fit within what I say. Lord Hall of Birkenhead: I want to reduce the Paul Farrelly: I want to come to your remuneration amount of money that we pay on consultants, I really committee in a moment, but I have had quite a long do. I think we are just over £10 million in this year time. I have a few more questions, Chair, but I want and I would like to reduce that further. to let other people in. But in answer to your point, there are some areas Chair: All right, Paul. We can come back to you. where consultants can add something to your thinking. They can bring a sense of how other people have Q56 Mr Leech: I want to ask a question in relation to tackled challenges. I brought in McKinsey to help senior management salaries. The annual report shows with the simplification of the BBC. I gave them tasks there has been a 30% decrease in the number of senior to do and a deadline and they have now gone. They staff and a 31% decrease in terms of salary levels. But have done their job and moved off. I think that sort of the table also shows that salaries over £250,000, the control, i.e. bringing people in for a point, is number of staff between 2009/2010 and the number important. But I am not an easy ride when it comes of staff in 2012/2013 is the same number. So while to consultants. there has been a significant decrease in the number of Jim Sheridan: I have to say it does concentrate the senior staff on the lower pay grades, the number of minds of managers when they are told, “If we bring staff on the higher pay grades has stayed the same in a consultant, you are getting the sack”. within that period, although it has gone up and then Lord Hall of Birkenhead: I can see that would back down again. Has the actual cost in very senior concentrate the mind amazingly. I do think salaries gone down or gone up in that period? consultants, properly chosen but run very tightly, can Lord Hall of Birkenhead: I can’t break it down other really add value. I also think there is something than to say what you have just said, which is that the implicit in what you are saying, too, which is right, pay bill for senior managers has gone down. We have that often managers properly led have the right answers and right solutions. But they need to be a target of reducing that number still further at all enabled to make decisions and to solve problems levels of senior management by 2015. The senior themselves. That is really important. So in answer to management numbers at the moment are 445 and by your question, I want to see the amount of money we 2015 we aim to bring that down to 415. I am spend on consultants for strategic reasons reducing. absolutely on to the issue you are raising. I think it is a proper one. At what level are those senior managers being— 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 Q57 Mr Leech: But given there has been a 30% appointed Suzanne Heywood, who is the wife of the decrease in the overall number of senior managers, Cabinet Secretary, and so on. She is also a partner in and these salaries exclude members of the Executive McKinsey—I am just reading this from the script— Board, you would have expected at least a small drop- who was appointed on a £600,000 contract after a off in the overall number of very senior salaries. But competition process. that does not seem to have happened so far. The We also have Godric Smith, Tony Blair’s official expectation would be that by 2015, that would be the spokesperson, the former head of government case. communications. He was given a contract of £100,000 Lord Hall of Birkenhead: I would hope that we can by our own James Purnell who joined the BBC. Then cut down at all levels of pay, Mr Leech, as you are we have Mr Smith’s public relations agency, which suggesting. The process for that is as I described was founded in April 2013. His agency was hired earlier. I shall be going through all our budgets over without any formal tender whatsoever. the next three months. I do want a simpler, slimmer Do you understand people’s cynicism about cronyism BBC with the appropriate number of senior managers. and using former political links to give people Might I just say that I think it really is important we positions in the BBC? get the right people in the right place to manage the Lord Hall of Birkenhead: Of course I do and you are organisation? Something I said in my speech 10 days raising an important issue here. I will take it bit by bit. ago was that managers should see themselves as On McKinsey there was a process. I was only enablers, as people who can make things happen and involved at the very end, and I withdrew to the very not people who stop things happening. I think that is end because I wanted others to take the decision a really important thing, and I see so many managers because I happen to know Suzanne Heywood. We who are well equipped for that, I really do. worked together at the Royal Opera House. But neither can I say, Mr Sheridan, that because I know Q58 Jim Sheridan: Lord Hall, in a previous life, somebody, they cannot come and work for the BBC. when I worked in the private sector, the company that Godric Smith was a different issue. I think people I worked for had a reputation for misusing consultants were trying to say I knew Godric. Alas, I did not know and indeed managers were described as just lazy. That Godric before he came to work for us. But his role, was the case until they brought in a new chief which I think an organisation like the BBC needs, is executive who gathered senior managers together and to have somebody who is outside the organisation told them in no uncertain terms that if he had to bring challenging us, but in a helpful sort of way, on how in a consultant, then the managers would go: he was we come across; what we are saying; can we do this cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 12 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford better; should we respond here, and all of that. He is in the first place when Soho is full of post production doing a job. I do not know how long it will go on for, facilities? Secondly, why did it fail so badly? but as I said to you I shall watch all these contracts Anne Bulford: This is linked to the period of very carefully and the Suzanne Heywood, McKinsey refurbishment of Television Centre, so Studios and one, they have done their job. It was not just her. It Post Production have been running a facility there for was a whole team of McKinsey people came in. They the benefit of in-house and other programme makers did their job and they have now gone. for some time. When the studios closed and the To my mind that is important, with consultants, facilities moved out through the period of because otherwise consultants can—and they do a refurbishment—they do not go back in until 2015— wonderful job—ease their way into an organisation as I understand it, work was done to look very and it can be very difficult to get rid of them. I was carefully at what studio facilities we were going to very clear with McKinsey that there was a specific need through that transition period and also what time scale. additional post production facilities might be useful. What is interesting is that the perspectives they That resulted in Studios and Post Production taking brought were of other organisations who had been three studios at Elstree through this period, including through the sort of depressing things that we have one where Strictly Come Dancing is now housed. been through but also organisations where there is a Demand was also identified to set up a facility in Post sense of who is responsible, which I want to bring and to hold on to the key talent that was there. A to the organisation, where we are clear about who is few months into that it became clear that that demand responsible for making decisions and doing things. simply was not going to come through and I think the They have been very helpful in helping us move management team are to be commended in saying, towards that sort of culture. “We have made a mistake”, stopping it and cutting it off quickly. But that is the sequence of events. Q60 Jim Sheridan: It goes back to the first point I raise with you in terms of morale. Employees have Q62 Chair: But is this not an example of where the some difficulty when they lose their job because the BBC moved into an area which is very, very well company or the corporation has to save money and catered for by some of the most professional and then they bring in what looks like close friends or skilled companies in the world and ended up losing allies and pay them whacks of money. The work force rather a lot of money as a result? says this is wrong; this is morally wrong. Why are Anne Bulford: It is certainly true that post production you doing it? is a highly competitive market. As I understand it, it Lord Hall of Birkenhead: I am really very sensitive was not a move into an area. It was moving what had to that. When I meet people, when I go round the been a facility in Television Centre into premises in corporation, I completely understand the way they are the West End, on the understanding that there was a thinking. We have some very honest discussions, as you can imagine, with BBC people, about a whole business need and a business requirement there for it. range of things. I relish that. I enjoy that. As it turned out, that was not sufficient to sustain that So it is up to me to be able to demonstrate to people and so they stopped it quickly. that things will change. So to my mind the task for me is, having spent money with McKinsey on Q63 Chair: Can I move on to the biggest failure, simplifying the organisation, getting rid of boards and which as Lord Patten rightly observed, makes the bringing more accountability, is to demonstrate to the severance payments pale into insignificance; the staff, to licence fee payers and to yourselves, that that failure of the Digital Media Initiative? When you was money well spent. eventually pulled the plug on it, the bill for DMI had Now, give me some months and I hope I can reached nearly £100 million, but alarm bells had been demonstrate that to you before I next come before rung considerably earlier than that. Would you like to you. tell us how it was that it was allowed to reach such a level of loss and why you did not take action earlier? Q61 Chair: Can we move on to one or two of the Lord Patten of Barnes: The full story will, I hope, be less successful BBC initiatives lately? available shortly, because we asked PwC to review First of all, I have here a press release from November the whole wretched business and we will publish their last year declaring, “BBC Studios and Post Production report as soon as it comes out. Let me describe it from today announced it will open a standalone post the Trust’s point of view. The Digital Media Initiative, production facility in the heart of Soho”. Anna Mallet, you will remember, began with Siemens being the chief executive said, “This move forms a key part responsible for it, and then it was taken in-house by of our future plans”. the BBC. This was before my time. The PAC was I then have a press release of August of this year, interested in it and I think in the spring, maybe seven months later. “BBC Studios and Post slightly earlier, February 2011, the PAC discussed it Production will leave their post-production facility in with the then Director-General and Director of central London next January, only a year after it Technology and Anthony Grant. Assurances were moved in”. Anna Mallett was quoted as saying, given about the roll-out of the initiative across the “Despite best efforts post production in its present BBC. I can’t remember the exact words, but that was current form is not proving to be commercially viable by and large what was said. I think at the time for BBC Studios and Post Production”. Why did you Anthony Fry said that he continued to worry about it feel the need to open a post production facility in Soho despite these assurances. I think he said that to the cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 13

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

PAC, who expressed themselves very pleased with Q66 Paul Farrelly: The Chair is asking questions of what they had heard, understandably. Lord Patten. Could Lord Hall answer the same In the Trust’s Finance Committee every quarter we questions? look at big projects and the risk involved in big Lord Hall of Birkenhead: There is a process going projects. In June-July last year suddenly the Digital on at the moment, number one, so I do not want to Initiative came up with a red warning. At the same comment on a person who was holding a responsible time we had a whistleblower write to us and in position at the time. Secondly, as the Chairman said, interviewing one of the candidates for the Director- I am looking forward to reading the PwC report. I General post one or two things were said about the think let us go on the evidence of people who are Digital Initiative that caused us unease. So, in the July looking at this to find out what has happened. All I 2012 Trust meeting we asked a series of pretty can add is I came in, I read the report, as the Chairman searching questions about an initiative that we were said. I also went out deliberately to Perivale to look starting to be told was behind time and losing money. at the archives there and what they were making of We received the reply to those questions in autumn what was going on. A great group of people, but it is and were so alarmed by what we heard that we asked clear to me that the DMI initiative was going the executive to stop any further spending on the nowhere. initiative. We wrote to the PAC, told the NAO what The decision was whether to completely write this we were doing and asked Accenture to review the down, to be frank, or to say there is still some value whole project while no more money was spent on it. left in it. I felt strongly we should write it completely The report by Accenture was on the Director- down to zero, as indeed did Anthony Fry and the General’s desk when he arrived in spring of this year Trust. If we can write back some value over the next and his decision straight away, I am pleased to say, couple of years, fine, but what I thought would be was to pull the project. appalling was to carry on with this project hoping that It is true, of course, that there have been other something would come right from it. calamities in the public sector with these projects, but One lesson I would say of this is that it comes back to a culture of responsibility, ensuring that someone is this should not have happened in the BBC, which has clearly in charge. The other two bits of learning, I always prided itself on being, among other things, a would say, before we get onto the PwC report, would very good engineering company. So, it is a pretty be that these big projects need to be broken down into lamentable story, but the ins and outs, the trail of e- ways they can be managed properly and appropriately. mails of who said what to whom, of what happened Thirdly, you need to listen to what the staff are saying at individual meetings or was agreed at individual about these sorts of projects, because I have met a lot meetings will be fully exposed in the PwC report. of people who said, “We knew that was not going anywhere, but we dared not say anything”. Q64 Chair: Whose fault do you think it was that it This poses a big issue for me. That is, you have to was allowed to reach this position? have an organisation and a culture more broadly, Lord Patten of Barnes: I do not want to prejudge where people feel they can say, “This is not working. what PwC says, but the management of a project like Now what do we do or shall we go for a cheaper this is an issue for the executive of the BBC. We look solution outside?” You need to have a culture that every quarter at big projects to check on what is encourages that and not, “There is a mistake. You are happening with them, and that is as it should be, but to blame. Fail. Hang somebody.” I think we need to the Trust does not manage individual projects. We do pull back. People have been saying to me, “We knew not manage the move to Salford or the move into New this was going nowhere and we knew there were Broadcasting House or something like the Digital solutions we could have bought off the shelf to Initiative. We check that they are done competently. various bits of that”. We need to ensure that that In Salford, as you know, while there were some culture is the one we have. But let us see what PwC arguments about some overpayments, by and large it say. was a project that went extremely well, below cost and ahead of time and without any impact on the Q67 Chair: Are you saying that you do not think services. But the Digital Initiative is a pretty good anybody should suffer for a £100 million loss of horror story and I do think that Anthony Fry, who licence fee payers’ money? has been tracking this all along, has been shown to Lord Hall of Birkenhead: No, I am not saying that at be right. all. What I am saying is there is a process going on at the moment and I do not want to comment on that Q65 Chair: Therefore ultimate responsibility lies because it is a legal process. with Mark Thompson. Chair: Someone may lose their job as a result of this? Lord Patten of Barnes: Ultimate responsibility lies Lord Hall of Birkenhead: It is a legal process going with the executive. The Charter and straightforward on at the moment and I would, if you do not mind, just common sense makes clear what is executive and like to leave it there. I am saying that people should be what is strategic and if, when I applied for this job I responsible and be held responsible, but I am also had been told that one of my functions would be to saying that you have to have a culture where people manage large digital projects, I would have said, “I who are in responsible positions are also listening to think that is for somebody else to do”. That is not what people are saying. People should not feel afraid my gig. to come and say, “The emperor has no clothes”. cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 14 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Q68 Paul Farrelly: Is the culture still going to be, alongside the public service part of the Corporation. “We are just going to wait for the management So, decisions are shared between the public service consultants to bring back another report before I as and the commercial operation under Tim Davie, and chief executive take a decision”? the Executive Board is taking responsibility both for Lord Hall of Birkenhead: Not at all. We are already the public service side and also the Worldwide looking at projects that Anne is taking the lead on and commercial side, because I think on decisions such as how we can run those in a clearer and more this it really is important that the whole of the BBC responsible way. I am saying that on DMI I look is making the decision, not just a part of the BBC with forward to hearing what PwC says, but I have given their co-operation. you some of my own conclusions from talking to people and going round the organisation. Q75 Paul Farrelly: One final question. You said earlier regarding the departure of John Smith that Q69 Paul Farrelly: When we looked at BBC’s there was a sense that BBC Worldwide was being commercial operations in 2009, we were scathing fattened up like a calf for sale. That is quite new to about the price that was paid for Lonely Planet and us. Can you tell us a bit more about it? the rationale for the business that it was. Hordes of Lord Patten of Barnes: That was my feeling when I BBC executives led by the Finance Director came in became Chairman of the Trust. But maybe I was and told us it was absolutely wonderful. It had been wrong. I was clear that BBC Worldwide should be, as signed off, it was commercially a fantastic deal and it were, a commercial arm of the BBC rather than the the BBC had been transparent, none of which was the BBC being the public service arm of BBC Worldwide. case. Now we see that Lonely Planet has suffered a I think that is a point well understood by the Director- pretty predictable fate. Could I ask, was the sale of General and Tim Davie, who will do an outstanding Lonely Planet signed off by the Trust, Lord Patten, job. It has to be said that when John Smith was Chief under the new rules? Executive he did increase the revenues and profits Lord Patten of Barnes: I can’t remember the year. very considerably. But I want to see a BBC Worldwide that is selling the best of the BBC and Q70 Paul Farrelly: No. The disposal, that was others throughout the world and is able, as a result, to signed off by the Trust? invest back in making good BBC content. Lord Patten of Barnes: Yes. Paul Farrelly: I do not have the BBC Worldwide Q76 Paul Farrelly: You would both resist any report and accounts with me so I do not know— pressure or any internal or external agenda to sell off Lord Patten of Barnes: We agreed to the sale with, BBC Worldwide? broadly speaking, the argument that it was the best we Lord Patten of Barnes: were likely to be able to manage in difficult Yes, absolutely. Let me make circumstances. 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, Q71 Paul Farrelly: Can you tell us what exactly because no state aid policy— was sold? Anne Bulford: As I understand it we acquired Lonely Paul Farrelly: The yes is sufficient. Planet as a trading entity and we sold out of that Lord Patten of Barnes: Yes. whole business, so it was this subsidiary that was sold. Q77 Mr Sutcliffe: Thank you, Chair. I start off with Q72 Paul Farrelly: So you sold the subsidiary? congratulations for the Bollywood Carmen production Anne Bulford: I believe so. in Bradford that I thought was fantastic and showed Bradford in a good light, so thank you very much for Q73 Paul Farrelly: Was there any cash in the that. I want to talk about the governance role. Lord subsidiary? Patten, you wrote to the Secretary of State in Anne Bulford: I do not know. I would have to check September following the PAC and NAO debacle, if back on that. you like, to say that you highlighted potential Paul Farrelly: Could you come back with the terms problems in the relationship between the Trust and the of the deal? executive. What is your view now? What work are Anne Bulford: Yes. The accounting looks very odd you carrying out to try to disseminate information because you will see in the report and accounts that about the roles of the Trust and the executive? the accounting shows a book profit because of the Lord Patten of Barnes: We are still having meetings exchange. The position was that there was an £80 about this, but I hope we will be able to set out clearly million cash loss through the course of the business. before Christmas the results of our joint work, and I hope that that will achieve three things. First of all, I Q74 Paul Farrelly: I have seen that, but I would like hope it will match in the Trust what Tony Hall is to see what was sold, if you can provide me with doing with the executive, which is to strip out some details, whether there was any cash in the business unnecessary layers. when it was sold. Secondly, I hope it will clarify exactly what the Trust Anne Bulford: Certainly. is responsible for and exactly what the executive is Lord Hall of Birkenhead: Could I add one point that responsible for, and do that in part by greater openness may be useful? One of the things we are doing is and transparency than we have at the moment. This bringing Worldwide and the planning for Worldwide has not been agreed yet, but I think some of what we cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 15

