House of Commons Culture, Media and Sport Committee
Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Sixth Report of Session 2016–17
HC 814
House of Commons Culture, Media and Sport Committee
Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Sixth Report of Session 2016–17
Report, together with formal minutes relating to the report
Ordered by the House of Commons to be printed 17 January 2017
HC 814 Published on 18 January 2017 by authority of the House of Commons 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 Damian Collins MP (Conservative, Folkestone and Hythe) (Chair) Nigel Adams MP (Conservative, Selby and Ainsty) Andrew Bingham MP (Conservative, High Peak) Julie Elliott MP (Labour, Sunderland Central) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Nigel Huddleston MP (Conservative, Mid Worcestershire) Julian Knight MP (Conservative, Solihull) Ian C. Lucas MP (Labour, Wrexham) Jason McCartney MP (Conservative, Colne Valley) Christian Matheson MP (Labour, City of Chester) John Nicolson MP (Scottish National Party, East Dunbartonshire)
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 Committee reports are published on the Committee’s website at www.parliament.uk/cmscom and in print by Order of the House. Evidence relating to this report is published on the inquiry publications page of the Committee’s website.
Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Kevin Candy (Inquiry Manager), Cameron Wall, (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, London SW1A 0AA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected]. Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 1
Contents
Summary 3
Background to today’s session 4 Introduction 4 The BBC 4 The role 5 Recruitment process 6
The candidate: Sir David Clementi 7 Biographical information 7 Possible conflicts of interest 7 Our evidence 8 Conclusion 9
Appendix 1: Details of the preferred candidate 10 SIR DAVID CLEMENTI 10
Formal Minutes 11
Witnesses 12
List of Reports from the Committee during the current Parliament 13
Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 3
Summary On 17 January 2017, the Culture, Media and Sport Committee held a pre-appointment hearing with the Government’s preferred candidate for the Chair of the BBC Board, Sir David Clementi. On the basis of the evidence provided to the Committee, we have concluded that he is a suitable candidate for the post. 4 Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Background to today’s session
Introduction
1. On 10 January 2017 the Government announced that their preferred candidate for Chair of the new BBC Board was Sir David Clementi. Under the new BBC Royal Charter, a unitary Board replaces the BBC Trust and will be wholly responsible for governance of the BBC. In May 2016, on publication of the White Paper on the BBC Charter Review, the Government announced they had asked Mrs Rona Fairhead to continue as Chair of the new BBC Board until the end of her existing four-year term in 2018. She had become Chair of the BBC Trust in October 2014 following a pre-appointment hearing before our predecessor committee.
2. However, in our report on the White Paper, we were firmly of the view that the process of appointing the chair of the new Board needed to be via an open and orderly public competition and that it had been inappropriate that any Minister, including the Prime Minister, bypass this requirement given that the two roles had very different responsibilities. Following publication of our report, the Government announced that it had decided to run a new process to appoint the first chair of the BBC Board for a four- year term. On 14 September, Mrs Fairhead indicated that she would not be applying for the new role.
3. In line with Cabinet Office Guidelines agreed with the House of Commons Liaison Committee, the Chair of the BBC Trust was a post subject to a pre-appointment hearing by us. This requirement now applies to the appointment of the Chair of the BBC Board. The outcome of the hearing is non-binding, although the report from a Select Committee holding a pre-appointment hearing should inform Ministers’ decision making on whether or not to proceed with an appointment. Our purpose in conducting this hearing is to satisfy Parliament that the post would be filled by someone of sufficient calibre and independence for the role.
The BBC
4. The BBC is a public corporation, established under Royal Charter. The Charter is the constitutional basis for the BBC, setting out its public purposes, guaranteeing its independence, and outlining the duties of its governing Board and the way it is regulated. The BBC’s mission is to act in the public interest, serving all audiences through the provision of impartial, high-quality and distinctive output and services which inform, educate and entertain. Under the Charter, the BBC must promote the following five public purposes:
(1) To provide impartial news and information to help people understand and engage with the world around them;
(2) To support learning for people of all ages;
(3) To show the most creative, highest quality and distinctive output and services; Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 5
(4) To reflect, represent and serve the diverse communities of all of the United Kingdom’s nations and regions and, in doing so, support the creative economy across the United Kingdom;
(5) To reflect the United Kingdom, its culture and values to the world.
