Library Note

Royal Charters and Parliamentary Scrutiny

This Library briefing provides information on royal charters, outlining the Sovereign’s prerogative power to grant them, and briefly describing their function. It also provides an overview of two examples of royal charters—the self-regulation of the press and the BBC—and discusses Parliament’s role in their scrutiny.

Royal Charters: Overview

Royal charters incorporate a body, turning it from a collection of individuals into a single legal entity. They are granted by the Sovereign on the advice of the Privy Council and are within the royal prerogative. They are legally binding documents, and do not require parliamentary approval. Royal charters and the affairs of chartered bodies are not generally debated in Parliament.

The Privy Council advises the Monarch on the exercise of prerogative powers. Those appointed to the Privy Council mostly comprise ministers, other parliamentarians and members of the judiciary. However, its day-to-day business is transacted by those of Her Majesty’s ministers who are Privy Counsellors; that is all cabinet ministers and a number of junior ministers. The Lord President of the Council is the head of the Privy Council Office. The current Lord President is Chris Grayling, the Leader of the House of Commons.

Royal Charter of the Self-regulation of the Press

On 30 October 2013, a Royal Charter on press regulation was granted, which established the Press Recognition Panel (PRP). The PRP is responsible for certifying applications for recognition from press regulators, and to oversee any such body. The drafting of the royal charter was subject to cross-party talks between the three largest political parties at the time. The Charter stipulates that amendment to its provisions is subject to parliamentary approval. This requirement is set out in the Enterprise and Regulatory Reform Act 2013, which specifically states that the Royal Charter cannot be altered unless the changes are in accordance with the terms of the Charter.

BBC Royal Charter

The BBC was established by Royal Charter in 1927, and is subject to periodic reviews. The current Charter expires on 31 December 2016. The Government published its white paper, A BBC for the Future: a Broadcaster of Distinction, in May 2016, which set out its proposals for the new Royal Charter. There has been debate during the renewal process with regard to parliamentary scrutiny of the Charter. There have been calls for Parliament to have an increased role, with suggestions that the draft charter should be subject to parliamentary debate and to a vote, as well as calls for the BBC’s mandate and governance structure to be defined in statute.

Sarah Tudor 23 May 2016 LLN 2016/027

Table of Contents

1. Royal Charters: Background ...... 1 1.1 Granting Royal Charters: Role of the Sovereign and Privy Council ...... 1 1.2 Bodies Constituted by Royal Charter ...... 2 2. Royal Charters and Parliamentary Approval: Press Regulation ...... 3 2.1 Leveson Report: Recommendations for Legislation ...... 3 2.2 Proposals for a Royal Charter ...... 4 2.3 Royal Charter on Self-regulation of the Press ...... 6 3. Royal Charters and Parliamentary Scrutiny: BBC ...... 7 3.1 Background ...... 7 3.2 Royal Charter Review: Progress and Developments in 2016 ...... 8 3.3 BBC Royal Charter and Debate on Parliamentary Scrutiny ...... 13

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1. Royal Charters: Background

Royal charters are granted by the Sovereign on the advice of the Privy Council.1 A royal charter is a way of incorporating a body, turning it from a collection of individuals into a single legal entity. They are legally binding documents, and do not require parliamentary approval.2 Royal charters can be dated back to the 13th century.3

1.1 Granting Royal Charters: Role of the Sovereign and Privy Council

The grant of a royal charter to any organisation is an act of grace entirely within the royal prerogative.4 However, the prerogative power of the Crown to grant charters is limited in that it cannot be exercised contrary to the public good or in violation of the common law, and it must not infringe the rights of a subject.

The Privy Council advises the Monarch on the exercise of prerogative powers and certain other functions assigned to the Sovereign by acts of parliament.5 Its origins can be dated back to at least the 13th century.6 Those appointed to the Privy Council mostly comprise ministers, other parliamentarians and members of the judiciary.7 However, its day-to-day business is transacted by those of Her Majesty’s ministers who are Privy Counsellors; that is all cabinet ministers and a number of junior ministers.8 The Lord President of the Council is the head of the Privy Council Office. The Lord President is always a cabinet minister and is often the Leader of the House of Commons or House of Lords.9 The current Lord President is Chris Grayling, the Leader of the House of Commons.

Privy Council Orders

The decisions of the Privy Council are recorded as ‘Orders’, which are usually Government decisions that have been drawn up by ministers and civil servants.10 These are then approved by the Monarch as a matter of course, and have the force of law.11

Orders come in a number of different forms, but the main distinction is between orders in council and orders of council.12 Orders in Council are Orders that have been approved personally by the Monarch at a meeting of the Privy Council. They fall into two broad categories, statutory and prerogative. The Privy Council states that statutory orders are “made under any of the numerous powers contained in acts of parliament which give Her Majesty a power to make orders”. However, prerogative orders are made “under the inherent power of the Crown to act on matters for which Parliament has not legislated”. Orders of council do not require personal approval by the Monarch. These can also be these can be statutory or prerogative.

1 Privy Council, ‘Royal Charters’, accessed 12 May 2016. 2 Department for Culture, Media and Sport, Information Note on the Draft Royal Charter, 12 February 2013, p 2. 3 Privy Council, ‘Royal Charters’, accessed 12 May 2016. 4 Robert Bulling, ‘Royal Charters’, Encyclopaedia of Forms and Precedents, August 2013, vol 33; and Daniel Greenberg, ‘Royal Charters’, Westlaw Insight, 26 February 2016. 5 Privy Council, ‘Privy Council: Overview’, accessed 12 May 2016. 6 House of Commons Library, The Privy Council, 8 February 2016, p 4. 7 Department for Culture, Media and Sport, Information Note on the Draft Royal Charter, 12 February 2013, p 2. 8 Privy Council, ‘Privy Council Members’, accessed 12 May 2016. 9 House of Commons Library, The Privy Council, 8 February 2016, p 4. 10 ibid, p 5. 11 Privy Council, ‘Orders’, accessed 12 May 2016. 12 ibid.