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford do should be in public. I do not think it will be “hold doubtless be within the intellectual infrastructure set the front page” but I think it will be quite important. by the Government, this Committee and others. In the Thirdly, if I can just add the other point, I think it course of that, I guess governance will feature, but the raises questions that Tony and I, the Director-General most important issue is, however, the future of the and I, have been asking about the role of the non- BBC itself and the licence fee, but that is for another executive directors and exactly how that should be day. seen. Those are the particulars. I have to say that my predecessor, Michael Lyons, wrote to the then Q82 Mr Sutcliffe: You are hoping to do something Secretary of State for Culture, Media and Sport about now that will hopefully include not a separation but a some of these matters in the summer of his departure, difference between the roles that will be transparent perhaps the summer before his departure, but did not to people, so that we will not have a situation where make any impact. you have to become the cheerleader for the BBC and also the regulator for the BBC. Q78 Mr Sutcliffe: In the debate yesterday a Lord Patten of Barnes: Greater clarity. I do not think colleague raised the issue of whether we should, as a that there is any great harm, when the BBC does Select Committee, scrutinise both together or whether things spectacularly well, to cheer. But we are a we should have two separate sessions. What is your regulator. In this whole debate I have been very view on that? The public view is that there is no interested in the honest responses of Ofcom and the difference. I accept that there is, but the perception is excellent officials who run Ofcom, who have pointed that you are very close. In particular when crises come out very clearly that they could, of course, regulate around, you are forced together even more. the BBC, but they cannot perform a governance Lord Patten of Barnes: I, of course, treasure every function in the BBC. At the moment Ofcom regulates moment I spend with the Director-General and the Channel 4, but it does not decide how much people in Managing Director of Finance. If those are in your Channel 4 are paid or whether they should be paid company as well they are particularly precious. I more or less. When people talk rather loosely about realise why somebody made the point, but I think we the present model not being right they are not quite should be capable of performing a regulatory and so convincing when it comes to alternatives. governance function without being thought to be Mr Sutcliffe: Lord Hall, have you anything to add in subject to executive capture. One reason why, and I terms of the relationship between the Trust and the know not everybody agrees with it, the Board of executive? Governors was disposed of was because people were Lord Hall of Birkenhead: Yes. I think we have a worried that it was subject to executive capture. chance here, for the next three years or so, to bring clarity, to have a simpler relationship where we are Q79 Mr Sutcliffe: What is the role of Nicholas focusing on key decisions we need to make, and also Crowe? What does Nicholas Crowe do? where we can strip out areas or functions that we just Lord Patten of Barnes: He is the sort of permanent do not think are adding value. I always think with all secretary of the Trust, a very experienced former civil organisations and relationships it is a bit like pipes in servant and he runs the Trust unit that has about just a hard water area. They accrete lime scale over time. over 64 people in it and a budget of £11.9 million, of This is a good chance to go straight back to what we which £3 million goes straight to Ofcom in fees. want to achieve and do together. That is one point. The other point is giving the executive clarity about Q80 Mr Sutcliffe: Has he had a view about the what it is there to do, and that also means with the proximity of the Trust and the executive? non-execs taking responsibility for decisions. Lord Patten of Barnes: Yes, and I suspect that In answer to your question earlier about the debate because this is part of a very distinguished public yesterday, it could be that in future you do not want service career, he feels even more frustrated than I do to see me, but you want to see some of the non-execs or the trustees do about the difficulty of getting across on the Executive Board because in the end, as the exactly what our role is and how we have been doing Chairman has been saying, we have executive it. The service reviews, the service licences, the responsibility for spending the money, for ensuring we interventions over things like children’s broadcasting are creative, for ensuring we are doing great work, and local radio and Radio 6, and the constant pressure and the non-execs are part of that. on pay and remuneration, all those things have been part of the Trust’s record that nobody takes very much Q83 Chair: On the issue of governance, the notice of. I am too old to moan that life is not fair, Secretary of State told the House of Commons but I think it is more difficult if you have been in the yesterday that the BBC has already agreed in principle trenches doing the digging sometimes to accept some to changes to its relationship with the National Audit of the criticism. Office. Can you confirm that in future the NAO will have unfettered access to the BBC? Q81 Mr Sutcliffe: This review you are carrying out Lord Patten of Barnes: It depends what you mean will lead to the thought patterns for 2016 when we get by unfettered. to the end of the current Charter. Will there be some Chair: That they can go where they choose to go recommendations that perhaps we will be able to look without seeking the permission of the BBC. at and discuss and consult on? Lord Patten of Barnes: With a proviso, and we are Lord Patten of Barnes: What we want to do is make discussing this with the Secretary of State. I do not a difference now. The Charter review process will think it is a controversial issue. We do not think the cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 16 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

NAO should involve itself in editorial matters, and Lord Hall of Birkenhead: I think that would be very that is pretty important. I have not had personally, interesting, yes. though others do have this concern, an ideological concern about the NAO. I was interested that Gavin Q88 Paul Farrelly: Your Remuneration Committee Davis, a former chairman of the BBC, said he used to is being rejigged. It was last year comprised of three have an ideological objection to the NAO having non-executives plus the Director-General plus the access, but in practice he did not feel that any more. Director of Business Operations. Was that Caroline I am much the same. I think our relationship with the Thomson previously? NAO is pretty good. I think they do very competent Lord Hall of Birkenhead: I am not sure. work, but we had worries in the past about Paul Farrelly: We can ask you later. Also a person interventions in editorial areas and we had concerns who was called the Director of Reward; do you know that there might be occasional ambulance chasing. But who was the Director of Reward? I hope that will not happen. We are trying to clarify Lord Hall of Birkenhead: I have no idea who the the editorial point at the moment and I hope that will Director of Reward was. lead to a smooth running relationship with the NAO. Q89 Paul Farrelly: Is there still a Director of Q84 Chair: Nobody would suggest that the NAO Reward? should have any role in questioning editorial matters. Lord Hall of Birkenhead: Well, as you have correctly Lord Patten of Barnes: You say no one would observed, it is run by the non-executives now. That suggest. is proper. Chair: It is written into the agreement between the Paul Farrelly: I am going to come onto it now. NAO and the BBC. The Secretary of State said very Lord Hall of Birkenhead: Okay, yes. clearly yesterday that will not change. Lord Patten of Barnes: Indeed it is. Q90 Paul Farrelly: I am just looking at the changes. There were three non-executives previously, plus the Q85 Chair: But that does not mean that at the DG, Director of Business Operations and a person moment the NAO has the complete freedom to called a Director of Reward. Can you shed any light? examine financial matters that it would like. It is Anne Bulford: We now have a person from HR who subject to delay, for instance, before it is able to look brings the material and is in a position to answer at various matters. detailed questions whose title I believe is Head of Lord Patten of Barnes: Three months. 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 Q86 Chair: Why should there be a three month talking about members or attendees who are delay? providing information. Lord Patten of Barnes: I hope that will be resolved Paul Farrelly: We will follow up as to what titles satisfactorily. people were given. Chair: Good. The NAO, as long as they keep out of Anne Bulford: Thank you. editorial matters, will be able to go where they choose without the BBC having the power to say, “No, you Q91 Paul Farrelly: Now you have rejigged it, there cannot go there”. are three non-executives and the Director of HR and Lord Patten of Barnes: Yes. the Director of Employment may attend. Lord Hall of Birkenhead: Yes. Q87 Paul Farrelly: Just on governance, some things are for the Trust, some things are not for the Trust. I Q92 Paul Farrelly: Does that mean that Lucy Adams am concerned about how the non-executive directors still attends the Remuneration Committee? of the BBC fit in with this. You had six and you now Lord Hall of Birkenhead: She does, yes. have four. Are you replacing the other two who have left? Q93 Paul Farrelly: She does, okay. Lucy Adams Lord Hall of Birkenhead: We are going to replace was someone I also mentioned in April as to what non-execs when we are through this process that the her role in facilitating this culture had been. In the Chairman has outlined. They have a really important meantime, Lucy Adams became news herself, role. Firstly, they run the Audit Committee. I think somewhat controversially, and is now leaving. I notice that is really key. The Executive Remuneration that immediately on the appointment of George Committee is also chaired and dominated by non- Entwistle she was appointed to the Executive Board, executives. having stepped down at the end of March 2011. That Paul Farrelly: We can see that, but I think we should conveniently meant, or maybe I am reading it too take you up on your invitation. I think you have a cynically, that she was not on the Executive Board at senior non-executive director. the time of the 2011/2012 accounts and therefore, her Lord Hall of Birkenhead: Indeed. remuneration of £320,000 was not up there in lights Paul Farrelly: I think there is a spare chair there for compared with George Entwistle’s, who was running next time and it would be interesting—it is now a the TV side, which was about £270,000, so £50,000 “her”—to ask her and get a feel for the level of less than the Director of Personnel. This time around, challenge by the non-executive directors to the she is now on the board at £320,000 and Danny Executive Board. Cohen, who has taken over George Entwistle’s old cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 17

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford job, his remuneration is £320,000, the same as Lucy Q98 Tracey Crouch: Do you think it will have an Adams, and £50,000 more than George Entwistle was impact on childcare or home lives to do the breakfast earning. Can you explain why he is being paid that show in particular, which can be quite difficult for much more than George Entwistle was? some women? I know that you did recognise that in Lord Hall of Birkenhead: I cannot tell you why some of your own comments. George Entwistle was paid what he was paid as Lord Hall of Birkenhead: We are going to have to Director of Television. What I can tell you is, in work this through case by case, station by station. I paying Danny Cohen what I thought was the right rate am sure there will be all sorts of issue like that, but I for the job—he has a huge job—an enormous amount want us to be a good employer. I want to see more rests on his shoulders. I have a huge amount of faith women in prominent positions, both in front of camera in him and that seemed to be the appropriate salary and microphone, and behind scenes as well. This is for him. It went through the non-executive directors. one step on that route. Getting Mishal to move to the They quizzed me about it and then they said that Today programme was another. I was delighted last was okay. week—or was it the week before—when four women were presenting the Today programme. I think it was Q94 Paul Farrelly: Cynics might possibly say you a week last Thursday. I was pleased about that: all cannot possibly have a Director of Television on the brilliant, good women. Executive Board being seen to be paid less than the Director of HR. The question that cynics might ask Q99 Tracey Crouch: I have to say I am slightly is: to what extent are Lucy Adams’ pay, terms and disappointed, if I may confess, that when I did read conditions, which seem very generous, responsible the headline that you had set out an ambitious vision still for inflating BBC executive remuneration? for BBC local radio that what was being reported was Lord Hall of Birkenhead: Well, I hope I have been simply the diversity targets that you were hoping to clear that, because I chair the senior management achieve. I just wondered what else your vision for the RemCo and also attend that meeting, I decide the future of local radio consists of? people who are put forward—as in Danny Cohen— Lord Hall of Birkenhead: One of the really satisfying obviously with advice. Lucy Adams will be leaving at bits of the job over the last six months has been going the end of this financial year and I will seek to employ around a whole range of local radio stations from someone at a lower rate, taking the point that Mr Orkney, run by four brilliant people, to Devon to Kent Leech made earlier on. to Lincolnshire. What we do in local radio is phenomenally important. It is really in touch with Q95 Paul Farrelly: The final question: do you know licence fee payers. It is really in touch with of any other big broadcasting operation where the communities in a way that other parts of the BBC are head of HR is paid more than the director of the main not. I really do want to see in all sorts of ways local broadcasting function? radio thrive in my time at the BBC. Lord Hall of Birkenhead: I do not have a specialist I think we need to look quite carefully, because degree in what other pay rates are out there. I have whatever you do, whatever bit of money you put their inherited what I have inherited. I think Danny is paid way, you have to multiply it by 39, but I want to think appropriately and, when I come to replace the Director through how we can build on what local radio does in of HR, I will seek to do that at a lower rate. communities. I will just give you one or two examples. Q96 Tracey Crouch: I want to ask a few questions One was from Radio Lincolnshire who, using a pot of on DQF and their impact on local services, but if I money that the director who is in charge of all the may, Lord Hall, I will just start with your comments English local radio stations holds, was able to put on at the Edinburgh Festival, where you set out a reported a play half an hour long, which then toured round ambitious vision focused on 50% of local stations RAF bases or stations—I forget what you call them having a woman presenting high-profile breakfast now—on The Dam Busters and went to The Dam shows? What progress has been made on that thus far? Busters anniversary event. It was put on with local Lord Hall of Birkenhead: That was only a few weeks students, working with the university, working with ago. It is something I will be monitoring very the RAF, working with all sorts of people in the carefully over the coming months. I want to get to community. No other organisation but the BBC and that for one very simple reason. It is not right that BBC Radio Lincolnshire would have had the sort of there are not more women in high-profile positions at ambition to do that. By the way, it was phenomenally the moment on that morning show on local radio moving because you realise that the students who stations. Also, I have always believed in the were doing it were the same age as all the crews that importance of local radio as a conduit through to went off and dropped the bouncing bombs. network radio, television and so on. So this felt to me If you go to Radio Merseyside, there you have the A to be an important start on getting more women in Team, which is led by a person who is full time, but prominent places on our screens and on our radio. these are people who come in and volunteer. They take telephone calls and they take issues from Radio Q97 Tracey Crouch: Do you have a time frame in Merseyside, and begin responding to those issues, mind for when you would like to see this? helping people directly; it may be fuel bills; it may be Lord Hall of Birkenhead: Yes, I think I said by 2015. a whole raft of other things. Tracey Crouch: All right, so 18 months or so. This is what I have seen and lots more in my first six Lord Hall of Birkenhead: Yes. months. Talking with James Harding, I want to know cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 18 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford where we take this and where we take this forward, partnerships. It is what you see in Salford brilliantly, because I think this is real public service. These working with the local communities. people are doing brilliant jobs. With all the limitations we have with money—and we have limitations with Q102 Tracey Crouch: I appreciate that you have to money—this to my mind is a very direct, important make the savings. You have to do so within a certain service we are providing people with. Some of it is time limit. Do you think that your overall property also examples of what the Prime Minister calls the and investment strategy is going to damage local Big Society. services in the long term? For example, the Bradford studios have closed and people have had to go to Q100 Tracey Crouch: I think we would all agree Leeds. I was talking to another colleague this about the value of local radio. Whenever there has morning. The Mold studio is closed, which means that been any debate in Parliament about the future of local they therefore have to go to Salford. The Chatham radio services, people appreciate what it is that the studios, in my own constituency, are under threat, BBC brings to their local community. Is it not the case which means that the largest conurbation in Kent will that, as a consequence of DQF, the local services, both no longer be served by local radio and TV studios. I radio and TV, are being spread a bit too thinly and can absolutely guarantee you that no one will go to there is a danger that they are becoming more about Tunbridge Wells, because it is practically in Sussex. news recycling rather than the examples that you give Is there not a question around the property strategy, of going out there and seeking local content? which could have an impact on the quality of the Lord Hall of Birkenhead: Yes, I think there is a content that is being delivered locally? danger of that. I think the Trust stepped in, if I Lord Hall of Birkenhead: I think you are on to understand the history right, and cut back the cut that something really important and it concerns me too. I was proposed for local radio. I think, indeed, completely agree. Tunbridge Wells to Chatham is a Parliament has had some say in that. What I am doing, very long way. Likewise, when you look at to answer your question, is looking, with the Director somewhere like Merseyside, Chester is an important of News, at what we want and how we think we can city. That area is really important too. How does that be ambitious with limited resources in local radio. reflect back into the network? I was in Bradford for I go back. I think there is a lot for us to do. There is the Bollywood Carmen on BBC3, which was fabulous, also a lot for us to do in partnership with local but what a number of council leaders and others were newspapers or other local organisations in finding new saying to me there was that it was really great to have ways of helping to give people information, but also something that reflected this side of Bradford to us. as you say reflecting the quality of the arts—I would Now, it is a bit hard to argue when you have moved say that—culture and other things going on in your studio in Bradford and said we will do all of this communities. from Leeds. These are questions that are open to me. I have the same question—and again it is a money I am concerned about the Bradford issue. I take the issue—with English regions as well. Increasingly the Chatham issue as well. BBC is really significant and important in reporting I have no idea whether we can afford this yet, but I what is happening in English regions to those English am with you. I think this is an area where we in regions. I do not know what the consequence will be modest ways need to make sure that where we base of what I am thinking, but that is an area I am very people allows them to reflect the communities we are interested in and I think it is a very important area for seeking to serve. If you ask me, the biggest change I the BBC. have seen—well, I have seen lots of changes since being away for 12 years—is the way in which our Q101 Tracey Crouch: Do you think DQF went a bit local role and our regional role has become more too far in its cuts to news in particular? significant, not less. Lord Hall of Birkenhead: I do not know fully yet, but it is the question I have as I go through all the Q103 Tracey Crouch: I would agree with that, but I budgets in the next few months. I know we have to fear that the future may look very different in terms land the DQF savings by the Charter period, which is of what you have just outlined being very much a hub the end of 2016. There is no going back on that. There and spoke model for delivering local content. It feels, is no magic wand there. That may mean some more with the closure of studios, particularly around my hard choices around the year 2016. We kind of know own county of Kent, that we are just going to have a where we are going until about the end of 2015. It is hub. Therefore, the rest of the county, the north and 2016 where I have a lot of questions. I really think west of the county, will have nothing. There will not what we are doing in the English regions and what we be any good quality service for people to contribute are doing in local radio is important. to both TV and radio. That will only serve to dampen There is another issue that just might interest you, the content for the BBC. So will you save Chatham which is around Birmingham. A lot of network studios? production has gone from Birmingham. I was with the Lord Hall of Birkenhead: I absolutely take the point. leader of the council in Birmingham last week and I want to say something and so does James Harding also with the person who is running the LEP there to later in the year or early next year about news and talk about what we can do together. I really believe about local. Our mission is finding the right way, that the BBC acting as a catalyst, working with other within all the issues to do with savings we have to people, can often do things that are bigger than just if make, to give a greater spread of news, comment and we work on our own. I want to work in those sorts of other things from around the areas we are seeking to cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 19