5. In December 2016 the Government completed its Charter review process with the publication of a new eleven-year Charter for the BBC which would come into force at the beginning of 2017. Under the new Charter, the BBC Trust has been replaced by a new BBC Board and all regulation of the Corporation has passed to Ofcom, the independent Communications regulator. These new arrangements for the BBC will be in place from the beginning of April 2017. The Chair of the Board will play a key role in the appointment of the Non-Executive members of the new Board.
The role
6. The advertisement for the Chair of BBC Board set out that prospective candidates for the role needed to be able to demonstrate a commitment to the independence, mission and public purposes of the BBC, as well as demonstrating they met a majority of the following criteria to a high degree:
• experience working at the highest level of public or commercial life in the UK and/or internationally, with experience of sitting on commercial and/or public sector boards;
• an understanding of the key challenges and opportunities facing public service broadcasting in the UK, and of the commercial media sector and the impact on audiences;
• strong leadership skills at board level, including the ability to chair meetings and represent a large institution in the public arena;
• a proven ability to think through complex issues strategically, independently and imaginatively; experience of exercising excellent financial management and securing value for money; and
• excellent communication and relationship management skills, and the ability to represent the BBC capably to a wide range of stakeholder groups, including audiences, parliamentarians and the media.
7. The time commitment for the Chair will be at least 2–3 days per week. The Chair will be responsible for providing strong leadership of the Board and the role will require a greater level of public facing, engagement and management activity than the other Board members.
8. It is expected that the appointment will be for a single term of up to four years, with the possibility of renewal for one additional term in exceptional circumstances. Terms for the Chair and other new members will not necessarily be the same, so that the terms of all non-executive directors do not expire at the same time. 6 Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Recruitment process
9. The BBC Chair competition was launched on 26 October 2016 via BBC press release and advertised on the Cabinet Office Centre for Public Appointments website, the DCMS Connect website and by search consultants Odgers Berndtson. The closing date was 16 November 2016.
10. The selection panel was made up of Sir Peter Spencer (Public Appointments Assessor), Sue Owen (DCMS Permanent Secretary), and two independent members, Lord Janvrin and Dame Colette Bowe.
11. The panel met to sift candidates on 22 November 2016. The Department for Culture, Media and Sport (DCMS) has confirmed that 19 applications were received by the deadline. Two applicants declared they were female, one declared they were BAME. The panel was concerned by the lack of diversity and asked the search consultants to find more potential candidates in order to improve both the strength and diversity of the field. We share the panel’s concern on lack of diversity. Subsequently, DCMS also contacted a number of other people who were considered to have potential for the post.
12. The search consultants proposed a grading for each candidate and presented their CVs and letter of application. The panel considered each candidate against the role and person specifications, agreed an initial shortlist of five candidates and undertook to assess late applications out of committee. Subsequently one late applicant was shortlisted and another person previously sifted out was reconsidered by the panel at the request of No 10 and added to the list.
13. Each of the shortlisted candidates was interviewed by the search consultants to probe specific aspects of their CV and to give a fuller picture of their experience, skills sets and potential areas of weakness.
14. Prior to final interview all seven short-listed candidates were given the opportunity to have a conversation with Lord Hall, Director General of the BBC and to receive a policy brief from Departmental officials. Each candidate was also given a media test, conducted by DCMS’s Head of News and Communications. Panel interviews were held on 12 and 14 December 2016.
15. Following interview, three candidates were deemed ‘appointable’. The Secretary of State for Culture, Media and Sport met all three candidates on Tuesday 20 December 2016 in the presence of a nominated representative of the Public Appointments Assessor. Thereafter the Secretary of State for Culture, Media and Sport made a recommendation to the Prime Minister that Sir David Clementi be confirmed as the preferred candidate for the role of BBC Chair. Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 7
The candidate: Sir David Clementi
Biographical information
16. Sir David Clementi has been Chairman of a number of organisations in both the commercial and not-for-profit sector. He has Board-level experience across a wide range of sectors: finance, property, mining, legal services, education and the Arts. From 2011 to 2015 he was Chairman of Virgin Money; from 2002 to 2008 he was Chairman of Prudential plc. Before joining the Prudential, David was Deputy Governor of the Bank of England for five years between 1997 and 2002. In addition to his membership of the Monetary Policy Committee, he was responsible for the day-to-day management of the Bank. Prior to joining the Bank of England, David worked at Kleinwort Benson for 22 years (1975–1997), including as Chief Executive (1994–1997).