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Prerogative orders are often used to dispatch business, such as the granting of royal charters and the affairs of chartered bodies, which is not thought to be of particular concern to Parliament, and to avoid its time being used to debate such issues.13 For instance, in 2009, the then Lord President of the Council, Baroness Royall of Blaisdon, stated in the House of Lords that:

The vast majority of the prerogative business done by the Privy Council is not significant enough for Parliament to want to take it over—for example, the affairs of chartered bodies.14

However, there are instances when matters relating to royal charters and chartered bodies have been debated in both the House of Commons and the House of Lords. Sections two and three of this paper each briefly describe a high-profile example where a royal charter has been debated in Parliament.

1.2 Bodies Constituted by Royal Charter

Charters were formerly used to grant the right to hold markets or fairs, for promoting trade by the incorporation by charter of trading companies, and to establish organisations such as universities and cities.15 Royal charters were at one time the only means of incorporating a body.16 However, bodies can now become incorporated through other methods, such as by becoming a registered body. This has meant that new grants of royal charters are normally reserved for bodies that work in the public interest such as professional, charitable, scientific, and educational or learned non-profit-making institutions or societies.17 The Privy Council states that these bodies need to “demonstrate pre-eminence, stability and permanence in that particular field”.18

The initiation of a royal charter can take place in a number of different ways.19 In most cases an existing organisation can petition the Privy Council to acquire chartered status. However, the state can also sponsor a charter, whereby a body is created for the first time at the initiation of the Government.20

There are currently over 900 chartered bodies.21 The types of bodies that are chartered include:22

 Public Bodies (and thus created through a state sponsored charter): for example, the British Council and various sports and research councils.

13 House of Commons Library, The Privy Council, 8 February 2016, p 5. 14 HL Hansard, 12 May 2009, col 1010. 15 Robert Bulling, ‘Royal Charters’, Encyclopaedia of Forms and Precedents, August 2013, vol 33; and Maurice Keen, England in the Later Middle Ages, 2003, p 140. 16 Privy Council, ‘Chartered Bodies’, accessed 12 May 2016. 17 ibid; and Robert Bulling, ‘Royal Charters’, Encyclopaedia of Forms and Precedents, August 2013, vol 33. 18 Privy Council, ‘Royal Charters’, accessed 12 May 2016. 19 Privy Council, ‘Applying for a Royal Charter’, accessed 12 May 2016; and Department for Culture, Media and Sport, Information Note on the Draft Royal Charter, 12 February 2013, p 2. 20 Department for Culture, Media and Sport, Information Note on the Draft Royal Charter, 12 February 2013, p 2. 21 Privy Council, ‘Chartered Bodies’, accessed 12 May 2016. 22 Department for Culture, Media and Sport, Information Note on the Draft Royal Charter, 12 February 2013, p 3.

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 Charities: such as, the Royal Society for the Protection of Birds (RSPB), the Royal Horticultural Society (RHS), and the Scout Association.

 Universities and Colleges: for example, the Universities of Cambridge and Oxford, King’s College, Imperial College.

 Professional Institutions: for instance, the Royal Institute of British Architects (RIBA), and the Chartered Institute of Marketing (CIM).

2. Royal Charters and Parliamentary Approval: Press Regulation

On 30 October 2013, a royal charter on press regulation was granted. It provided an example where the drafting of a royal charter was subject to parliamentary debate, and amendment to the charter is subject to parliamentary approval.

2.1 Leveson Report: Recommendations for Legislation

Background

In July 2011, the Prime Minister of the Coalition Government, David Cameron, established a two-part independent public “inquiry into phone hacking and other illegal practices in the British press”.23 Lord Justice Leveson was appointed to chair the Inquiry, and a panel of six independent assessors were selected to assist him. On 29 November 2012, Lord Justice Leveson published his report, An Inquiry into the Culture, Practices and Ethics of the Press.24 The report covered only part one of his Inquiry, which focused on the culture, practices and ethics of the media.25 Part two of the Inquiry, which proposed to examine the relationships between newspaper organisations and the police, prosecuting authorities and relevant regulatory bodies, will begin once all criminal investigations into historic phone hacking have been concluded.26

Recommendations on Press Regulation

The report made recommendations for a new self-regulatory body, which would be independent in respect of appointments and funding, with a standards code, an arbitration service, and a speedy complaint-handling mechanism.27 Lord Justice Leveson emphasised that it was “essential that there should be legislation to underpin […] and facilitate its recognition in legal processes”.28 It stated that the purpose of the legislation would be to “enshrine, for the first time, a legal duty on the Government to protect the freedom of the press”.

23 HC Hansard, 13 July 2011, col 311. In the 2010–15 Parliament, the Conservative Party and Liberal Democrat Party were in coalition government. 24 House of Lords Library, Leveson Report: Reaction, 30 November 2012; Leveson Inquiry, An Inquiry into the Culture, Practices and Ethics of the Press: Executive Summary, 29 November 2012, HC 779 of session 2012–13. 25 Leveson Inquiry, ‘Terms of Reference’, accessed 12 May 2016. 26 Further information on the current status of part two of the Leveson inquiry can be found in the House of Commons Library briefing, Press Regulation after Leveson: Unfinished Business?, 29 April 2016. 27 House of Lords Library, Leveson Report: Reaction, 30 November 2012; Leveson Inquiry, An Inquiry into the Culture, Practices and Ethics of the Press: Executive Summary, 29 November 2012, HC 779 of session 2012–13, p 17. 28 Leveson Inquiry, An Inquiry into the Culture, Practices and Ethics of the Press: Executive Summary, 29 November 2012, HC 779 of session 2012–13, p 17.

