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BBC Charter

Volume 774: debated on Wednesday 12 October 2016

Motion to Take Note

Asked by

That this House takes note of the drafts of the BBC’s new charter and the agreement between the Secretary of State for Culture, Media and Sport and the Corporation.

My Lords, this debate marks the conclusion of the BBC charter review.

Over the last two years, this Government have listened very carefully to the views of industry and the public, including reading more than 190,000 consultation responses. Committees of both Houses gathered evidence and issued reports. Sir David Clementi chaired a review of the BBC’s governance and regulation for the Government, and David Perry QC conducted an independent review of the sanctions appropriate for TV licensing offences. The devolved Administrations and Parliaments also contributed in a number of ways. At this stage of the review I would like to place on record my and the Government’s gratitude to all those noble Lords who made time to talk to me, officials and other Ministers in recent weeks.

To sum up, this has been a remarkable process, achieved in a limited time. I am informed that there have been 17 official bits of business on the charter review just in the Chamber of this House since last June.

It comes as little surprise that the BBC should engender the largest consultation in government history, nor that at times the debate has got rather heated, because the BBC means a great deal to a great number of people. But the Government and the BBC agree that this extraordinary public debate has allowed us to get a good outcome. The noble Lord, Lord Hall, following the publication of the draft charter, remarked:

“There has been a passionate debate over the BBC’s future. Overall, we have the right outcome for the BBC and its role as a creative power for Britain. It lays the foundation for more great programmes and journalism”.

We agree with this, and that is what we wanted to achieve. The BBC is an extraordinary national treasure, loved by audiences across the UK and around the world. The Government are absolutely clear, and the charter and agreement illustrate this, that we fully support and endorse the BBC’s scale and scope and remit, which have served the BBC well and made it into what it is today. We now have a charter and agreement that will support a BBC which continues to make world-class content that UK audiences love, which remains an impartial provider of high-quality news, is independent, transparent and accountable, and benefits the rest of the UK creative sector.

I am also very pleased by similar views voiced in the recent debates in the devolved legislatures, held for the first time as part of this charter review. Most of that feedback has been very positive and by and large concludes that the charter strengthens the BBC and delivers for the devolved nations.

Since we set out our policy proposals in a White Paper in May, we have had collaborative discussions and negotiations with the BBC and Ofcom. Indeed, we continue to work closely with both to deal with minor and technical drafting matters and on the transitional arrangements. We now have a draft charter and framework agreement which provide details of those policy proposals and have the agreement of both the BBC and Ofcom.

Time is limited, and I know that noble Lords have plenty of helpful comments to make, so let me briefly set out a few of the key policies, in particular those where we have made significant progress since the White Paper in May. I start with independence, rightly a key concern of this House. The BBC will now appoint nine members of its new unitary board, compared with five appointed by the Government, with all BBC appointments following a robust and transparent process in line with public appointments best practice. We agree with the BBC that it should appoint the majority of board members overall, as well as an equal number of non-executive board members as those appointed by the Government. I am pleased that the BBC and the Government have been able to resolve this issue. The noble Lord, Lord Hall, has remarked that he is “glad” the Government “have reconsidered”.

I also recognise that there has been a lot of concern in this House about the mid-term review. The Government have listened carefully to this. Members of this House have been concerned that this could become a sword of Damocles hanging over the BBC and that it could become another charter review. We were always clear that we wanted the health check to be sensibly constrained to certain areas, so Article 57 of the charter makes it clear that the BBC’s scale and scope will not be in the scope of the mid-term review. Nor will the BBC’s next funding settlement coincide with the mid-term review, a concern which I know that the noble Lord, Lord Alli, and others have brought up on a number of occasions.

I turn now to regulation. The charter, and the agreement in particular, set out Ofcom’s new role as the BBC’s regulator. Ofcom will monitor and review how well the BBC is meeting its mission and public purposes, regulate editorial standards, hold the BBC to account over market impacts and public value and consider appeals from the industry after it has complained to the BBC. All this presents significant change. Clearly, Ofcom will need to fill in a lot more detail on how it will do this. It is right that this should be done in consultation with the industry. It will therefore consult on its new operating framework for the BBC next year.

The noble Lord, Lord Hall, said that he wanted the BBC’s feet held to the fire regarding its distinctiveness. Ofcom will be doing this in future. I know that there has been considerable concern about how exactly this would be done, and whether it would be a vehicle for government interference. It will be no such thing. As Schedule 2 of the agreement makes clear, Ofcom will need to set regulatory requirements for the BBC in this respect, and it goes on to list a number of ways in which Ofcom could do this; for example, around genre, quality and audiences served. But ultimately, these are decisions for Ofcom to take. However, let me be clear—and this has been the crux of the debate so far: the agreement is clear in Schedule 2 that the BBC’s output and services, taken as a whole, need to be distinctive. This is not a way for the Government or anyone else, be it the regulator or industry, to pass judgment or complain about the distinctiveness of individual programmes. I hope that this important point will give noble Lords some reassurance.

We also set out that more can be done to make the BBC more transparent and accountable, given the considerable public funding that it receives. We have therefore listened to the Culture, Media and Sport Committee’s recommendation to lower the threshold above which the salaries of individuals have to be published. The new charter sets it at £150,000, which is close to the Prime Minister’s salary and in line with the wider public sector. We have discussed the role of the National Audit Office further with the BBC. We are assured that the NAO has the right experience in acting in specialised organisations such as the security services as well as highly commercial environments such as Network Rail, and we will therefore extend its remit to conduct value-for-money studies to the BBC’s commercial subsidiaries, which generate vital funding for the BBC public service television budget.

Another major theme has been the concern that the BBC should better reflect and represent each of the home nations. We agree. At a high level, among other requirements, the charter provides for a strengthened public purpose, emphasising the role the BBC plays in the creative economy across the UK’s nations and regions. There is also a new requirement to fully reflect the diverse nature of the UK and strengthened requirements around minority language provision. Further, appointments of nations’ members on the unitary board will now need the agreement of the devolved government Minister and of the Secretary of State for the England member. The charter also obliges the BBC to appear before committees and lay their annual reports and accounts in the devolved legislatures for the first time.

As I have said, we have come to the right outcome after a good process. The Government now look forward to hearing the views of both Houses before the charter is considered by the Privy Council and then given Royal Assent. These changes will secure the future of the BBC, strengthen it, and give it an unprecedented degree of independence. The world’s finest broadcaster deserves nothing less. I beg to move.

My Lords, I draw the House’s attention to my media interests as listed in the Register of Lords’ Interests.

There has been much debate about the future of the BBC, the White Paper and the charter renewal. On 2 June I wrote to the then Minister, the noble Baroness, Lady Neville-Rolfe, setting out 15 questions on a range of concerns I had that were based on three core tests that the noble Lords, Lord Lester of Herne Hill and Lord Fowler, and I had set for the White Paper. Those tests centred around the BBC’s core mission, its independence and its licence fee. I thank the noble Baroness, Lady Neville-Rolfe, for the courtesy and the care she showed towards my concerns, and I wish her the best in her new post. I also thank her for arranging for me to meet officials on 29 June and put on record my thanks to both officials for the way in which they approached that meeting and for the hard work they have put into the White Paper, the charter renewal and the draft agreement between the Secretary of State and the BBC. Finally, while I am in a thanking mood, I belatedly welcome the Minister to his new post, thank him for meeting me on Monday, and wish him the best at his department.

Many of the issues covered in those 15 questions have been resolved in a way which safeguards the public interest and allows the BBC to conduct its business free from state control. I am glad the Government have listened to many in this House and the countless organisations that contributed towards the consultation process. The framework document is stronger as a result of that.

I am left with only a couple of issues for which I would be grateful if the Minister could confirm from the Dispatch Box the Government’s intentions so as to leave commercial competitors and Ofcom in no doubt that this agreement is not designed to make the BBC less competitive or less successful. In a global media market we should want the opposite: a more competitive and a more successful BBC. The threat to the BBC is not from ITV or Sky but from global media giants. Therefore, can the Minister confirm—which I think he has already done—that in the BBC’s core mission to be distinctive, the agreement will not enable competitors of the BBC to undermine or hobble it by referring pointless complaints to Ofcom on the basis of distinctiveness?

My fear is that if I were running ITV or Sky, I would point at a successful programme and say that the BBC was not delivering distinctiveness. For example, I would say that “The Voice” is not distinctive from “The X Factor”, or that “The Graham Norton Show” is not distinctive from “Alan Carr: Chatty Man”; after all, they are both chat shows. I would say that “Countryfile” is not distinctive from “Countrywise”, or that “EastEnders” is not distinctive from “Coronation Street”. The point is that distinctiveness is subjective and risks being used as a way of stopping the BBC making popular programmes.

I have particular concern when it comes to paragraph 1 of Schedule 2. I noted in an interview with Sharon White, Ofcom’s chief executive, in yesterday’s Financial Times that she said Ofcom was still working out the details on how to measure the BBC’s distinctiveness. I fear that it will be overzealous in its application of the distinctiveness rule. I also look forward to hearing what the noble Lord, Lord Lester of Herne Hill, has to say on Ofcom—that is a trailer, in TV talk—and I want to help clarify the test for Ofcom. I believe, and I want to put it clearly on record, that it is the view of this House and the other place—having consulted my honourable friend the shadow Secretary of State for Culture, Media and Sport—and the view of the Government, from what the Minister said from the Dispatch Box, that the distinctiveness test should be over the totality of the BBC services and not individual channels, genres or programmes. Ofcom needs to take particular note of that. I hope that the Minister will reconfirm that from the Government’s perspective from the Dispatch Box.

The second area of concern is scheduling. The White Paper makes it clear that the BBC can affect competitors through its scheduling. Can the Minister confirm that by being popular and maximising its ratings the BBC will not be breaching its framework and licensing obligations? The primary yardstick of measuring success of programming on the mainstream channels has to be ratings. I do not want ratings to become a dirty word for the BBC, as the more people that watch the BBC, the better value it is for licence fee payers. I would certainly pay more just to watch my right honourable friend the former shadow Chancellor perform on “Strictly”. If the charter gets renewed, this area of scheduling is particularly important.

Once again, I thank the Minister and his department for the work they have done on the appointments process, which I think is a satisfactory outcome. Returning the policy decision on free licence fees for the over-75s to the BBC is also a good decision, and the assurances on the health check are particularly welcome—in particular, the aspects not affecting the licence fee. All those issues are to be welcomed. If the Minister can give me reassurances on distinctiveness in scheduling, I think that the agreement will be in a good place, and I certainly welcome it.

My Lords, we on these Benches welcome this debate and the words of the new Secretary of State when introducing the draft BBC charter—that she wants a strong, distinctive, independent BBC. We all do. As the Minister mentioned, the consultation process leading up to the BBC White Paper confirmed that that is what the British public also overwhelmingly want. So, despite the huffing and puffing of the last Secretary of State and the threats that he was going to blow the house down, it did not happen. Indeed, this draft charter further underpins that great institution, the BBC, and we on these Benches are grateful to the Government for listening and responding to some, if not all, of our concerns. I give personal thanks, too, to the Minister for arranging to meet me and my colleagues.

We welcome the decoupling of the charter review process from the election cycle. We welcome that the mid-term review will now come after the next licence fee settlement, and we also welcome the new unitary board, with Ofcom as regulator. However, although the appointments procedure is a considerable improvement, we on these Benches believe that all non-executives to the board should be independently appointed and that none should be government appointees. As a government statement published in March made clear, in the case of such appointments Ministers will,

“make the final decision on merit and must of course be free to reject advice from the panel on the merit of candidates”.

We do not think that that is appropriate for a body which will oversee the BBC’s day-to-day editorial and strategic decisions, including issues around political programming.

We welcome the fact that there will be no top-slicing of BBC revenue, and that index-linking of the licence fee will stay and will cover people using catch-up on iPlayer. However, we are still concerned about the process by which the funding settlement is negotiated. The covert way in which, last time, the Chancellor ensured that the BBC took on the costs of funding free TV licences for the over-75s was not appropriate. The licence fee is not public money but the public’s money. Will the Minister agree that there must be no more raids? Does he not also agree with the House of Lords Communications Committee report that:

“A new process must be established to set the level of the licence fee in a transparent way”,

and that there should be a requirement for public involvement and scrutiny?

We very much welcome the inclusion in the draft charter of a new public purpose to,

“reflect, represent and serve the diverse communities of all of the UK’s nations and regions”.

I know that my noble friend Lady Benjamin will be talking more about that. I take the opportunity here to express the gratitude of these Benches for the work that Ed Vaizey did in this area when he was Culture Minister.

Last week was one of mixed messages in this area. The diverse talent on show in the London Film Festival’s opening film, “A United Kingdom”, was cause for celebration. However, the BFI’s survey revealing that nearly 60% of the British films made over the previous decade had no black actors was clearly not. While representation on and off screen is not just the responsibility of the BBC, its reach and size means that it is key, so it must hit its own target of achieving,

“a workforce at least as diverse, if not more so, than any other in the industry”,

by 2020, because—as I am sure the Minister agrees—it is achievements that we need, not simply ambitions. So we welcome that Ofcom has indicated that its approach in monitoring this area will have a “harder edge”.

We would like to see Ofcom apply the same harder edge to the BBC’s training obligations, given its vital contribution to the development of talent and skills across the UK’s creative media industries and in journalism. Does the Minister not agree that talent and skills in the creative industries are an area we cannot afford to ignore? Their development is crucial and the BBC is a crucial part, and we believe that training and skills should be made one of its core public purposes.

Although we welcome the National Audit Office’s involvement in auditing the BBC, we are concerned that this will extend to commercial subsidiaries such as BBC Worldwide, which do not receive public funding. Why, when the NAO’s own website states:

“Profit making companies will remain responsible for the appointment of their auditors”,

is this part of the draft framework agreement?

Then there is the matter of the BBC’s independence as programme maker. While paragraph 55(7) clearly states that editorial and creative judgments should not be part of the value-for-money examination, this is seriously undermined by paragraph 55(8), which allows the comptroller to determine what this exemption means in practice. Can the Minister assure the House that he will review this anomaly, which seems to challenge the BBC’s editorial independence?

Then there is the thorny matter of distinctiveness. My noble friend Lord Clement-Jones will be going into detail on our concerns in this area, so I will confine my comments to the obvious: the BBC must be allowed the creative freedom to inform, educate and make popular entertainment programmes. “Distinct” is a weasel word—too distinct appeals to too few.

I found myself agreeing with the Foreign Secretary, Boris Johnson, who in his conference speech described the BBC as the,

“single greatest and most effective ambassador for our culture and our values”,

and as a crucial contributor to Britain’s role as a “soft power superpower”.

We have come a long way since the beginning of the year, when rumours of the demise of the BBC, as we know it, swirled through certain editorials and opinion pieces, and when, as Armando Iannucci put it, we seemed to be,

“in some artificially-concocted zone of outrage”.

It was clear what the public wanted and the Government have to a large degree responded, for which, as I said earlier, we are grateful. But this of course is a draft charter and a draft agreement, and I end by asking the Minister to continue listening. The BBC, as Sir David Attenborough says, is one of the most precious things we have.

My Lords, I welcome the long-overdue reform of the BBC’s governance set out in this draft charter and agreement, although I will suggest that the text could, with benefit, be clarified and sharpened in places.

But I begin, I am afraid, on a somewhat more critical note than that of noble Lords who have spoken thus far. I used to believe that a royal charter was an apt symbol of the BBC’s proper independence from Government and Parliament, but I know better now. Twice during the present charter we have seen Government mount raids on the BBC with far-reaching consequences, and absent any public consultation or parliamentary scrutiny whatever.

The current 2006 charter and agreement contained this clause:

“The BBC may use sums paid to it to … fund any activities properly carried on by the BBC except … those carried on for the purposes of the World Service”—

in other words, you cannot use the licence fee to fund the World Service. But in 2010 the coalition Government shamelessly ignored that clause and, indeed, required the BBC to fund the World Service from the licence fee, alongside a number of other services that had also previously been financed by Government. In a second raid, in 2015, the Government transferred to the BBC the obligation to pay for free licences for the over-75s. We all remember that.

At a time when the migration to the internet is gradually undermining the finances of UK commercial broadcasters, and when, as a consequence, we are witnessing the long-term and tragic decline of UK production, the impact of these two raids will be—over the span of a decade—to take almost exactly 25% out of the real resources available to the BBC for its core services. A massive reduction in programming is therefore simply unavoidable.

So how was such far-reaching action possible in defiance of the 2006 charter? After the World Service ambush, an amendment was quietly made by an Order in Council simply deleting the clause that I read out, which had expressly forbidden such action. Royal charters and the Privy Council emanate from Norman times and were used by tyrannical kings to bypass Parliament. They should have no place in modern times. I accept, of course, that a royal charter is a done deal on this occasion, but let us all agree that the BBC needs the protection of statute next time round. As we discuss the draft this evening, let us recognise that, at any point in the next 11 years, the charter and agreement can be changed again without reference back to Parliament. Let us recognise specifically that these clauses contain nothing to inhibit a third raid. But it is of course not too late: let us even now consider amending the charter to put an open and proper process around any such interventions during its term.