17. He has experience of governance issues in different types of organisations, covering both commercial and not-for-profit organisations. From 2003 to 2007 he was on the Board of the Financial Reporting Council, responsible for the Combined Code of Corporate Governance. He has chaired the Audit Committee of an international FTSE company, Rio Tinto, and acted as a Senior Independent Director and Chairman of the Finance and Audit Committee of the Royal Opera House.
18. He also has experience of regulatory systems. He was a Director of the Financial Services Authority from 1997 to 2002. In 2003/04 he carried out a review for the Ministry of Justice of the regulatory framework for legal services in England and Wales, reporting to the Lord Chancellor in December 2004. The main recommendations of the Report formed the basis of the Legal Services Act 2007. In September 2015 he was asked by the Secretary of State at the Department of Culture, Media & Sport to review the governance and regulatory arrangements for the BBC, reporting in March 2016.
Possible conflicts of interest
19. Candidates for the post were required to complete a form outlining possible conflicts of interest. Sir David wrote:
In March 2016 I published a ‘Review of the Governance and Regulation of the BBC’. It was an Independent Review. Its recommendations were entirely mine, not those of the Government or the BBC. The time spent on the Review was unpaid. I do not believe that the work prejudices my independence, or creates a conflict of interest.
As indicated on my CV, I have three paid Non-Executive posts: Chairman of King’s Cross Central Partnership (a partnership re-generating a large area around King’s Cross); Chairman of World First (a financial technology company); and Deputy Chairman of Ruffer LLP (an asset management company).
If appointed to Chair the BBC, it would become my primary role and be given priority at all times. I would like to retain my King’s Cross role, but would wish to discuss with you giving up my positions at World First and Ruffer. I do not consider that any of these roles raises a conflict of interest, 8 Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
but the Appointments Process needs to be concerned with time conflicts. I believe the BBC role will be time consuming and that the job specification underestimates the time the Chair will need to spend, particularly in the first six months.
In addition to my business roles, I hold a small number of unpaid roles in the charitable sector. I do not believe any of these gives rise to a conflict of interest, or a conflict in respect of available time.
Our evidence
20. In oral evidence we asked Sir David about the following specific matters:
• Reasons and motivations for applying for the post;
• Experience and selection process;
• Potential conflicts of interest;
• Role of the new BBC Board and relations with Ofcom;
• BBC Studios, independent production and other commercial activity;
• Championing, defending and protecting the BBC’s independence;
• Staff morale and savings programme;
• Size, scale and scope of the BBC: international and domestic presence;
• Journalism and local radio;
• Sports rights: Free-to-air content;
• Transparency of senior appointments;
• Knowledge and views on evolution of public service broadcasting;
• Over 75s’ Licence Fee costs: future settlements;
• Diversity: Representation of older women on screen;
• Homophobia in sport;
• BBC perception in the devolved nations;
• BBC culture: tendency to be over-defensive;
• Coverage of post-Brexit referendum;
• Diversity: Catering for BAME and younger audiences;
• BBC Monitoring; and
• Charter period: mid-term health check; Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 9
Conclusion
21. In our report on the BBC Charter Review, we envisaged any new Chair appointed should be a significant figure, ideally with acknowledged experience in managing large organisations and should be comfortable with the media spotlights that will inevitably follow them. Overall we were satisfied that Sir David met this criterion. A concern was that although Sir David has substantial boardroom experience, most of this has been in the financial sector, albeit at a very high level, but he did not have any professional experience within a media organisation. We questioned him about this and he showed a willingness and enthusiasm to learn quickly once he was in post. He demonstrated he had managed to do this in the period producing his review for the Government on the future governance arrangements for the BBC. We acknowledge his honesty in accepting there were gaps in his knowledge of the industry, and he assured us that he would endeavour to plug these gaps with careful appointments of non-executive directors, who would bring specific areas of expertise to the unitary Board. Despite this lack of broadcasting experience, given Sir David’s responses to our questions, we are content to confirm his appointment as Chair of the BBC Board and wish him well with the challenges the Corporation will face in the new Charter period ahead. We were also pleased that Sir David acknowledged the BBC’s shortcomings in the area of diversity—not least the dearth of older women on screen— and that he has promised to tackle this as a top priority. 10 Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Appendix 1: Details of the preferred candidate
SIR DAVID CLEMENTI
Sir David Clementi has been Chairman of a number of organisations in both the commercial and not-for-profit sector. He has Board-level experience across a wide range of sectors: finance, property, mining, legal services, education and the Arts. From 2011 to 2015 he was Chairman of Virgin Money; from 2002 to 2008 he was Chairman of Prudential plc. Before joining the Prudential, David was Deputy Governor of the Bank of England for five years between 1997 and 2002. In addition to his membership of the Monetary Policy Committee, he was responsible for the day-to-day management of the Bank. Prior to joining the Bank of England, David worked at Kleinwort Benson for 22 years (1975–1997), including as Chief Executive (1994–1997).