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Initial Responses

Following the publication of the Leveson report, David Cameron expressed support for its recommendations. However, on the issue of underpinning a self-regulatory body with legislation, Mr Cameron stated that:

I am not convinced at this stage that statute is necessary to achieve Lord Justice Leveson’s objectives. I believe that there may be alternative options for putting in place incentives, providing reassurance to the public and ensuring that the Leveson principles of regulation are put in place. Those options should be explored.29

The then Leader of the Opposition, Ed Miliband, urged the Government to support all of the proposals set out in the report, including the need for legislation:

I believe that Lord Justice Leveson’s proposals are measured, reasonable and proportionate, and Labour Members unequivocally endorse the principles set out and his central recommendations. We support the view that Ofcom is the right body for the task of recognition of the new regulator, and the proposal that the House should lay the role of Ofcom down in statute. We endorse the proposal that the criteria any new regulatory body must meet should be set out in statute. Without that, there cannot be the change we need. Lord Justice Leveson is 100 percent clear on that in his report.30

The then Deputy Prime Minister, and Leader of the Liberal Democrat Party, Nick Clegg, made a separate statement. He expressed his support for Lord Justice Leveson’s “core proposal […] namely, a tougher system of self-regulation, supported by new independent checks recognised in law”. He stated that “changing the law is the only way to give us all the assurance that the new regulator is not just independent for a few months or years, but is independent for good”.31

2.2 Proposals for a Royal Charter

On 12 February 2013, the Department for Culture, Media and Sport formally published its proposals for a royal charter to be created to implement Leveson’s recommendations and establish a new self-regulatory system for the press. The Department explained that cross-party discussions had been taking place and would continue over the coming weeks.32 However, it further stated that the draft royal charter had been “published outside of the normal arrangements for collective agreement” of the Coalition Government, and that it did not “reflect an agreed position between the Conservative and Liberal Democrat parties”.

The draft royal charter set out provisions for a new recognition panel to be created, which would be responsible for certifying applications for recognition from a press regulator or regulators. The panel’s functions would have been to:33

 Determine applications for recognition from regulators.

29 HC Hansard, 29 November 2012, col 449. 30 ibid, col 451. 31 HC Hansard, 9 November 2012, cols 470–1. 32 Department for Culture, Media and Sport, ‘Lord Justice Leveson Report: Regulatory System for the Press’, 12 February 2013. 33 Department for Culture, Media and Sport, Draft Operative Provisions for a Royal Charter, 12 February 2013, article 4.

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 Review whether a regulator which had been granted recognition should continue to be recognised.

 Withdraw recognition from a regulator where the recognition panel was satisfied that the regulator ceased to be entitled to recognition.

The charter could have only been amended with the written consent of the leaders of the three largest political parties in the House of Commons, and upon approval of two-thirds of both Houses of Parliament.34

In response to the publication of the draft royal charter, both the then Shadow Secretary of State for Culture, Media and Sport, Harriet Harman, and the then Liberal Democrat spokesperson, John Leech, reportedly expressed opposition to the proposal.35 In a letter to the then Cabinet Office Minister, Oliver Letwin, Ms Harman argued that the draft charter had “failed the test” of implementing Leveson, and urged that it be accompanied by statute to prevent it from being amended by ministers through the Privy Council.36 Ms Harman called for the cross-party talks to be concluded by 21 February 2013.

Following further cross-party discussions, on 18 March 2013, the Government published a revised version of the royal charter.37 The revised charter would have established a recognition panel that would approve and oversee a new independent press regulator to replace the Press Complaints Commission.38 The press would write its own code of conduct, but the regulator would decide whether the code had been breached. Under the agreement, the charter was to be submitted to the Privy Council on 8 May 2013.

On the same day, the Prime Minister was granted an emergency debate in order to lay the new draft charter before the House of Commons.39 Introducing the motion, Mr Cameron reiterated his opinion that statutory regulation was “not necessary” to regulate the media and to create a recognition body.40 He stated that the “Leveson principles” could be implemented “via a royal charter”. However, he also said that “two important but relatively small legislative changes” would need to be made. He further explained that:

[I]n order to create an incentive for newspapers to take part in the system, we should establish a system of exemplary costs and damages that would not apply to newspapers that take part. We have accepted that recommendation and will be legislating for it—it can be done only via legislation.

I will come on to the second change we are making, but we are not embedding the charter in legislation or legislating about it; we are simply repeating the words of the charter. The charter says clearly that it can be changed only if there is a vote of two

34 Department for Culture, Media and Sport, Draft Operative Provisions for a Royal Charter, 12 February 2013, article 9.2. 35 Patrick Wintour, ‘Tory Press Reforms Fail to Convince’, Guardian, 12 February 2013. 36 House of Commons Library, The Leveson Report: Implementation, 27 March 2014, p 10. 37 Department for Culture, Media and Sport, Draft Royal Charter on the Self-regulation of the Press, 18 March 2013. Further information on the cross-party talks and the various proposals for draft legislation to underpin the Royal Charter can be found in the House of Commons Library briefing, The Leveson Report: Implementation (27 March 2014). 38 House of Commons Library, The Leveson Report: Implementation, 27 March 2014, p 14. 39 HC Hansard, 18 March 2013, cols 630–80. 40 ibid, col 633.

