Governance and Regulation of the BBC (2000 word essay)

A Royal Charter and associated Service Licence has been the constitutional basis for the BBC since 1927. With the current 10 year BBC Royal Charter1 up for renewal in 2016 there is significant debate over the future of the BBC led by the Government (Culture, Media and Sports Committee, 2015). This essay discusses the proposals for governance and regulation outlined in the BBC Charter Review: Public Consultation, Green Paper (Department for Culture,Media and Sport, 2015) and the Clementi report (Clementi, A Review of the Governance and Regulation of the BBC, 2016) commissioned by the Secretary of State, specifically to review governance and regulation of the BBC. Currently the BBC is ‘governed’ by three distinct bodies, each with its own function; the BBC Trust, the BBC Executive and Ofcom2. The push for a different model of governance in the BBC has gathered momentum over the recent years as a result of a series of failures including delivery of the Digital Media Initiative (The Public Accounts Committee , 2014), serious management and editorial failings over the Jimmy Savile scandal (Smith, 2016) and the excessive severance payments to senior staff (Sherwin, 2013). It is believed that a major reason behind these failures was lack of clarity of roles, responsibilities and accountability in the BBC’s governance and regulatory framework. Critics of the current system suggest that the regulatory and oversight roles of the Trust are not independent from the BBC’s Executive, and that the Trust’s operational role potentially conflicts with the regulatory function it is also required to undertake. There has been considerable suspicion of the Government’s proposals for the BBC. The Labour Party believes that the BBC is at real risk from the Green Paper’s recommendations as they see them as a step towards privatisation of the BBC. Maria Eagle, Labour’s shadow culture secretary, said: “Under this Government the independence of the BBC is at real risk, so the chair of a new board must be appointed through an independent process. Labour will oppose any attempt by the Conservative Party to dismantle or downgrade the BBC.” (Cookson, 2016). Professor Des Freeman argues that the Green Paper “…is a short-sighted, neoliberal-inspired assault on the concept of public broadcasting and not an attempt to make the BBC more accountable to and representative of its audiences” (Freeman, 2015). His view is that the government wants to sell off public assets and that the process involves funding cuts and diminishing the scale and scope of the BBC as a public service provider. In addition, he believes that the Green Paper was influenced by press barons as a reward for supporting the Conservatives at the last election. An example of this alleged influence is the choice made by George Osborne, Chancellor of the Exchequer, to make the BBC pay the £700m cost of funding TV licences for the over-75s out of its funding settlement following a meeting with Rupert Murdock (Jasper Jackson, 2015). Such views are also held by Tom O’Malley, (Campaign for Press and Broadcasting Freedom) when commenting on the Clementi report, said “…this is recommending one more stage in a process which is seeing the erosion of public service broadcasting, through successive attempts to delimit the BBC’s activities…” (O'Malley, 2016) and Michael Klontzas, suggests that the longer term agenda within the Green Paper proposals for governance and regulation dramatically challenges the fundamental values of the BBC and the status quo of public service broadcasting (Klontzas, 2015).

The Green paper proposes three options for governance and regulation of the BBC in the next Charter period. The first option is a model based on the current arrangements with some changes to tighten the roles, responsibilities and accountabilities of both the BBC Trust and the BBC Executive. The second option suggests a new standalone regulatory organisation, and the third proposes moving more regulation to Ofcom while abolishing the BBC Trust. The paper suggested that “the latter two options would likely see the BBC having a Unitary Board” (Department of Culture, Media and Sport, 2015) and the dismantling of the BBC Trust. From the outset, its establishment was seen as a controversial decision under Tessa Jowell, the then Secretary of State (House of Lords, 2005), as there was strong support for establishment of a unitary board at that time.