To be more positive, I wholeheartedly welcome the emphasis that the Government have placed on distinctiveness—I do not have the reservations that others have expressed so far. The root justification for a publicly funded BBC is to offer, in the round, programming that the market does not provide or underprovides; it is to stretch all of the nation’s best creative, entertainment and journalistic talents, and thereby to engage, extend and delight every kind of licence payer. However, the drafting of the charter places too much emphasis on reviewing the BBC’s services. It is as important to bring a distinctive approach to every genre, and to serve every section of the audience, as it is to consider the distinctiveness of individual networks and services. The drafting could, with benefit, underline that.

The BBC has creativity deep in its soul, but history—and I do mean history—tells us first that the BBC, like any institution, can slip off the rails, falter in specific genres, and fail to follow how society is changing and thus to meet new and emerging audience need. Secondly, history tells us that the BBC, an unusually large and very complex organisation indeed, has not always been well managed as an institution. This new regulatory and governance framework should reduce risk in both respects, but only if the key players rise to the challenge.

It is vital that Ofcom avoids box-ticking regulation—there is a bit of box ticking in the draft. The old IBA should be its exemplar. Someone has to do what generations of trustees and governors, often captured by the institution, have rarely done; that is, to call a spade a spade and identify boldly and confidently where the BBC is succeeding and where it is falling short, and to require the BBC to do something about it. For the avoidance of doubt, there were of course areas of programme weakness in my time, as there always will be. I suggest that the majesty of Ofcom’s responsibility to make judgments about the BBC’s programme performance could be more emphatic in the text.

As for the management of the institution itself, it plainly is the victim of much dialogue and compromise. A 14-person board is too large and unwieldly. It will lack intimacy and risks being ineffective. That said, the appointments to that board will now be critical. Given the intermittent failure of the BBC over the sweep of its history to manage itself well as an organisation—to be alert and strategic; to be efficient; to deal with underperformance, and so on—the board does not need another lottery selection of the great and the good but robust non-executives of wide, worldly and heavyweight institutional experience. Such individuals have emerged in the past, thankfully, but—and I say this from personal experience—only rarely.

It is good news that the chair will be involved in all appointments as it is vital to start with an overview of the required mix and not just make one incremental appointment at a time—a Whitehall failing. However, it is an odd feature of the draft, and not good practice in my experience, for the chief executive—here, the director-general—to be on the nomination committee responsible for appointing independent directors. Executives should not choose who will mark their homework.

Finally, I think that the new requirement placed on the BBC to reveal the compensation of top talent is low politics. The BBC is in the market in important ways: it must buy its electricity, recruit support workers and hire top technologists. It must do all this with prudence and care, and the board must be certain that it does. But requiring the BBC to reveal Gary Lineker’s compensation is just mischief-making. It will invade the privacy of people who are not determining how to spend the public’s money; it will frighten away talent; and it will sow unnecessary dissension. I ask the Government simply to drop this requirement.

Overall, I welcome the new framework—it is an improvement. If it is implemented well by Ofcom, and if we end up with a new, muscular BBC board, the world’s most outstanding broadcaster and the UK’s most important cultural institution will emerge even better and stronger still.

My Lords, I have been pondering what interest to declare in this debate. I have never been employed by the BBC, but have received very modest remuneration for occasional broadcasts; I listen to Radio 4 more than any other channel; I fall asleep when watching “Newsnight”, despite my best intentions; and I belong to a generation for whom, in our childhood and early life, television and radio were the BBC—in my native Cornwall in the late 1950s, there was no ITV. I say all this because I realise that the BBC is so much part of the fabric of my life that I can be an incurable romantic about it.

In some ways, the BBC is rather like the Church of England: it is both national and local, and everyone in the BBC, as in the Church of England, imagines that power is being exercised somewhere but they always believe that it is somewhere else and that they do not have any. That is true even for the people in charge—just ask the Archbishop of Canterbury, or perhaps the chair of the BBC Trust. People demand the unreasonable of both institutions while being quietly fond of them. But we are often most critical of those we love—constructively, one hopes.

The draft charter and agreement are much better than I had feared in the wake of the unseemly licence fee settlement. To make the licence fee a means of funding a particular government policy still seems to me to be inappropriate. That is especially so when the accountability of the BBC to the actual licence fee payers is rather unclear in these new arrangements. The new board’s independent remit does not really make it the voice of licence fee payers, nor can that be the role of Ofcom. It would be good to have some clarity from the Minister on where the voice of those who pay the licence fee is really heard.

We have already heard from the noble Lord, Lord Alli, that there is a word that has a high profile in the draft charter that was, I believe, entirely missing from the last BBC charter. It is, of course, “distinctiveness”, to which he referred. An information sheet from the DCMS tells us that the BBC has recognised it should become more distinctive and that the Government want to create more structures within the BBC,

“to provide audiences with world class distinctive content”.

Nowhere, though, are we told what distinctiveness is and how we would recognise it. It seems to be assumed that it is obvious. Yet, of course, as we know and as we have heard, Ofcom is to regulate this widely agreed yet ill-defined concept. I hope the Minister will comment on this.

The BBC’s first public purpose is to provide impartial news and information to help the people of this country understand and engage with the world around them. I believe we are generally extremely well served, although I have always believed there is one area where the BBC is insufficiently distinctive. It was mentioned in the consultation. It is in relation to religion. Less effort is put into interpreting a religious world than a political one, even though the world population is much more religious than it is political. Sport has a galaxy of professional pundits and commentators; religious affairs has one correspondent and not even a religion editor—partly, I suspect, because it is assumed that news and current affairs more generally can deal with religion as a minority genre. Or, perhaps, it is just too difficult to interpret an intensely religious world to what is assumed to be a secular Britain.

While there is a need for a distinctive service, the BBC has not invested sufficient resources, not least in its own religion and ethics department. I do not believe the BBC has any sort of evangelistic task, but it has an educational one, and our increasing religious illiteracy as a nation does us no favours in our understanding of and relationships with the wider world, especially the world beyond Europe.

It is peculiar what now rates in this area as a news story. I was surprised last week by the scant reference in the BBC to the most reverend Primate the Archbishop of Canterbury’s visit to Rome. Perhaps it is because Archbishops of Canterbury have been trotting to Rome so often in recent years. But for the Pope and the most reverend Primate to commission 19 pairs of Anglican and Roman Catholic bishops to engage in joint mission together, some from parts of the world where religious division is deeply rooted, was surely worthy of more attention. Or have we become so cloth-eared or cynical that we do not see an imaginative, distinctive and creative religious act for what it is? The public purposes of the BBC cover news and impartiality, education and learning, creativity and diversity. There is no mention of religion anywhere in the BBC’s public purposes. Perhaps the Minister will enlighten us on where it actually fits.

Back in June, the most reverend Primate the Archbishop of Canterbury drew attention in a speech to the need for true diversity to pay proper attention to religion. The most reverend Primate quoted the historian Simon Schama, who said:

“My generation grew up thinking that religion was completely marginal to British life, which, as for the rest of the world, has been proved more and more wrong”.

Distortions of religious beliefs and sacred texts are becoming more common in our world and are being used as political weapons. But if we are unfamiliar with the tenets and beliefs of the world faiths, we will not be able to interpret or assess them, or sort out good religion from bad.

A commitment to religious literacy among its journalists and the promotion of a more religiously literate nation would be a major and distinctive public service that the BBC could offer our country. There is a huge amount of resource around on religious literacy itself. In an age when so much of our public and political discourse is bedevilled by a rejection of complexity, this is an area where the recognition of complexity is very badly needed.

In what I suspect some would not regard as the happiest days in our island story, a couple of things we can take comfort from are, first, that we have world-class universities in this country—some of the greatest universities in the world—and secondly that we have almost certainly the best television and radio companies, with the BBC at their heart. I declare an interest straight away: that I was chairman of the BBC Trust for two years. It was not the most comfortable or happiest job I have ever done, for reasons to which I might return, but it was always an honour to be associated with the BBC, which is such a central part of our national conversation, an enormous part of the civic life of this country and admired around the world as a very great broadcaster.

I note in passing that even at the height of the awful events surrounding Jimmy Savile’s activities, the BBC was still regarded as the fourth institution in the country in which people took the greatest pride, just after Her Majesty, the Army and the National Health Service. It regularly scores on public trust so much more than any of its overwrought critics in the written media as to be embarrassing—which is, I suspect, one reason why they never report it.

At the heart of the new draft charter, which is a great improvement on what we were led to expect we might get from the previous Secretary of State—I congratulate the new Secretary of State on the progress she has made—is the laying to rest of the BBC Trust. Perhaps I can say a word without being too defensive about that. Until 2007 the BBC’s independence was defended and protected pretty well over the years by a chairman and board. If noble Lords look at the history, they were a pretty good cross-section of the British establishment in all its exotic tribalism. But it worked and they defended the independence of the institution.

Then, in the years before 2007, the BBC made a mistake. It got wrong in the run-up to the Iraq war pretty well the only thing the Government at the time got right. It was punished for it by a change in the governance at the BBC. The old board was scrapped and in its place was established the BBC Trust as a regulator, which it had from time to time to cheer, when it was allowed. When I became chairman of the BBC Trust I was told that I could call myself the chairman, but that I was not really the chairman. Indeed, the director-general was allowed to establish a board himself, which acted in parallel with the board of the BBC Trust.

The trust did a lot of good work on distinctiveness, quality of programming and commercial issues, but we sometimes made the mistake of drilling down too deep. On the other side, the executive regularly hid behind the skirts of the trust when things went wrong. We could have made the whole thing work, perhaps with the present director-general, who has done such a very good job, but there was a real problem. Very often we were dealing with issues and problems that had been created under the old board. We regularly found it difficult to find out whoever was responsible when things went wrong. There was a sort of Macavity principle: Macavity was never actually there. It was probably inevitable that we should see this change in governance. I wish the new system well and those who run it the very best of luck, working, as I said, with a great broadcasting institution.

I have one or two points briefly to make about the charter. First, I agree with what the noble Lord, Lord Birt, said about the licence fee settlement—not just the finance on the table but the way it was done. It was a scandal to do it like that and I hope that in future, the licence fee can be settled after a process of public consultation, not least consultation with the House of Commons and the House of Lords. The Select Committee here said that the present system was “unacceptable”. So it is, and it really must be changed in the future.

The balance of the board is a great improvement on what we had before. Perhaps it would make some sense if the senior independent directors were elected by the board on its own, without the Government getting involved in the process.

I have reservations about allowing the NAO and the Comptroller and Auditor-General to determine in looking at BBC expenditure what is creative, what is editorial and what is not. I think there is a tendency on the part of individuals in that institution to ambulance-chase. They should not be allowed to determine what is an editorial matter or a creative matter if the BBC itself disagrees. There should be some arbitral process along the lines that exists for the Bank of England.

I agree with the noble Lord that it is ludicrous to talk about transparency regarding what “Strictly Come Dancing” presenters are paid when there is no transparency regarding how the licence fee settlement is established in the first place. There is no public interest whatever in knowing what Gary Lineker is paid. It is merely a rather unpleasant, populist gesture towards some of our tabloids and will probably lead to pushing up talent pay rather than the opposite.

While I am grateful to the Secretary of State for improving the arrangements for the BBC in the future and while I wish it the greatest good fortune—I am sure that it will not be obliged to publish lists of all the people born in other EU countries who work for it; I am sure that that will be put on one side, even though we live in these days in which we are open for business but closed to foreigners. The new arrangements are an improvement, but I think the BBC is very often a great deal better than we deserve.

My Lords, I declare an interest: I work for the BBC as an independent contributor. Another interest is that at different times in my life I have been educated, entertained and informed by the BBC in a way that I believe is not available in any other way in any other country. As has already been said, it would puzzle an outsider to unravel why there are any doubts about the value and the greatness of the BBC. It has failings, but if you do not fail sometimes, you do not succeed at any time. Try. Fail. “Try again … Fail better”, as Samuel Beckett wrote.

If one puts aside the inherent weaknesses of large and complex organisations that the noble Lord, Lord Birt, spoke about, and some of the individuals within such organisations, what emerges is still a broadcasting phenomenon that is almost 100 years old and arguably in better shape than it has ever been. The broadcasters that I know around the world look at it with awe, as the noble Lord, Lord Patten, indicated, as do ever more listeners around the world who receive its programmes in the increasingly powerful tides of progressive globalisation which the BBC rides so successfully.

Much of weight and value has been said. I want to ground my thinking in the BBC’s briefing notes. It reaches 97% of the UK population every week, with an average of around eight-and-a-half hours of TV and more than 10 hours of radio per head. There are nine television channels, 10 national radio channels, 39 local radio stations and all the online and mobile services, including BBC3, iPlayer and, all at 40p a day.

In the BBC briefing note which all your Lordships have received there is an omission that I would like to treat as an opportunity, because, for me, the BBC is the sum of its programmes. There are comprehensive details in the note of channel after channel and station after station, but there is nothing about Radio 4. I am sure that no one is to blame; it is just W1A, or maybe it is a deliberate error. Still, for some, Radio 4 is the BBC’s pole star. It reaches almost 12 million listeners a week, about a quarter of whom are young, “future generation” listeners. There are 2.5 million podcast downloads a week, 600 hours of drama a year—it is far and away the biggest drama commissioner in the UK—1,000 documentaries or features and much more, as I am sure many of your Lordships know.

I hope your Lordships will excuse what I am about to do, but if you do not, it will not take too long. As my mentor, the late Huw Wheldon, said, you ignore the obvious at your peril. Let me mention just some of the programmes on one channel on one day—tomorrow, Thursday 13 October, 2016 on Radio 4. At midnight, there is a comprehensive news bulletin. There is the “Shipping Forecast” at 5.20 am, rightly chosen by Judi Dench as one of her desert island discs, celebrated in a fine poem by Seamus Heaney and the best way to wake up to the idea of our island’s history—as well as the crunching of all those wonderful coastline consonants. There is the state of our land on “Farming Today”, and then with a trumpet of Tweets comes the “Today” programme, with an unparalleled team, on for three hours to deliver the state of this and other nations with high-end news, features, politics and sport. We know that it is so important that if John Humphrys stops talking for more than 17.3 seconds, the PM presses the button to send our hydrogen bomb wherever it has been programmed to go.

Then three leading academics will talk about plasma, and on to the age-defying, septuagenarian “Woman’s Hour”. We have the authoritative “From Our Own Correspondent”, “You and Yours” analysing through conversation our daily life, and then another cracking news bulletin at 1 pm with Martha Kearney. We move on to drama and literature with Mariella Frostrup’s “Open Book”, and films, Eddie Mair and “Front Row”, with Ritula Shah at 10 pm. And at 11.30 pm, there is the climax and crown of the schedule, “Today in Parliament”. And did I mention “The Archers”? Billy Connolly once suggested that its title music should be our national anthem. And this excludes the comedies, quizzes and quiddities which notch up our days as surely as Big Ben. The energy and spectrum of this channel is like nothing else anywhere in the world. Nothing comes even close. It is so good that we take it for granted. I have worked out that, given the number of television, radio and other channels that the BBC delivers, Radio 4 costs us less than one penny a day.

I congratulate the BBC on arriving at such a good overall result in this charter negotiation—and, fair play, the Government have acknowledged much of the BBC’s case, worked it through and improved on it. It has changed the composition of the unitary board completely—now it will consist of nine BBC appointees and five from government. The DG will have editorial control, and the mid-term review will not consider the public purposes of the BBC nor licence fee funding. They are told that they will make distinctive programmes. I agree with my noble friend Lord Alli on this: what does “distinctive” mean? Who in Ofcom will define it? How is it better than the producers, the writers and the TV executives at defining such a thing as distinctiveness? It will be a very interesting philosophical debate. I am still rather apprehensive about what happens when the notorious Osborne/Whittingdale factor—that is, £700 million of licence fee payers’ money to be spent on social engineering for old-age pensioners—unravels in 2021. Could the BBC walk away from it? That would be very difficult, so what will be the real consequences? And there are worries about the BBC within the BBC. As Private Eye points out this morning, the world news budget is being slashed at a time when more than ever we need to state our new case to the world. Caversham, the gold standard monitoring service fatally wounded by the Cameron Government’s withdrawal of funds, will dwindle away—another loss of a world leader. We have only so much family silver.

Overall, this is a positive result for the BBC. We can see its unequalled spectrum of programmes moving to its second century with its cylinders intact and the licence fee still delivering. It is a positive result, too, for those of us who watch and listen to programmes. The noble Lord, Lord Hall, and his troops have done well and deserve our congratulations, as do the Government. He has marched them up to the top of the hill and long may they stay there. And long may they get the support they deserve and already widely enjoy from the British public. I welcome the agreement.