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford serve. To take your own example of Kent, I know Q107 Mr Leech: Would you expect the overall trend damn well that Tunbridge Wells is one side of Kent, in future years for spend on Scotland and Northern you can go to Chatham, you can go to look at the Ireland to increase as a proportion of BBC spend? brilliant Turner Contemporary at Margate. This is a Lord Hall of Birkenhead: Yes, we have specific very big county and our job is to make sure we can targets of getting more spend from Scotland and cover those things properly. That equally applies to Northern Ireland. Lincolnshire, Merseyside, Devon and so on. Anne Bulford: Yes, the spend in Scotland dropped slightly in the year, mainly as a result of The Weakest Q104 Tracey Crouch: One final question, do you Link. We are expecting that to go up towards 10% in think that the RAJAR figures have reflected any the current year. Overall, as I understand it, we are impact of DQF? Have they shown that DQF is aiming to have 50% of production outside London, creating a cut in listening? with 17% in the nations, so we are on track to Lord Hall of Birkenhead: What the RAJAR figures achieve that. show for me on local radio is the impact on the Lord Patten of Barnes: Can I say something about evening merger of programmes. I am not overly the Welsh figures, which are, you are quite right, concerned about it to be honest with you, if that is extraordinary and stand out in comparison with the what you are asking me. On RAJAR figures and others. I suspect that there are, among other features figures more generally, I am concerned about the explaining that, the Welsh language and rugby speed with which audiences find other ways to football, both of which are, of course, prominent parts content, especially young audiences. of the BBC’s offering in Wales and near the heart of Tracey Crouch: Thank you. Welsh culture. Q108 Mr Leech: There is also evidence to suggest Q105 Mr Leech: Yesterday, in the debate on the that black audiences are less happy with the BBC than future of BBC, I and a couple of other Members white and Asian audiences. What is the BBC doing to remarked that the poll ratings for BBC were at levels tackle that, specifically to improve ratings among the that politicians could only really dream of, but the black audiences? picture when you look at more of the detail is not Lord Hall of Birkenhead: Yes, I am not satisfied with necessarily stated so clearly. For instance, people in our delivery in programmes that black audiences will Wales seem far more satisfied with the BBC than find useful to them and they will want to watch. It is people in Northern Ireland and Scotland. What are an area, as it is with some younger audiences too, you doing to improve ratings in regions where the that I want to see plans for how we will reach those BBC is not so popular? audiences. Part of that is also, of course, making sure Lord Hall of Birkenhead: It is a really interesting that we are employing people who can help us reach question. For me, what BBC North based in Salford those audiences. That is why the employment targets demonstrates is what we want more of. A sense of we have are also vital, but it is not an area I am yet place, of the non-metropolitan nature of news and all satisfied with. sorts of other things, is properly reflected. You see that in a markedly different share and reach for BBC Q109 Mr Leech: Can I also ask about BBC3. It services, because people in the North feel there is reaches about 29% of its target audience. How does something there. that compare with similar commercial broadcasters? Likewise, with Scotland and Northern Ireland, what is Lord Hall of Birkenhead: E4, I think, is around about done nationally in Scotland and in Northern Ireland is 20%. Sky One is about 10%. ITV2 is about 20%. In really important and a vital part of what we are doing, terms of digital services, it is out there. but we are also kind of reflecting programmes back to the network. It was fabulous, for example, in Scotland Q110 Mr Leech: If you were to take away the BBC1 to see the beautiful series Hebrides running first in and BBC2 repeats that are put onto BBC3, what Scotland and then across the network. That sense that would your percentage reach then? If you took away things from Scotland are reflected back into the UK is those programmes that have actually been repeated? very important. Lord Hall of Birkenhead: I see exactly what you are We are on a path here to do more from the nation’s trying to get back to. I do not have those figures, but communities and regions. It goes up and down a little maybe I can get back to you with some suggestion of bit every year, but the trend is in the right direction. what it might be. I do think that the programming that we do for BBC3 is important, both the things we buy Q106 Mr Leech: The same results came out last year in, but also the things that we make. One of the areas in relation to Northern Ireland and Scotland, but the that I sort of alluded to in my speech but I want to percentage spend by the BBC on Northern Ireland and develop is how BBC3 and Radio 1 can work much Scotland has actually gone down. Surely that is more together; Radio 1 concentrating more on music, counterproductive. BBC3 concentrating on other genres. Lord Hall of Birkenhead: As I said, if you look at it One of the bleeding obvious things that came up is year-on-year, things can go up and down a bit, but the that we have a news service on BBC3. We do not call trend is up and we have a direction to get more out of it anything yet. We have Newsbeat on Radio 1. Why Scotland and Northern Ireland with specific targets. not take the Newsbeat brand and run that across the We will make sure we meet those. I think it is really two? Both the controller of BBC3 and of Radio 1 have important. more work to do to see how, together, with these two, cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 20 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford a channel and a station, we can reach out to our Q115 Mr Leech: Three senior people are in front of younger audiences with things that will bring them the Committee, none of whom are able to tell me into what the BBC can deliver. where on the EPG those channels are. Does that not suggest that moving all children’s TV on to channels Q111 Mr Leech: One of the really interesting facts that the average person does not know where to find and figures was that only 47% of people thought the is a potential problem in terms of getting the message BBC provided programmes that no other broadcaster across about children’s programmes? would make. Is that a positive or a negative? Lord Hall of Birkenhead: Okay, so I have failed your Lord Hall of Birkenhead: It is a really good question. Freeview EPG test, but let me just give you two other I start off by saying, if you can get 47% of people to facts. Newsround now is not on BBC1, but the figures say, “Do you know what, the BBC is making for Newsround are growing. Likewise, with Blue distinctive programmes that no others will make”, that Peter, the figures are growing, so these two channels strikes me as an awful lot of people saying very good are working and they are finding their audience. things about the BBC. In answer to the follow-up, Now, I think the challenge is not BBC1, 2 and the two which I guess you will come to, “Could that be C channels. Actually, the challenge for us is this. I higher?” I would love it to be higher. saw a bit of video that haunts me, which is a kid who When you think of all the excitement around has a magazine in his hand. It is a toddler sitting up programmes such as Strictly Come Dancing on and he is going like this with the magazine and then Saturday evening, through to the Bake Off tonight, hitting it, then getting bored and just throwing the through to a programme I was watching last night on thing away. What we have to do with children’s is to Pussy Riot, an extraordinary programme on BBC4, or make sure in an area where children especially are a programme about the Ottomans, then you turn on growing into different consumers of digital media, the radio and I listened last night to a programme that we have things that are specifically BBC, good about Italy now on Radio 4 at 8pm, you think, “This content to offer them. That is a big challenge. I know is extraordinary”. To my mind, 47% is a good figure, the team in Salford are well up for it. but I want to shift it higher. Mr Leech: I was not actually going to follow up my Q116 Mr Leech: Finally, there is some evidence that question with that. we are not necessarily getting through to the post- Lord Hall of Birkenhead: All right. CBBC young people. What are you doing to face that challenge to make sure that you are providing Q112 Mr Leech: Is this not also an indication that something for the next generation of adults who you other commercial broadcasters are actually following want to watch BBC and access BBC productions, so the BBC rather than the other way around? that they stick with the BBC over the next 20, 30, Lord Hall of Birkenhead: I hope other broadcasters 40 years? will follow us. I really do want us to be the one to Lord Hall of Birkenhead: You are completely right follow. I think it is interesting, when you look across and that means Children’s working with Radio 1, but Europe, that in those areas that have a really strong also with BBC1 to see what programmes children 10 and healthy public service broadcaster like the BBC, and onwards use. Some still stick with the C channels the commercial sector is also very vibrant. It is good after that, but this is an area where we have tried that we feed off each other, we do better because we are in competition. The people who benefit are the having a channel especially for the over 10s. That did licence fee payers. not work, as I understand, but this is an area where I think we do need to do more work on how, once you Q113 Mr Leech: There is currently some research get to 10, you become a BBC consumer. being done, suggesting exactly what you have just Anne Bulford: Going back to the awareness of the said, which is as yet unpublished. When will we be channels—I do not have any children, so I do not likely to see that? know where they are, I am afraid, on Freeview— Lord Hall of Birkenhead: I do not know, but I can Mr Leech: Neither do I. No one does. find out when that can be published and we will make Lord Patten of Barnes: My grandchildren do, I know. sure you see it first. Anne Bulford: The children’s awareness of children’s channels and digital channels is very high and Q114 Mr Leech: On children’s TV, I have a bit of CBeebies and CBBC are the first place they go. So 0 an obsession with the EPG. Can any of you tell me to 6, 95% of them are aware of it; 6 to 12, 89% for what channels CBeebies and CBBC are on Freeview? CBBC. So I think that is very encouraging. Where the Lord Hall of Birkenhead: On Freeview, no, I am channels are, how we cross-promote them, how we going to fail your test. take people to those channels is what is important. Lord Patten of Barnes: Yes, I am afraid I am a bad Everything that Tony said about the way in which the grandfather. app has built up and broken out, I think, shows that Lord Hall of Birkenhead: Yes, but I will say the app content is very sticky. Children love it and they find is doing extremely well and I am immensely proud of it and come to it. what Children’s does for us. I am also aware in taking on this job you are taking on something very precious, Q117 Mr Leech: Do you have a view on whether or which is the amount of content that we make that no not all the BBC channels should be within the same one else makes for that 0 to 10 market. It is really range on the EPG, like on the Sky platform where the important. children’s channels are with other children’s channels? cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 21