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thirds of this House and two thirds of the House of Lords. […] We will repeat exactly that point in legislation in the Enterprise and Regulatory Reform Bill.41

He insisted that the legislation was to “protect the royal charter”, rather than to “recognise the royal charter”.42

Amendments to this effect were made to the Enterprise and Regulatory Reform Bill in the 2012–13 session, and new clauses on exemplary damages were added to the Crime and Courts Bill in the same session. On 25 April 2013, both bills received royal assent.43

On 25 April 2013, the Newspaper Society announced that a number of publishers in the newspaper industry opposed the cross-party charter.44 It stated that the newspaper industry would be presenting its own proposal for a royal charter to the Privy Council.45 According to the statement, the industry’s draft was “closely based on the draft royal charter published on 12 February”.46 On 30 April 2013, the Press Standards Board of Finance Ltd submitted its petition for a royal charter to the Privy Council.

On 8 October 2013, the then Secretary of State for Culture, Media and Sport, Maria Miller, announced that the charter submitted by the newspaper industry had not been recommended for approval by the Privy Council.47 The final cross-party charter therefore went forward to the next meeting of the Privy Council on 30 October 2013, where it received the royal seal.48

2.3 Royal Charter on Self-regulation of the Press

Recognition Panel

The Royal Charter on Self-regulation of the Press, as sealed on 30 October 2013, allowed for one or more independent self-regulatory bodies to be set up. The Charter established a recognition panel to certify applications for recognition and oversee any such body.

The Press Recognition Panel (PRP) was set up on 3 November 2014. Schedule 3 of the Charter lists 29 criteria that regulators have to meet in order to be recognised.49 If the PRP concludes that a press regulator meets the criteria, then it is known as an “approved regulator”.50 The criteria set out in schedule 3 includes: a requirement for any regulator seeking approval to be independent of the publishers they regulate; sufficiently funded; open to all publishers; and is able to provide the public with proper opportunities to raise concerns about the conduct of the regulator’s members.51 In addition, the Royal Charter requires the Panel to undertake reviews of approved regulators to ensure they continue to meet the Charter’s recognition

41 HC Hansard, 18 March 2013, col 633. 42 ibid. 43 HL Hansard, 25 April 2013, col 1546. 44 House of Commons Library, The Leveson Report: Implementation, 27 March 2014, p 14. 45 Publishers supporting the draft charter included News International, Associated Newspapers, Trinity Mirror, the Telegraph Group and Express Newspaper. 46 House of Commons Library, The Leveson Report: Implementation, 27 March 2014, p 14. 47 HC Hansard, 8 October 2013, col 46. 48 BBC, ‘Press Regulation: Privy Council Grants Royal Charter’, 30 October 2013. 49 Press Recognition Panel, ‘Frequently Asked Questions: What is the Royal Charter’, accessed 13 May 2016. 50 Press Recognition Panel, ‘Frequently Asked Questions: What is the Press Recognition Panel’, accessed 13 May 2016. 51 ibid; and Department for Culture, Media and Sport, Royal Charter on Self-regulation of the Press, 30 October 2013, schedule 3.

House of Lords Library Note I Royal Charters and Parliamentary Scrutiny 7 criteria. Recognition can be withdrawn if the regulator no longer meets the requirements. At present there are no recognised regulators. The majority of the national newspapers joined the Independent Press Standard Organisation (IPSO), which has stated that it will not be seeking recognition.52 IPSO’s members include News UK (whose publications include the Sun and the Times), the Daily Mail, Daily Telegraph and Trinity Mirror. However, the Independent Monitor of the Press (IMPRESS) has applied for recognition, and is awaiting the PRP’s decision.53

Amendments and Dissolution

The Charter requires that there is approval from both Houses of Parliament (and where relevant the Scottish Parliament), with at least a two-thirds majority in both Houses, before any amendments can be made to the Charter or before it can be dissolved.54 The Charter also stipulates that amendments must be ratified by the unanimous agreement of the Board of the Recognition Panel.55

The Enterprise and Regulatory Reform Act 2013 provided that the Royal Charter could not be altered unless the changes were in accordance with the terms of the Royal Charter, ie there had been agreement by both Houses.56 Section 96 of the Act states that:

Royal Charters: Requirements for Parliamentary approval

Where a body is established by royal charter after 1 March 2013 with functions relating to the carrying on of an industry, no recommendation may be made to Her Majesty in Council to amend the body’s charter or dissolve the body unless any requirements included in the charter on the date it is granted for Parliament to approve the amendment or dissolution have been met.57

3. Royal Charters and Parliamentary Scrutiny: BBC

The BBC is established by royal charter rather than act of parliament, and is reviewed at periodic intervals. Although its renewal does not require parliamentary approval, it is a royal charter which has often been debated in Parliament and has been scrutinised by select committees of both Houses.

3.1 Background

Incorporation of the BBC

The British Broadcasting Company was formed in 1922, when the Government licensed six radio manufacturers to start the new company.58 John Reith was its first General Manager. In 1926, the Committee on Broadcasting, under the chairmanship of the Earl of Crawford and

52 House of Lords Communications Committee, Press Regulation: Where Are We Now?, 23 March 2015, HL Paper 135 of session 2014–15, p 5; and Press Recognition Panel, ‘Frequently Asked Questions: What Press Regulators Currently Exist’, accessed 13 May 2016. 53 Press Recognition Panel, ‘Second PRP Call for Information about IMPRESS’s Application’, 4 May 2016. 54 Department for Culture, Media and Sport, Royal Charter on Self-regulation of the Press, 30 October 2013, articles 9.2–9.4 and articles 10.1–10.2. 55 ibid, article 9.5. 56 Enterprise and Regulatory Reform Act 2013, section 96. 57 ibid. 58 BBC, ‘A Short History of the BBC’, 19 April 2002.