My Lords, I am grateful to the Minister and the Secretary of State for offering to meet me before this debate. I was prevented from doing so by illness that rendered me speechless. I am also grateful to the Minister for his explanations, adding to the library of documents we now have. I shall try not to repeat what we have already heard, much of which I completely agree with. I hope that the Government will be open minded and reflect on what Members of this House and the other place say in these debates. Surely that should be the value of consulting Parliament at this stage.

The central problem with the Government’s proposals—as raised across the House by, for example: the noble Lords, Lord Fowler and Lord Inglewood, as senior Conservatives and former chairs of the Communications Committee; the noble Lords, Lord Stevenson of Balmacara and Lord Puttnam, from the Labour Opposition; the noble Lords, Lord Birt, and Lord Pannick, the noble Viscount, Lord Colville, and the noble Baroness, Lady Deech, from the Cross Benches; and my noble friends Lady Bonham-Carter and Lord Foster of Bath—is that there are no statutory criteria or requirements that must be met in the charter or the agreement between the Secretary of State and the BBC.

That it is why I introduced a short BBC Royal Charter Bill, which should have its Second Reading next month where I hope it will have wide support. In resisting legislation, Ministers rely on the fact that for some 90 years the BBC has been governed by charter without any statutory underpinning. That is true, but now the Government’s proposals change the BBC’s governance radically by creating a powerful unitary executive board and by giving Ofcom extensive powers to regulate the BBC. What has also changed is that Parliament set a perhaps unfortunate precedent in giving effect to the Leveson report by creating statutory underpinning for a charter to create a regulator of print media. That showed that it is possible to have both a charter and statutory underpinning.

Ministers resist any attempt by Parliament to regulate their prerogative powers but it is in the public interest for Parliament to lay down fundamental principles to protect the independence and viability of the BBC, free from political interference. As a first step, building on the powerful speech by the noble Lord, Lord Patten of Barnes, I would welcome an assurance that the Government will ensure that there is proper public consultation and parliamentary scrutiny before any BBC funding settlement is agreed by adding that commitment to Clause 43 of the charter.

The drafts do not put the Government under any duty to ensure that the BBC is and remains independent. They contain no obligation to ensure that the BBC is properly funded to enable it to perform its public functions. There is no commitment to avoid further top-slicing of the licence fee. There is no suggestion that the Government will reconsider the adverse impact that the unseemly transfer of the cost of free licence fees for the elderly over 75 will have on the BBC’s funding and programming—the net result being a 20% to 25% cut in licence-fee funding.

Clause 67(4) of the draft agreement says:

“The Secretary of State may give the BBC a direction in writing that the BBC must not broadcast or otherwise distribute any matter, or class of matter, specified in the direction, whether at a time or times so specified or at any time”.

There used to be a similarly broad power of state censorship contained in an Act of Parliament. It was used to ban broadcasting by Irish terrorist organisations of any matter, including gardening programmes. The noble Lord, Lord Pannick, and I failed to persuade the Law Lords in 1991, in R (Brind and others) v Secretary of State for the Home Department, to test the compatibility of the use of that power with the free speech guarantee in Article 10 of the European convention. However, that was before the Human Rights Act 1998, which requires legislation to be read and given effect in a way compatible with the convention rights. The problem is that the power of ministerial censorship is not in legislation but in this draft agreement. What are the legally binding safeguards ensuring that the Clause 67(4) power is exercised only where necessary and proportionate to meet a pressing need, as required by Article 10 of the convention?

The Government propose to give Ofcom the power to regulate the BBC but there are no safeguards limiting Ofcom’s abi1ity to interfere with the BBC’s editorial independence. That is quite wrong and it is not a matter for Ofcom to decide; it is not for the regulator to decide the limits of its power. That matter should be in these documents and decided by Parliament. There are also no safeguards against the watering down of the BBC’s public service commitments, for example as regards children’s programming—a subject dear to my noble friend Lady Benjamin.

These proposals enable the BBC and Ministers to appoint the members of the new unitary executive board. However, the chair and other members should be appointed by an independent process free from cronyism and political bias or nepotism. That should be addressed before the charter is approved. Furthermore —other noble Lords made this point—the proposals enable Ministers to determine what “distinctive” means. That is an elusive, weasel word. The Minister did not explain its meaning and I share the concerns expressed. There is no protection of the BBC against much richer competitors challenging current and future BBC programming.

I am sorry to cast a bit of a cloud over some of this but I make these points. I hope that the Minister, his Secretary of State and their advisers will reflect on them and those made by colleagues, and will make changes to the drafts prior to placing the charter before the Privy Council. I suggest that it would be for the convenience of the House if he wrote to those taking part in the debate replying to these points, so that we see they have been considered and know what the Government will do about them.

I, too, declare an interest in having an unhealthy attachment to Radio 4, as a member of the House of Lords Communications Committee, and as a filmmaker who has worked for and in partnership with the BBC periodically over the last 35 years.

So many reports, so much briefing and lobbying, so many threats and U-turns, so many column inches, and we still have a draft charter that fails to settle many of the concerns raised by various stakeholders. In Reith Not Revolution, the report of the committee ably chaired by my noble friend Lord Best, we set out these concerns in some detail, and I believe he will address them later. Yet above all other considerations we heard that the BBC must be independent: independent financially, independent editorially and independent of government influence, answerable only to the licence fee payers who are both its investors and its audience.

I, too, have some anxiety about this word “distinctive”. Is it, at best, a badly drafted attempt to keep the BBC honest or, at worst, a Trojan horse to undermine its independence, delivering to its commercial rivals and successive Ministers an endless opportunity to challenge its programming as not being distinctive? Is the “Today” programme distinctive because John Humphrys insists on the binary opposite of whatever his interviewee just said; is it distinctive because it offers an unfettered opportunity for politicians to trail their speeches before a word has been uttered in public; or, in the age of rolling news and Twitter stream, is it simply another news source and not distinctive at all? Is “The Great British Bake Off” distinctive or merely popular? The BBC has provided hundreds of hours of food-related programing—historical, practical, political and scientific —and what is distinctive is not the part but the whole. A show in a tent that measures human endeavour in the shape of a chocolate profiterole is just one small part of its remit to educate, inform and entertain.

In his opening remarks, the Minister offered that the detail was to be determined by Ofcom, but, much as I admire Ofcom under the leadership of Sharon White, it is simply not equipped—nor should be asked—to judge. Indeed, I noticed with great admiration the reticence of Ms White when asked what programmes she would consider distinctive. The Secretary of State has a well-publicised view. The BBC’s commercial competitors have a view. But the regulator to which this vague and impossible task now falls quite sensibly does not. We need sight of that detail before this word is enshrined in the charter.

Like others, I was not a fan of the muddled duties of the BBC Trust and welcome the new board. But like my noble friend Lord Birt, I believe we need more discussion about who as well as how. The board needs programme-makers, digital expertise, those who have presided over organisations’ transformation, representation from the workforce and, most importantly, representatives of the licence fee payers. The unedifying horse-trading we have seen about who appoints whom is actually not the point. All these appointments should be skills-based and entirely free from government. However excellent any single government appointment might be, the perception will be that they are under the influence of those who appointed them, with the consequent loss of public trust.

The draft charter does accept that the licence fee settlement should be an open and transparent process involving some sort of public consultation but offers no detail or substance as to how it will be conducted. Almost without exception, those who came before the committee, whatever their other differences, agreed that a licence fee deal done in a back room, agreed by a handshake between Secretary of State and director-general, was unacceptable. The current Secretary of State could now distinguish herself from her predecessors by putting in place a transparent process that is clearly defined and separates funding from political favour.

The Reithian vision of an independent British broadcaster able to,

“educate, inform and entertain the whole nation, free from political interference and commercial pressure”,

did not anticipate a world where the commercial competitors would demand protection from the BBC. The charter determines that Ofcom keep “market impact” in mind when reviewing new and changed services. Market impact is as subjective as distinctive programming, and the provisions lack clarity, opening the BBC up to anti-competitive challenges that threaten its programme-making, schedule and future services.

The broadcast sector is vibrant and thriving and the commercial players have many admirable successes of their own. It is a mixed economy in which the BBC must be free to compete. The broadcast ecosystem allows for invention and experimentation in the public broadcast sector, with its duties to support new talent, be diverse, provide specialist programming, work in the nations and regions, and train the next generation in front of and behind the camera. Many in the creative industries cut their teeth at the BBC and end up at its competitors. If we hamper the BBC’s editorial freedom or conspire to punish its successes, ultimately we will diminish the whole sector.

Finally, we must remember that the terms of the charter and agreement were determined before the European referendum. Now more than ever we need a strong and vibrant—independent—BBC,

“to bring the world to the UK and the UK to the world”.

The Minister introduced the debate by saying that this process is at its conclusion. Listening to colleagues, I hope he will reconsider that position.

My Lords, it is worth saying at the outset that the dire and wild predictions made by some about what the Government had in store for the BBC have turned out to be very wide of the mark. It is also worth repeating what almost all noble Lords have said about the huge importance and value of the BBC to our national life and, as the noble Lord, Lord Bragg, said, to people’s everyday lives.

The draft agreement between the Government and the BBC and the draft royal charter take us to 2027, 11 years away. If we look back at the past 10 years, we have seen an amazing transformation in the media, broadcasting, subscription television, streaming and so on. There will be even greater changes in the coming decade, some of which may yet be no more than a gleam in the eye.

When I was at school, a speaker at our speech day said something I have never forgotten. He told us that we would need something much more important than GCEs, qualifications and degrees—adaptability—because the world was going to change in ways that we could not begin to imagine. The same is true for the BBC. It will need to be adaptable. So we have to look at the agreement and charter in the certain knowledge that the world in which the BBC operates will see great changes over the lifetime of this charter.

This brings me to the new constitution and the new BBC board. Its overall responsibility will be, as the draft charter says, to set,

“the strategic direction for the BBC within the framework set by this Charter and the Framework Agreement”.

But we also want the BBC to think outside the box as the world changes around it. I am sure that the current director-general can do that. I very much hope that the new board will let him.

It is also vital that the BBC does not get bogged down in bureaucracy. Under the draft agreement, the BBC has to operate under a list of specified public purposes. But please can we avoid the nightmare of a mountain of public purposes, remits, priorities, values and targets, all of them overlapping—the horror unearthed by those of us who sit on your Lordships’ Communications Committee? I remember going into my local town hall many years ago and seeing posters boasting of and listing, “Our 200 promises to you”. Of course, no employee could remember even one of them.

As the noble Lord, Lord Birt, said, the BBC is going to need a chairman and directors who are tough and robust. It is not easy being a non-exec. You have to rely on the executives to supply you with the information you need and, even more importantly, not the pile of papers that you do not need. So my advice to any potential BBC director is to ask, “How will the board be served? What information will I get? What information will I ask for?”; otherwise, the board could become the creature of the BBC executive.

I apologise to my noble friend the Minister for having another go at this but I would prefer members of the board to be given one term only; otherwise, there is a risk that they will, consciously or unconsciously, seek to curry favour in the hope of being reappointed. I say this because there are times when board directors have to dig their heels in with their chief executive, in this case a highly respected director-general. At that point, directors should not be thinking about their reappointment or even have it at the back of their minds. If the Government really want a truly independent BBC board, as they say they do, this is what they should do.

Turning to the new role being given to Ofcom, I think we all understand how unsatisfactory it has been for the current BBC Trust to act as both cheerleader and regulator and why therefore the job of regulator has been given to Ofcom, which has a wealth of experience and expertise in the regulation of the communications industry. Nothing I am about to say should be seen as a criticism of Ofcom but, rather, as my reflections on the job Ofcom is being asked to undertake.

I have no major concerns about Ofcom’s role in looking at the impact of the BBC on the competitive marketplace. It is well placed to do this, but we do not want Ofcom to decide how the BBC should be doing its job; nor, I think, does Ofcom. But let me give your Lordships one example from the draft agreement, under the heading “News and current affairs”. I quote it directly, so I have not tried to correct the rather peculiar grammar. It says:

“Ofcom must impose on the BBC the requirements they consider appropriate for securing … the programmes included in the UK Public Television Services include news programmes and current affairs programmes at what appears to them to be an appropriate level”.

It is impossible to deduce from this what will appear appropriate to Ofcom. I suspect that even Ofcom will not know for some time, so how will the BBC know whether it is likely to fall foul of Ofcom?

Let me give another example, which other noble Lords have talked about: the definition of distinctive. The definition with which Ofcom will have to grapple includes “taken as a whole” and “overall”. This gives huge discretion to Ofcom to decide what is or is not distinctive. Does Ofcom know how to interpret, assess and evaluate this? Probably not. So Ofcom will have to feel its way, building up judgments on a kind of case law basis, with the BBC again not really knowing what will fall foul of Ofcom. These are matters of subjective judgment. They cannot be easily measured and are not quantifiable.

Many years ago, a wise Treasury Minister said that the trouble with the Treasury and its equations is that it cannot quantify common sense. The same is true here. Of course somebody has to regulate the BBC. If it cannot be the BBC itself, and it cannot, then we have either to establish a brand-new regulator, which would be a huge exercise, or give it to Ofcom, which is well established. I am sure that Ofcom is well aware of the challenges it faces, but the Government may well want to look at how the new regulatory framework is working well before 2027. The mid-term review would allow the Government to do just that.

My Lords, I refer your Lordships to my interests in the register and declare my interests as a rights-holder and ex-employee of the BBC, and as a recent resident of Albert Square. I, too, welcome the Minister to the Dispatch Box and look forward to his reply at the end of the debate.

I am extremely pleased to take part in this debate and, like other noble Lords, I welcome the changes in the proposed new charter and agreement, which I believe build on public concern and the concerns of those who cherish high-quality public service broadcasting. My noble friend Lord Bragg spoke quite rightly and eloquently of the programming on a single day on Radio 4. I want to give special mention to the staff of the BBC, who pursue its values tirelessly.

The lobbying in advance of this debate has been intense, not least from the commercial broadcasting sector, which seems to believe that the BBC is a threat and would like to see its strength, dominance and success reined back even further. These are objectives I do not share, even though they are offered under the guise of greater openness and transparency. On transparency, and particularly on the subject of talent pay, I point out that the BBC is already incredibly transparent on what it pays. Any transparency should be industry-wide and not confined to the BBC, where it may restrict access to and the retention of talent. Indeed, I believe that such an approach would drive talent away. As the noble Lord, Lord Patten, alluded to, it is nothing short of pandering to governance by tabloids. We should be better than that.

I am grateful to the House of Lords Library for its extensive briefings and for the copy of the proposed charter and agreement, which I have read with interest. Although, as I said, I welcome most of the proposals, I remain deeply concerned about the following matters. The involvement of the Secretary of State and Ministers for Scotland, Wales and Northern Ireland in appointments to the board of non-executive members is unacceptable and should be rejected, even at this late stage. The independence of the BBC should be maintained at all times and never undermined by perceived political interference, benign or otherwise. The BBC is a public service broadcaster, not a state broadcaster.

The mission statement refers to public interest, yet there is no definition within the document of such public interest. Equally, article 11 of the draft charter discusses the BBC’s “Market impact” and bizarrely states:

“The BBC must have particular regard to the effects of its activities on competition in the United Kingdom”.

Yes, I smile but perhaps the Minister could tell me why it should have such regard and in what instances this would apply. Furthermore, paragraph (2) of article 11 states that the BBC must,

“seek to avoid adverse impact on competition which are not necessary for the effective fulfilment of the Mission and … the Public Purposes”.

Can the Minister clarify what is meant by an adverse impact on competition? I take note of his earlier references to Ofcom’s responsibility but I would welcome greater clarity.

I welcome that the BBC must promote technological innovation, as in article 15, but wonder why it must share its research and development knowledge and technologies. Surely, this seems to put the BBC at a commercial disadvantage.

Like other noble Lords, I reiterate my concerns expressed in previous debates about distinctiveness. There is little clarity offered within the definitions provided, and there is a real danger that the BBC could become a low market provider delivering that which is unavailable, and largely unwanted. Furthermore, the role of Ofcom in monitoring this obligation to provide distinctive output and services could easily prevent the BBC running popular programmes, as was said earlier, or developing new online services that its competitors would frown upon. With regard to its online content, we have heard complaints in this House that the BBC raises the quality threshold too high. Long may it do so, and not just in its online journalistic content.

It would be remiss of me if I did not express the concerns of the Save Our BBC campaign, which calls for a clear statement in the new charter for the BBC to remain accountable to licence fee payers. I look forward to the Minister’s response to that statement.

I believe that it is lamentable that the BBC has become an arm of social security in its financing of the licence fee for the over-75s, with all the attendant consequences.

As other noble Lords have said, we should all be rightly proud of the BBC for setting standards of excellence worldwide in journalism, reportage, news, drama and wider entertainment, including sport. That it does so for a cost of £2.80 a week should be a matter of national pride and—dare I say?—prudence. We know what the BBC costs but above all else we know its value, and we should defend it.