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Anne Bulford: Yes, all broadcasters would like all trying to get a business going, or someone who walks their channels to be together at the top of the EPG among the unwashed. You can do it with Question and the way in which the rules work on the different Time; you get a cross-section. But on the Marr platforms and the regulation that interacts with that is programme, the first London luvvy who walks by gets very complicated and hard to steer through. There are dragged in and obviously they review the London a lot of rules about where prominence comes, and how papers. Then it is the London broadcasting company, the lots move up and down. with no relevance whatsoever to anybody else. Lord Hall of Birkenhead: Yes, I do not think it is Q118 Mr Leech: I suspect it is pretty unrealistic to quite any luvvy who happens to be passing who is expect BBC3 to be on channel 103. That is never pulled in, but there is a serious point and I take that. going to happen, so they clearly could not be right I do think that we need to do more to reflect what is next to each other, but would you see children’s BBC going on right across the UK and voices from right channels benefiting from being with other children’s across the UK in all our output. That is why I have channels or being with other BBC channels? been from afar—well, not that far, but from the Royal Lord Hall of Birkenhead: In truth, you would want Opera House—completely behind what the BBC was both, would you not? That is having your cake and doing in Salford. It applies exactly to Scotland. It eating it. I think what you are on to is a really big applies to Northern Ireland. It applies to Wales. Also, issue, an important issue, which is in a free-for-all it applies to the other English regions too. It is how do you ensure there is prominence. You used the interesting. word. I am sure that is right. Prominence for the This is not about Scotland, but I will just give you offerings of public service broadcasters like the BBC. this for instance. When I was in Lincolnshire, I described the Dam Busters thing, but what struck me Q119 Mr Leech: Do you think that requires there was the political reporter for Lincolnshire saying legislation? to me, “If you really want to understand the rise of Lord Hall of Birkenhead: I think you ought to have UKIP, then you need to be out here, because it is about a look at that and it is important that we ensure potholes in roads; it is about migration and so on”. I prominence of the services that we and others are think, for us to be as ambitious as I want the offering. It is really important. I welcomed what the Corporation to be, we have to be delivering content Secretary of State for Culture, Media and Sport said from right across the UK. in Cambridge, which is that we should not be paying Your point is the right one, which is that the voices for retransmission on other services as well for public we use when we broadcast should reflect the whole of service broadcasters. That was a very helpful the UK and different perspectives. comment. Jim Sheridan: You should have called his bluff and Q122 Mr Bradshaw: On that, it is often alleged that said any number. He would not have known. the BBC has a snobbery about English regional Lord Hall of Birkenhead: I only realised that now. accents. I am originally from Norfolk and I now Tracey Crouch:Itis72to77. represent Devon. You do not hear very many people Lord Hall of Birkenhead: Is it? on the national BBC with strong Norfolk or Tracey Crouch: Yes, one down from the news Devonian accents. channel. Lord Hall of Birkenhead: I think it does not matter Lord Hall of Birkenhead: Thank you. what people sound like in terms of their accents. One of the great things about Britain, when you fly around Q120 Jim Sheridan: Anyway, if can just pick up the Britain, is that you are suddenly aware of so many point, very briefly, that in Scotland obviously the accents from different places and we want to make revenue has dropped and the listening and viewing sure that is reflected on our airways. I take the point. figures have dropped. Has any assessment been I happen to think Merseyside accents are great. I carried out by the local management in Scotland of would like to hear more. I think it is important that the reasons why that has happened? Also, on BBC you reflect the diversity of the UK outside London. ALBA, is it washing its face? Is it making money? I do worry about this. It is the point Mr Sheridan was Lord Hall of Birkenhead: Yes, it is washing its face making. We have to guard against the metropolitan and doing a very good job. On the Scottish services, bias. I think it came out strongly in Stuart Prebble’s obviously I talk a lot with the Director of Scotland report when he was reviewing Europe, migration and about referendum coverage, about the Games next religion—this notion that we should look beyond year, and we have ambitious plans in Scotland for Westminster, beyond London, and seek to reflect ensuring that not only does Scotland talk to Scotland, things that are happening. If that comes with accents, but Scotland talks to the nation and the UK. that is fine by me. That, I think, is really important for us. Q121 Jim Sheridan: Can I just make a brief comment in terms of relevance to Scotland. I have Q123 Paul Farrelly: John is determined to not go raised this with your colleagues on a number of out on anything as boring as pensions, so he has called occasions. On programmes like the Marr programme me before Philip. I will be very brief, John. Before I or newspaper reviews, there is this constant pool of go on to pensions, can I ask one curiosity question London luvvies who are pulled in. They have no about changes to the executive team. On future media, relevance whatsoever to anybody else. Why can we you had Ashley Highfield, who was the Director of not get somebody perhaps that is struggling a bit, Future Media and Technology. He commissioned the cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 22 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Digital Media Initiative and was also Chief Executive The accounting deficit is a snapshot in time. The way of Project Kangaroo. Most recently, you have James in which the contributions are calculated and any Purnell, described—this tickled me—in the accounts, deficit recovery plan that comes through are as a result “Previously Senior Producer at Rare Day and Advisor of a triennial revaluation and we are in the process of at Boston Consulting Group”. Full stop, nothing more. undertaking one now. The valuation point that will In the meantime, you had a chap called Ralph Rivera, also reflect the bond yields means that the valuation who was on the Executive Board and is now not on for the purposes of calculating contributions this year the Executive Board. What has happened to Ralph will go up and we anticipate having to put more Rivera? money into the pension scheme for a second phase Lord Hall of Birkenhead: He is there and doing a recovery to deal with that. fantastic job. He is an inspirational character and doing a great job leading future media. Q127 Paul Farrelly: When do you anticipate deciding that course of action? Q124 Paul Farrelly: Is he Director of Future Media? Anne Bulford: The statutory process for that requires Lord Hall of Birkenhead: Yes, reporting into James us to have reached agreement with the pension Purnell. trustees and settle all of that by June of next year. We Paul Farrelly: He reports into James Purnell. are very hopeful that we will do that comfortably Lord Hall of Birkenhead: Yes, because when I ahead of that and the range of assumptions that we discovered or felt—and I think I may have talked a see, leading to more money needing to go in, are built bit about this in April—that future media, strategy, into our plans through to the end of the Charter period. policy, communications and something else, marketing, I think, were all reporting into the Q128 Paul Farrelly: Is that likely to be popular with Director-General, I wanted to bring together a division BBC staff? that said, “How do we get this strategy? How do we Anne Bulford: I think BBC staff value their pensions communicate it? How do we market it? By the way, very highly. We take the requirement to fund it how do we then connect with future media and use properly very seriously. We are talking about dealing that?” That is why James came in. with the deficit that has arisen as a result of movements in bond markets. I do not think anybody Paul Farrelly: He is reporting to James Purnell, but relished taking money from content and programmes presumably he is still being paid more than James and putting it towards pensions, but that is where we Purnell—£309,000 last year. find ourselves. That is what we need to do. Lord Hall of Birkenhead: He is not paid more. Is he Paul Farrelly: That is a common refrain at the BBC paid more? He is paid more than James Purnell. at the moment. Paul Farrelly: That is the statement of pay there. Anne Bulford: Yes, the thing about pensions is that Lord Hall of Birkenhead: That is right. Yes, but look, you have to look at them over a 30-year arc and we I said the same thing in answer to a previous question. do these points in time. In common with many I have people whose remuneration has been dealt with organisations, we find ourselves facing a pension earlier. I am trying, as I bring people in, to lower the valuation at a pretty unusual point in bond markets, remuneration. but that is where we are. Paul Farrelly: Is it being urgently addressed now? Q125 Paul Farrelly: Are there two people doing Anne Bulford: It is, yes. the job? Chair: We have one final set of questions. Lord Hall of Birkenhead: No, James Purnell has come in to run these various divisions. I see the point Q129 Philip Davies: I just want to ask about you are making, yes. In that, we are looking for impartiality at the BBC, one of my favourite subjects, savings to show that overall the cost is coming down. as you will recall. I just wondered, Lord Hall, whether Paul Farrelly: Okay, I am now satisfied that Ralph in your brief time at the BBC you have found it Rivera has not just disappeared. curious that the BBC purchases more copies of the Lord Hall of Birkenhead: He has not disappeared. He Guardian than any other newspaper. Has that struck is fighting fit, I am delighted to say. you as being in any way curious, given the respective readerships of all of the national papers? Q126 Paul Farrelly: A rather big number, in the Lord Hall of Birkenhead: Two things: it does and latest accounts, the deficit on the pension fund has what I am also curious about is the number of gone from £1.17 billion to £1.7 billion. In 2010, there newspapers we buy. was a programme of remedial action because of the deficit then, which was at £1.13 billion. That was over Q130 Philip Davies: What do you propose to do 11 years. The deficit is now much greater, so what is about this imbalance in the papers? the BBC proposing to do about the deficit now? Lord Hall of Birkenhead: Now I know about it, the Anne Bulford: The £1.7 billion accounting deficit this imbalance is one thing, but the numbers is another, so year has come about mostly as a result of movements I will be looking to cut back on the number of papers in bond yields, so the underlying accrual rates that we use. I do think people need to read papers, but reflecting the 2010 reforms, which Members of the need to read a broad range of papers clearly. Committee may recall resulted in a capping on future accrual to 1%, have come through and the investment Q131 Philip Davies: I was struck the other day when returns are pretty good. I was listening to the Today programme that in the cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 23

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford news report about the Policy Exchange, it was that condensing into two and a half minutes means described as the right-wing Policy Exchange. I had you have to leave out some stuff. Now, if you look at never known of it described as right-wing before. It the debate that was on Newsnight, I think it was either might have been centre-right, but certainly not right- the night before or the night afterwards, a lot of these wing. issues were gone through and gone through very Looking into it, it seems that I stumbled across a thoroughly. In the condensing job you have to do, report by the Centre for Policy Studies, which which is difficult—you know this—to get a two monitored mentions of different organisations by the minutes twenty something-or-other seconds piece on BBC. It mentioned how many times a sort of “health the 10 o’clock news, of course some things get left warning” was attached to different think tank reports. out. The report was proper and impartial. It was quite striking that any what you might call If I have any comment to make about impartiality, “right of centre” organisations often came with a because I know it is something you are very hot on, health warning—“beware, do not really believe what quite rightly, it is that we should avoid group think. this one says, because this is a right-wing The report that Stuart Prebble came out with on organisation”, whether it is the Centre for Social impartiality some months ago was really good on that. Justice, the Institute for Economic Affairs—but the We should look, as Mr Sheridan was saying, at getting left of centre ones like Demos, Social Market a range of voices and examples from around the UK. Foundation were very rarely given any kind of health I also think, to be honest with you, we should do more warning. What do you make of that? on Europe. This is clearly a vital issue and us Lord Hall of Birkenhead: I would love to see the reporting from Europe on Europe to the UK is an report. If you send it to me, I will give you detailed important bit of what we do. conclusions from it. Let me say one thing, which is that we should be careful with exactly what you are Q134 Philip Davies: The BBC, for weeks and weeks suggesting. We need to label think tanks and other and weeks, described what the Government call the reports clearly from whence they came. There is no Spare Room Subsidy as solely the Bedroom Tax. My doubt about that, whether they are left, right, centre understanding is it is clearly a political term. I do not or whatever; so a fair point. know whether you consider a withdrawal of subsidy to be a tax. Do you consider a withdrawal of subsidy Q132 Philip Davies: We know what your view is of to be a tax generally? the BBC because, when you came in, you decided you Lord Hall of Birkenhead: I absolutely want to make were short of Blairites at the BBC and went around sure we get the terminology right and I think over the recruiting a whole host of new ones. We know where last few months or even longer, since I have been you think the political leaning of the BBC is. there, we have been getting it right. Lord Hall of Birkenhead: New Blairites— Philip Davies: I want to just run a few recent stories Q135 Philip Davies: It took weeks of complaints, did past you. We had over the weekend the issue of the it not, by the Government? It took a letter, I think, BBC’s reporting of a report about benefit tourism. The from the Secretary of State before the BBC, after BBC took a report commissioned by the European weeks of this, finally accepted that it was a political Commission—no doubt friends of Lord Patten— term. Now that the BBC allowed it to gain so many basically hook, line and sinker. In their quotes benefit tourism was described as “a canard, a myth”. Could legs, every time there is a report, it now refers to the you point to the 276-page report where it says in that so-called Bedroom Tax or what critics call the report that benefit tourism was a canard and a myth, Bedroom Tax. It still cannot help itself, can it? as the BBC described it, because I could not see it in Lord Hall of Birkenhead: We have to find ways of the 276-page report. describing what are controversial measures and issues. Lord Hall of Birkenhead: I am very, very happy to You are damned if you do; you are damned if you rely on Mark Easton’s judgment, who is a very fine don’t. Thank God we listened and we said, “Let’s journalist, that the words “canard” and “myth”, which change what we are doing”. That is the sort of BBC I is one of the links here, was actually used in the thought you wanted. report. Let me make a broader point. Watching that Philip Davies: It was after you had allowed the term item, which I think was about eighth or ninth down in to become current. the 10 o’clock news, they were reporting clearly on a Lord Hall of Birkenhead: Maybe we should be report that had been produced by the European responding quicker, but we responded, and I think that Commission. Both the Secretary of State and also the is important. There is obviously a dispute about this. European Commission person were given a chance to Philip Davies: I am astonished, you see, because with express their views about it. I have to say, I thought the amount of stuff that you come out with, I would the report was interesting and well constructed. have thought that mistakes were inevitable, probably daily. I make dozens of mistakes every day. I think Q133 Philip Davies: Did it make it clear that the anyone who takes decisions makes mistakes. The number of job-seeking EU migrants coming to the UK BBC, given the volume of decisions it makes on a had increased by 73%, which was in the report? I did daily basis, I would imagine would make lots of not see that on the BBC part of the report. Was that mistakes. bit of the report there? Lord Hall of Birkenhead: Did you read my speech Lord Hall of Birkenhead: No, it is a two and a half two weeks ago? minute report and you know, Mr Davies, and I know Philip Davies: Absolutely, unfortunately— cobber Pack: U PL: COE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Ev 24 Culture, Media and Sport Committee: Evidence

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford

Lord Hall of Birkenhead: Did you see the bit in there, Philip Davies: I am sure the figures were even higher Mr Davies, which said we should own up to mistakes when you were party chairman complaining of the quickly? That is right, is it not? bias at the BBC. I do not recall you quoting those Philip Davies: Absolutely, absolutely. figures when you were complaining about it. Lord Hall of Birkenhead: That is right, is it not? Lord Patten of Barnes: No, I mean, our party Philip Davies: Yes, it certainly is. It is just very chairmen do all sorts of things to earn their crust. difficult to get the BBC to do it. Lord Hall of Birkenhead: Yes. Q137 Philip Davies: If, Lord Hall, your premise is that you think that the BBC has work to do on Q136 Philip Davies: It always says it should do it, ensuring its impartiality, that it does not always get but it never actually manages to do it. It did do on things right and that it will be much quicker at trying one particular thing. The Trust ruled—and this is one to make sure that it responds to that and does things, of the few ones that I can find where everyone is clear I would say more power to your elbow. What I worry that a mistake was made—that the John Humphrys about is this complacency that we have at the BBC programme on welfare was shockingly biased. Do you where it seems to think, despite what lots of people in stand by that? the country think, that everything is fine and dandy, Lord Patten of Barnes: Can I ask you two questions? everything is hunky-dory, and that there is nothing Philip Davies: No, I am asking you the questions. really to do apart from more of the same and keep up You forfeited the right to ask the questions when you the status quo. It is that complacency that I object to. lost your safe seat in Bath. If you had wanted to ask Lord Hall of Birkenhead: I hate complacency. Let us the questions on this Committee, then you may well get that clear. I like your description that, as you go have. I am asking you the questions. about your work, you make lots of right decisions and Lord Patten of Barnes: Oh my goodness me. Mr lots of wrong decisions. I think that is very fair. The Davies, what a whopper. Can I just ask you have you organisation, which is so broad and so big, is doing read the report? some fantastic work and having real resonance at Philip Davies: On? work with the public. There are two things. We are Lord Patten of Barnes: On the John Humphrys always and should be searching after impartiality, new programme? views, new perspectives on what we are doing. When Philip Davies: Absolutely I have, yes. we get things wrong, and we are bound to and I said Lord Patten of Barnes: Tell me where it criticised this in my speech, let us not keep looking over our John Humphrys. shoulder. Let us make decisions on the basis that we Philip Davies: No, I am asking you the questions. It want to get things right, but when we get things criticised the programme. wrong, and we are bound to, let us quickly own up Lord Patten of Barnes: It said that— to them, correct it with the viewers or listeners and Philip Davies: I am asking you if you stand by the move on. fact that you think that programme was not balanced The third thing that strikes me coming back into the and fair. BBC that works well, are these reviews that we have Lord Patten of Barnes: I think you suggested that it just done, for example on Stuart Prebble and another criticised John Humphrys. one coming up looking at news. These give us a Philip Davies: Well, it is his programme. chance to stand back and say, “Are there things that Lord Patten of Barnes: It did not criticise John broadly, over a year, two years or three years, we need Humphrys once. to improve on?” I am not complacent. I am a million Philip Davies: It was his programme. per cent behind the people who do a very good and Lord Patten of Barnes: What it actually said was hard job in the BBC News. As I say, we are bound to there were some statistics that were not in the make mistakes. Own up. Move on. programme that would have made it a better programme if they had been in. On your earlier point, Q138 Philip Davies: My final question then relates it is quite important when one is making these to Question Time, which you were good enough to accusations to take account both of the specific and look into following our session last time. Your reply the general. On the specific, you referred to the CPS was different to your predecessor’s. I was now told report earlier about think tanks. I think it was the same that the Question Time audience has the same CPS report that described the IEA, the Institute of proportion of Conservative and Labour supporters in Economic Affairs, as being more left-wing than the it wherever the location is around the country. What Institute of Public Policy Research, which is what you is that proportion of each? and I would probably describe, both of us, as a left- Lord Hall of Birkenhead: 30% Labour; 30% leaning think tank. Conservative; 10% Liberal Democrat; a further 10% On the general point about impartiality, it is worth that depending on where they are could be UKIP or noting that in February, after Savile, when people another party; then there is roughly 5% depending on were asked what organisation they most trusted when the location and 15% of “don’t knows”. I brought you it came to news, 58% said the BBC. The next a small present, which is the audience application organisation that they mentioned was ITV on 14%. form from a previous edition of BBC Question Time, While it is always a struggle to be as impartial as you with the sorts of questions we ask of people before would like, I think we do a pretty good job as far as they join the audience. Here it says, “What is your the public are concerned. opinion of the situation in Afghanistan?” That was cobber Pack: U PL: COE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG01 Source: /MILES/PKU/INPUT/039780/039780_o001_Mark_CMSC 22.10.13.xml

Culture, Media and Sport Committee: Evidence Ev 25

22 October 2013 Rt Hon Lord Patten of Barnes, Lord Hall of Birkenhead and Anne Bulford when Afghanistan was hot. Now it would be, in this different because of course people ask questions, but week, something different. none the less it is an important gauge, no more than The questions include, “Are there two issues you that, like an opinion poll is, of what people are would like to discuss in the current news? How old thinking. I was much taken by, I think it was the Prime are you? Have you been on Question Time before? If Minister, at Question Time some time over the last there were a general election, what party would you few weeks remarking on the fact that we had done a vote for?” and so on. It shows the care that the poll looking at exactly that: people’s thoughts about producers take to ensure that we have an audience that benefits and about changes and whether public is representative. services more broadly had suffered in all the cuts. He was genuinely surprised that the answer they got was Q139 Philip Davies: Is that your view of it when you that an awful lot of people were supportive of what watch Question Time, that that looks like a was going on. representative audience to you? I think that goes back to what our duty is. Our duty is Lord Hall of Birkenhead: The thing you cannot to ask difficult questions, to counter consensual views, predict, Mr Davies, is quite how audiences respond to to think beyond the obvious or beyond the group Governments or to others. I know that through theatre. think. You can never be absolutely certain the way people are going to respond. That, by the way, is the Q141 Philip Davies: Will you do more to make sure excitement of watching Question Time, and why it is these audiences are representative and to make sure such a brilliant and important programme. that the production companies are doing— Lord Hall of Birkenhead: Yes, yes, but please have a Q140 Philip Davies: Any Questions?, recently, was look at the Question Time. from Ilkley. I know Ilkley. It is in the neighbouring Philip Davies: I will do. I will give you the report I constituency to me. I would love to have Ilkley in my was referring to earlier. constituency. It is the bastion of Conservatism. Lord Hall of Birkenhead: Thank you very much. This Lord Patten of Barnes: Make it even safer and we is Christmas early. Thank you very much, indeed. would all be delighted. Jim Sheridan: Can you clarify if the Morning Star Philip Davies: It is the bastion of Conservatism, will now be part of the newspaper review? Ilkley. I would be delighted to take it off Kris Lord Hall of Birkenhead: I will look into Morning Hopkins’ hands if he ever wished me to do so. He Star as well. would not, but I wish he would. The BBC at Any Chair: I think we have probably exhausted almost Questions? did a poll in the audience. Nobody had to every topic. Can I congratulate the Director-General express a view. It was literally put your hands up if on his anticipation of Mr Davies’ line of questioning you are in favour of the Government’s welfare in coming prepared for it and thank all three of you reforms. for coming for such a long time. Now, I do not know which opinion polls you look at, Lord Patten of Barnes: Can I just add a clarification but if you look at any opinion poll about people in in response to Mr Farrelly’s question. Mark favour of the Government’s welfare reforms, there is Thompson did not repay £102,000 or whatever, a massive majority in favour. Now, in Ilkley, I can because he was paid, as one would expect, month by guarantee, if the majority of the country are in favour, month, and that went up until the beginning of Ilkley would be more. I was not there, but I heard November. Jonathan Dimbleby say that, on the basis of the show Chair: We will have a series of questions in detail, of hands, it was a massive majority against the which we may send to you in writing, so perhaps that Government’s welfare reforms. Does that indicate to is an area you might respond to when you come back you that you are doing a good job of getting a to us. Thank you very much. representative audience in these kinds of programmes. Lord Patten of Barnes: Thank you very much indeed. 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 cobber Pack: U PL: CWE1 [SE] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 26 Culture, Media and Sport Committee: Evidence

Written evidence

Written evidence submitted by the BBC which provides supplementary answers relating to the oral evidence given on 22 October 2013 Question 17: Even though Lord Patten did clarify the position on Mark Thompson’s pay at the end of the transcript—please confirm whether the BBC has anything more to add Answer Mark Thompson did not pay money back to the BBC. His contract with the BBC provided for a six month notice period and he was not paid his notice up front. Mr Thompson stepped down from the Executive Board on 16 September 2012 and was placed on garden leave, during which he was paid normally (ie monthly), until he started at the New York Times. Mark Thompson’s last day of employment at the BBC was 11 November.