Following analysis of the Trust model, Clementi concluded that it was flawed. The review addresses the issue of restructuring the BBC Trust but states that it would still leave two Boards within one organisation, with the likelihood of confused responsibilities” (Clementi, 2016). Clementi explained that “No good governance3 system will ever guarantee good outcomes, but if you have a single board with a good governance system, you know who’s responsible” (Jane Martinson, 2016). Although no one can argue against the importance of clarity of roles, responsibilities and accountabilities, the contrary view of David Elstein, Chairman of openDemocracy (an independent not-for-profit news website) is that the answer is not to “reform or replace”, but to find the right structures for each of the governance functions we need to have in place” (Elstein, 2015). He suggests that the current model should be retained, but better governance needs to be in place, although it could be asked why the present structure does not already achieve this. In an attempt to achieve independence Sir David Clementi recommended that the government should not appoint all the non-executive members of the new board. He thinks the chairman, deputy chairman together with four board members representing the four countries of the United Kingdom be appointed by the Government. The remainder should be recruited on merit by the board itself. Although having a unitary board with non-executive members seems a reasonable approach, Gustavo Manso, wrote in his paper on Independent Boards and Innovation, suggests that independent directors, with no ties to the organisation other than their directorship, may have unintended effects on corporate innovation (Manso & etal, 2015). Therefore, the future executive leadership of the BBC will need to play a crucial role in the unitary board if the BBC is to attain the necessary creative and innovative development. The proposed second option is to create a standalone regulatory model (the name currently used is OfBeeb) that would be completely distinct from the BBC and Ofcom. This would create a clear demarcation line between the BBC being both “regulator and cheerleader” (Deans, 2013). This model is supported by the BBC Trust in their response to the consultation. They suggest because the public have different expectations for the BBC in terms of higher editorial standards, accuracy and impartiality a bespoke regulatory body would apply the independent scrutiny that was needed (BBC Trust, 2015). On the other hand, an alternative view to this option put forward by the Green Paper and the Clementi Report is that a single regulator’s relationship is difficult to manage and that the BBC would have two public broadcasting regulators, one specifically focused on BBC issues, the other looking at the BBC alongside other public service and commercial broadcasters. In addition, a “lighter” role for OfBeeb focusing on the Service Licence and monitoring performance was suggested at a workshop held by the London School of Economics and Political Science (LSE Media Policy Project, 2015). The response to this model was that it could be too weak to impose regulation.

The third proposal is that Ofcom takes over all the regulation of the BBC. It could make more sense to have a department within Ofcom that has a specific role to regulate the BBC, but reporting to the Ofcom Board so that public and commercial broadcasting is wholly regulated by one body. This model would result in abolishing the BBC Trust and the creation of a unitary BBC Board. This consultation proposal is supported by the Clementi report “regulatory oversight should pass wholly to Ofcom, which is already the public service regulator for the UK’s broadcasting industry and has the ability to look at the BBC in the context of the market as a whole” (Clementi, 2016). This approach is supported by Independent Television (ITV) which perhaps senses possible commercial opportunities from such an arrangement in the future (ITV, 2015). However, there are counter arguments against this approach. Michael Starks, in his article for the Voice of the Listener & Viewer organisation (Starks, 2015) argues that putting the BBC wholly under Ofcom would be the start of a BBC subscription-based service by stealth. Dame Collette Bowe, the former chair of Ofcom also commented that Ofcom is not the right organisation to replace the BBC Trust, she said “the BBC needed more than a regulator to ensure it was meeting its public purposes” (Jackson, 2015).

Although The National Union of Journalist (NUJ) support change to the current model, they express concerns about the oversight of the BBC being passed wholly to Ofcom. Michelle Stanistreet NUJ general secretary, said “The watchdog does not have a good record on protecting the public service elements of broadcasters…” and “… It has allowed news and current affairs to be chipped away and we fear it will not safeguard the BBC’s future news output." (Stanistreet, 2016). In their response to the Green Paper consultation the Voice of the Listener and Viewer Paper questioned Ofcom’s ability to fulfil this proposed role (Voice of the Listener and Viewer, 2015). The debate and the discussions will continue, but if Ofcom takes over the regulatory role of the BBC it would be in a powerful place when setting broadcasting regulation. The mechanism used to set out what the BBC should provide and how it is delivered is the Service Licence. A Public Value Test (PVT) is used to assess the impact of any changes made to the Licence, ensuring the BBC’s role cannot be amended without formal review and consultation. The Clementi Report recommends that the Service Licence is replaced with "operating licences"4 which would be more high level and based on programme outputs. It suggests this would allow a more responsive approach to how BBC services should be provided and delivered by allowing easier focus on particular output genres – children's programmes, for example – or on tailored broadcasting for the different parts of the UK. But if Ofcom does become the regulatory body it will be relying on the BBC unitary Board to design and deliver the detail of such operating licences.