Therefore, let me give a further example of the BBC’s excellence. Across the 15 major UK festivals in 2016, 875 of the 2,051 performances were by artists who uploaded their music via BBC Introducing. Radio 1 broadcasts just over an hour of news on each of the three days sampled, three times as much as Capital and six times the amount broadcast by Kiss. There was more news during Radio l’s breakfast show than on Kiss across the whole day, with half-hourly Radio 1 bulletins between 6.30 am and 8.30 am. I could go on, but I think the BBC eloquently speaks for itself.

My Lords, I rise to speak in this important debate on the issues of diversity and children’s contestable funding, and I declare an interest as per the register.

I shall first concentrate on the children’s contestable fund proposal. I am most encouraged by conversations with DCMS advisers on this issue, as they have carried out in-depth discussions with organisations, such as PACT, and individuals about how the contestable fund of £20 million per year over a three-year period will be used for at-risk genres. However, there are major concerns about how the Government propose to ensure that this funding is channelled into content rather than the administration of the fund.

Some have argued that the fund should be administered by the BBC or that it should be set up as a development fund to which a commissioned project could apply for finance to ensure that the project gets to screen. However, we all know that most commercial broadcasters are not commissioning UK children’s productions, so which screen will productions end up on? Will it be the BBC, or are the Government going to compel commercial broadcasters to show children’s programmes?

More worryingly, what will happen after the three years? Will funds then be obtained by top-slicing the BBC’s overall budgets or, even more frighteningly, will they be obtained from the BBC children’s budget itself? BBC children’s programming is thriving and nothing should be done to endanger it. This is why any future measures must be designed not to harm this valued and much-loved asset. Will the Minister give some sort of clarification and indication of what the Government propose to do with regard to contestable funding and of when a firm decision will be made on how and when it will be operational?

I now turn to diversity. The new draft charter and agreement mark an unprecedented turning point for diversity and equal opportunities in broadcasting which should be celebrated. However, there are some concerns that the Government have not issued a helpful information sheet for this area, as they have done for all the other issues. Why not diversity? I hope the Minister can reassure the House that this omission will be rectified as soon as possible to allay anxieties.

The draft charter states:

“The BBC must ensure it reflects the diverse communities of the whole of the United Kingdom in the content of its output … (including where its activities are carried out and by whom) and in the organisation and management of the BBC”,

and that it must provide,

“a duly accurate and authentic portrayal and representation of the diverse communities of the whole of the United Kingdom”,

and that it must,

“ensure that it assesses and meets the needs of the diverse communities”.

That is clear, unambiguous, comprehensive and, most of all, very welcome. I hope the Minister can confirm that this diversity requirement applies to on-screen and off-screen employment from all suppliers, both internal and independent.

The agreement also provides us with the details on how the requirements in the charter will actually work, and says steps must be taken to make sure that people are aware of the BBC’s arrangements to achieve them and, furthermore, to review the arrangements and publish a report once a year on their effectiveness. This is so important because the Government’s ambitions for improving diversity and social inclusion will never be realised if we do not have clear evidence on what works and what does not work. I stress that this is not just in the BBC but across the whole of the public sector, because far too often institutions boast of good practice but then we find that “good practice” does not amount to effective action to drive diversity.

The charter and the agreement now give us what we need to make lasting change and a lasting difference. But the extent to which the diversity ambitions are realised will depend on how Ofcom applies and enforces, with full authority, the provisions. Therefore, it is essential that Ofcom confirms that it will require the BBC to publish full data in relation to all elements of diversity and equal opportunities and ensure that diversity is not pushed to the margins. It should also provide evaluation of the data.

It might also be sensible for Ofcom to set and publish minimum standards for diversity, setting the clear expectation that the BBC will make significant progress on improving diversity. If there is no progress, Ofcom can require the BBC to take further positive action in accordance with the guidance on what could be done published by the Equality and Human Rights Commission and Ofcom in August 2015.

As a member of the BBC diversity advisory panel, I am aware of the ambitious on-air and off-air diversity targets that will be set by the BBC to deliver change and lead the way by 2020. But we need to ensure these policies are sustainable and embedded in the BBC’s DNA—and that includes radio. Many people have worked, largely in vain, myself included, for over 40 years trying to advance diversity in broadcasting. Now, at last, we are on the brink of real progress, so we must not miss this opportunity to make lasting change.

I conclude by paying tribute to Ed Vaizey, the former Culture Minister, who has done so much to bring us to where we are today. Three years ago, he seemed a lone trailblazer in government for diversity; today diversity and social inclusion are at the top of the Government’s agenda. Ed Vaizey’s crucial contribution should not be forgotten.

I look forward with great optimism and joy in my heart after this epic 40-year diversity odyssey. I hope the Minister will not only celebrate this moment with me but also give the House the reassurance that diversity and the decision on children’s contestable funding will be at the top of the Government’s list of priorities.

My Lords, I welcome this debate, although I rise with some apprehension, as the register notes my membership of that endangered —nay, condemned—species, the BBC Trust. I acknowledge, too, a previous speaker in the debate, the noble Lord, Lord Patten of Barnes, who led the BBC Trust for several years with that considerable élan for which he is renowned and which was demonstrated again here this evening.

Perhaps I should also acknowledge that, earlier in my career, I worked for the BBC World Service in its then iconic home, Bush House. In many ways, those were the happiest days of my career—there was a real international atmosphere and purpose, which prepared me well for a later career in the United Nations. The strength of the World Service, much respected in this House, stems in large part from its membership of the wider BBC family.

Over the past few months, there have been many meetings between the BBC Trust and officials of the Department for Culture, Media and Sport, including the Secretary of State, Karen Bradley, about the new charter. When it was published on 15 September, the chair of the trust, Rona Fairhead, welcomed it. She noted a more transparent process for setting the licence fee, but added that the Government should go further and that future funding proposals should be subject to external scrutiny. We cannot have repeats of past settlements, much commented on in this debate, that were negotiated behind the closed steel doors of the Treasury.

The BBC cannot and should not be subject to the intense political pressure it was in 2015 when forced to take responsibility for free licences for the over-75s, a measure introduced by the previous Labour Government. If the subsequent Government disliked that measure then they should have had the political courage to repeal it, rather than the Chancellor issuing a diktat that challenged the very independence of the BBC and resulted in a 20% cut in licence fee funding. Welfare reforms cannot and should not be dumped on the BBC; it is not an arm of government, and any similar force majeure would be a serious assault on its independence. I would welcome the Minister’s recognition of that.

The draft charter is a step forward, as it recognises that the Government must consult the BBC in advance. In my view, future charters should be published no later than eight weeks in advance before a final determination is made. However, the consultation must be broader than at present, and I firmly believe that Parliament and the public should be consulted widely in future.

I return to my concerns about the World Service. That oft-stated critical purpose,

“Bringing the UK to the world and the world to the UK”,

is surely more critical now than perhaps at any time in our modern history. We are a truly international people, having made a huge contribution to the wider world, but that very engagement has also been a two-way process and the BBC should reflect that, not only in the World Service but in its domestic services, given our increasingly diverse population.

With regard to the World Service, will the Minister clarify the situation regarding the future BBC Korean service? I do not expect him to answer now, but I would be grateful if he would be so good as to write to me at some future date. There can be no doubt in this House that there is a need for a BBC Korean service in one of the most closed societies in the world. Here I acknowledge the championing by our colleague the noble Lord, Lord Alton, of human rights and the establishment of a Korean service. Now is not the time to back away from a much-needed service.

As we as a country take the now ineluctable step of leaving the EU, we must do everything we can to demonstrate that this is not a country in retreat, which might be easily deduced by many, but one that still has noble international ambitions and some of the finest institutions in the world. That is surely what the BBC is, and no European broadcaster, or for that matter North American broadcaster, would contest that statement. We must also note that the BBC is one of the few public institutions these days capable of uniting people across the UK. As a nation, we can ill afford to put that at risk.

My Lords, I begin by stating categorically that I am an unashamed admirer of the BBC in most of its works but not necessarily in all its pomp. In my view, there are a number of areas that are open to question. One of them is the lack of transparency and the need for more public scrutiny. I have no intention of taking issue with the level of salaries taken by senior staff in the corporation for, as a trade unionist, I believe that if this is the rate for the job, so be it. However, I was sorely tempted to do so on reading of a certain senior post given last week to an individual together with a substantial salary, but I resisted that temptation as it might be thought that I had a particular personal interest in so doing.

My support for the BBC is not total, however. As I have already stated, over the years I have been critical of this lack of transparency and the need for greater public scrutiny. I have attempted to raise a number of issues both in this House and in the other place, and almost always have been rebuffed by successive Governments on the grounds that the BBC’s charter is independent of the Government and there is no provision for the Government to interfere in the day-to-day operation of the BBC. That obvious statement was also made to me last year by the former Secretary of State for Culture, Media and Sport, Mr Whittingdale. In one case, he referred me to the BBC Trust, and of course I received the same response from it as I had from the Secretary of State. Of course the Government should not interfere in the day-to-day programming of the BBC, but surely, in cases where they are not interfering but merely asking for more clarification, openness and transparency from the corporation, it should be forthcoming.

My concern relates in part to a BBC programme entitled “Wanted Down Under”. This programme provides travel and accommodation to families of four or five people to allow them to spend time—generally about a week—in Australia or New Zealand to see whether they would like to settle in one or other of those countries. As I understand it, the families who are selected to make this visit to one of those countries are chosen after researching their desirability to emigrate there, the object being that if they wish to stay after finding suitable work, they can, but the BBC licence holder will pick up the tab for the total costs of their stay. Again, we do not know the cost of the programme, because we do not have that transparency, so we do not know how much the licence holder is having to cough up for the programme.

My point is clear: if that is the desire of those chosen, they ought to pay, like others who have had the same desire over the years and paid their way without the assistance of the BBC or anyone else. If those families wish to go to Australia or New Zealand, the Governments of those countries or their tourist boards should foot the bill.

Following the change of direction by the Government away from the Osborne austerity programme into an expansionist approach for our economy, I should have thought that any further exodus, however small, of our talent and skills would not be welcomed. The Prime Minister talked about more apprenticeship schemes to assist in a productivity drive, which is laudable but, as Philip Hammond said in his speech to the Tory party conference in Birmingham,

“long-term growth requires us to raise our national productivity”,

which, he pointed out, is lower than the US, France, Germany and Italy. He went on to state that that has to change if we are to build an economy that will work for Britain.

What I am suggesting may on the face of it be considered small fry, but the message is clear: the BBC should not be encouraging its viewers with an advertisement paid for by its licence holders to go to their promised land. One could argue that such an exercise is minuscule, but it is in effect blatant advertising which could have a detrimental effect on our aim to increase our productivity. I am sure that Australia and New Zealand need electricians, plumbers, engineers, mechanics and so on, but so do we, to meet the needs rightly outlined by both the Prime Minister and the Chancellor. Because of the uncertainties of Brexit, this example could be followed by other personnel in vital services such as the National Health Service, who do not need to be encouraged to do so by one of our treasured institutions.

In short, there should be no move to discourage people from going to those splendid Commonwealth countries if that is their desire. My objection is that they should not be encouraged to do so by the BBC picking up the tab for those who wish it.

I hope that the new charter will take account not just of that particular case but the overall case for more transparency and closer scrutiny by the public of what is going on in their name.

My Lords, my noble friend Lady Bonham-Carter has eloquently set out our general view on these Benches, both positive and less positive, of the draft charter and framework agreement. Other of my noble friends have put their finger on a number of other particularly important points

I want to explore two specific aspects of the framework agreement in detail—one of commission and one potentially of omission. I listened very carefully to what the Minister said but I agree with the noble Lord, Lord Alli, my noble friend Lord Lester and the noble Baroness, Lady Kidron, that the way in which the new requirement for distinctiveness is framed is a potentially serious weapon in the hands of commercial competitors to the BBC.

Paragraph 1 of schedule 2 defines distinctive as,

“substantially different to other comparable providers across each and every UK Public Service both in peak time and overall”.

There are five separate criteria set out in paragraph 1(2), each of which must satisfy this test of substantial difference. This is a much bigger hurdle than the BBC has been asked to negotiate before, and it comes close to saying that the BBC should be doing only what its commercial competitors cannot or do not want to do.

Paragraph 2(1) states that, as well as keeping all current requirements, for the first operating licence Ofcom must,

“consider the case for increasing”,

them to further distinctiveness, and that it must consider the case for new requirements.

Paragraph 2(2) then sets out in further detail what Ofcom should “have particular regard to” in increasing or setting new requirements, and specifies,

“(i) music, arts, religion and other specialist factual; (ii) comedy; and (iii) children’s programming”.

This is prescription of a kind that was abolished for commercial PSBs back in the Communications Act 2003. Moreover, it refers to those genres in terms of whether they are “underprovided or in decline” across PSB as a whole. So Ofcom, while presiding over a decline in these areas on commercial PSBs, could impose compensating obligations on the BBC. A classic example is children’s programming: expenditure has fallen drastically on the non-BBC PSBs. Is the BBC therefore to become the victim of Ofcom’s leniency as regulator of these PSBs?

We on these Benches are particularly concerned about the combination of the provisions of schedule 2 and paragraph 57 of the framework agreement, which means that competitors can complain about breaches of the onerous and highly specific schedule 2 distinctiveness requirements and force a review. It seems that a complaint can be prompted at any time by a commercial competitor. Given the wording of the framework agreement, does the Minister seriously believe that commercial competitors will not take advantage of these provisions and chip away at the broad remit the BBC currently has? Furthermore, under paragraph 12 Ofcom is now entitled at any time to carry out a “competition review” of any BBC service where it believes that it may be having,

“adverse impacts on fair and effective competition”.

This appears to be unrelated to any “material change” and can therefore be prompted at any time by competitor complaints. The impact of this on the BBC in terms of planning and gaining commercial partners could be enormous. All this could give rise to a relentless series of complaints and further erosion of the breadth of the BBC’s output—death by a thousand reviews.

Ofcom may try to resist the onslaught, but that risks it becoming a political football in a way that it has largely managed to avoid. Does the Minister accept that these are real dangers? Can he assure us that the provisions of the draft will be reviewed again to meet these criticisms?

My second main point arising from the draft framework agreement is one of omission and relates to the BBC’s role as a key provider of training and development for the UK’s media industries, referred to by my noble friend Lady Benjamin. Creative Skillset has pointed out that paragraph 13 of schedule 3 of the draft framework agreement places a duty on the BBC to train its own staff and to “work in partnership” with the rest of the industry on the development and maintenance of a highly skilled media workforce. But the training duty in the framework agreement is set out in very broad terms and is similar to the duty in the current agreement, under which the BBC has cut its investment in the BBC Academy disproportionately in recent years, by 35% between 2010 and 2014. Can the Minister confirm that the Government expect the BBC to make training and development a clear strategic priority, integral to the fulfilment of the BBC’s public purposes? Further, can he say that they expect Ofcom to set clear regulatory requirements, encompassing all the necessary elements, and to be rigorous in holding the BBC to account for its compliance?

In summary, we on these Benches agree that Ofcom has been an effective and responsible regulator, but the question is how it will use its powers over the BBC in future. Will it have adequate discretion and flexibility? First, will it have a robust approach and specific powers to reject vexatious and frivolous complaints which may be made in respect of the BBC? Secondly, how do the Government envisage Ofcom’s ability to conduct competition reviews at any time under clause 21 of the agreement being exercised, even when there are no changes in services? Thirdly, what exactly is meant by,

“adverse impact on fair and effective competition”,

specifically in the context of scheduling and the competition reviews that Ofcom will now be able to make?

Fourthly, how Ofcom goes about its duties in doing this will be critical. What leeway will Ofcom have in carrying out its regulatory functions and its duty to enforce compliance before it is open to legal challenge? I look forward to the Minister’s reply to those crucial questions.

My Lords, I begin by picking up on some points that noble Lords have made. I was very interested in what my noble friend Lord Birt said about trying to be distinctive, because in some ways you can try too hard. Noble Lords may remember the BBC’s excellent coverage of Wimbledon last year—and then it put on, on BBC 2, “Wimbledon 2Day”, which was terrible and execrable. But it had the common sense and wisdom to change it, and I am sure that it will not be there in that format next year. So we can all make mistakes, and we all do.

In fact, I made a mistake when I last spoke in this Chamber on the £150,000 cap at which salaries should be revealed. I said then that I had no real problem with my salary being revealed—it is nowhere near £150,000. Maybe what I was thinking was that it would be very good if the public were aware of what most contributors to the BBC are paid. I mean, it is really almost embarrassing sometimes. I can tell you that Gary Lineker would not put his trousers on for what they get, although we know that he will take them off for his salary, because famously he did.

Several issues of importance are under discussion these evening. I am very grateful to the Minister for giving us this opportunity to air them. I agree with many noble Lords who have talked about the need to keep government at arm’s length from the BBC, but we have to acknowledge that the Government have listened and moved some way from their initial position, if not as far as some would like. It is perhaps in the area of journalism that this issue is most important. Although I must acknowledge an interest as a BBC broadcaster and composer, I have been able to observe journalism from a fairly neutral and objective stance. In fact, I even read the news for some while, but I did not write it.