Questions 71–73: Mr Farrelly asked for a breakdown of what exactly was sold when the Lonely Planet sale went ahead Answer On 31 March 2013, BBC Worldwide completed the disposal of the Lonely Planet group of companies, which were wholly owned subsidiaries. Worldwide sold the equity that it held in its Lonely Planet subsidiaries to a US media company called NC2 Media for £51.5 million. Of this, £41.2 million was paid on completion, with the remaining £10.3 million received in the following year. There was £4.4 million of cash in the business when we sold it, as disclosed in our 2012/13 Annual Review. Of that amount, £3.2 million was left in the business in line with the Sale and Purchase Agreement to support the continuing operations of the disposed entities. BBC Worldwide had paid a total of £131.7 million for Lonely Planet.

Questions 88–90: Mr Farrelly asked for information about the composition of the Remuneration Committee Answer The existence and composition of the Executive Remuneration Committee is determined by the Royal Charter (article 35, paragraphs (5) and (6). This determines that there should always be a Remuneration Committee and that only non-executive members of the Executive Board may be members of the Committee. In practice this Committee has three non-executive members. Current members are Sally Davis (Chair), Dame Fiona Reynolds and Brian McBride. There are a number of regular attendees to the Executive Remuneration Committee. These are: Tony Hall, Director-General; Anne Bulford, Managing Director, Operations and Finance; Lucy Adams, HR Director; and either the HR Director, Employment or Head of Reward.

Question 110: Mr Leech had a question about BBC3 and its reach if BBC1 and BBC2 repeat programmes show on BBC3 were disregarded Answer This data is not readily available but we have been able to analyse a sample of 6 individual weeks (using a random number generator) within 2013, analysed reach within each of those weeks, and then averaged the results. By subtracting the unique reach figures for each BBC One and BBC Two repeat programme from the overall programme reach for the week we are able to provide a rough estimate. However there are a few caveats with this methodology: — Stripping out the reach derived from these programmes in a sense assumes that nothing else replaces these programmes in the schedule—the reality is that if they were removed, something else would be put in its place, which would bring some additional viewers to the channel. — We cannot know, from the data we have, whether some of the people who come to BBC Three to view these repeats stay for other non BBC One/Two programmes, which they would not otherwise have watched.

The results: The analysis suggests that taking BBC One and BBC Two repeats does have some impact on reach, but it doesn’t go down dramatically. — Including the BBC One and Two programme repeats, the average weekly reach is 11.5 million individuals aged 4+, (19.8% of the population). This goes down to 9.5 million (16.5% of the population) if BBC One and Two repeats are excluded. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 27

— It is important to note, however that BBC Three’s target audience is adults aged 16–34. If we specifically look this group, the impact is smaller. The average weekly reach including BBC One and Two repeats is 3.8 million 16–34s (25.7% of the 16–34 population). This goes down to 3.4 million (23.3%) if they are excluded. Source: BARB, Techedge, Consolidated data, based on unique programme reach, at least 15+ consecutive minutes watched, random sample of 6 individual weeks in 2013 so far (weeks 1, 13, 21, 27, 36, 42). Also worth noting is that reach isn’t an exact figure for a young adult channel like BBC Three. An additional 9% of viewing comes from online (iPlayer), but that isn’t included in the analysis. The following tables show BBC Three reach and share versus similar channels: Average weekly reach (within BBC Three TX hours) Individuals 4+ Adults 16–34 Av. Weekly Av. Weekly reach Av. Weekly reach Av. Weekly reach reach (%) (000s) (%) (000s) BBC 3 21.2 12,244 27.0 3,991 E4 (inc. +1) 13.7 7,895 22.9 3,383 ITV2 (inc. +1) 19.8 11,421 22.5 3,319 Sky 1 (inc. +1) 8.9 5,115 10.7 1,578

Source: BARB, Techedge, consolidated data Weeks 1301–1342 (01/01/13–20/10/13) Average weekly reach, at least 15+ consecutive minutes Daypart = 1900–2759

Share of Viewing (within BBC Three TX hours) Individuals 4+ Adults 16–34 Share (%) Share (%) BBC 3 2.9 6.0 E4 (inc. +1) 2.1 5.2 ITV2 (inc. +1) 2.6 4.1 Sky 1 (inc. +1) 1.2 1.9

Source: BARB, consolidated data, all homes Weeks 1301–1342 (01/01/13–20/10/13) Daypart = 1900–2759

Question 131: Lord Hall, in response to Mr Davies, said he would consider a report by the Centre for Policy Studies and offer his conclusions on it Tony Hall’s Response You asked me to consider a report by Dr Oliver Latham for the Centre for Policy Studies. One part looks at “slant” in BBC online reporting, based on a “statistical” study of the way the BBC refers to think-tanks, compared to the way that the Guardian and the Daily Telegraph refers to them. The second part discusses what it calls think-tank “health warnings”. I should say from the outset that we take seriously the issue of appropriate descriptions for all such organisations to ensure that the audience is properly informed about the weight to give to any evidence or research. In the interests of both accuracy and impartiality, it is important that there is clarity and consistency in our approach, but the specific description will often depend on the particular context. Our analysis and research team provides useful guidance for journalists in ensuring accurate descriptions are attached to the various think-tanks. We do not believe that the CPS report represents an accurate picture of our coverage, or of the position of the respective think tanks. For instance, in the second part of his report, Dr Latham has picked four think tanks he describes as “recognised as left-of-centre”, four others described as “right-of-centre” and one other. There is no explanation of why he has chosen these particular think-tanks. There is no mention, for instance, of “Reform”, a “right of centre” think-tank often quoted on the BBC. Similarly, there is nothing to explain the criteria for his selection of BBC web pages. This means the report does not contain sufficient information for anyone else to test his methods, and without this, I really do not think that any useful conclusions can be drawn from it. Interestingly, one academic who has spent some time looking at this report, Gordon Ramsey of the Media Standards Trust did try to replicate its methods. He views the findings as “deficient”. cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 28 Culture, Media and Sport Committee: Evidence

One simple fact that leads me to have little confidence in its robustness, is its own labelling of think-tanks: the NIESR is classified as right wing—because it is quoted more in the Telegraph than the Guardian, and ResPublica as left wing, as it appears more often in the Guardian. It places the Adam Smith Institute well to the left of the IPPR. The BBC does not accept that the CPS report presents reliable evidence to support the conclusion that its online reporting exhibits a “left-of-centre slant.” 14 November 2013

BBC Annual Report 2012/13 BBC TRUST’S RESPONSES TO FOLLOW-UP QUESTIONS TO 22 OCTOBER 2013 ORAL EVIDENCE SESSION Lord Hall’s vision for the BBC 1. The Trust is responsible for setting high-level strategy and budgets for the BBC’s services and activities. Did the Director-General present and receive approval from the Trust for the new strategy he announced? If not, which of the Director-General’s proposals will need approval and budget authorisation by the Trust?

Answer: In the September Trust meeting, the Trust satisfied itself that the Director General’s strategy was consistent with the high level framework and objectives it had set in the BBC’s strategy Putting Quality First in December 2010. However some of his specific proposals, along with any budget changes, will still need to be put to the Trust for approval. We believe Playlister; 30 days/series stacking; BBC1 +1; The Space, iPlayer+; R1 video/iPlayer channel; and BBC Store may have to be considered. The minutes for the September Trust meeting can be found here: http://downloads.bbc.co.uk/bbctrust/assets/files/pdf/about/minutes/2013/26_sep.pdf The relevant item is 107.3—“The Trust approved the high-level strategy and agreed it was consistent with the four strategic objectives it had set for the BBC”.

Number of Senior Managers 2. Lord Patten announced at the Prix Italia in September that he wanted the number of senior managers at the BBC to comprise 1% of the workforce by 2015, compared to around 2.5% at the last count. Lord Hall told the Committee (transcript Q56) that senior management numbers at the moment are 445 and the BBC aims to bring that down to 415 by 2015. How can these figures/targets be reconciled? — How can or will the Trust enforce a further reduction if the Executive does not meet the 1% target?

Answer: Lord Patten did not announce this target at the Prix Italia. The 1% target was proposed by the Executive and agreed by the BBC Trust as part of the Executive Pay Strategy for 2011–2015, which was published in July 2011 and widely reported on at the time. The Trust are committed to ensuring that Licence Fee payers’ concerns about senior management pay and headcount should be clearly heard within the BBC, and are discussing with the DG how he will take this agenda forward.

Governance 3. How does the present internal review of the BBC’s system of governance differ from the review Lord Patten held after his appointment in 2011, which concluded back then that improvements could and would be made in areas such as the roles and responsibilities of the Trust and the Executive Board, and the interaction between both boards?

Answer: The 2011 review, initiated by Lord Patten shortly after he arrived as Chairman of the BBC Trust, delivered significant improvements around the Trust’s relationship with Ofcom and the handling of complaints. Ofcom now provides the BBC Trust with an independent assessment of market impact on all matters that require a “significance” test; the BBC’s complaints process has also been comprehensively reformed, with our latest research showing a substantial improvement in the way complaints are handled when they are received by the BBC. The Trust and the BBC Executive Board believe there is more to be done on bringing clarity to the respective roles of the two parts of the BBC and the current governance review will build on the conclusions of the 2011 work. We published the conclusions of the review on 11 December and announced a series of changes to the working relationship between the Trust and Executive, including greater separation between the Trust and Executive; more comprehensive project reporting; a strengthened role for Non-Executive Directors, building on their expertise and expanding their responsibilities; and plans to increase transparency. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 29

BBC Journalism, News and Current Affairs 4. There has been a sizable increase in proportion of complainants not satisfied with the BBC’s initial response to complaints and an increase year on year in the number appealing both to the Executive’s Editorial Complaints Unit and then on to the Trust’s Editorial Standards Committee. Why is that?

Answer: The number of appeals to the Trust’s Editorial Standards Committee increased by 19% in 2012–13, but there was very little difference in the actual number of appeals that were considered by the Committee (79 in 2012/13 compared to 77 in 2011–12). This would suggest that audiences are more aware of the different stages of the complaints process which are open to them which is a positive development. 5. Channel 4’s audience research shows that viewers perceive Channel 4 News as being more independent both from the influence of big businesses, and from the government, than the BBC and other broadcasters. Does the BBC accept their findings?

Answer: Research by Ipsos Mori in February of this year actually showed that the BBC remains by far the most trusted source of news in the UK, with 58% of the public picking the BBC as the one source they trust the most, far ahead of the next nearest (which is ITV on 14%).

Programmes and audiences 6. The BBC reaches 96% of the population but reach of individual services varies significantly with some as low as 1%. Are there any BBC services whose reach is too low for effectively serving audiences and providing value for money?

Answer: Across its portfolio of services, the BBC must ensure it is providing something for all parts of the audience; it must also promote six public purposes, as set out by the Royal Charter. The Trust is responsible for setting the budget and remit of each service, and monitoring performance to ensure they are serving audiences effectively and delivering value for money. 7. The BBC’s Purpose Remit Survey for 2012–13 found that 80% of people “would miss the BBC if it no longer existed”. This represents a decline from 82% in autumn 2011 and 85% in 2008–09. Why did the BBC not note this downward trend in the Annual Report whilst simultaneously highlighting small but favourable increased figures elsewhere? — How concerned is the BBC that a fifth of the population wouldn’t miss the BBC if it no longer existed at all?

Answer: We publish all Purpose Remit Surveys and data tables on our website. The Annual Report highlights key figures and findings from these surveys, including areas for improvement. For example, this year’s Annual Report noted that audiences in the devolved nations continued to call for better representation of their nation in news, drama and entertainment programming. The Annual Report does not claim to include the survey in full. 8. The BBC’s Purpose Remit Survey also found that in 2012–13 a majority of important population segments didn’t think the BBC offered them much or was good value for money (eg C2DEs and black audiences). Why are these figures not reported in the Annual Report?

Answer: As above, we publish all Purpose Remit Surveys and data tables on our website. The BBC also publishes an annual equality report that covers workforce and on screen representation. 9. The figures showing that 4 out of 10 people still think the BBC is not good value for money hasn’t changed in at least five years, despite the BBC’s longstanding aims for improvement. Why is that?

Answer: It is reassuring that these figures have remained stable during a period of economic recession, when many licence fee payers have been facing considerable financial pressures. Ensuring value for money across all its activities remains a key objective for the BBC. cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 30 Culture, Media and Sport Committee: Evidence

BBC Children’s services 10. Following the Trust’s review of Children’s services, what are the main priorities and actions that the Trust have set for the Executive?

Answer: In the review we set out six specific actions and priorities for the BBC Executive—and we will monitor and publish reports on progress against these actions. They were: 1. We expect CBeebies and CBBC to provide some relevant high-quality and distinctive content for all children aged 12 and under, although we do not underestimate the challenges in doing so. We fully support plans by BBC Children’s to improve the services’ reach to older children and those in satellite/cable households, and to improve the transition of children aged 4–6 between CBeebies and CBBC. We will monitor performance of CBeebies and CBBC among different age groups one year after our report’s publication, and on an ongoing basis. BBC Children’s should monitor performance levels closely and ensure there is no decline in viewing as it implements these plans. 2. We support the current scope of the BBC’s radio and audio output for children but the Executive should find ways to promote it more effectively so that audience awareness levels increase and more children might discover speech radio programming that appeals to them. We have asked the BBC Executive to update us on plans to increase children’s awareness and listening of bespoke radio content within 6 months of our report’s publication. 3. The Trust will continue to monitor the impact of the Delivering Quality First initiative on BBC Children’s to ensure that there is minimal need for scope cuts beyond those achieved from stopping the broadcasting of output on BBC One and BBC Two. This is to protect the quality and scope of the output of BBC children’s. 4. To allow us to monitor the impact of DQF more effectively, and to support performance accountability generally, the Executive should establish robust quality metrics for children’s content, which are regularly analysed and reported to the Trust as standard. The Trust will monitor this on a quarterly basis each year. 5. We support the development of plans by BBC Children’s to improve its online and interactive offer to meet audience needs and expectations better. This is subject to any required approvals and subject to the plans adhering to existing syndication, editorial and other BBC guidelines and policies. We will assess progress of these plans in one year. 6. We would like to see more concerted action taken by other BBC TV, radio and online services to consider children as an audience for mainstream output and to continue to seek opportunities to include relevant BBC Children’s output as part of their offer. The Trust will consider children as an audience when we are reviewing BBC television and radio services over the next few years. 11. Can you clarify what is the financial position of Children’s service given the seemingly contradictory statements in the BBC’s Trust’s review of Children’s services? Paragraph 22 stated: Following the last review, the Executive awarded BBC Children’s an increase in funding from 2010–11 to 2012–13. The department continues to benefit from a re-adjustment to its baseline budget, which assumes the additional investment carries on until 2016–17. However, in paragraphs 25 and 26, the Trust stated: The Executive has taken specific action to protect the Children’s departmental budget, which has meant that the reduction to this budget of 10.5% over the DQF period was proportionately much less than the reductions agreed for other BBC services. The department’s budget will reduce from £101.7 million in 2011–12 to £91 million in 2016–17 in cash terms. When the Trust approved the Executive’s DQF plans, reductions in the scope of children’s content were expected to be minimal beyond the savings in repeat fees as a result of stopping the broadcasting of output on BBC One and BBC Two. BBC Children’s was expected to make efficiency savings, like every other BBC department. BBC Children’s will reduce the commissioning budgets of CBBC and CBeebies by around 8% and 5% respectively to achieve a £6.1 million saving in 2013–14. As a result, both services will commission slightly fewer original programmes over the next two years.