The Clementi Report suggests that improving these mechanisms will result in better governance of the BBC. In relation to PVTs, the Clementi Report covers a range of processes and potential procedures that introduce more flexibility and responsiveness to monitoring performance, whilst attempting to strengthen BBC governance. However, this focus on performance management potentially makes the BBC more vulnerable to commercial competitors should the Corporation’s performance be deemed not acceptable by Ofcom. The BBC does operate systems to demonstrate its performance in relation to public accountability. In the Green Paper and the Clementi review the key aim is to simplify and improve what is currently done around complaints handling and ensuring there is transparency of decision making and research into audience opinions to link with an overall improvement in governance and regulation. The general consensus from the Voice of the Listener and Viewer was that on the whole they had been impressed over the past nine years with the BBC Trust’s engagement with licence fee payers and the work it has done to obtain their views (Voice of the Listener and Viewer, 2015) . The political structures that oversee the BBC are the Government and Parliament, with the National Audit Office (NAO) scrutinising its spending. Again the Green Paper proposes options for the Government and Parliament to improve their scrutiny of the BBC by proposing the NAO have statutory access to the BBC’s accounts, as they do with other Government agencies. This would mean that the BBC’s Annual Report and Accounts would be under greater public scrutiny. Recent criticisms of the management of the BBC estate costs (National Audit Office, 2014), (Conlan, 2015) would support the case for closer public audit. The BBC and its supporters will respond that this will reduce the Corporation’s political independence, although the Green Paper argues that such a move would not undermine the BBC’s editorial independence.

Although the question “should the existing approach of a 10-year Royal Charter and Framework Agreement continue?” does not appear to arouse the same level of debate as to the regulatory structures and management of the BBC it underpins the framework by which the BBC delivers its services. The BBC Trust believes that the existing approach of a Royal Charter and Framework Agreement should continue, although it makes the case for an eleven-year Charter so that the next renewal period allows sufficient time for proper Government and public consideration after the 2025 General Election (BBC Trust, 2015). A similar view is held by UK Music, an umbrella body representing the collective interests of the UK’s commercial music industry in that a full year after the anticipated 2025 General Election would allow time for debate and discussion. (Kiehl, 2015). A further suggestion in the Green Paper is that systems should be put in place to have interim reviews on the Charter. Conversely, the British Film Institute believes that given the pace of technological change, it might be sensible to consider shortening the next Charter period. (British Film Institute , 2015). This links with The Telegraph speculated that the Government is considering shortening the length of the BBC Charter to five in order to make its funding model more flexible, amid the rapidly shifting media landscape (Williams, 2015).

Whatever the outcome of the debate over the length of the BBC’s Charter there needs to be appropriate time to review and consult and to respond to changes in society and technology. In addition, agreement should be reached at the beginning of each Charter period for the next renewal date. Although alternatives to the BBC Royal Charter are not discussed in the Green Paper this issue was discussed in the House of Lords in 2005 during the previous extension of the BBC’s Royal Charter. It was proposed that the BBC should be placed on a statutory basis by Act of Parliament. (Select Committee, House of Lords, 2005). But the Select Committee was of the view that, “at least for the present, the BBC should continue to be governed by Royal Charter”. Since then Lords Fowler and Inglewood, former chairmen of the House of Lords Select Committee wrote an open letter to John Whittingdale, Secretary of State, setting out their views on the future of the BBC Charter. They believe that the Royal Charter, is too reliant on the Government and allows it to “do very much what it likes”. They proposed that a statutory corporation be set up, by Act of Parliament “with a commitment to its independence”, similar to that of Channel 4. (Rawlinson, 2016). Although, there seems to be little chance any government would support this since it would potentially reduce their influence on the BBC.

Whilst there are weaknesses over the current governance and regulatory framework under which the BBC operates – with three separate bodies – there is significant suspicion over the motives of the current Government’s review. Robin Lustig, former World Service Advisor asks: "Who are the people who want to dilute the influence of public broadcasting? "They are either commercial rivals who fear they are not making as much money as they would be able to, were it not for the public service broadcasters - or they are governments who want to have more control over what's being said." (Kesby, 2015). The future governance framework for the BBC is likely to be shaped by such considerations.

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