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Balcarres, published a report which proposed that a public broadcasting corporation be set up by an “Act of Parliament or be incorporated under the Companies Act”.59 The report stated that the United States system of “uncontrolled transmission and reception is unsuited to Britain and that broadcasting must accordingly remain a monopoly.60

On 14 July 1926, the Postmaster General, Sir William Mitchell-Thomson, announced that the Government had “accepted in general” the Committee’s recommendations.61 However, he further stated that the service provided by the British Broadcasting Company would be incorporated into the British Broadcasting Corporation (BBC), which would derive its authority from a royal charter. The Postmaster General, explained to MPs that:

My chief objection to a body set up by statute is that it really tends to prejudice the position of the new body from the start by investing it in the mind of the public with the idea that in some way it is a creature of Parliament and connected with political activity. […] With that in our minds we have decided that we should not proceed to set up the new body by statute.62

Purpose of the BBC Royal Charter

The BBC was incorporated by royal charter in 1927, and has been renewed at periodic intervals since then.63 The Charter sets out the public purposes of the BBC, guarantees its independence and sets out the governance arrangements. The Charter also makes provision for an Agreement between the BBC Director-General and the Secretary of State. The Agreement provides more detail on matters outlined in the Charter and also sets out the BBC’s funding and regulation.

3.2 Royal Charter Review: Progress and Developments in 2016

The current Charter came into effect in January 2007 and is due to expire on 31 December 2016. The Royal Charter explains that the BBC “exists to serve the public interest” and that its “main object is the promotion of its public purposes”.64 It further states that:

The BBC shall be independent in all matters concerning the content of its output, the times and manner in which this is supplied, and in the management of its affairs.65

The Charter also sets out the BBC’s governance structure. The 2007 Charter established the BBC Trust and the Executive Board. Under the 2007 Charter, the main role of the Trust is to set the “strategic direction of the BBC” and provide “general oversight” of the Executive Board.66 The Board has responsibility for “delivering the BBC’s services in accordance with the priorities set by the Trust” and for “all aspects of operational management”, except that of the

59 Report of the Broadcasting Committee, 1925, 1926, Cmd 2599, p 6. 60 ibid, p 5. 61 HC Hansard, 14 July 1926, col 448. 62 ibid, cols 449–50. 63 House of Lords Library, Future Funding and Independence of the BBC, 3 September 2015, p 4; and House of Lords Library, Progress on BBC Charter Renewal, 7 March 2016, p 1. 64 Department for Culture, Media and Sport, Broadcasting: Copy of Royal Charter for the Continuance of the British Broadcasting Corporation, October 2006, Cm 6925, p 2. 65 ibid, p 3. 66 ibid.

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Trust’s resources. Rona Fairhead is the current Chairman of the BBC Trust.67 Lord Hall of Birkenhead (Crossbench) is Director-General of the BBC and chairs the Executive Board.68

The BBC derives its authority from the Royal Charter, and renewal of the Charter does not require parliamentary approval. However, the Government has undertaken to “ensure that there is an opportunity for the BBC Charter to be debated by both Houses of Parliament before it is brought into effect”.69 The Government has also made a commitment to consult the Scottish Government, the Welsh Government and the Northern Ireland Executive throughout the process of reviewing the Charter.70

The following sections provide a brief overview of recent developments in the Charter review process and a short summary of the Government’s white paper, A BBC for the Future: a Broadcaster of Distinction. Further information on the consultation process, the white paper, and a more detailed examination of the issues surrounding the Charter review can be found in the House of Commons Library briefing, BBC Charter Renewal (3 March 2016); and the House of Lords Library briefings, BBC: Future Financing and Independence (3 September 2015), and Progress on BBC Charter Renewal (7 March 2016).

Government Consultation

On 16 July 2015, the Government published the green paper, BBC Charter Review: Public Consultation, which it described as the “first stage of the process in setting a new Charter”.71 The consultation set out four broad issues for public discussion: the overall purpose of the BBC; the scale and the scope of the BBC’s services and operations; how it should be funded; and the BBC’s governance and regulation”.72

The consultation was open for twelve weeks from 16 July to 8 October 2015, and invited responses from members of the public, industry experts and other organisations. The Government received over 192,000 responses.73 In November 2015, the Secretary of State for Culture, Media and Sport, John Whittingdale, said that it was his “hope and intention” that the Government would publish a white paper in “the first half” of 2016.74

On 1 March 2016, the Government published the Summary of Responses. The paper showed that 81 percent of the respondents indicated that the BBC was serving its “audiences well”, and almost three-quarters of them believed that the Corporation should “remain independent from one or more of Government, Parliament and Ofcom”.75 Mr Whittingdale stated that the

67 BBC Trust, ‘The Trustees’, accessed 16 May 2016. 68 BBC, ‘Executive’, accessed 16 May 2016. 69 House of Lords, Written Question: BBC: Royal Charters, 1 February 2016, HL5390. 70 Department for Culture, Media and Sport, Smith Commission—Memorandum of Understanding—BBC; Memorandum of Understanding; BBC Charter Review/Welsh Government; and Memorandum of Understanding: BBC Charter Review/NI Executive, 21 October 2015. 71 Department for Culture, Media and Sport, ‘Government Begins Debate on the Future of BBC’, 16 July 2015. 72 HC Hansard, 16 July 2016, col 1120. 73 Department for Culture, Media and Sport, BBC Charter Review Public Consultation: Summary of Responses, 1 March 2016, p 5. 74 House of Lords Communications Committee, Corrected Transcript—BBC Charter Renewal: Public Purposes and Licence Fee, 17 November 2015, question 220. 75 Department for Culture, Media and Sport, BBC Charter Review Public Consultation: Summary of Responses, 1 March 2016, pp 39–41.

10 House of Lords Library Note I Royal Charters and Parliamentary Scrutiny consultation responses made clear that the public “do value the BBC”.76 However, he also noted that the responses indicated that there were areas that the BBC “falls short for some viewers”, such as reaching black, Asian and ethnic minority and young audiences, and representing the lives of people in the UK’s nations and regions.