I would say—notwithstanding the example from the noble Lord, Lord Patten, of something going wrong, as it clearly did—that in my experience, successive parties, as they have come into power, so have they, as the Government of the day, found BBC interrogation and reporting to be an irritant. That is precisely what it should be if journalists are doing their job of examining, inquiring, and scrutinising the work of government. In that respect, journalism at its most probing is not unlike some aspects of the work of your Lordships’ House, which sometimes irritates the Government.

What I really want to focus on this evening is this idea of distinctiveness. If the noble Lord, Lord Alli, will forgive me, I will not talk about having a general distinctiveness but more of being a specialist in the area that I have some knowledge of—the arts, and music in particular. As I was listening, I was thinking about what is distinctive. Is Simon Rattle’s reading of Sibelius’s seventh symphony distinctive because it is set apart from others? Are the speeches of Donald Trump distinctive? They are certainly set apart from those of others, for which we are rather grateful. Is Graham Norton distinctive? I think that what the BBC does in terms of the arts, and music in particular, is incredibly distinctive. It is the only broadcaster that commissions and encourages new work—young musicians—and unusual repertoire. Much can be said about a lot of speech; perhaps we can use the same terminology.

Why is this so important? I think that I would have no difficulty in getting the Minister, indeed the Government, to agree that, in the fields of science and technology and throughout industry, R&D—research and development—is essential. It is what makes us a nation of inventors, of innovators. It is what helps us to keep ahead of the game in world trade. Just look at the people who we produce, who bring a huge amount into the economy—Sir James Dyson, the iPlayer, the world wide web. And so it is in the arts and in music. Composers, conductors and players need the space and the investment to float their ideas. That is what the BBC singularly does for all areas of music, not just classical music. Classic FM, for example, does a very successful job of providing listeners with their favourite bits of music—and very good luck to them—but they do not embrace risk, the new, the things that are essential to research and development.

If noble Lords are perhaps thinking, “Oh dear, some new music is rather difficult and challenging”, that is true—but in his day, Beethoven was described as cacophonous. Yet Beethoven is now part of our staple musical diet. He is a much-loved genius who we realise was ahead of his time. This is a really interesting thought, because “ahead of his time” is a description that we should bear in mind as we consider the freedom that we need to bestow on the BBC so that it may pass on that freedom to the composers, the writers, the directors of today. The opportunity to get it wrong is so important. Did your Lordships know that Donizetti, Bellini, and Verdi wrote a whole host of operas before they wrote the pieces that we all love and celebrate today?

Purely commercial broadcasters simply cannot hope to encourage innovation in this way, however good a job they do. The BBC does, in every branch of music. I welcome the view that ratings are not everything, that to fly the intellectual, challenging flag of innovation and adventure is a position that we should be hugely proud of. If I may say so without embarrassing him, it is what the noble Lord, Lord Bragg, does in “In Our Time”. The rest of the world salutes this excellence, in series such as the Proms and “Hear and Now”. Excellence is not gimmick; excellence is innovation and the ability to look forward, in the same way as we ask of our scientists and our industrial captains, and to develop the world that we will all encounter tomorrow.

Before the noble Lord sits down, I hope he does not mind my observing that he has just given us an excellent definition of what distinctiveness is, which should allay some of the fears of those who have spoken about it. What he said applies to every kind of genre, whether it is comedy or entertainment. Anybody who is a decision-maker in the BBC takes that set of ideas into every area of programming. That is what distinctiveness is. Does the noble Lord accept that?

My Lords, there is much in the draft charter and agreement of the BBC that I commend and welcome. However, I wish to focus on one issue above all others, independence, which I consider to be of paramount importance—that is, independence from government, Parliament and politicians and other people who potentially wish to exert undue influence.

First, I wish to make a few introductory points. The BBC belongs to everybody, even if it is the property of nobody. It does not belong to the Government; it is not a state broadcaster. It does not even belong to the licence fee payers. It belongs to everybody equally.

Secondly, we live in a world of partisan press—I have no problems with that—where the development of social media is creating an ever bigger echo chamber in a kind of broadcast version of barroom banter. All this makes the need for public service broadcasting all the more important. Of course, the BBC is at the heart of public service broadcasting in this country.

Thirdly, the BBC is a much-loved British institution; it is popular. There is nothing wrong with that. It may be illogical and perhaps nobody would have invented it in the way that it has evolved, but it is popular. We should recognise that the British people like it. I put on record that I agree with the evolution of the governance of the BBC that we see as we move away from the trust.

How do we attack independence? It seems to me there are two main ways: the first is financial and the second is political. The saying that he who pays the piper calls the tune is an old truism but no less correct for that. It therefore seems to me that the BBC’s financial settlement must be fixed and hypothecated, and for a fixed-term duration. As has already been remarked, it is absolutely no good for the Government to raid the till, regardless of their motives for doing so. Although the licence fee can clearly be criticised, it seems the best on offer, and I support it. It must not become a cash reserve for the social security budget and should be dedicated wholly and exclusively to the BBC. I echo those who have said that they think that the previous licence fee settlement was a very disappointing exercise of clandestine politics in smoke-filled rooms. Instead, we ought to have an open process that is consultative and engenders public debate both inside and outside Parliament.

It is also important to remember that the Treasury may say that the BBC licence fee is a tax and define it as a tax. But in the English language it is not a tax; it is a licence for services and needs to be viewed as such.

Dealing with the problems posed by political influence may be a bit more difficult. For reasons which, if you think about it, are quite obvious, it is necessary to distinguish between Government and Parliament, because they are not coterminous. As has been said before, I am sure there may be better ways of appointing governors than the one contained in the draft charter and agreement. I certainly think that the approach envisaged for press regulation in the post-Leveson world, even though it has not yet been fully implemented, is probably a better model for the long run. However, the rules and processes that apply to appointment—particularly the observance of those rules and processes—is the most important part of it all. Although you can criticise the arrangements in the draft charter and agreement, whatever is finally done, the important thing is that the process is kept under review and honoured in the spirit as well as the letter, and that Nolan principles are properly and unequivocally applied. On top of this, I would make a specific request that the new arrangements include something new: that each governor, rather like a European Commissioner, should be required to take a specific oath “not to take instructions” before assuming office.

Perhaps the trickiest aspects of ensuring independence lie in the area of regulation and accountability/answerability. Of those two, regulation is possibly the easier. Ofcom as a separate regulator is the correct body to do this, subject of course to proper guarantees of its own independence and processes. Ofcom, the courts and, if relevant, the competition authorities should be the interface for confrontational complaints and regulation, be the complainant the Government, Parliament or a member of the public.

On accountability and answerability, I define the former as supplying information requested by law and the latter as answering legitimate questions from government and Parliament. It is of course axiomatic that they must not include matters that relate to journalistic independence and associated judgments. Within the parameters which are set out, this is fine so long as any subsequent pressures for change are not channelled direct but via Ofcom. It might follow from this that Select Committee reports of both Houses would have to be addressed as much to the regulator as to the Government.

One of the principal changes proposed by the new arrangements is that the National Audit Office becomes the corporation’s auditor. I must admit that I have reservations about that, and for exactly the same reasons as Sir Christopher Bland gave in his evidence to the Communications Committee of this House in 2011, which I then chaired, and which are repeated in its final report, The Governance and Regulation of the BBC. He said that,

“the House of Commons is deeply attracted to getting its hands on the BBC and I think there are dangers in using the NAO in an inappropriate way”.

From my own perspective, it would be better for the BBC to have its own auditor, because auditors are by definition independent and the House of Commons should be able to instruct the NAO to look into aspects of the BBC’s financial activities, very much as now. With a system of independent regulation, the consequences of the House of Commons/NAO’s criticisms would be capable of much better and more transparent resolution than at present. This is the right way to approach the question of inappropriate use of public money.

As we all know, the BBC is a child of the law, and as a public body it is also a child of Parliament and Government. It therefore follows, not least in a set of arrangements which contain sunset clauses, that from time to time, refreshment and/or changes are necessary. Traditionally, as has been said on a number of occasions, this has been done by the straightforward use of the royal prerogative via the mechanism of the royal charter, the argument being that it ensures that this aspect of the media is above political and parliamentary pressure. History suggests that this is not the case, not least because it is always possible to amend a charter by Act of Parliament if you want to.

Traditionally, it has been felt that establishing the BBC by charter and agreement is an important democratic safeguard, yet the more you look at it, the more it becomes all words and no substance. However, if it is wished that it continues to be established in this mode, the precedent of the relatively recent and—as I, or as the noble Lord, Lord Lester, said—not fully introduced processes for press regulation offer the possibility of Parliament overseeing the Government’s potentially damaging exercise of the royal prerogative. It is desirable that there are proper safeguards over the Government’s use of the royal prerogative. This subject is of direct relevance not only to the BBC.

I recognise that I and many others have made points to the Minister that he cannot be expected to answer instantly. I therefore request that he undertake to respond to all the points in writing, with a copy placed in the Library and posted on the web, cross-referred to this debate.

As I said in opening, I have focused my remarks on independence, because that, above everything else, must be the core attribute of the BBC. It is not a state broadcaster and must never be allowed to become one.

My Lords, I too declare that I am a former employee of the BBC—but in the face of so many senior luminaries of the BBC, I should point out that I was a humble Scottish economics correspondent. My son works for BBC Children in Need, so I suppose his boss is Pudsey.

I shall take up the point that the noble Lord, Lord Inglewood, made about the National Audit Office, because I am concerned about the implications of NAO audits of the BBC. The role of the NAO will be to look at the BBC’s commercial subsidiaries. The BBC is a global commercial enterprise. How can such a huge organisation, operating globally, function within the confines of a public service auditor?

My noble friend Lord Pendry talked about value for money and the “Wanted Down Under” programme. I have an even more serious addiction than the noble Baroness, Lady Kidron, who is addicted to BBC Radio 4. I am addicted to Radio 4 but I am also addicted to the World Service, particularly during the night. The value-for-money issues surrounding such intense public sector broadcasting are very difficult to quantify. Indeed, much though I am a huge fan of “House of Cards”, written by the noble Lord, Lord Dobbs, the BBC has already revealed that the cost of two series of “House of Cards” for Netflix, viewed by 6% of the UK adult population, would allow the BBC to deliver 14 drama series, viewed by 71% of UK adults. I would love to see how the National Audit Offices manages to deal with that.

A number of references have been made this evening to training. The BBC’s training function has historically been the gold standard of broadcasting training, and it is regrettable that there has been a reduction in training expenditure. Not only does it create a much better environment for our creative industries by raising the skill levels of the people in those industries but—here I am speaking particularly about news broadcasting— it allows us to reach out to countries that do not have the benefit of a free media. That is an area that I would like the Minister to expand upon, if not this evening then perhaps in a letter, saying what guarantees can be given in relation to the whole provision of training.

I mentioned the BBC World Service but I have also worked for the Foreign and Commonwealth Office. Although my career is not as distinguished as that of the noble Lord, Lord Williams, there is absolutely no doubt in my mind that one of the best aspects of public diplomacy that we have is the BBC World Service. It comes into its own in crisis situations, and it seems absurd that the Foreign Office is now absolved of responsibility for that function. It is absolutely critical that we do not consider cutting the funding of the World Service and that it should be expanded. Like the noble Lord, Lord Williams, part of my training took place at Bush House. Sadly, Bush House is no more but the World Service was an inspirational environment. I remember as a young woman being hugely affected by the comments of Terry Waite and John McCarthy. When they were eventually released following their kidnapping, they said how significant they found it being able to listen to the BBC World Service.

Similar things can be said about BBC Monitoring. In an environment in which we are concerned about international radicalisation, it plays a key part in our ability to understand what is happening in those parts of the world to which we do not have ready and direct access. Therefore, I urge the Government to look more seriously at expanding, rather than reducing, the monitoring service. This matter was mentioned earlier this evening.

Obviously, as a Scot, I am concerned about BBC Scotland. It has already made a number of announcements about how it will meet the new commitment to recognising national identity. However, I want to say a little bit about Gaelic broadcasting. Gaelic is one of the most significant minority languages in the United Kingdom that is still used. I am not a Gaelic speaker and I do not come from a Gaeltacht, the Gaelic-speaking parts of Scotland—although I am allowed to call myself a Gaelic granny because I have a four year-old granddaughter in Gaelic-medium education, which is enormously successful.

BBC Gaelic radio has been mentioned in the charter since the 1920s but, for the first time, BBC Alba is referred to in the charter. BBC Alba is very successful; 15% of the Scottish population watch it. There has been a huge interest in Gaelic among young people, and the channel provides fantastic opportunities to develop independent production—over 100 people in the highlands and islands of Scotland work in the independent production industry thanks to the opportunities provided by BBC Alba. However, 74% of its output is repeats. Wonderful though it is to see Rhoda MacDonald—one of the most distinguished Gaelic broadcasters, and who used to be one of my special advisers—on BBC Alba, seeing her 20 years ago every week is a bit disconcerting. As most of the programmes we see on BBC Alba are repeats, that makes the channel unsustainable. It is about funding. It is necessary that the BBC, at a UK-wide level, addresses the issue of how to fund the advancement of minority languages.

I wonder whether the noble Baroness would like to say how the BBC can do that given the circumstances that I outlined earlier, in which it has effectively lost 25% of its core funding over 10 years.

I recognise that. Indeed, one of my criticisms is the reduction in funding, and we have had a number of references tonight to the change in the licence fee for the over-75s. There are areas where I would criticise the BBC. Some of those criticisms are of the bureaucratic structures around the BBC and non-programme making, which are necessary but sometimes have spiralled quite considerably out of control.

If you want to have diversity, you must recognise that there are many areas of diversity. Part of that includes minority languages. The Irish got it right to a T. They built their modern economy by recognising the value of Gaelic education in encouraging the development of modern languages. As a consequence, if you look at the number of back-office functions in Dublin for major multinational corporations, you will see that a lot of those are there due to that early investment in the Gaelic language and, through that, in modern languages. I do not, therefore, dispute what the noble Lord says about the impact of cuts; they are very considerable indeed.

My time is up. As somebody who was a BBC news trainee, I know that the worst crime is to go into the pips. However, one of the most important things for us to recognise is that there is a lot of bitching about the BBC. It is that same kind of negativity that has got us into problems with Brexit and so on. The BBC is probably one of the best standard bearers of British values and democratic values that this country can provide.

My Lords, I want to preface my remarks by reminding the House that the BBC and the renewal of its charter as contained in this draft was not a foregone conclusion. The BBC as we know it was in real danger of emasculation. The constant, almost daily, drip of negative stories about the BBC in some media outlets, and the so-called informed leaks and misinformation, were a concern for many. Against this backdrop, it was good to hear the voices of reason and sanity reminding us what a revered organisation the BBC is, both nationally and worldwide.

I sat in on a number of debates in which noble Lords across all Benches spoke with objectivity and passion about how important the BBC is to us. I particularly remember the inside knowledge shown by our own Lord Speaker, who regularly rose from the Conservative Benches to defend the BBC. The work of the House of Lords Communication Committee was also invaluable, and, of course, the public response meant that no Government could turn their back on what was being said.

So now we have a draft charter and I congratulate the Government and the BBC on it. The charter and the licence fee are guaranteed for the next 11 years. The Government have listened to the concerns about the make-up of the unitary board, and yes, the BBC is a public service broadcaster, not a state broadcaster. I share the concern of the noble Lord, Lord Birt, about the size of the board and how crucial the appointment of those members to it is.

A number of issues still need consideration. We have heard a lot about distinctiveness. The BBC is distinctive and will continue to produce distinctive programmes. It surely does not mean that every programme has to pass a test or hallmark—excuse the pun—of distinctiveness. It does mean that the BBC should be at the vanguard of producing distinctive and original programmes, and, dare I say it, popular programmes.

The other concern is over talent pay. This is mean and measly. If it is about public money—it uses public money so it should be declared—that argument should be true wherever public money goes. So why are we not publishing the amount that chief executives of academies earn, or highly paid principals of academies? This is a ridiculous proposal that will have the effect of poaching talent and increasing costs. Thinking about it, if a particular star is working for an independent that is producing a programme for the BBC, their salary does not have to be revealed. It makes a nonsense of what is being proposed.

I accept up to a point what the noble Lord says, but the fact is Mr John Humphrys is not poachable by anybody. He knows exactly what salary is being paid to whichever politician he is interviewing at any point in time, but that politician does not know what his salary is and they ought to.

So do I, as a former head teacher, know the salary of the chief executive of a particular academy chain? No, I do not, if that is the argument.

I turn to radio. There has been much debate over the course of the charter review process about the extent to which BBC services are distinctive compared with those offered by the commercial sector. UK Music has run the campaign #letitbeeb in support of the BBC’s existing music services. It has argued and shown that 75% of all music tracks played across the BBC radio stations did not appear on commercial services. While it welcomes that Ofcom is being given powers within the framework agreement to consider the extent to which Radio 1 and Radio 2 promote UK artists, the new powers conferred on Ofcom should not be used as a means to introduce quotas, which might adversely affect the distinctiveness of the BBC’s current music output.