He has significant experience of governance issues in different types of organisations, covering both commercial and not-for-profit organisations. From 2003 to 2007 he was on the Board of the Financial Reporting Council, responsible for the Combined Code of Corporate Governance. He has chaired the Audit Committee of an international FTSE company, Rio Tinto, and acted as a Senior Independent Director and Chairman of the Finance and Audit Committee of the Royal Opera House.
He also has significant experience of regulatory systems. He was a Director of the Financial Services Authority from 1997 to 2002. In 2003/4 he carried out a review for the Ministry of Justice of the regulatory framework for legal services in England and Wales, reporting to the Lord Chancellor in December 2004. The main recommendations of the Report formed the basis of the Legal Services Act 2007. In September 2015 he was asked by the Secretary of State at the Department of Culture, Media & Sport to review the governance and regulatory arrangements for the BBC, reporting in March 2016.
At present he has three paid Non-Executive posts: Chairman of King’s Cross Central Partnership (a partnership re-generating a large area around King’s Cross); Chairman of World First (a financial technology company); and Deputy Chairman of Ruffer llp (an asset management company).
David graduated from Oxford University with a degree in Politics, Philosophy and Economics. He qualified as a Chartered Accountant and then spent two years at Harvard Business School obtaining an MBA. He is an Honorary Fellow of Lincoln College, Oxford and an Honorary Member of the Royal Institution of Chartered Surveyors.
David lives in London, is married with two grown-up children. He was appointed Knight Bachelor in the New Year Honours’ List in 2004.
This appointment process was run in accordance with the OCPA Code of Practice. It is a requirement of the Code that political activity is declared; David Clementi has declared no such political activity. The role of the BBC Chair attracts remuneration of £100,000 per annum. Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 11
Formal Minutes
Tuesday 17 January 2017
Members present:
Damian Collins, in the Chair
Andrew Bingham Christian Matheson Julie Elliott Jason McCartney Nigel Huddleston John Nicolson Julian Knight Draft Report Pre-appointment( hearing for the Government’s preferred candidate for Chair of the BBC), proposed by the Chair, brought up and read.
Ordered, That the draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 21 read and agreed to.
Resolved, That the Report be the Sixth Report of the Committee to the House.
Ordered, That the Chair make the Report to the House.
[Adjourned till Tuesday 24 January at 10.00 am 12 Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC
Witnesses The following witness gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.
Tuesday 17 January 2017
Sir David Clementi, the Government’s preferred candidate for Chair of the BBC Pre-appointment hearing for the Government’s preferred candidate for Chair of the BBC 13
List of Reports from the Committee during the current Parliament All publications from the Committee are available on the publications page of the Committee’s website.
The reference number of the Government’s response to each Report is printed in brackets after the HC printing number.
Session 2015–16
First Report BBC Charter Review HC 398 Second Report Appointment of the Information Commissioner HC 990
First Special Report Tourism: Government response to the HC 382 Committee’s Sixth Report of Session 2014–15
Second Special Society Lotteries: Government response to the HC 415 Report Committee’s Fifth Report of Session 2014–15
Session 2016–17
First Report Cyber Security: Protection of Personal Data HC 148 Online (HC 716 | HC 763)
Second Report Establishing world-class connectivity HC 147 (HC 714) throughout the UK
Third Report BBC White Paper and related issues HC 150 (HC 715)
Fourth Report Countries of Culture: Funding and support for HC 114 the arts outside London
Fifth Report Accessibility of Sports Stadia HC 62
First Special Report BBC White Paper and related issues: HC 715 Government Response to the Committee’s Third Report of Session 2016–17
Second Special Establishing world-class connectivity HC 714 Report throughout the UK: Responses to the Committee’s Second Report of Session 2016–17
Third Special Report Cyber Security: Protection of Personal HC 716 Data Online: Government Response to the Committee’s First Report of Session 2016–17
Fourth Special Cyber Security: Protection of Personal Data HC 763 Report Online: Information Commissioner’s Response to the Committee’s First Report of Session 2016–17