Answer: The budget of BBC Children’s was increased with some new funding following the last Trust service review of Children’s, which was published in 2009. BBC Children’s “baseline” budget was assumed to continue with this increased level of underlying investment until 2016–17. When DQF savings targets were applied to BBC Children’s, as they were across the BBC, they were applied to this higher level of the Children’s budget. Applying the savings targets to this higher level of funding, however, does still mean a reduction to the BBC Children’s actual budget of 10.5% (ie from £101.7 million in 2011–12 to £91 million in 2016–17, as set out in our report), over the DQF period. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 31

This reduction is proportionately much less than the reductions that some other BBC departments are facing. Having less money to spend will necessarily involve changes to how children’s services operate but, as the Trust’s report makes clear, we expect these changes to be achieved with minimal impact on the audiences of CBeebies and CBBC. In terms of definitions used within the BBC (and our report), “scope” cuts are those which would be expected to have an impact on audiences’ appreciation or usage of BBC services, while “productivity” cuts are those which are not expected to do so. The reduction in the commissioning budget referred to in paragraph 26 of our report, is part of the overall 10.5% savings that BBC Children’s is making. While meeting its required savings targets will lead to some reduction in the volume of originations, BBC Children’s is confident that the commissioning decisions the Controllers are making will maintain the strong and varied programme mix found on both channels, and there will be negligible impact on audience expectations. The planned scope cuts within BBC Children’s remain those agreed by the Trust as part of the DQF plans in 2012. These were the removal of children’s programmes from BBC One and BBC Two. The Executive expect BBC Children’s to meet the remainder of its saving targets through a combination of productivity (efficiency) savings and increased commercial revenue. And the BBC Children’s online offer will benefit from some reinvestment of funding rather than require any reduction in scope. 12. Does the Trust believe that the 9–12 year-old and the 12–16 year-old audiences are underserved, and if so how does it plans to deal with the problem?

Answer: The Trust’s review did not conclude that older children in the 9–12 and 12–16 year old age groups were underserved, although we have highlighted a number of challenges and asked the BBC Executive to address them. Our review found that reach to older children by both CBeebies and CBBC was lower than other age groups. We expect the BBC Executive to provide high-quality and distinctive content for children of all ages, and we support the action they have set out to improve reach to older children, such as commissioning programmes aimed specifically at these age groups. A key challenge is the growth in technology and children’s access to it, with tablets and smartphones becoming more widely used by children, particularly older children, and it is important the BBC keeps pace with this. We support the development of plans by BBC Children’s to improve its online and interactive offer to meet audience needs and expectations better. On radio, while the BBC has had some success with family-friendly content for older children aged 10–14 on Radio 4 Extra, awareness of this content remains low and we have asked the BBC to find ways to promote it more effectively. We have asked them to update us on this within six month of our report’s publication. Across the BBC as a whole, reach of BBC TV and radio is lower amongst older children and teenagers compared with adults, and as set out above we would like to see more concerted action taken by other BBC TV, radio and online services to consider children as an audience for mainstream output.

BBC Annual Report 2012–13 BBC EXECUTIVE’S RESPONSES TO FOLLOW-UP QUESTIONS TO 22 OCTOBER 2013 ORAL EVIDENCE SESSION Lord Hall’s Vision for the BBC 1. Given Lord Hall’s vision for iPlayer and the ability for users to become their own schedulers, assembling the content they like when they like from the BBC, will the BBC need as broad a portfolio of channels in future as it does today?

Answer: Lord Hall’s speech on 8 October 2013 was explicit about the continued popularity of television channels, which serve a different need from services like iPlayer. Channels are social media, bringing people together in an environment where a channel scheduler has done the work of collecting together a set of programmes that they think viewers will want to watch. iPlayer still only accounts for around 3% of all BBC television viewing—the vast majority of what people watch today has been delivered via a television channel. But we also think channels will be different in the future—not just the traditional stream of linear programming. Users will be able to go back in time—through the backwards programme guide on YouView, for example. They will be able to go into the future or create their own schedule from programmes released early. Channels will know what users like to watch and suggest what they might cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 32 Culture, Media and Sport Committee: Evidence

want to watch next. Through services like the Connected Red Button, viewers of channels will be able to access extra coverage, alternative programmes, radio stations or content the BBC has made especially for online. 2. Viewers who only watch on-demand and catch-up services such as the iPlayer or 4oD don’t require a TV licence. Does the BBC’s plans for the iPlayer, with more content available for far longer on catch-up—including programmes premiering online before broadcast—potentially undermine future licence fee revenue?

Answer: At present a TV licence is needed if anyone in the household watches or records TV programmes in the year on any device at the same time as they are shown on TV. This requirement is commonly understood by people. Whilst a small number of homes watch only catch-up TV and therefore do not need a licence, our analysis suggests they account for only 1–2% of households overall (most households also watch some broadcast or live-online TV and therefore need a TV licence). In our view, the introduction of content premiered on iPlayer will not change this. We anticipate that the vast majority of households who watch content premiered on iPlayer will continue to also watch live TV, by broadcast means or online, and so will still need a TV licence. Premiering will enrich iPlayer as well as complement the BBC’s broadcast services. However, the licence fee definition could start to create perverse incentives, with a fee payable for some ways of consuming BBC TV but not others. We would welcome discussing this issue with the Committee to consider whether and when the licence fee should be modernised again. It is worth noting that the licence fee has always adapted flexibility to technology change over time, including through a relatively simple change to the regulations in 2004 to capture households watching linear TV over the internet—a change which is now well understood.1 3. Should TV licensing be required in future not only for those who watch programmes “as they are broadcast” but any use of iPlayer on any device?

Answer: The licence fee definition remains robust, with only 1–2% of households consuming exclusively on- demand content and so not requiring a licence fee. However, the definition could start to create perverse incentives, with a fee payable for some ways of consuming BBC TV but not others. We would welcome discussing this issue with the Committee to consider whether and when the licence fee should be modernised again. 4. How does the BBC currently enforce TV licensing for those who watch TV programmes as they are being broadcast on devices other than a television but claim only to watch catch-up TV? Does the BBC seek, and do ISPs and mobile operators, provide usage information? Has the BBC successfully prosecuted anyone in this situation?

Answer: We can and have prosecuted people watching TV illegally using equipment other than TV sets. There is no separate enforcement strategy as our existing approach enables us to catch people watching on any device. We don’t have access to data from ISPs on people’s web usage, and we are not seeking to obtain it. Fewer than 2% of households watch only catch-up TV and therefore do not need a licence.2

Headcount 5. What is the current size of the BBC workforce and what is the headcount expected to be in 2015 when the Delivering Quality First saving target is to be achieved?

Answer: The total BBC workforce (excluding commercial subsidiaries) comprised of 20,156 staff (18,644 full time equivalents) as at 31 October 2013. The DQF programme extends through to the 2016–17 financial year and we anticipate that there will be further staff reductions through that period.

Executive and Talent Pay 6. When negotiations were undertaken with existing senior managers over the introduction of the £150k cap on redundancy, was any attempt made to end the legacy of free private medical cover and car allowances that many still receive? What is the current cost to licence fee payers of these benefits? 1 77% of those watching linear TV content on a PC or laptop at least weekly report that they know it requires a TV licence. 2 BARB Establishment Survey, Q2 2013. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 33

Answer: Car allowance and PMI are contractual, taxable benefits. Removing either benefit from current employees without consent constitutes a change in contractual terms which exposes the BBC to significant legal risks such as claims for unlawful deduction of wages, breach of contract and unfair dismissal. The BBC considers the legal risks when determining whether to remove contractual entitlements without consent. For changes to redundancy severance terms, while there is some legal risk, it is reduced because the majority of individuals will not be made redundant and there is no immediate impact on their terms and conditions. Removal of health care and car allowance would have an immediate and significant impact on the individual’s pay and benefits. PMI and car allowance have ceased being offered to new senior manager appointments since August 2011 and April 2012 respectively. The total annual spend on car allowance is £2.2 million (in 2009, the annual spend on car allowance was c£3.6 million). We do not offer the benefit to new SM appointments and the allowance is frozen so the annual cost will continue to reduce each year. The total annual spend on PMI, including insurance premium tax (IPT) was c£750k on renewal in January 2013. 7. It has been reported that last year BBC Worldwide bought Jeremy Clarkson out of Bedder 6, a company set up to bolster his pay, at a cost of £10 million to £15 million. What was the business case for buying Mr Clarkson out of this arrangement? Did this reduce the dividend that would otherwise have been returned for BBC public service operations in the year?

Answer: Bedder 6 was a joint venture between BBC Worldwide (BBCW) and Jeremy Clarkson (JC)/Andy Wilman (AW) (Top Gear presenter and Executive Producer respectively), established in November 2007. BBCW owned 50% of the shares in Bedder 6 and JC/AW 50%. The joint venture was set up to maximise the commercial value of Top Gear. It was successful in doing so with £149 million of Top Gear revenues generated in the first five years. The joint venture ensured that the key talent was retained by the BBC. Under the terms of the original agreement between BBCW and JC/AW, JC/AW had an option to put their shares and require BBCW to acquire their stake at market value, within five years. In April 2012 JC/AW exercised their put option. As a result BBCW reached a negotiated settlement with JC/AW to acquire their shares in a way that ensures JC/AW’s ongoing commitment to Top Gear. This settlement is structured to help safeguard the show’s long term future by incentivising JC/AW to participate in the development of the UK production and format and is forecast to deliver net incremental cash to BBCW over the next 10 years, and has a positive net present value to BBCW on conservative assumptions. In total in 2012–13 BBCW returned £156 million to the BBC in dividends and investment in content. The Bedder 6 deal did not reduce the level of dividend, which was paid in accordance with a pre- determined target. Does the overall figure in the annual report for pay on talent represent the total remuneration paid or are there any other deals with production companies via the BBC’s PSB or commercial operations in existence that may give a less full picture?

Answer: The disclosures on talent spend in the BBC Annual Report and Accounts (for example, page 76 of the 2012–13 Annual Report and Accounts) represent the amounts paid directly to artists and contributors by the BBC in respect of their work on programmes for broadcast on the BBC’s public services. It excludes amounts paid to artists and contributors via independent production companies since the BBC does not have full visibility of, or manage, such payments, and amounts paid to artists and contributors by BBCW.

Bullying and Harassment Issues 8. In follow up to Lord Hall’s answer to Q6 of the transcript, how many disciplinary hearings have there been (and are forthcoming), and what has been the outcome of those that have already taken place?

Answer: Between 1 January and 30 September 2013 there were 8 disciplinaries in relation to bullying and harassment/sexual harassment. These resulted in two written warnings, four final written warnings and one dismissal. The remaining case required no further action. 9. How many incidents of “whistle-blowing” were reported at the BBC in 2012–13, and what proportion was made via the BBC’s independently administered “whistle-blowing hotline”? What was the nature and outcome of these reported incidents?

Answer: In 2012 there were a total of 42 incidents of whistle-blowing. 22 of these were reported via the Expolink service (the BBC’s independently administered “whistle-blowing hotline”). The cases involved allegations cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 34 Culture, Media and Sport Committee: Evidence

of incidents of fraud, computer misuse, bullying/harassment, data protection breaches/violations and theft. Two resulted in termination of employment; 25 were referred to HR/management/the police. In 2013 there have been a total of 23 incidents of whistle-blowing so far. Six of these were reported via the Expolink service. The cases involved allegations of fraud, sexual assault, harassment/bullying, copyright infringement, HR/miscellaneous complaints or theft. One resulted in termination of employment (and was reported to the police); two employees were disciplined; nine were referred to HR/Management/litigation/ the police; seven are still under investigation.

Governance 10. How does the present internal review of the BBC’s system of governance differ from the review Lord Patten held after his appointment in 2011, which concluded back then that improvements could and would be made in areas such as the roles and responsibilities of the Trust and the Executive Board, and the interaction between both boards? Why were the problems that ensued not picked up and resolved as a result of the previous governance review? BBC Trust answering. 11. KPMG have been the BBC’s auditors since 1995. Does the BBC believe there is a risk that appointment of this length can undermine an auditor’s objectivity and independence? What actions have the BBC Executive taken to preserve their independence? What does the BBC assess as potential or perceived threats to auditor independence?

Answer: The BBC takes the independence of its auditors very seriously. There are various mechanisms and processes to ensure independence of the auditors. Responsibility for appointment, dismissal and fees The appointment governance process is established under the BBC’s Charter. The Charter requires the BBC to appoint an eligible auditor with the approval of the Trust and the Secretary of State (for Culture, Media and Sport). The BBC’s Audit Committee has the responsibility to oversee the appointment, dismissal and remuneration of the auditors and will make recommendations to the Trust accordingly. The Audit Committee is comprised entirely of non-executive directors, in line with good practice corporate governance. Regular tendering The appointment of the external auditors is tested periodically through tendering exercises. In 2008 KPMG competed with other audit firms on the BBC’s consultancy framework and as a result of that exercise were awarded a further contract for audit services. This is now coming to an end (2013–14 is the final year) and another tender exercise is planned to commence shortly. Review of non-audit fees paid to auditors The Audit Committee has a formal process for awarding any additional work to KPMG and regularly monitors the level of fees for any such additional work to ensure that such work is not incompatible with auditor independence. KPMG processes As an established, well regarded, international audit firm, KPMG has its own processes for ensuring independence is maintained. It discusses these with the Audit Committee each year. These processes include the regular rotation of key audit personnel with a maximum time limit that staff may work on the BBC’s audit. 12. The BBC’s Charter expires in 2016 and is something that is not mentioned in relation to pension risk or in any area of the BBC’s risk register summarised in the annual report. Why is this not considered a risk, given that the Corporation has no assurances whatsoever on future funding or a range of other matters?

Answer: The BBC acknowledges that, due to the way in which it is constituted under fixed term Royal Charters, on the expiry of each Charter the Corporation may be subject to changes in its status, scope, or funding model. The BBC seeks to mitigate this risk through the fulfilment of its Public Purposes, and by ensuring that it continues to serve all audiences with high quality, distinctive content. Recent statements suggest that there is prevailing public and political support from all three main parties for the BBC to continue as an entity beyond the expiry of this current Charter. The risk register included in the BBC Annual Report and Accounts is a summary of the main operational risks facing the Corporation. Charter Review is considered to be a broader strategic issue rather than an operational risk concerned with the day to day running of the BBC. Moreover, the BBC Annual Report and Accounts are prepared on a going concern basis in accordance with International Financial Reporting Standards, meaning that there is an underlying presumption that the business will continue to function for the foreseeable future. The risk register included in the Annual Report and Accounts is prepared on a basis consistent with this approach. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 35

In terms of the BBC’s risk management processes, Charter Review is reflected in terms of its potential impact on different areas of the BBC’s activity rather than as a risk in and of itself. For example, in its procurement of long-term supply contracts the BBC will take account of Charter Review risk through the inclusion of provisions which define how contracts may be terminated in certain circumstances. With regard to pensions risk the Trustees of the BBC Pension Scheme are responsible for evaluating the quality of the BBC’s covenant as sponsor to continue to honour its financial obligations to the Pension Scheme in all eventualities, including an assessment of the likelihood and impact of any future changes under Charter Review. In discharging this responsibility the Pension Scheme Trustees commission an independent expert to conduct a covenant assessment as part of their statutory duty to carry out regular valuations of the Scheme. This has most recently been carried out as part of the 2013 actuarial valuation of the BBC Pension Scheme, and the Pension Scheme Trustees have taken this risk in to account in reaching their overall valuation.