Local radio is important to the identity and well-being of local communities. Local commercial radio is increasingly disengaging from the fabric of local communities, as its business model in an increasingly competitive commercial market moves towards local radio station mergers and a national provision with local opt-outs for news, sport and weather. The 39 BBC local radio stations are more important than ever to the identity of the communities they serve. The proposed local news partnership to support local journalism is a welcome initiative.

I support my noble friend Lady Benjamin and her comments about the importance of children’s programming. She has long been a campaigner on this issue and I congratulate her on the tremendous work she has done on it. In 2014, the BBC spent £84 million on original children’s programmes, with barely £3 million spent by commercially funded public service broadcasters. The proposal of a small amount of contestable funding is welcome, but even if commercial PSBs could be enticed back into commissioning children’s programmes, should the licence fee payer subsidise profitable commercial organisations that no longer see a commercial market for children’s content? What about engagement with children and parents on the role and significance of advertising free children’s services?

The BBC charter debate around children’s content has been dominated by industry and production interests. Perhaps we need also to reflect on the views of children and young people themselves. What about the BBC showing faith in young people by giving them an advisory committee of their own? There is an urgent need for all PSBs to cater for children older than 12. Such a need has been reinforced by Channel 4’s inability to deliver on its obligations to provide programming of appeal to older children, particularly 10 to 14 year- olds, a fault which Ofcom has noticed but has apparently been unable to address.

The next 11 years will see the broadcasting landscape change beyond recognition. It is important that the BBC charter and Ofcom regulations do not inhibit the BBC in responding and adapting to these new challenges.

My Lords, I speak as chair of your Lordships’ Select Committee on Communications. The committee spent nine months on its inquiry into the BBC’s charter, publishing its report, Reith not Revolution, earlier this year. We had decided against investigating new governance and regulatory arrangements for the BBC because others were doing so, so I have nothing to share with your Lordships on those important matters. Instead, we looked at the fundamentals: the purposes of the BBC, its scale and scope, the process for its funding and the period over which the charter should run.

Broadly, although we heard calls for radical changes to the nature and role of the organisation and the way it could raise its income, we concluded that there should be no such dramatic alterations to the BBC’s overarching purposes or its scale and scope; that funding by means of a licence fee should be maintained; and that the new charter should last for a full 11 years this time, to provide continuity and freedom from government influence as well as to avoid the hazards of the electoral cycle.

In the event, the Government accepted this case, taking on board some modest tweaks to the current processes, and the significant changes in the draft charter concentrate on governance and regulatory measures. This is clearly a happy outcome from the committee’s perspective, and it accords with the evidence that we received and the public’s strongly expressed opinion on the subject.

My anxiety when reading the White Paper and before seeing the draft charter was that the new settlement might be effective only for five years, not 11, because it could be up-ended by the planned mid-term review. This exercise, I feared, could be an unwelcome opportunity to reopen Pandora’s box and revisit all the issues around purpose, scale and scope which the committee hoped had been put to bed for a good decade. I raised this worry with Ministers on several occasions and requested that the charter make plain that the interim review should be confined to looking at the new regulatory and governance arrangements. It is therefore good to see these limitations on the scope of the interim review explicitly spelled out in the draft charter in just the terms that I know your Lordships’ Communications Committee would wish. I thank the Ministers for this section in the draft charter.

However, a nagging doubt remains. It concerns the basis for deciding on the BBC’s funding settlement. The licence fee system is, quite rightly in the committee’s view, set to continue, with the extension to cover the new ways in which the BBC’s output is accessed online. However, our report stressed the unsatisfactory way in which the licence fee was set last time around: a deal done behind locked doors with no public consultation and transparency. Many noble Lords have tonight criticised this clandestine—some have said scandalous—process. Now the draft charter suggests that in 2022 government will decide on the funding settlement—that is, the level and scope of the licence fee—but it is silent on any wider consultation about it.

Because the BBC is, of course, entirely dependent on the level of funding it receives from the public, the Government’s unfettered ability to decide on the licence fee is of the greatest significance. If there is the possibility of major changes in five years’ time entirely at the discretion of the Secretary of State then the sword of Damocles referred to by the Minister will still constantly hang over the BBC’s management. This power over the purse gives the Government a commanding influence over the BBC, not directly through the charter but outside it.

Our committee saw an important role for the independent regulator, Ofcom, in making a recommendation on the level of the licence fee based on proper evidence. Although the Secretary of State could reject that advice from Ofcom, we stressed that if they did so they should explain their reasons.

We also strongly recommend public engagement in that decision to moderate what could otherwise be a constant threat to the BBC’s independence. Your Lordships’ committee would certainly be strongly opposed to another behind-the-scenes deal, perhaps accepted by the BBC under duress. Surely the lesson from the major rows last time, including the controversy over the cost of free TV licences for the over-75s, was that a transparent process and public discussion on this issue is essential. Licence fee payers should surely have a voice in what they must pay. Can the Minister give some reassurance that the five-year review of the licence fee, like the 11-year review of the charter itself, will be subject to proper openness, public consultation and—I suggest—consideration by both Houses of Parliament?

My Lords, I started off by looking at whether I should make this speech at all. I read what I said last time, in the debate instituted by my noble friend Lady Bakewell, and thought maybe I should not as I said then most of what I want to say now. However, I will say several things, which I hope will be brief.

First, as a Scot I do not want to see the Scottish Parliament in control of a BBC Scotland. I do not want the Scottish Parliament to have regulation of the broadcasting or internet services in Scotland. Lastly, maybe most mundanely but also most importantly, I do not want a “Scottish Six”. In other words, I do not want to see an hour-long Scottish programme at six o’clock. One has only to listen to “Good Morning Scotland” on the radio to know that that is not something any Scot in his right mind would want. By the way, my wife always insists on turning on BBC Radio Scotland on the bedside radio, not because she is interested in listening to the news or even the weather forecast in Scotland but because it puts her back to sleep. I said, “Let’s change it to Radio 4”, and she said, “But Radio 4—the ‘Today’ programme—keeps me awake”. So I do not want any of that.

I welcome the Minister to his new position and I welcome this debate, but at the end of the day we are not going to vote on the charter, we cannot amend it and we cannot do anything at all but have this debate today. That is it as far as I am aware. Several noble Lords—the noble Lord, Lord Birt, in particular—said that it is time the BBC was put on a statutory basis and that we had the introduction of a Bill to establish the BBC in that way. Then the House of Commons and the Houses of Lords, in which there are many experts as we have seen tonight, would be able to look at that, examine it in detail and amend it and then we could go into that process. It may be too late for that now, but I hope that in the very near future the Government will consider it and put it in process.

I have three reasons for this. First, I must say to my noble friend Lord Cashman—

I just want to clear up a misunderstanding. The proposal is not for detailed legislative intervention in the BBC but simply for some standards and principles that the charter and agreement must meet. There is no suggestion of interference by statute in the BBC. It is setting down standards and criteria.

Well, the BBC is going to continue its life for the next 11 years, apparently, on the basis of the charter that we are debating tonight. There is no statute that we can seek to amend at this point in time.

I have to say to my noble friend Lord Cashman that there are people who are accountable to the licence fee payers. They are elected by the licence fee payers. They work along the Corridor from us. They are called Members of Parliament. They are elected by the licence fee payers and the BBC should be accountable to them. Therefore, that should be part and parcel of the work they undertake. Of course, that is not the only job they do; they do a lot of other work as well. I was one of them and I know they do a lot of other work. But the fact is that the BBC is a public body. It ought to be accountable to those who are elected to represent the people of this country.

Secondly, the noble Lord, Lord Sherbourne, is absolutely right. The noble Lord, Lord Birt, has to be congratulated on the work he did as director-general in moving the BBC into the new media, but 11 years is a long, long time in the modern world. If you look back 11 years to 2005, just after I came to this House, you will see how much the media have changed during that period. If you look forward 11 years, it will change even more and even faster. I can watch any programme I want from anywhere in the world on this screen I am holding, but also by putting it on to my television screen through a variety of devices, which will get cheaper and easier to use as time goes on. We have to take account of that. Having an 11-year charter is a nonsense when we could have the BBC established as a statutory body, accountable to the public and to those who are elected by the public, and then change it as we go along. At the moment it is almost immutable and 11 years is too long. We have to consider whether or not the changes that are taking place in our society are those that are going to be necessary and are going to happen anyway.

Lastly, person after person has used the term “broadcasting”. We are moving, if we have not moved already, into an age in which broadcasting is the wrong word. It is now narrowcasting. We listen to what we want to listen to, we watch what we want to watch, when we want to watch it, on what device we want to watch it on, and how we want to watch it. That is the future, and we have to take that into account when we look at the future of the BBC.

My Lords, I thank the Minister for opening this debate in a way that enabled Members of this House to speak their minds, rather than putting his foot down and saying that this was the final decision.

The BBC is facing a reduction in its financing and that has to be taken into consideration. It has dropped by 25% and I seriously recommend that the Government contemplate how to deal with that. None the less, the BBC’s services reach 97% of the UK population every week. The average is eight and a half hours of TV and 10 hours of BBC radio. My son-in-law works as a director for the BBC World Service, and I am proud to note that that service reaches a global audience of 246 million weekly.

The music of the BBC is wonderful and Radio 3 is particularly responsible for that. The head of public affairs at the BBC has suggested that the focus should be on the best of new British talent. I suggest that the organisation Awards for Young Musicians should be incorporated into Radio 3 and that the Government ought to approach Hester Cockcroft, who is in charge of that organisation, about this.

BBC News is considered to be the most accurate of the broadcasters, with 58% of the British public seeing the news in that way. That is highly commendable and I hope that it will remain the same.

On the issue of children, again, the head of public affairs at the BBC has said that the BBC will make the full range of BBC content for children available through a single online platform. That is subject to discussion but it would be interesting if that debate could be held.

I noticed that my colleague the noble Lord, Lord Maxton, said that he does not want consultation with the Scottish Parliament, but consultation with devolved Governments would be wise—not necessarily to accept what they say, but as the voice of the people around the United Kingdom.

If the noble Lord will allow me, I did not say that there should be no consultation with the Scottish Parliament but I do not want the Scottish Parliament to have control over the broadcasting services.

I entirely agree with that. I heard the noble Baroness, Lady Liddell of Coatdyke, pointing out that Scotland could have stronger broadcasting. She talked about the Gaelic language and how it was being noted and strengthened. That is very worth while.

I am concerned about two elements of this charter. One is that Ofcom could involve itself in editorial and creative judgments, which is a great mistake. Because it is to become the governors, I hope that will not happen.

The National Audit Office is also to audit the accounts. That should not allow it or the Public Accounts Committee to be involved in editorial or creative judgments. That must be emphasised and set out in the charter. The BBC is such a wonderful institution that it must speak for the people and to the people. I hope that it will continue to excel and to be the best broadcaster in the world.

My Lords, I first refer to my media and other interests set out in the register.

What is planned for the BBC in the draft charter represents the greatest vote of confidence this much-loved institution has had in living memory—and I go back to Muffin the Mule. The BBC now has long-term charter certainty, secure and adequate funding in an age when the economy is very challenging indeed, a reaffirmation of the licence fee and, most important of all, a constitution that further enshrines and guarantees its independence, the cornerstone of its public support.

However, to this trained eye the proposals before this House require some comment, in no particular order of importance. First, I can find nothing but unintended and expensive consequences resulting from the new requirement to disclose talent salaries. The Government’s intention is not, I am sure, to feed the prurience of the press. Their stated intention is to make the BBC’s spending on talent more transparent. It will be transparent, certainly, but ultimately it will be inflationary. I used to be an agent for talent many years ago, and later I had many years as a buyer of talent for different broadcasters. I can confidently predict intense pressure from talent agents as they scour the published fees of talent they do not represent and compare them against the deals they have negotiated for their clients. They will then have to explain to their clients why, let us say, John Humphrys is earning more than they are. “Why is he worth more than my client?”, they will ask. This pressure will be as certain as it will be inflationary. What this disclosure requirement in reality says is that we must increase transparency in the interests of value for money by prescribing exactly the conditions to promote inflation. The other unwanted side-effect is that some top talent will choose not to work for the BBC under this proposed disclosure condition, not because they have anything to hide but because, understandably, they do not want their private, commercial arrangements subject to the judgments of tabloid leader-writers. To take an extreme example, does Alan Bennett really want a Sun readers’ poll to decide if he is worth his fees? I would describe this proposal as Ongar which, as your Lordships know, is a small Essex town beyond Barking. I urge the Government to drop this idea now. Please believe me: it will only cost the BBC dearly.

Secondly, many noble Lords have alluded to training, a seriously important point which is recognised in the draft charter. The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Liddell, put particular emphasis on it. The Government are laying responsibility for expenditure and commitment to BBC training on Ofcom. They should require Ofcom to consult Skillset, other agencies and broadcasters, including the BBC, and then to publish precisely what it expects of the BBC in respect of training investment.

Thirdly, there is the vexed question of the NAO and its new and broader oversight of the BBC’s operations. I have reluctantly come to the conclusion that it must be right that the NAO has meaningful oversight of BBC efficiency and of the spending of public money—does anyone remember the £120 million of public money that got written off the disastrous digital project? However, it is equally right that there is a clear editorial line that the NAO must never be allowed to cross. This is acknowledged in the Government’s proposals, but in a dispute between the NAO and the BBC about where that line is drawn, it is the NAO itself which is judge and jury. This is far from satisfactory. Either we need an independent arbitrator—perhaps Ofcom—or, better still, the BBC’s news operations should be ring-fenced and ultra vires for the NAO. This would remove all suspicion and would also ensure that some future Comptroller and Auditor-General does not stumble across the line. It is very important that the BBC’s relationship with the NAO be maintained on a firm footing. We cannot have any kind of ambiguity about who is deciding what about where that editorial line should be drawn.

I keep hearing the word statutory in relation to the BBC. I do not think it is an accident that the BBC has always existed under a royal charter and that it remains independent to this day. Naturally, your Lordships are always concerned, as indeed I am, to ensure that the BBC’s independence is maintained. There is a direct connection between its royal charter status and the fact that there are no votes in either House on the BBC and no statutory way in for the politicians to have their way with it, if they were so tempted. I urge your Lordships to be very careful in proposing statutory underpinnings for the BBC. The BBC has been invaded many times, but has never been conquered—it is a bit like China. I remember being out on the streets the last time the board of governors decided to stop the transmission of a programme. In the end, it is the British public and the staff of the BBC who are the great defence of the BBC’s independence.

We have a new settlement for the BBC, and at the end of the debates in Parliament, the BBC will have a secure future. I have always believed that the long-term future of the BBC depends not on political favour but on the overwhelming support of the British people. It must continue to earn that support through its skill at turning the public’s money into programmes on radio and television, and online, that they did not know they would enjoy. I have to say I am glad I no longer commission programmes. The worst idea I have ever heard for a television programme in my life is people going into a tent and being judged on how good their cupcakes are. I would have absolutely turned that down; I am glad I am not commissioning programmes any more. But God bless the BBC for having a go with it—well done.

The BBC must, above all, use its guaranteed income to take risks and to innovate. Yes, it needs to prove it can be popular from time to time, but not all the time. There has been much agonising about defining distinctiveness here this evening: it is a misconception that distinctiveness and popularity are mutually exclusive. There is a line going back from “Bake Off” to “Morecambe and Wise”, “The Two Ronnies” and “Porridge”, and many hundreds of wonderful shows in between. They were hugely popular and set the nation talking, but nobody ever said they were not distinctive. Popularity and distinctiveness are not mutually exclusive. I have a word of warning to Ofcom as it struggles with this issue: quotas and prescription are the enemies of innovation and distinctiveness. The BBC must be editorially free to experiment and to take the risks and meet the challenges that free-to-air private sector broadcasters cannot afford to. It must always be a nursery for British talent, onscreen and offscreen. It now has the resources to do that, and a secure future—we wish it well.

My Lords, I am grateful for being allowed to speak in the gap. I declare an interest as a freelance television producer who used to work for the BBC.

I, too, want to raise my concerns about the talent drain at the BBC. I fear that this charter will damage the quality of many BBC programmes beyond repair. For me, the most worrying part of the charter is hidden away in Section 3 of Schedule 7 to the agreement, entitled “Television, Radio and Online Production”. It calls for 100% of BBC programmes outside news to be put up for competitive tender by the time of the next charter, a great percentage of them much earlier.

My noble friend Lord Hall made an agreement last year with PACT, the independent producers’ association, which would open up 40% of the in-house production quota to competitive tender. I imagine he naively hoped that the move would assuage the former Culture Secretary’s demand for competition to sweep through the BBC, but the Culture Secretary simply responded by kicking down the door and introducing 100% competition. This strikes at the very core of the BBC, the in-house production base. These are the people who make many of the great history, science, arts and current affairs programmes for which the BBC is so justly famous. For two decades, until this summer, I have been proud to have been involved in making these programmes.