Clementi Review

On 16 September 2015, Mr Whittingdale announced that the Government had commissioned an independent review into the governance and regulation of the BBC. It was led by the former Deputy Governor of the Bank of England, Sir David Clementi. The review was asked to make proposals in relation to: the model of governance and regulation of the BBC; the specific mechanisms of governance and regulation; and the way in which the BBC engaged with licence fee payers and the industry.77

On 1 March 2016, A Review of the Governance and Regulation of the BBC, was published by Sir David Clementi. The review recommended that regulatory oversight of the BBC should pass wholly to Ofcom, and that the BBC should have a unitary board made up of a majority of non- executive directors.78 In response to the review, John Whittingdale said that Sir David had “set out a clear, sensible vision for how the BBC can be reformed for the better”.79 Rona Fairhead argued that the model put forward by Sir David was “a structure that we broadly believe can work”.80 However, she stressed that further work would be needed to “put more flesh on those bones of the structure that he has designed”. Ms Fairhead also stated that the BBC would “work with the Government to ensure roles are clear, the structure is effective, and the BBC’s independence protected”.81

Parliamentary Committees 2015–16

Select committees in both the House of Commons and House of Lords have published reports in 2016 on the BBC Charter renewal process.

The House of Commons Culture, Media and Sport Committee announced in July 2015 that it was launching an inquiry into the BBC Charter review.82 The inquiry built upon and extended the work of the Committee’s February 2015 report, Future of the BBC, and took account of the Government’s green paper and the BBC’s own position papers. The Committee focused on six main areas relevant to the BBC Charter renewal: governance and regulation; the BBC’s international presence; production; local journalism; technology and innovation; and reshaping the culture of the BBC.83 The Committee recommended that that the BBC Board was

76 Department for Culture, Media and Sport, ‘Culture Secretary Keynote Speech to Oxford Media Convention 2016’, 2 March 2016. 77 Department for Culture, Media and Sport, A Review of the Government and Regulation of the BBC, 1 March 2016, Cm 9209, p 85. 78 ibid, p 7. 79 Department for Culture, Media and Sport, ‘Culture Secretary Keynote Speech to Oxford Media Convention 2016’, 2 March 2016. 80 BBC Trust, ‘What’s at Stake in Charter Review’, 2 March 2016. 81 BBC Trust, ‘BBC Trust Statement Following the Publication of Sir David Clementi's Review into the Governance and Regulation of the BBC’, 1 March 2016. 82 House of Commons Culture, Media and Sport Committee, ‘BBC Charter Review Inquiry Launched’, 22 July 2015. 83 House of Commons Culture, Media and Sport Committee, BBC Charter Review, 11 February 2016, HC 398 of session 2015–16, p 7.

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“reformed as a unitary board and strengthened, with the addition of an independent chair”.84 Pending the results of the Clementi review, the Committee judged that “wider accountability should be the task of a separate section of Ofcom”.85 The Committee also concluded that:

Charter renewals should be divorced from the electoral cycle, to distance the BBC from the political pressures associated with a general election, and to avoid the additional uncertainty and delay caused by any changes in government and Parliament.86

The Committee described its report as “preliminary”, and stated that it expected to conduct further work as the “Government’s intentions become clearer, especially after the promised white paper”.87

The House of Lords Communications Committee inquiry examined the public purposes of the BBC, who should set the level of the licence fee, and whether the scale and scope of the BBC were appropriate to its stated mission.88 The Committee published its report, BBC Charter Review: Reith Not Revolution, on 24 February 2016. The Committee concluded that the ‘Reithian Principles’ articulated by the BBC’s first Director-General, Lord Reith—to inform, educate and entertain—should be “reaffirmed as the mission statement of the BBC” and given greater prominence within the organisation.89 The Committee reported that it had not heard “a convincing case” for a significant reduction in the scale or scope of the BBC.90 On the setting of the licence fee, the Committee described the lack of a clear process as “unacceptable”.91 The Committee recommended that in future, the body which regulates the BBC should publish an evidence-based recommendation on the level of the licence fee; the Secretary of State should then have an obligation to accept the recommendation, or publish reasons for not doing so, with parliamentary approval required for any change to the licence fee.92

The Lords Committee also argued that that the BBC’s next Charter should last for eleven years in order to decouple it from the general election cycle.93 The Committee further recommended that:

Thereafter Charters should last for ten years to protect the impartiality and independence of the BBC and to provide stability for the BBC and the wider creative industries that relate to it.94

84 House of Commons Culture, Media and Sport Committee, BBC Charter Review, 11 February 2016, HC 398 of session 2015–16, p 10. 85 ibid, p 11. 86 ibid, p 46. 87 ibid, p 5. 88 House of Lords Communication Committee, BBC Charter Review: Reith Not Revolution, 24 February 2016, HL Paper 96 of session 2015–16, pp 13–14. 89 ibid, p 3. 90 ibid, p 8. 91 ibid. 92 ibid, p 9. 93 ibid, p 4. 94 ibid.

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White Paper on BBC Charter Renewal 2016

On 12 May 2016, the Government published its white paper, A BBC for the Future: a Broadcaster of Distinction, in which it set out its proposals for the new BBC Charter. Its key points included:

 A new mission statement for the BBC “to act in the public interest, serving all audiences with impartial, high-quality, and distinctive media content and services that inform, educate and entertain”; with an emphasis on “distinctiveness” in programme-making, and a commitment to diversity to be enshrined in the new Charter.

 A new “unitary board” to be created, replacing the existing BBC Trust and internal BBC Executive, with responsibility for ensuring that the Corporation’s strategy, activity and output are in the public interest. No more than half of the board members to be government appointees.

 Ofcom to be appointed as the external, independent regulator of the BBC.