BBC Journalism, News and Current Affairs 13. In his recent speech Lord Hall said that the BBC’s ambition is to double its global audience by 2022 to half a billion. How will the BBC realise this ambition and what percentage of the half a billion audience does the BBC envisage would be paying for its content?

Answer: The growth of mobile internet around the world and the potential to expand the BBC’s global news reach on TV are the opportunities that are likely contribute most to reaching half a billion. Given the stretching nature of this target, the BBC has also asked Sir Howard Stringer (former Chairman of Sony) to assist in drawing together both internal ideas and external insights on how to achieve it. Commercial income is expected to play an important role in funding the investment required. It is impossible to say at this stage exactly how the BBC will be consumed in 2022; as now, some countries will be reached entirely by commercially funded services, but public funding will also remain essential in meeting the global audience requirements and in particular in providing news to markets of greatest need. 14. There has been a sizable increase in the proportion of complainants not satisfied with the BBC’s initial response to complaints and an increase year on year in the number appealing both to the Executive’s Editorial Complaints Unit and then on to the Trust’s Editorial Standards Committee. Why is that?

Answer: There has not been a sizable increase in the proportion of complainants not satisfied with the BBC’s initial response to complaints. Between 1 April-30 September 2013, 0.24% of Stage 1 complaints were escalated to Stage 2, representing a slight fall compared to 0.25% between April-September 2012. During the same period, 0.15% of complaints were escalated from Stage 2 to Stage 3, representing a slight rise from 0.1% between April-September 2012. The volume of complaints escalated from Stage 1 to the Editorial Complaints Unit (within this very small proportion), and then from Stage 2 to Stage 3, has increased sizeably. This is largely because of online and social media campaigns, which generate large numbers of almost identical complaints around a particular issue. In the current year to date there have been fewer occasions which provoked such campaigns, and the number of complaints referred to the ECU is somewhat lower. 15. Channel 4’s audience research shows that viewers perceive Channel 4 News as being more independent both from the influence of big businesses, and from the government, than the BBC and other broadcasters. Does the BBC accept their findings? BBC Trust answering.

Programmes and Audiences 16. The BBC reaches 96% of the population but reach of individual services varies significantly with some as low as 1%. Are there any BBC services whose reach is too low for effectively serving audiences and providing value for money? BBC Trust answering. 17. In 2012–13, what was the 15 minute reach among 16–34 year olds for (i) each of the BBC’s television services and (ii) the television portfolio in aggregate?

Answer: Please see the data below. As per the Annual Report, 3+ mins consecutive reach is also given for the BBC News Channel and BBC Parliament.3 The BBC TV portfolio has higher reach amongst this age group than competitors’ TV portfolios. 3 BARB, FY1213 = 020412–310313; FY1112 = 040411–010412. All homes. Run in AdvantEdge, reach data has been run in the Time Module. BBC Portfolio includes BBC One (inc. HD), BBC Two (inc. HD), BBC Three, BBC Four, BBC HD, BBC News, BBC Parliament, CBBC, CBeebies, BBC Red Button (inc. Olympic streams) cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 36 Culture, Media and Sport Committee: Evidence

Channel 2012–13 Average weekly reach (15+ mins cons) % of16–34 year-olds BBC One (SD+HD) 65.4 BBC Two 33.8 BBC Three 29.4 BBC Four 5.5 CBBC Channel 3.8 CBeebies 10.4 BBC News Channel 5.3 BBC News Channel (3+ mins cons in line with industry 9.0 standards) BBC Parliament 0.2 BBC Parliament (3+ mins cons in line with industry standards) 0.4 BBC TV Portfolio 76.2

18. What was the average amount of BBC television viewing for teenagers in 2012–13 and prior year?

Answer: Please see below average weekly reach for the BBC TV portfolio and time spent watching the BBC TV portfolio in 2012–13 and 2011–12.4 The BBC TV portfolio has higher reach and time spent amongst this age group than competitors’ TV portfolios. Measure 2012–13 2011–12 13–19 year-olds 13–19 year-olds BBC TV Portfolio average weekly reach % (15+ min cons) 70.6 71.5 BBC TV Portfolio hours per head per week (hh:mm) 03:59 03:50

19. In 2012–13 and in the prior year, what were the 15-minute and 30-minute weekly reach figures for BBC Three among (i) 16 to 34 year olds and (ii) its overall audience, when acquired programmes and programmes transferred from BBC One and BBC Two are excluded?

Answer: 2012–13—When acquisitions and transfers from BBC One/BBC Two are removed, 66% of the channel’s output remains (in terms of programme minutes broadcast). 15-minute (consecutive) average weekly reach to programming excluding the acquisitions/transfers stands at 2.76 million 16–34 year-olds (that is c65% of BBC Three’s average weekly reach to 16–34 year olds before the exclusions) and 8.12 million individuals overall (that is 62% of BBC’s Three average weekly reach to all individuals before the exclusions).5 2011–12—When acquisitions and transfers from BBC One/BBC Two are removed, 65% of the channel’s output remains (in terms of programme minutes broadcast). 15-minute (consecutive) average weekly reach to programming excluding the acquisitions/transfers stands at 2.81 million 16–34 year-olds (that is 64% of BBC Three’s average weekly reach to 16–34 year olds before the exclusions) and 7.97m individuals overall (that is 61% of BBC’s Three average weekly reach to all individuals before the exclusions). We are unable to provide the 30 minute consecutive average weekly reach figure as requested. This is because the industry software we use for analysis of this type would automatically exclude any programme of under 30 minutes when calculating 30 minute consecutive average weekly reach. This would mean that the reach figure generated would exclude not only acquired programming and that transferred from BBC One and Two but also all BBC Three originations of under 30 minutes in length.6 4 BARB, FY1213 = 020412–310313; FY1112 = 040411–010412. All homes. Run in AdvantEdge, reach data has been run in the Time Module. BBC Portfolio includes BBC One (inc. HD), BBC Two (inc. HD), BBC Three, BBC Four, BBC HD, BBC News, BBC Parliament, CBBC, CBeebies, BBC Red Button (inc. Olympic streams) 5 BARB, 15 mins consecutive average weekly reach (minus acquisitions/films and programmes transferred from BBC One/Two) among all individuals 4+ and 16–34 year-olds, FY1213 = 020412–310313; FY1112 = 040411–010412. Run in AdvantEdge, reach data has been run in the Programme Module. The definition of 15-minute consecutive reach used for this analysis differs slightly from the channel reach figures provided earlier. This is because this is a more complex analysis only possible using a different application which bases channel reach on an individual watching the specified minutes consecutively of one programme and automatically excludes programmes of less than the specified reach minutes. This is different from the industry standard application for calculating channel reach which bases reach on an individual watching the specified number of minutes consecutively of the channel—be that of one programme or split over more than one programme as long as it is consecutive. This application does not allow analysis at an individual programme level. 6 This processing issue of the system automatically excluding programmes of under 30 minutes in length also pertains to the 15- minute reach results as the system will have excluded all programmes of under 15 minutes when calculating the 15-minute reach excluding acquisitions and transfers. However, because only a small proportion of the schedule is under 15 minutes in length this is not the material issue for the 15-minute consecutive reach that it is for 30-minute consecutive reach when using the Programme Module. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 37

20. What was the cost per user hour figure for BBC Three in 2012–13 excluding the hours viewed of acquired programming and transfers from BBC One and Two?

Answer: The cost per user hour of BBC Three originations in 2012–13 is 9.4p.

21. The BBC spent £70 million in 2012–13 on acquired programmes. How much of this was spent on acquired programmes produced outside the UK and what was the comparative figure for 2011–12?

Answer: In 2012–13, 85% of the £70 million acquired programming was produced outside of the UK. The 15% UK-produced acquisitions included children’s programmes like Shaun the Sheep and Rastamouse; stand- up comedy shows from Andy Parsons and John Bishop and British movies like Calendar Girls. To put this in context, the BBC’s network TV spend on originations is £1.3 Billion.7 In 2011–12, 85% of the £75 million acquired programming was produced outside of the UK.

22. The BBC’s Purpose Remit Survey for 2012–13 found that 80% of people “would miss the BBC if it no longer existed.” This represents a decline from 82% in autumn 2011 and 85% in 2008–09. Why did the BBC not note this downward trend in the Annual Report whilst simultaneously highlighting small but favourable increased figures elsewhere? How concerned is the BBC that a fifth of the population wouldn’t miss the BBC if it no longer existed at all? BBC Trust answering.

23. The BBC’s Purpose Remit Survey also found that in 2012–13 a majority of important population segments didn’t think the BBC offered them much or was good value for money (eg C2DEs and black audiences). Why are these figures not reported in the Annual Report? BBC Trust answering.

24. The figures showing that 4 out of 10 people still think the BBC is not good value for money hasn’t changed in at least five years, despite the BBC’s longstanding aims for improvement. Why is that? BBC Trust answering.

25. The Annual Report states that the average listener and viewer spends 19.5 hours a week with the BBC. How does this break down by average for television, radio and online?

Answer: In 2012–13 the 96% of the UK adults who used the BBC each week spent 19:26 hours on average per week with BBC services. This 19:26 breaks down as follows.8 — BBC Television: 10:07 — BBC Radio: 08:15 — BBC Online: 01:04

26. Weekly reach figures for BBC television and radio are based on 15 minute reach. Why is reach for BBC online services, including viewership of both live and on-demand programmes on BBC iPlayer, based on 3+ minute reach?

Answer: 3-minute reach is used for BBC Online in order to also capture the activities that people naturally want to access as quickly as possible in the online sphere eg checking news headlines, the weather, sports results. As stated in the Annual Report, in 2012–13, the average weekly reach of BBC Online based on 3-minute reach was 48.1%. For the reason stated above, this is the preferred reach criteria. However, for information, in 2012–13 the average weekly reach of BBC Online based on 15-minute reach was 38.7%.9 7 Ofcom figures for 2013. 8 Cross-Media Insight Survey by GfK, 2012/13 = Weeks 14 2012 to 13 2013, adults 16+. This data is from the Cross-Media Insight Survey run by GfK for the BBC. This survey is designed to give a weekly Pan-BBC reach figure—such a figure is not possible to ascertain from industry sources such as BARB and RAJAR as they measure TV and Radio separately. The Cross- Media Insight Survey also collects details of the amount of time that those adults using the BBC each week record as spending with BBC services in a daily diary—those figures are given above. 9 Cross-Media Insight Survey by GfK, 2012/13 = Weeks 14 2012 to 13 2013, adults 16+ cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 38 Culture, Media and Sport Committee: Evidence

BBC Children’s Services 27. What improvements to BBC Children’s services will we see by the end of this current financial year?

Answer: BBC Children’s has initiated a number of initiatives in response to the recent BBC Trust review of BBC Children’s services. In most cases the timescale for reporting back on these is one year since the publication of the report (September 2014). Listed below are the BBC Trust’s recommendations for BBC Children’s, plus some key initiatives which viewers should start to see implemented before the end of this current financial year: BBC Trust: We fully support plans by BBC Children’s to improve the services’ reach to older children and to those who have more choice in satellite and cable households. We also support the plans to improve the transition of children aged 4–6 between CBeebies and CBBC. The increase in non-linear viewing creates further opportunities to serve children of different ages in different ways. The opportunities created by non-linear viewing dovetail with plans to improve reach to older children, as access to iPlayer via mobiles and tablets is higher amongst the 9–12 year old audience. We are beginning to premier some programmes online (such as The 4 O’clock Club) and we are also creating more online- only or red button-only content such as the recent Wolfblood “secret” episode. We are also exploring a CBBC YouTube channel, as a means of highlighting content to audiences who are not regular consumers of CBBC but do use YouTube often. This channel could include preview clips of upcoming programmes, behind the scenes films of how CBBC shows are made and special interviews with cast. All of the material on a BBC Children’s YouTube channel would point users back to the CBBC website. A new comments feature on the CBBC website has recently launched, enabling fan-based participation around key programmes which appeal to an older age range. Creating drama and comedy shows with the right “older” tone, in terms of characters, subject matter and production values, is also key to reaching 9–12 year olds. Drama and comedy in particular perform well in satellite and cable households, and this is reflected in the CBBC commissioning and investment strategy. CBBC will continue to produce dramas which appeal to an older age range, such as Wolfblood, The Dumping Ground and the newly-commissioned World’s End, as well as comedy dramas such as the 4 O’clock Club, All At Sea and the new Hank Zipzer next year. In addition, the first-ever CBBC comedy panel show called The Dog Ate My Homework will air soon and will provide a platform for developing CBBC comedy talent. There are plans to extend recent collaborations with BBC One in order to re-purpose prime-time content for the CBBC audience. An upcoming example is Richard Hammond’s Miracles of Nature, due to be broadcast in January 2014. Further collaborations, such as showing family films across both BBC Three and CBBC, are also in development. A mix of strategic initiatives is already in place to transition the 4–6 year olds CBeebies audience across to CBBC. A recent pilot navigated CBeebies viewers across to the CBBC schedule, and this experiment will be repeated again over Christmas 2013. An online game is now in production which will, for the first time, appeal to both the CBBC and CBeebies audience and exist in different variations on both websites. Versions of key CBBC programme brands are also being considered for CBeebies. BBC Trust: We support the current scope of the BBC’s radio and audio output for children but the Executive should find ways to promote it more effectively so that audience awareness levels increase and more children might discover speech radio programming that appeals to them. BBC Children’s is developing further initiatives to increase awareness of CBeebies Radio. These include: a possible tie-in with the CBeebies schedule in order to navigate viewers to appropriate radio content; an increase in navigation messages via continuity links and trails (already underway); and exploring how CBeebies Radio could be supported on the BBC’s other radio networks. Underpinning all these initiatives are plans to further develop and simplify how parents can access CBeebies radio content in order to make it easier for children to discover audio programming. BBC Trust: To allow us to monitor the impact of DQF more effectively, and to support performance accountability generally, the Executive should establish robust quality metrics for children’s content, which are regularly analysed and reported to the Trust as standard. In the next financial year BBC Children’s will meet its DQF targets and will continue to deliver a high- quality mix of content, partly via securing commercial co-production funds from other partners. The children’s tracker ChatterBox has become our tool for understanding what children think about our brands and content. The survey has been designed with children in mind (although some adult supervision is naturally required for younger ones), with length of survey and language kept front of mind. This will provide a much improved understanding of our audience’s attitudes to the quality and overall brand strengths of CBBC and CBeebies. As the audience data builds over successive quarters, this will become a key component in how we report back to the Trust. BBC Trust: We support the development of plans by BBC Children’s to improve its online and interactive offer to meet audience needs and expectations better. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 39

Responding to the growth in consumption via mobile and tablet is a critical element of BBC Children’s online plans. Already underway and due to deliver in 2014 are fundamental changes to both the CBBC & CBeebies website, which will enable them to better serve content to mobile devices. Developments around the recently launched and highly successful CBeebies app are planned, as are app plans for CBBC, both due in the next six months. BBC Children’s are also working with the BBC iPlayer team about potential enhancements which will benefit younger users. A possible YouTube channel has already been outlined above—which would link back to the CBBC website. The first CBBC interactive game show will launch early in 2014, allowing viewers to play along at home online, in sync with the broadcast content. 28. Does the BBC believe that the 9–12 year-old and the 12–16 year-old audiences are underserved, and if so how does it plans to deal with the problem?

Answer: The BBC Trust’s review of BBC Children’s services did not conclude that older children (9–12 and 12–16 year olds) were underserved, although they did ask the BBC Executive to address a number of challenges identified during the review. To fully reach 9–16 year olds, BBC Children’s must deliver the right mix of content on the right platforms. It is worth noting that trend data shows that younger audiences tend to move away from the BBC, and TV consumption in general, but then return as they grow older. However, although there is no dedicated BBC service for 12–16 year olds, we know that they consume BBC services in significant quantities. For example: — BBC One has a reach of 57.4% to 12–15 year olds;10 Radio 1 has reach of 30.4% — Programmes such as Doctor Who, Miranda, Waterloo Road, The Voice, Eastenders and The Apprentice do particularly well with this age bracket — We also have a strong online offer (iPlayer and Bitesize) which appeals to this age bracket We continue to look to strengthen our relationship with this young audience: — On BBC One and Two, we invest to ensure our content has the widest appeal—focusing on drama, factual entertainment and entertainment — Developing our iPlayer proposition, with more investment in online-first or online-only content, which is likely to skew younger — Creation of a dedicated group to identify, create or kickstart ideas which will primarily benefit a younger audiences 29. What proposals does the BBC have for improving the reach of BBC Children’s regionally, amongst boys, and amongst BAME audiences?