The in-house programme makers are specialists who can turn a seemingly impossibly complicated science PhD paper into television or make a three-part series on dark matter, a substance we are not even sure exists. Until now, the volume of programmes being commissioned for in-house production has allowed a mass of talent to remain within the BBC. However, all these programmes are being put out to competitive tender. The first to be announced are “Horizon” and “Songs of Praise”.

The BBC is burdened with being the gold standard of the industry. Supporting a wide range of regional offices, it will inevitably have higher overheads than those of independents. In-house production costs have been dramatically reduced in the last seven years since the licence fee was frozen, but that will not be enough to compete with lean, mean independents. I speak as a freelance producer working for an independent company, so I know what I am talking about.

The BBC will lose these tenders and independents will take up the slack. That means that the whole industry will become casualised, and in the cut-throat world of independent television there is no place for very specialist producers who just concentrate on one genre. There is much more work and many more opportunities for generalists. As a result, the great stock of BBC programme-making talent that has been built up and passed on down the generations of BBC producers is now coming to an end. Many of my former colleagues are leaving voluntarily. This week, huge redundancies are going to be announced for BBC producers across all genres. My noble friend Lord Hall says that these people are the core of the BBC, and I agree. We are about to lose a great treasure of knowledge and talent, and once it is gone we are never going to be able to rebuild it.

My Lords, it has been a privilege to listen to the expert contributions to today’s debate. There is clearly wide support for the BBC and for the need to judge the draft charter and agreement in terms of whether or not they ensure a BBC that is independent, impartial, financially secure and popular. After all, that is what the vast majority of the 190,000 respondents to the Government’s survey said they wanted—not a BBC that had been cut down to size nor one that merely filled in the gaps left by the other broadcasters, but a BBC able to fulfil Lord Reith’s vision of an independent British broadcaster able to educate, inform and entertain, as well as a BBC that was well governed and appropriately but proportionately regulated.

Like other noble Lords, I warmly welcome the many positive changes that have been made since the White Paper and I congratulate all those, not least those in government and in the BBC, who have made them possible. However, strong cases have been made for further changes, not least to statutory underpinning, as proposed by my noble friend Lord Lester. I congratulate the Minister on his new post and I thank him for the meeting that some of my noble friends and I had with him recently, but I hope he is still in listening mode. We are, after all, discussing a draft set of documents, so I hope he will confirm that proposed changes, including those that have been raised in this debate, are not ruled out. I was somewhat concerned to hear him implying that only a few minor technical details remain to be sorted out. Frankly, there is little point in a debate in your Lordships’ House if from the outset it is to be ignored.

Given the shortage of time, I hope that your Lordships will understand that, rather than dwelling on the many positive aspects of the draft charter, I shall concentrate on those areas where we believe that further change is needed. For example, as my noble friend Lady Bonham-Carter said, there have been huge strides in the composition of and appointment to the new BBC unitary board, but we would still prefer to see all the non-executives independently appointed. Does the Minister not agree that it is somewhat hard to claim independence from government when the powerful chair of the BBC board and the chair of the equally powerful BBC regulator, Ofcom, will both be appointed by the Government?

Of course we welcome the assurance that there will be a more transparent process in setting the licence fee, but as many noble Lords, such as the noble Lord, Lord Best, said, far more is needed. Surely the Minister would agree that there needs at least to be public consultation on new licence fee proposals followed by debates in both Houses before decisions are made.

As many noble Lords said, proposals for the disclosure of presenters’ pay are certainly not in the long-term interests of licence fee payers. They are, as the noble Lord, Lord Birt, put it, mischief-making, even ludicrous, as the noble Lord, Lord Patten, put it, and inflationary, as the noble Lord, Lord Grade, called them. We were certainly disappointed to see the threshold drop from £450,000 to £150,000, and even more concerned to hear from the Minister that applying that disclosure level to other BBC personnel has not been ruled out. I hope that the Minister can update us on that point.

My noble friend Lady Benjamin raised the issue of the long-term future of the contestable fund. If the three-year pilot is successful and the fund continues, we hope that the Minister can at least assure us that the licence fee will not be top-sliced to pay for it.

On top-slicing, we, like so many others in your Lordships’ House, believe that it is entirely wrong to be transferring to the BBC responsibility for both policy and funding of free TV licences for the over-75s—a more than 25% cut in licence fee funding, putting much loved programmes and services at risk and placing the BBC in the very difficult position of having to become a social policymaker. Social policy should be made by government and funded by government through taxation and hence democratically accountable. Surely the Minister must accept that the BBC is not an arm of government and that this move undermines the independence of the BBC.

We are of course in greater agreement with the Government’s plans for the expanded role of the NAO, but with some caveats and requests for clarification. The BBC has argued that its commercial arms, which do not use licence fee revenue, should be judged like any other business on financial performance, not on value-for-money practices, which are intended for public bodies. I would certainly welcome the Minister’s comment on that.

I am very puzzled about the relationship between the NAO’s value-for-money examinations and editorial and creative judgments. On the one hand, paragraph 55(7) of the agreement is clear that editorial and creative judgments should not be part of such examinations. Indeed, the Comptroller and Auditor-General is not entitled to question the merits of such judgments. On the other hand, paragraph 55(8) allows for the Comptroller and Auditor-General to determine what editorial and creative exemption means in practice. It states:

“Where an issue about the meaning of editorial or creative judgement arises it shall be for the Comptroller and Auditor General to determine the meaning having consulted the BBC”.

Surely it does not make sense that the Comptroller and Auditor-General cannot deal with editorial and creative judgment but he alone can decide what is and what is not such a judgment. I hope that the Minister will agree at least to review that situation.

I shall make one final point about the NAO. The agreement is clear that the Comptroller and Auditor-General and the BBC are required to agree a memorandum of understanding on VFM examinations, yet nothing is said about what happens if the two cannot agree. Perhaps the Minister can tell us.

I turn finally to the expanded role of Ofcom as regulator, especially in respect of distinctiveness and competition. Of course the BBC should be distinctive. It already is, as many noble Lords have illustrated. But if demands for ever more distinctiveness are pressed too far, the BBC will move to become merely the provider of those things not done by other broadcasters —the market failure model so beloved by John Whittingdale. That would let other public service broadcasters off the hook, with the BBC being required to pick up the slack in less profitable genres which commercial PSBs drop, as we saw happen when Ofcom lowered commercial broadcaster requirements in 2003. Does the Minister agree that Ofcom has to be diligent in ensuring that all PSBs pull their weight?

Our other concern is that BBC long-term planning and the security of its partnership deals could be put at risk by having to deal with an onslaught of competition inquiries—death by a thousand reviews, as my noble friend Lord Clement-Jones has termed it. On Monday, Ofcom told a number of us that inquiries could be carried out in many different circumstances, from BBC proposals for major changes to no changes at the BBC but a change to the broadcasting ecology in which it operates. Of course, there will also be inquiries caused by complaints from rivals and others. I was heartened to hear Ofcom say that it will not be cavalier about initiating investigations and believes that a strong board will head off the likelihood of many being needed. But there is understandable uncertainty. Ofcom has still to consult on how it will carry out its new role. There is not even yet any definition of,

“adverse impacts on fair and effective competition”,

which forms the basis of any of its inquiries.

We have no idea how distinctiveness will eventually be interpreted and assessed. I share the view of many that, while the NAO cannot interfere in the BBC’s editorial and creative judgments, there is no explicit prohibition, as there should be, on Ofcom. My noble friend Lord Clement-Jones has set out our concerns that Ofcom’s powers to conduct competition reviews appear too open-ended and that the complaints system could give competitors a green light to flood Ofcom with complaints about competitive impact.

Given the understandable uncertainty, and for the avoidance of doubt, can the Minister confirm that no inquiry will be conducted unless there is a strong evidence base to justify it? Does he agree that Ofcom should investigate cases only where the changes in market conditions have taken place after Ofcom assumes full responsibility in 2017? Will the Government insist that, before Ofcom recommends any changes to BBC services following an inquiry, it must demonstrate that the competitive harm identified cannot be tackled except by changes within the BBC? For example, should not changes to BBC services be the last resort in cases where the market has changed around the BBC?

I look forward to the noble Lord’s answers and if he cannot give them all now, as has already been proposed, will we receive a letter covering all the points in the debate? The BBC is the best and most trusted broadcaster in the world. I hope that the points made in this debate will help to ensure that it remains so.

My Lords, I thank the Minister for honouring his commitment, I think made on his first outing at the Dispatch Box—he is a brave man—to secure an opportunity for us to debate the draft royal charter and agreement on the BBC. It is a debate, which as he said, signals at least the beginning of the end of the process, which commenced immediately after the last election. I am also very grateful to him for putting on record his, and by implication the Government’s, support for the BBC. We have waited a long time to hear a Minister endorse the corporation in such terms as the world’s finest broadcaster. It is. As others have said, it is the envy of the world and we should cherish it.

This has been an excellent debate with a very distinguished cast list. It builds on the tradition established in your Lordships’ House of a cross-party consensus about the BBC, and a steely determination to ensure that the BBC continues to inform, educate and entertain; and to survive and thrive in the long term.

Many of those who have spoken have raised issues about matters that have caught their eye in the papers before us. I will not deal with all of them, and if time presses when the Minister comes to respond, I should be grateful if he could undertake to write to all those who have participated on issues relating to, for example, the World Service, training and skills, diversity, children’s programming, the impact of competitive outsourcing, regional production, Caversham, support of new technological areas, minority language programmes and local radio. It cannot be said that we have not given him a hard time—we have, but he is up to it, and I am sure that he will respond in the fullest possible way.

Given that whatever is signed and sealed by the Privy Council this autumn will be the charter, which will take the BBC into its second century, the key question that we need to have answered this evening is whether these draft charter and agreement papers strengthen or weaken the BBC over the next 11 years. We also need to examine what lessons can be learned for the future. We on this side have five main concerns in relation to the Government’s proposals, covering independence, distinctiveness, transparency, regulation and process, all of which have been picked up already, and I shall not therefore go into them in great detail.

On independence, like many noble Lords, we are concerned that the Secretary of State will still retain a significant role in the appointment of the chair of the new BBC board as well as the four members representing the nations. Indeed, as we picked up on today, she has the casting vote, or at least the veto, on the English member, so she has a double whammy. Although the charter says that the appointment of the chair can be made only following a “fair and open competition” and after a reappointment hearing by the Select Committee, there are shortcomings in the existing public appointments process. We believe that there are still grounds for concern in the light of the Government’s response to the Grimstone review of public appointments —for example, in the wide scope given to Ministers to intervene before and during any appointment process. It is vital that an appointment as important as the new BBC chair is carried out to the highest standards so that the country can be confident that the successful candidate was selected purely on merit and not as a result of personal and political connections with the Government of the day.

On distinctiveness, I was a little amused, I think, to discover that the Minister took six minutes to mention the dreaded D-word. I do not know whether that was psychological or deliberate, but it was certainly interesting. We have discussed it at length, and everybody who has spoken has been concerned about it. We argued against the inclusion of such a term in the White Paper proposals when we had that chance but, like others, we broadly accept the current approach to distinctiveness as a way in which to analyse some of the issues arising from the new regulatory structure. However, like others, we wish to make sure that it is restricted to services and not to individual items of content. That was mentioned by the Minister and picked up on particularly by my noble friend Lord Alli, who raised the question of whether it might impact on scheduling. This is a really important issue and we need to have answers before the draft agreement and charter are sealed. We are concerned about this innocuous term—perhaps we should not be. The problem is that it could help the BBC not to rest on its laurels, as others have said, so that it constantly tries to inform, educate and entertain in new ways, but that has been turned into a veiled threat that it should not be popular. It will be a disaster if the rules concerning distinctiveness in the new charter and agreement have the effect of fostering a defensive mentality within the BBC that is not conducive to innovation and creativity.

As the Minister said, on transparency the BBC is a huge operation. It has an impact on many aspects of our lives, not just through its public purposes and commercial activities. It supports our creative industries; it carries out training, although we hear that that is already under pressure, and maybe needs further support from Ofcom; and it supports diversity and regional engagement. It is our biggest funder of the arts and culture in the country and, if noble Lords will forgive the metaphor, if it catches a cold, the whole creative economy gets flu.

It is, as the Minister said, important that its funding arrangements are put on a transparent basis, and the White Paper recognised that the last two licence fee settlements were carried out behind closed doors and without effective parliamentary scrutiny—or, indeed, any scrutiny. However, the draft charter and agreement failed to include any specific provisions as to how best to ensure a more transparent process. The Government have rejected the sensible proposal that the level of the licence fee should be set by an independent body akin to the Low Pay Commission, yet there is a wide consensus that having a clear, fair process for setting the level of the licence fee is in the public interest. We welcome the provision in the draft charter that the BBC’s next funding settlement in 2022 will be for at least a five-year period, and the Government must consult the BBC and take account of the level of funding needed to deliver its mission and public purposes. But that is not enough. The draft charter already requires the Government to put terms of reference for a future charter review before Parliament—both Houses—and consult the public and hold debates in each House. Why should this level of democratic accountability not also be applied to the setting of the level of the licence fee? Like other noble Lords, we think that the requirement for disclosure of salaries above a low threshold is neither necessary nor sensible and should be withdrawn.

On regulation, the BBC will in fact face two regulators: the NAO and Ofcom. We agree broadly with this approach but, as always, the devil is in the detail. It is, in this case, somewhat undercooked in some areas of the draft agreement that we have before us. The points made about the NAO have been well made by others and I will not go over them. It is, I am sure, unacceptable —as the noble Lord, Lord Grade, said—to have the NAO, or the Comptroller and Auditor-General, to be judge and jury in the same case. This needs to be sorted, and sorted quickly. There is a parallel, which has been mentioned, with the Bank of England, whose independence is secured by a set of arrangements which might well be copied across for the BBC.

Schedule 2 of the agreement requires Ofcom to set regulatory conditions to secure BBC output and services, and it gives specific, detailed guidance about what it must consider for the BBC’s TV, radio and online services. But as others, including the noble Lord, Lord Clement-Jones, have said, these clauses follow an old-fashioned approach to content regulation that would introduce a prescriptive and inflexible regulatory framework, which is surely not what is required to achieve the BBC’s editorial independence and creativity. Imposing quotas should be a response to evidence of failure to deliver the obligations of the charter, not the starting point. This needs to be redrafted. I suggest to the Minister that the principal aim should be to ensure that Ofcom, as an independent regulator, has the freedom to determine how best to regulate the BBC to secure agreed policy goals.

On the mid-term review, the Government have been at pains to stress—I am sure that they are sincere about this—that this should be a light-touch exercise, not involving the mission, public purposes or funding. It would, however, be helpful if the Minister could stress again, beyond peradventure, that this review is a diagnostic aid, not a pass/fail test.

Finally, on process, the Government pay lip service to the idea of a people’s BBC; Ministers often repeat the mantra that the corporation remains accountable to the licence fee payers. However, neither the charter nor the agreement set out any mechanism for this accountability to be delivered in practice. Previous charters specified that the BBC Trust, or previously the BBC’s governors, had accountability to the licence fee payer as one of its responsibilities. Why has this been dropped? The public consultation research by the Save Our BBC organisation unequivocally concluded that licence fee payers fully expect the BBC to continue to be accountable to them as major stakeholders. In this day and age, and as technical and communications methods develop apace, the ways in which this can be achieved increase and improve rapidly. I wonder whether our Communications Committee might like to look at this issue in the near future, perhaps also combining it with some of the other big issues that have been raised today. Those include whether the time has finally come to give the charter statutory underpinning, which I would support; the role of Parliament in the charter review process; and the future of the licence fee after 2027, including the possibility of introducing a more progressive funding mechanism.

The BBC is the cornerstone of the creative industries in this country and the creative industries are the powerhouse of our future prosperity. They represent one in 11 jobs, they bring in £76 billion a year, they enhance our reputation overseas, they are intrinsic to our whole added-value economy and they have seen growth year on year well ahead of the rest of the economy. As has been said, Brexit really sharpens the need for us to ensure that these industries are supported. The truth is that the British creative industries cohere as a balanced ecology with the BBC at its heart. No sensible person would take an axe to the tallest tree in the middle of a forest and not expect to do serious harm to the whole of that forest. Why is it so difficult for Ministers to grasp that the existence of a strong and confident BBC does not harm the wider industry? It fosters and creates a competition for quality and we should support that.

The history of broadcasting in this country is rightly praised for what it has achieved: bringing on-stream, over time, both state-funded and commercial services, which compete for audiences but not for funding. As we approach the centenary of the BBC, we should reflect on and be proud of the fact that, for nearly 100 years, people from different traditions and political backgrounds have worked together to ensure that the BBC informs, educates and entertains, that it is independent, and that it survives and thrives into its second centenary. That remarkable feat of political engagement—evidenced again this evening—is in itself surely worth celebrating.