 The licence fee to be continued for at least eleven years, and increase in line with inflation until 2021–22.

 Editorial decisions to remain the responsibility of the Director-General, and their editorial independence to be explicitly enshrined in the Charter. The unitary board would consider any issues or complaints that arise post-transmission.

 The BBC to ensure that it serves all nations and regions in the UK.

 An eleven-year charter period to be established to remove it from any political cycle, and a mid-term review to “provide a health check focusing on the governance and regulatory reforms”.

 A stronger role for the National Audit Office to scrutinise BBC spending.

 Measures to close the “iPlayer loophole”, so that those who currently view BBC on-demand programmes only, pay the same as those watching or recording it on television as it is shown live.

 All employees and freelancers who earn more than £450,000 to be named.95

John Whittingdale presented the white paper to the House of Commons on the day of its publication. Commenting on the proposals, the Shadow Secretary of State for Culture, Media and Sport, Maria Eagle, expressed concerns about the appointment of board members. She argued that “despite what [Mr Whittingdale] says”, the Board will “run the BBC” and “have influence over output and therefore over editorial decisions”.96

In reply, Mr Whittingdale emphasised that it would be the “first time” that at “least half, and possibly more than half” of the members of the BBC board would be “appointed independently

95 Department for Culture, Media and Sport, A BBC for the Future: a Broadcaster of Distinction, 12 May 2016, Cm 9242, pp 7–12; and House of Commons Library, BBC Charter Renewal, 13 May 2016, pp 28–9. 96 HC Hansard, 12 May 2016, cols 734–5.

House of Lords Library Note I Royal Charters and Parliamentary Scrutiny 13 by the BBC”.97 He further stressed that the board would have “no involvement in editorial decision making”. He stated that the Director-General “remains the editor-in-chief, and he is responsible for editorial matters”.

Lord Hall, Director-General of the BBC, said that the white paper delivered a mandate for a “strong, creative BBC”.98 He also expressed support for the proposals on the governance of the BBC, describing them as the “most significant reform in the BBC’s history”. However, he stated that there remained a difference of opinion on how the new board should be appointed:

We have an honest disagreement with the Government on this. I do not believe that the appointments proposals for the new unitary board are yet right. We will continue to make the case to Government. It is vital for the future of the BBC that its independence is fully preserved.99

He also stressed that any further expansion of the NAO’s role must include an “explicit exclusion for editorial decision-making”.100

Rona Fairhead, Chair of the BBC Trust, also stated that further debate needed to be had on the arrangements for the board in order to ensure that they achieved the “correct balance of independence, public oversight and operational effectiveness”.101 Ms Fairhead stated that the BBC would continue to discuss this with the Government.

3.3 BBC Royal Charter and Debate on Parliamentary Scrutiny

There has been debate during the renewal process with regard to parliamentary scrutiny of the BBC Royal Charter. There have been calls for Parliament to have an increased role, with suggestions that the Government should be obligated to lay the draft charter before Parliament and allow opportunity for both Houses to debate and vote on the charter, as well as calls for the BBC’s mandate and governance structure to be defined in statute.

Increased Parliamentary Scrutiny

In February 2015, the House of Commons Culture, Media and Sport Committee, then chaired by John Whittingdale, argued that Parliament must have an “increased role” in scrutinising the BBC’s Agreement with the Secretary of State, and in examining the draft royal charter.102 The Committee called for both matters to be debated on the floor of the House of Commons. The Committee thought that the Charter gave the BBC “security of tenure and independence”.103 In its 2016 report, the Committee suggested that “at least for the present”, the BBC “should continue to be governed by Royal Charter”.104

97 HC Hansard, 12 May 2016, col 737. 98 BBC, ‘BBC Response to the Government White Paper’, 12 May 2016. 99 ibid. 100 ibid. 101 ibid. 102 House of Commons Culture, Media and Sport Committee, Future of the BBC, 26 February 2015, HC 315 of session 2014–15, p 113. 103 ibid, p 7. 104 House of Commons Culture, Media and Sport Committee, BBC Charter Review, 11 February 2016, HC 398 of session 2015–16, p 6.

14 House of Lords Library Note I Royal Charters and Parliamentary Scrutiny

In 2005, the House of Lords Committee on the BBC’s Charter review argued that the “BBC’s mandate and structure should be defined in statute rather than by royal charter”.105 It stated that the “passage of an act through Parliament is more democratic, more independent and more transparent”. The House of Lords Communications Committee described the Royal Charter in 2011 as a “suitable process”, but it believed that there should be an “enhanced transparency in the renewals process”.106 It further “acknowledge[ed] that Charter renewal may not be the only appropriate method of ensuring the continuity of the BBC”. In its 2016 report, the Communications Committee stressed that the renewal process should be decoupled from the election process.107

The BBC Trust has said that the Royal Charter would “probably continue to provide the best safeguard of the BBC’s independence” but that it would like some additional “protections”.108 It suggested that there should be a “more formal parliamentary process for future Charter reviews”, and called for a “legal obligation” for the “Government to consult publicly with the BBC’s regulator as part of any funding negotiations, and to seek parliamentary approval for any change to the BBC’s funding”. The BBC Trust has also said that there was a “case for an eleven–year Charter”.