Answer: BBC Children’s acknowledge the challenges highlighted in the BBC Trust review of BBC Children’s services: — There are variations in the 2012–13 average weekly reach of CBBC, most notably the South versus the North, Scotland and Northern Ireland. — In 2012–13, 4% more girls than boys watched CBBC. — Weekly reach amongst white children was 3.7% higher than amongst children from BAME homes in 2012–13. Regional reach Since BBC Children’s moved to Salford in 2011 and enhanced its production activity in the North of England, the gap in CBBC viewing between northern and southern audiences has narrowed from 5% in mid-2012 to 3.2% in mid-2013. We believe our regional portrayal and activity is improving all the time, partly thanks to our production unit in Glasgow and new commissions from independent production companies based in Northern Ireland and Wales. In addition, BBC Children’s hosts live events across the country; for example, 40,000 attended “Live in Leeds” this summer, with another event in Newcastle planned for 2014. Examples of children’s programmes produced outside of London and the South include: — All at Sea, made in Scarborough — The Dumping Ground, made in Newcastle — Wolfblood, made in Northumberland — 4 o’clock Club, made in Manchester 10 We do not have data to hand for 12–16 year olds cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 40 Culture, Media and Sport Committee: Evidence

— Young Dracula, made in Liverpool — Stepping Up, made in Liverpool and Wales — Hit the Stage and the animated segments within comedy-drama Roy, both made in Northern Ireland — Numerous studio shows continue to be made in Salford, including: Blue Peter, The Slammer, Swashbuckle, Friday Wind Up, Daredevil — Time for School contrasts two very different communities for a young audience—one in Birmingham and the other on Holy Island — New CBeebies drama series Katie Morag is filmed on the Isle of Lewis, set in one of UK’s most far-flung communities The BBC Trust review acknowledged that regional disparities are in part driven by the relative penetration of satellite and cable (where BBC services perform less well)—and therefore BBC Children’s plans in relation to satellite and cable homes should also help improve BBC Children’s regional reach. Reach amongst boys Some of the key elements which make content attractive for boys are: action-adventure drama, comedy, animation and gaming in particular. CBBC will continue to create online games based around the most popular TV shows and will make these games increasingly available for mobile and tablet. As already highlighted, the first CBBC interactive gameshow to allow online “playalong” via second screen is due to launch in January 2014. CBBC app plans are in development and these have great potential to deliver gaming content. CBBC will continue to commission action-adventure dramas such as Wizards v Aliens, comedies such as 4 O’clock Club, All At Sea and Hank Zipzer, and is unique in providing entirely UK-produced animation series such as Strange Hill High and Dennis & Gnasher. Although there is less gender disparity within the CBeebies audience, it is worth noting recently- commissioned content in two areas favoured by boys—pirates in the highly successful Swashbuckle (plus associated online games) and dinosaurs via a BBC Bristol production featuring the Natural History Unit’s extensive “Walking With Dinosaurs” archive. Immersive dinosaur games will also be available soon. In animation, we show strong boy-oriented action titles such as Mike the Knight, Tree Fu Tom and Octonauts Reach amongst BAME audiences Diverse portrayal on BBC Children’s is critically important. At both the commissioning and production stage, we interrogate producers on the subject of diverse portrayal and insist that our programmes reflect the broadest possible spectrum of children and families across the UK. Diversity onscreen is enabled partly via a wide-range of presenting talent—such as Cat Sandion and Sidney Sloane on CBeebies, the Newsround reporting team and new Blue Peter presenter Radzi Chingyanganya on CBBC. We also make sure that a diverse range of talent feature in primary roles within drama and comedy shows—examples being the protagonists in The Dumping Ground, 4 O’clock Club, Wolfblood and Johnny & Inel. We also take steps to make sure that a wide range of our audience feature onscreen, whether in the wider cast of scripted programmes or as participants in series such as Nina & the Neurons and the award-winning Something Special (which engages with a very diverse range of children who have learning disabilities).

BBC Studios and Post Production 30. The BBC’s Annual Report and Accounts stated that the new post-production house’s “sales pipeline is encouraging”, but in evidence Anne Bulford said that a few months into the venture it became clear that the demand simply was not going to come through. Why did you keep this statement in the BBC’s Annual Report and Accounts (page 109)?

Answer: It should be emphasised that the post production operation being referred to sits within the BBC Commercial Holdings Group, rather than being licence fee funded. Following the decision to sell BBC Television Centre BBC Studios and Post Production, a commercially funded subsidiary, was required to review its operations all of which had been historically housed within the building. A decision was made in Autumn 2012 to re-locate the small post production team (c.15 individuals) to a new base in Charlotte Street. The operation was set-up on a trial basis (short term lease/limited capital investment) to test whether the business could be made to work in a new central London location. The alternative would have been immediate closure. The business had a soft launch in Spring 2013 and initial indications were encouraging (for example many customer visits and expressions of interest and a good number of business leads being pursued and won). In May/June 2013 (when S&PP provided their update for the BBC Annual Report), the sales pipeline was still looking promising with one very material longer term contract in discussion. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 41

However in the ensuing weeks, many key target projects were not secured and it was clear that demand for the business was lower than anticipated and certainly less stable/predictable. After reviewing the sales pipeline and other operational factors the decision was taken to close the operation during 2014. By acting decisively, the company was able to minimise losses. The venture did not involve licence fee funding. 31. What were the Charlotte Street post production facility losses for the year?

Answer: The Charlotte Street operation was not funded by the licence fee. This is therefore a commercially confidential matter. 32. Why hasn’t BBC Studios and Post Production turned a profit in any of the last six years? What is the projected profit or loss for the year 2013–14?

Answer: BBC S&PP has made an operating profit (excluding exceptional items) for each of the last 4 years. The Company has encountered a number of exceptional, one-off costs in recent years largely due to BBC- related initiatives, which have led to net losses. These include restructuring costs generated by the move of the BBC Sports and Children’s divisions to Salford and asset write-offs connected with the sale of BBC Television Centre. As a commercially funded limited company, BBC S&PP does not customarily make public announcements about forecast trading results due to commercial sensitivities. 33. Does BBC Studios and Post Production make a profit on the services provided to Channel 4, ITV and Sky? If not, why does it continue providing those services?

Answer: As a commercial operation, BBC S&PP does not make disclosures about the profitability of individual client contracts. 34. Has the BBC considered selling off BBC Studios and Post Production (or further parts of it) and buying in capacity and services from others?

Answer: BBC S&PP emerged from the BBC Resources division in 2008 when a number of strategic options were looked at for the Corporation’s commercial studios and post production operations. As the 100% shareholder in BBC S&PP, the Corporation regularly reviews the full range of strategic options for BBC S&PP.

Delivering Quality First (DQF) Programme 35. In 2012–13, the BBC incurred £43.7m in restructuring costs. What is the payback period for the restructuring costs incurred by each of UK PSB Group, BBC Worldwide, BBC World Service and BBC Monitoring in 2011–12 and 2012–13?

Answer: The £43.7 million recognised in 2012–13 in the accounts consists mainly of accounting entries (as per accounting standards). It is not therefore based on actual payments made in the year. The BBC calculates payback periods on the expected cash timings for restructuring cases, consequently the payback analysis provided below has been based on the actual redundancy payments incurred during each of the financial years in question (cash payments), as opposed to the year in which a provision was raised for these payments (accounting entries): 2011–12 Payback 2012–13 Payback UK PSB Group 1.2 1.3 BBC World Service and BBC Monitoring 1.1 1.5 BBC Worldwide 0.8 0.7

36. Why have finance and operations costs increased by 19% to £67.7 million in 2012–13?

Answer: Between 2011–12 and 2012–13 finance and operations commenced two key projects, incurring an additional c£10 million of expenditure. These transformation projects are underway to deliver ongoing savings under our DQF efficiency programme, with one completing in the current financial year. There was also a £1.6 million prepayment made against our group insurance premiums in the year, the benefit of which is being seen in 2013–14. The current recurring costs of the division are now below those seen in 2012–13, in line with our DQF savings targets. cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 42 Culture, Media and Sport Committee: Evidence

Long-Term Contractual Commitments 37. Could you provide a breakdown of the £2.5 billion “other fixed payments on long term outsourcing arrangements” on page 59 of the BBC Full Financial Statements 2012–13?

Answer: Please see the breakdown in the table below: Sum of other commitments (£m) Distribution 1,816 Technology 232 Broadcast services 132 Property 88 Other 201 TOTAL 2,469

38. Does the BBC have any significant variable cost long-term contractual commitments relating to future years beyond the £3.6 billion fixed costs quoted in the Annual Report?

Answer: All of the contracts in the table above have variable elements that are dependent on a number of factors. The variable elements are considered as part of the forecasting and budgeting process for the BBC as they are not committed payments.

Foreign Exchange and Interest Rate Risk Management 39. How does the BBC assess the costs to itself of covering its FX and interest rate risk in the way in does (eg by using forward rate agreements, interest rate caps and collars)? How does the BBC determine its risk appetite and how often is this reviewed? Why is the coverage of swaps and collars of £132.6 million (70%) higher than the current level of borrowings?

Answer: Foreign Exchange The BBC has historically run a conservative Foreign Exchange policy with the primary objective being to protect the business from cash flow volatility related to foreign currency movements. All the foreign exchange activity carried out is purely for hedging purposes and no speculative trading activity takes place. The Group Treasury function is not run as a profit centre but as a cost centre. For major contractual commitments any individual exposure over £25k sterling equivalent is hedged (or smaller contractual payments amounting to over £100k per annum). The hedges are arranged as and when each contracted exposure arises and out to the end of the current Charter Period for any longer term commitments. Additionally within the commercial business a rolling monthly hedge programme is used to hedge forecast foreign currency cash-inflows over a two year time horizon. By the start of each financial year 80% of that years forecast exposures will be hedged and 40% of the subsequent years. The cash flow forecasts are reviewed on a regular basis and formally on a quarterly basis to ensure the level of hedging is consistent with the underlying exposures. A similar policy is employed for the World Service and News gathering for foreign currencies required to run their operations. There is no direct cost to the BBC in covering foreign exchange risk over the relatively short timeframes involved with most contracts. For longer term hedging any cost beyond market rates and spreads is limited to credit charges made by the banks to cover their potential exposure to the trading counterparty over the term of the deal. The BBC does not pay option premia. The policy was most recently reviewed earlier this year as part of the BBC Finance Effectiveness programme and there is regular monthly reporting to senior management. Interest Rates The general policy employed is to have 80% of the projected total interest payable over each financing cycle at a fixed rate. Traditionally interest rate swaps/caps or collars have been used for this purpose. The hedges are constructed against forecast debt levels on completion of each piece of financing being arranged. The level of hedges in place within the commercial business at March 2013 was, as noted in the Annual Report, £132.6 million higher than the actual level of debt at that date. It should be noted that £70 million of hedges matured in early to mid-April 2013. Most of the remainder of the over-hedge is related to seasonality within the business, the peak debt runs at a level c£50 million higher than year end debt. The final factor is related to the hedges being arranged against debt forecasts that have a four or five year time horizon and there is inevitably some variation between these long range debt forecasts and actual debt. cobber Pack: U PL: CWE1 [O] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Culture, Media and Sport Committee: Evidence Ev 43

Upon completion of the current budget cycle a full review of the interest rate hedges in place will be undertaken and any hedges that are, in the light of those long term forecasts, no longer required will be unwound. This exercise will be completed by the end of the 2013–14 financial year. No interest rate hedges are held at the BBC at this stage in relation to the Public Service facilities arranged. Annually, upon completion of each budget cycle a full review of the interest rate hedges in place is undertaken and any hedges that are, in the light of those long term forecasts, no longer required are unwound. This year’s exercise will be completed by the end of the 2013–14 financial year.

Letter from John Whittingdale OBE MP, Chairman, Culture, Media and Sport Committee to Lord Hall of Birkenhead, Director-General, BBC PANORAMA NORTH KOREA UNCOVERED: BBC TRUST’S INVESTIGATION Following the completion of the BBC Trust’s Editorial Standard Committee’s investigation into the BBC Panorama programme: North Korea uncovered, the Committee considered the Trust’s findings at our meeting yesterday. The Committee also has received a letter from the father of one of the students who went on the visit, and who is the complainant in this case. The Committee would like to know what actions you are planning to take following the Standard Board’s findings, in particular what the consequences will be for individuals in relation to the parts of the complaint that were upheld. The father of the student has written to me following the Trust’s conclusions and I would request that you respond to the Committee on the points he raises in his letter, which I enclose.11 The complainant’s personal details have been removed as he wishes to remain anonymous so that there are no repercussions for his family. 2 April 2014

Letter from Lord Hall of Birkenhead, Director-General, BBC to John Whittingdale OBE MP, Chairman, Culture, Media and Sport Committee Thank you for your letter dated 2nd April, received on the 9th. BBC News accepted in full the Trust decision on Panorama’s North Korea Undercover programme broadcast on 15 April 2013. Aspects of the BBC’s handling of the project fell short in a number of areas, with the Trust finding against the BBC on 4 of its 21 rulings. The Trust also took the view which I had set out before your Committee—that there was a clear and strong public interest in commissioning and broadcasting the programme and that the correct referral procedures and processes were followed by the programme team and senior management. The BBC has apologised to Student X for the finding by the Trust that insufficient information was given to her ahead of the trip about the involvement of the BBC journalists and the potential risks. This meant that Student X did not have sufficient knowledge on which to give informed consent. We have also apologised to the LSE following the Trust’s finding that the programme created the risk of harm to the LSE’s reputation. The Trust agreed that in view of the breaches, those apologies were the appropriate outcome and did not ask the BBC Executive to take any further action. I thought it would be helpful, however, if I set out for you below what other actions the BBC itself has taken in the light of what happened. First, though, with regard to the important matter of Parent X’s allegation that I have misled your Committee, may I say categorically that that is not the case. As I made clear to the Committee, from the assessments of risk which the BBC had undertaken—and which the Trust has accepted as appropriate—the most likely outcome, if the trip had been discovered, was for the students to be expelled. In those circumstances, that would be the “best” outcome. This is supported by the evidence offered by the Trust’s Independent Editorial Adviser in quoting from the risk assessment form. The risk assessment also pointed out that “detention could not be ruled out”, but said that it was “unlikely”. It is the job of a proper risk assessment to consider such eventualities and the consequences, even if they are not expected to occur. This is precisely what happened here and does not amount in any way to a discrepancy between my evidence to the committee and the Trust’s conclusions. With regard to Parent X’s comments about “misstatements by senior BBC Executives”; this was dealt with by the Trust’s report and I have nothing to add. Turning now to the actions taken: I asked BBC News to take another look at its processes regarding risk assessment. As a result, the editorial procedures to clarify our responsibility to third-parties have been strengthened. High risk forms now require staff to make explicit any duty of care we may have to outside contributors as well as to BBC staff and freelancers. We have also introduced a general third party reputational risk assessment which, for instance, would cover all external institutions, including universities. 11 Not printed. cobber Pack: U PL: CWE1 [E] Processed: [09-05-2014 10:35] Job: 039780 Unit: PG02

Ev 44 Culture, Media and Sport Committee: Evidence

The BBC also gave assurances—through Universities UK—to the academic community about any future projects involving undercover journalism. This was in line with the above amendments and my evidence to your committee last year: (i) Undercover BBC journalists will not [in any normal circumstances] accompany UK universities or other recognised research institutions, on trips abroad without the full consent and co-operation of a member of the senior management team of the university involved. (ii) BBC journalists will not purport to be university staff without the agreement of a member of the senior management team of the university involved, (iii) When assessing risk, the BBC will, where relevant, take into account potential risks to universities’ reputations. With regard to your point about individuals: the Trust made no recommendation for action or sanctions and, as you know, we would not, in any case, comment on any internal staff matters. 14 April 2014

© Parliamentary Copyright House of Commons 2014 This publication may be reproduced under the terms of the Open Parliament Licence, which is published at www.parliament.uk/site-information/copyright/

Printed in the United Kingdom by The Stationery Office Limited 05/2014 039780 19585