I look forward to the Minister’s response. He has been listening hard and I am sure he will acknowledge that we have made some very sensible suggestions. He said that this was the end of the process, but is it really? After he has reflected on this debate, it would be good if he would write to us if any of the points we have made today have struck home and he is minded to move on them, because that would show the power that is available here which he should be using. In any case, it would be nice to know, before the other place has a chance to debate this, that we got in first.

My Lords, this has been a very useful and informed debate. I thank all noble Lords who spoke today and who have stayed so late.

The debate today has shown how far we have come, and I am grateful to all those who acknowledged the positive progress we have made over the last few months. However, some issues clearly remain and I hope to address as many of these as I have time for. I will follow the suggestion of many noble Lords in that I will write to all noble Lords who have participated in the debate on the issues that I have not addressed. I missed the penultimate point on the list of the noble Lord, Lord Stevenson, but I will read Hansard.

In answer to the noble Baroness, Lady Bonham-Carter, and the noble Lords, Lord Lester, Lord Foster, and others, we will of course continue to listen. I hope to give an example of that later. I will not guarantee that there will be any major fundamental changes—that is slightly beyond my remit—but we are listening. Perhaps I was a bit presumptuous in saying that we had come to the end of the process. It is better to say that we are perhaps at the beginning of the end of the process.

I start with an easy point—distinctiveness. This was always going to be a large part of the debate and has been raised by many noble Lords. Despite the scare stories that the Government would start to interfere in individual programming and scheduling decisions, the charter and agreement give the Government no such role. The documents are very clear that scheduling decisions are for the board.

Many noble Lords asked what we mean by distinctiveness. I agree that this is not straightforward. However, I also agree with those noble Lords who talk about its importance, including the director-general. Page 32 of the Government’s White Paper sought to define distinctiveness, which centres around the range of genres, the quality of the BBC’s programmes and its risk-taking innovations. This will be consulted on further by Ofcom, which will, of course, have to make the final judgment.

There were concerns that the provisions would give the BBC’s competitors a hook on which to challenge individual BBC programmes on the basis that they might not be distinctive. I already set out earlier that the agreement makes it clear that the BBC’s services and output, and services taken as a whole, need to be distinctive. While Ofcom may receive such representations from the BBC’s competitors, it is clear from the agreement what the Government’s intent is here, and they will treat those complaints accordingly. So for the record, let me reiterate: we do not want these provisions to give anyone the right to judge individual programmes, nor do we see the charter as allowing this to happen. We give Ofcom a role to set broad metrics about how to measure distinctiveness, and these include considerations around the BBC’s genre mix, including genre mix at different times of day, and target audiences. But again, these are high-level requirements which will allow Ofcom to develop a sensible, evidence-based and dispassionate approach to considering the distinctiveness of the BBC, a measure on which the BBC itself is keen to improve.

The noble Viscount, Lord Colville, spoke in the gap and talked about the director-general, competition and moving to studios by the end of the charter period, making the BBC 100% competitive. The director-general himself has set out that he believes in greater competition as regards programme-making. He believes that BBC Studios, a new commercial production subsidiary, will unleash and invigorate the full creative potential of BBC productions. So in response to the noble Viscount, we do not believe that the BBC itself shares his concerns.

Another controversial point is the over-75s deal mentioned—disparagingly, I must say—by many noble Lords, who raised the issue of last year’s budget deal around that concession. I remind noble Lords that, as has been mentioned, the licence fee is classed as a tax, despite my noble friend Lord Inglewood’s disapproval of this, and that as such, the elected Government retain ultimate control over it. I can understand that a number of noble Lords might wish that that were different, but it is the system that we have been relying on successfully for decades. I cannot agree with the noble Lord, Lord Lester, that a public and parliamentary consultation is therefore appropriate. That track record remains unbroken, even by last summer’s deal. Far from the disastrous consequences that were decried in the media, the BBC Director-General, the noble Lord, Lord Hall, said:

“The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC”.

We made various concessions such as that on the iPlayer loophole, making sure that all those watching BBC content will pay for the BBC in the future.

The noble Lord, Lord Birt, and the noble Baroness, Lady Bonham-Carter, called the agreement that the Government reached with the BBC in 2015 a “raid” on the BBC. However, I point out to noble Lords that the measures in this charter, which ensure that the licence fee-setting process will happen every five years, is a certainty that the BBC has not had in previous charters, and which my noble friend Lord Inglewood should approve of.

A lot of discussion was had, quite rightly, on the effectiveness and the role of Ofcom and whether it has the ability to regulate the BBC. It is a widely respected and experienced regulator and is able, in the words of some noble Lords, to “call a spade a spade”. There is no doubt that the regulation of the BBC is a big task for Ofcom to take on. However, the subject matter is not new to Ofcom, and nor will it come as a surprise that it has been preparing for it for many months. It already has a good overview of the BBC’s business and the issues it faces. Under the current regulatory arrangement, Ofcom already conducts market impact assessments on the BBC’s new services—a sensitive area, where Ofcom has provided valuable services. At the end of the long debate we decided that Ofcom would be best placed to regulate the BBC, and I agree.

Of course, Ofcom will clearly have to stand the test of time and prove itself, which is why the mid-term review will look at the BBC’s governance and regulation. A reasonable amount of time will have passed by then to allow us to return to the issue and consider this question. On the view expressed by the noble Lord, Lord Stevenson, I repeat that this is not looking at the scope and purposes of the BBC, nor at the financial settlement. It is a health check on the governance and regulation of the BBC.

The noble Lord, Lord Stevenson, was concerned that we might possibly have been too prescriptive in what we were telling Ofcom to do. However, we think that it will have the ability to do its job. It is a change for Ofcom, and it is therefore right that we have set out to provide clarity and granularity regarding Ofcom’s role, through the charter and agreement, wherever we can. There are a number of benefits to that. The concerns of Ofcom and the BBC, which have been involved in the negotiation, have been listened to and there is a sensible balance between the two.

My Lords, the late Lord Campbell of Alloway once rebuked me for making a serious point after the dinner hour. I am very sorry to make an intervention at a quarter to 11 pm, but am I right in understanding what the Minister said—that any new funding settlement will not be the subject of public consultation or parliamentary approval, and that there will be no binding safeguards against undue interference with the BBC and its editorial independence in the charter or the agreement? Is that correct, or have I misunderstood?

The noble Lord is correct in saying that I have given no undertakings about how the process will take place in five years’ time. I said that we had certainty for five years, which is a new thing. However, it is not for me to say what the Government will do in five years’ time, although I know that the noble Lord would like me to do so. Measures in the agreement set out that the BBC will provide evidence to the Secretary of State, but at the moment there are no guarantees that there will be a vote in Parliament on the funding settlement. There may well be a discussion about it but I cannot give a guarantee today that there will be a binding vote.

The Minister has proved himself to be a very generous listener. I hope he will accept that there has been something close to a consensus right across the House—with views expressed very elegantly by the noble Lords, Lord Inglewood, Lord Best, and many others—that it is a question not just of the licence fee but of the Government intervening and requiring the BBC to spend money on things that it might not have chosen to, and doing so, as we know, in circumstances of secrecy. I think that the mood in the House is that these processes should be open and transparent, that there should be public consultation and that Parliament should have a chance to discuss them. The problem here—let us again call a spade a spade—is not the DCMS but the young turks at the Treasury who want to retain their power to do this. They have exercised their power any number of times and they want to continue to do so. Will the Minister agree to take back the mood of the House and seriously consider introducing proper process into this strand of the charter?

I think I said right at the beginning that I was in listening mode. Speaking as a former Treasury Whip, I use that expression. I certainly understand the strong views on this point expressed by the noble Lord and many others. I am not going to give a guarantee from the Dispatch Box tonight that this process will change, but I can guarantee that I will take back what has been said to the Secretary of State. I have already said that I will write to noble Lords, although I did not say that that would necessarily be before the next debate. I cannot do more than say that I am listening and that I will take back the views of the House.

Quite a lot of mention was made of training. We agree that the BBC plays an important role in skills and training. I do not think it is appropriate for Ofcom to regulate what the BBC does on training—in contrast to what it does regulate, which is the BBC’s output or its effect on the wider market. I am confident that the BBC will continue to make an important and valued contribution in this area.

There has been a lot of talk about salary transparency and the decision to drop the threshold from £450,000 to £150,000. Many spoke passionately and somewhat disparagingly about that. We have been clear that we believe that licence fee payers deserve transparency in this context. It is, after all, public money. Indeed, a number of those affected, including the noble Lord, Lord Berkeley, agree that increased transparency over salaries will not drive talent away. On the other hand, we have listened to some of the issues relating to BBC Studios, which will be competitive. There are concerns about whether the new salary transparency requirements will cover BBC Studios. We have thought very carefully about the concerns that both the BBC and a number of noble Lords have had about this outstanding question. I can today confirm that full, named salary disclosure will not be applied to BBC Studios in future.

I am very sorry to interrupt, but I must make one small correction. It is absolutely true that I did say that at one point. However, I was very convinced by what I heard from the noble Lords, Lord Grade and Lord Patten, and from my noble friend Lord Birt. Therefore, I would slightly retract from the position that I took. I think there is a danger that this disclosure could create an uneven playing field. I am sorry to disappoint the Minister in that small respect.

I have noted the noble Lord’s lack of agreement with me and will take it on board.

As I was saying, named salary disclosure will not be applied to BBC Studios in future. It will not be benefiting from taxpayer funding. It needs to operate on a fully commercial basis to be successful, so we agree with the BBC that to require full, named transparency would undermine BBC Studios’ ability to compete effectively in the market. However, we expect BBC Studios not only to conform to best practice standards across the industry around pay and transparency but to lead the way.

We have also had reassurances from the BBC that it will respect the overall principle of pay transparency, which is clearly set out in the drafts. We expect that all those who have worked for the BBC this year and have earned more than £150,000 from the licence fee will be disclosed in the BBC’s 2016-17 annual report, even if some of those individuals will have moved into BBC Studios before the end of the current financial year. I hope that shows that, at least in some respects, we are taking on board points, even at this late stage.

The National Audit Office is part of an important change that was made. I start by saying that the provisions that deal with the NAO in the draft framework agreement result in an arrangement that has, in practice, changed very little from that under which the NAO currently conducts its work on the BBC. It has been conducting value-for-money studies on the BBC’s publicly funded operations for years, and the reports that have come out of this are welcome and have helped the BBC to improve.

All this work has been done in an environment where the NAO has been precluded from assessing the merits of the BBC’s editorial and creative decisions, and that remains the case, as the agreement makes very clear. The agreement clarifies that it is ultimately for the Comptroller and Auditor-General to define that boundary. This is so the BBC cannot claim that a number of issues are editorial in nature, thus taking them out of the scope of the NAO’s scrutiny. But, importantly, the NAO will also need to take responsibility for those decisions. I am sure the BBC will make it very clear publicly if it thinks the NAO has overstepped its powers. I do not accept that the NAO is a conduit for Parliament to lay its hands on sensitive BBC information. The Comptroller and Auditor-General is an officer of Parliament but he is fully independent.

The memorandum of understanding between the BBC and the NAO was mentioned, and the MoU between the Bank of England and the NAO was alluded to. We think the two organisations are perfectly capable of agreeing a memorandum of understanding, and that will include a dispute resolution mechanism. The statutory power of the NAO is a backup—a last resort—so that it continues to do the audit, but we expect the memorandum of understanding to be agreed between the two organisations. If there are any difficulties, my department and the Secretary of State herself, if necessary, will get involved to make sure that that happens.

Could the Minister just repeat that? Is he saying that any disputes concerning the NAO exercising its statutory functions but against the will of the BBC, because it has a carve-out mechanism for editorial reasons, are going to be resolved by the Secretary of State?

No, I did not say that. I said that the agreement says the memorandum of understanding should contain a dispute resolution mechanism. However, to take the position of the noble Lord, Lord Foster, what happens if that cannot be agreed? First, I am saying that if they cannot agree the memorandum of understanding, the DCMS and the Secretary of State herself if necessary will, if you like, bang heads together to make sure they can. But the noble Lord, Lord Foster, alluded to what happens if even that does not work. Then I am saying that the statutory basis on which the NAO goes in is what they will rely on. Having said that, it still cannot deal with editorial matters, but the problem is: what is an editorial matter?

Does that mean that, when the final decision is taken, the NAO’s Comptroller and Auditor-General will be the final arbiter—that the NAO will make the decision even if the Secretary of State sympathises hugely with the BBC?

It is not a question of the Secretary of State sympathising or not on that. The only role I mentioned for the Secretary of State is making sure that the memorandum of understanding, which includes a dispute resolution mechanism, should be signed and agreed. But at the last resort, yes, the Comptroller and Auditor-General will be able to do his job using his statutory powers if the dispute resolution has not been agreed.

Could the Minister help us understand how those statutory powers support that in the context of a royal charter? I simply do not understand it.

As far as I understand it from the Bank of England Bill, the NAO is set up and has statutory powers to go in and do its job. The framework agreement and the charter specifically say that, notwithstanding the statutory powers of the NAO, it is not able to judge on editorial matters. At the last resort it can go in under its statutory powers. It is not allowed to opine on editorial matters, but the tricky thing is: what is an editorial matter? That is where we want the memorandum of understanding between the NAO and the BBC to be agreed. My attempted explanation was to cover just what happens if the memorandum of understanding is not agreed. That is where I said the DCMS and the Secretary of State would lend a hand to make sure it is.

The Minister has my great sympathy as I listen to him. The fundamental problem I have is I do not understand how this charter and agreement will be enforced. I gave the example in my speech of the King Charles I clause—Clause 67 of the agreement. It is a power of unlimited censorship over the BBC. It is in an agreement, not in a statute. Could the Minister write to me and explain how the limits to that of proportionality, necessity and all the rest of it are to be enforced?

Absolutely. I may be able to come to that, but if I do not I will certainly write to the noble Lord. I take his point.

The noble Baroness, Lady Liddell, and the noble Lord, Lord Williams, talked about the World Service. I agree with all noble Lords who spoke about that, saying that it is one of the most highly regarded offerings of the BBC. We acknowledge that. I can personally testify to that, having just come back from Myanmar, where it played a huge role during the time the generals were in charge. That is why we have protected funding for the World Service from the licence fee for the next five years and we have increased its funding even further by £34 million in 2016-17 and by £85 million for each of the three years thereafter. I will write to the noble Lord, Lord Williams, about the World Service in Korea.

BBC Monitoring is a Foreign Office responsibility and is co-ordinated by the Cabinet Office. An agreement between them and the BBC is expected very shortly.

I take on board the point made by many noble Lords about the statutory underpinning of the BBC. We do not agree with the noble Lord, Lord Lester, and other people on that. I will write to noble Lords about it. I have promised to listen; I do not hold out great hope that it will happen in this charter, but I recognise that it is an issue which has been raised around the House.

On the contestable pot mentioned by the noble Baroness, Lady Benjamin, we will consult in the autumn on precisely how the fund will work—I look forward to her full contribution to the consultation—to ensure that the fund can support under-served genres as effectively as possible. We will have to see at the end of the pilot exactly what we do.

I agree with the noble Baroness that diversity is one of the most important issues, which is why we have made it a new duty for the BBC. I do not think we can be much clearer about how much of a focus it should be. She may have seen in the newspapers a couple of days ago that Sharon White of Ofcom went public in saying how important she thought diversity was and that Ofcom intends to look at it.

There are a number of points to which I will not be able to respond—from the right reverend Prelate about accountability to licence fee payers, and from the noble Lord, Lord Lester, on Clause 67(4) and on his further point. On appointments, we think that we have moved quite a long way and are in considerably better shape than we were when all members of the trust were appointed by the Government. On independence, I think that there are things which the noble Lord, Lord Inglewood, will be happier about and the Government agree with him about the importance of that.

I need to come to a close because I am over time.

I apologise to the Minister because I realise he is coming to the end, but there is one huge area that he has not dealt with. It is the whole issue of complaints on competition matters. Will he undertake to write to the House on that subject? After all, it is the death by a thousand reviews that I mentioned in my speech and that was echoed by my noble friend Lord Foster.

I apologise for not mentioning that; I agree that it is a big issue. In short, we think that Ofcom is an experienced enough regulator to deal with that, but, as I have said several times, I will write to all noble Lords on all questions that I have not answered adequately, including those on the list of the noble Lord, Lord Stevenson.

I repeat my thanks to all noble Lords who have spoken tonight and who met us previously. I thank the devolved Assemblies and Parliaments, as well as the BBC negotiating team. I am particularly grateful to the officials who have got us here, including educating a new Lords Minister at short notice.

Whatever one thinks of the outcome, I think we will agree that this has been a genuine process of negotiation. While the White Paper established the principles that guided the outcomes of this charter review, the devil has been in the detail. Neither side has got exactly what it started with, but we should not undervalue what each side has achieved. Together, we have ensured that there will be a BBC fit for the future —one we will continue to be proud of. This charter and agreement will give it the tools to be exactly that. Now we must let it get on with the job.

Motion agreed.

House adjourned at 11.04 pm.