Statutory Framework

Lord Birt (Crossbench), a former Director-General of the BBC, has argued that the Royal Charter did not “safeguard” the BBC’s independence, and has called for legislation to provide a statutory framework for the BBC.109

Lord Lester of Herne Hill (Liberal Democrat) has also argued that it was “time to place the BBC on a statutory footing”, and stated that he will be drafting a bill to provide a “framework of core principles and duties governing ministers and the BBC, while leaving the detail to be covered in the Charter and the accompanying Agreement”.110 He explained that:

The bill will provide for the BBC to be a statutory corporation established by royal charter but subject to the Bill’s criteria. It will underpin the BBC’s duty as a public service broadcaster to serve the public interest […] It is important that the BBC—and nobody else—defines the scope of its public service broadcasting and its limits. The bill will protect the BBC’s independence as regards the content of its output, the times at which and the manner in which that output is supplied, and the governance and management of its affairs. The Secretary of State, other ministers of the Crown, the BBC and anyone else with responsibility for the BBC’s governance will have a duty to ensure that the BBC is able to operate independently from ministers and other public authorities in the United Kingdom.111

105 House of Lords Committee on the BBC’s Charter Review, The Review of the BBC’s Royal Charter, 1 November 2005, HL Paper 50-1 of session 2005–06, p 70. 106 House of Lords Communications Committee, The Governance and Regulation of the BBC, 29 June 2011, HL Paper 166 of session 2010–12, p 53. 107 House of Lords Communication Committee, BBC Charter Review: Reith Not Revolution, 24 February 2016, HL Paper 96 of session 2015–16, p 4. 108 BBC Trust, Initial Response to the Government’s Green Paper on BBC Charter Review, July 2015, p 4. 109 HL Hansard, 10 March 2016, cols 1455–6. 110 HL Hansard, 21 April 2015, cols 824–5. 111 ibid, col 825.

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Lord Lester argued that the existing BBC Royal Charter “is really a ministerial charter”, with no “overarching, binding principles approved by Parliament that ministers or the BBC must respect”.112 Lord Puttnam (Labour) has stated that he would be “avidly supporting” Lord Lester in “arguing in favour” of placing the BBC on a statutory footing,113 and Lord Alli (Labour), Lord Inglewood (Conservative) and Lord Pannick (Crossbench) have also expressed support for Lord Lester’s bill.114 Furthermore, Lord Pannick has suggested that a bill could be required to make the necessary amendments to Ofcom’s statutory powers in order for it to become the BBC’s external regulator, which would also provide “a very convenient opportunity to add restrictions on the powers of ministers over the BBC”.115

Lord Fowler (Conservative), the Chair of the House of Lords BBC Charter Renewal Committee in 2005, has also argued that the BBC Royal Charter “needs fundamental reform”.116 He has suggested that there are two possible courses:

We can turn the BBC into a statutory corporation like Channel 4. That has substantial attractions. With Channel 4, for example, it means that fundamental changes would have to be approved. […] That is one course. The alternative is to make the charter changes subject to approval by both Houses of Parliament. In this way, the BBC Trust proposal would have had to come to Parliament and be approved by both Houses. That is an alternative and perhaps less elaborate way of doing it.117

Lord Foster of Bath (Liberal Democrat) has also stated that Parliament should have a role in “ensuring the independence of the BBC from government interference”, and argued that either “votes in both Houses on the draft charter, or the acceptance” of Lord Lester’s “proposals for statutory underpinning of the BBC would be wise”.118

However, Lord Grade of Yarmouth (Conservative), a former Chair of the BBC Board of Governors, has argued that “one of the underpinnings of the independence of the BBC is the fact that there is never a vote on the BBC in either House”.119 He further stated “that is what has contributed the most to its independence”. Lord Sherbourne of Didsbury (Conservative) also cautioned that placing the BBC’s charter renewal into legislation might “make the process more political”.120

Government Response

Presenting the Government’s white paper on the BBC Charter to the House of Commons, the Secretary of State for Culture, Media and Sport, John Whittingdale, stated that the Royal Charter was the “constitutional basis for the BBC”.121 The white paper reiterated that the

112 HL Hansard, 21 April 2015, col 824. 113 ibid, col 807. 114 HL Hansard, 21 April 2015, col 825. 115 David Pannick, ‘Parliament Not Ministers Should be Responsible for the BBC Charter”, Times, 19 May 2016. 116 HL Hansard, 21 April 2016, col 807. 117 ibid, cols 806–7. 118 HL Hansard, 12 May 2016, col 1823. 119 HL Hansard, 11 May 2016, col 1741. 120 HL Hansard, 21 April 2016, col 835. 121 HC Hansard, 12 May 2016, col 729.

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Royal Charter was the “foundation of the BBC”, and stated that:

[The Charter] has stood the test of time and while some reforms are needed, these don’t mean the whole process of enshrining the BBC by Royal Charter should be abandoned. The Government will therefore continue the unbroken line of Royal Charters from 1927, ensuring that there is a constitutional basis for the BBC and laying out the public purpose of the corporation guaranteeing its independence and outlining its governance structures.122

The white paper further highlighted that responses to its green paper had emphasised “continued support” among both industry stakeholders and the general public for “maintaining the Royal Charter as the method by which to constitute the BBC”.123

In response to calls for there to be an opportunity for Parliament to debate and vote on the draft charter, the Parliamentary Under Secretary of State at the Department for Culture, Media and Sport, Baroness Neville-Rolfe, stated that:

[The Government] recognise how important the scrutiny of both Houses, including this House, is, and we have demonstrated that. We have had debates here which we have listened to, we have had excellent reports by the committees involved in both Houses and we have made it clear that the white paper needs careful consideration. We have informed the House that there will be a debate in the coming session.

I take the point that was made about the draft charter. I am not sure I can give an answer on that today, but I will bear it in mind. We will consider whether there should be a vote in Parliament, but I remind the House that there would be disadvantages in a vote as well as advantages.124

122 Department for Culture, Media and Sport, A BBC for the Future: a Broadcaster of Distinction, 12 May 2016, Cm 9242, p 57. 123 Department for Culture, Media and Sport, A BBC for the Future: a Broadcaster of Distinction, 12 May 2016, Cm 9242, p 57. 124 HL Hansard, 12 May 2016, col 1824.

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