BBC Annual Report and Accounts 2007/2008
Part One: The BBC's Trust's review and assessment

Chairman's introduction

The Trust works for the public who own and pay for the BBC. For them, we ensure the BBC is independent, efficient and firmly focused on its public purposes.

To do this, we must equip the BBC properly: we set the strategic direction, the priorities, and the budgets. We make sure the editorial framework is robust and all the boundaries within which the BBC must operate are clear and firmly in place. And most of all, we set the challenge of delivering – as efficiently as possible - quality programmes and services which stand out from the crowd to justify the licence fee. In short, we make sure the BBC is clear what is expected of it, and then we satisfy ourselves it is meeting this expectation. And we aim to do our job armed with a clear understanding of what licence fee payers - in all their diversity - expect and think about their BBC.

This report covers our first full year as BBC Trustees and how we've started to approach our task. You'll see from this report that our focus has centred on three main themes: reaching everyone; increasing the quality and distinctiveness of BBC programmes and services; and rebuilding trust amongst audiences.

The last of these was not originally on our agenda. But as can sometimes happen, the unexpected reordered our priorities somewhat. Editorial integrity and trust in the BBC is fundamental to the contract between the BBC and its audiences. The events of last summer were serious, but we have been reassured by the progress made so far by management in responding to them and the signs of recovery of the public's confidence.

As to 'reaching everyone' and 'quality and distinctiveness', these objectives arose directly from what we heard from licence fee payers and are now cemented within the BBC's long-term strategy.

In the BBC outlook section we lay out these and the four other objectives we set the management last October when we approved the Director-General's strategic plans for the next six years. These objectives seek to ensure that the BBC meets all the public's priorities and addresses those areas where it is not performing as strongly as it needs to. This includes reaching those who do not currently value the BBC highly, but without jeopardising the loyalty of those who do.

This is because much of what the BBC does – on television, radio and online – is already of an extraordinarily high standard and highly valued. The public frequently remind us that it's their BBC and, whilst they are not shy in highlighting what they don't like, they expect us as Trustees to be supportive of what they do like.

We've therefore sought to understand what programmes audiences define as quality or distinctive, particularly on television, and have used those to illustrate to management what the public wants, as well as what they don't. The range of programmes audiences have marked high for quality this year is wide – from the more obvious examples, such as Cranford and Life in Cold Blood; to the classics like Question Time and Panorama; and to the new and more risky, such as The Mighty Boosh and The No 1 Ladies Detective Agency. We cover this topic in more detail later in the report.

The annual efficiency savings of 3% we have set are stretching, but we are confident they are deliverable without affecting quality. Indeed, the only purpose of the money released is reinvestment to increase quality and to serve the public better.

Reaching everyone in the 21st century requires investment in new technology. That the BBC has maintained its overall reach and grown its television reach is a remarkable achievement. Even so, the arrival of the BBC iPlayer has been a landmark event and an important illustration of the public's appetite for on-demand.

BBC iPlayer was of course the subject of our first public value test, and this year we've applied the same to the HD channel and Gaelic Digital Service. In doing so we've held open meetings for others in the industry at the beginning of the process, during the process to discuss our initial conclusions, and after we have reached our final decisions – to explain them and how we have taken on board their input. We've also encouraged the public to give us their views and we've canvassed them via formal research. This robust scrutiny and input from outside the BBC to our independent decision-making processes is a real strength and I believe means we are serving the public better.

This year bbc.co.uk was the subject of our first extensive service review. We found a service strongly appreciated by its users, but one where the financial management needed urgent attention. We will not approve additional investment until satisfied that the right controls are in place and until we have scrutinised in further detail the management's proposals.

The public's influence has been strong throughout the year. Their comments and concerns prompted our review of the network news coverage of the changing United Kingdom, which has led BBC management to introduce changes. The BBC's new commitment to make 50% of its programmes outside of London by the end of this Charter was sparked by what we learned about audience dissatisfaction in those parts of the UK some distance from the south-east. And the public's concerns about star salaries led us to review the BBC's role in how the media industry decides what to pay those who appear on-air and on-screen. While we found the BBC was generally not paying more than other broadcasters for the top names, it is clear there's some scope for the BBC to do more to keep these fees down. We'll be reviewing progress on this next summer and report again.

Overall, we want to see a BBC that operates in an open and accountable way. We want the public to feel more reassured that the BBC is working for them. The Trust has been struck by management's constructive and positive response to the increased scrutiny they have faced. It has sometimes been uncomfortable, but we believe that the benefit of this rigour is starting to be recognised by those on the receiving end of it.

We want the BBC to be a good corporate neighbour to others in the UK media sector. We also believe that cooperation with other media providers – which implies a degree of commercial caution by the BBC – may provide a better way of protecting long-term audience interests than increased regulation. This is an important issue and one which we will explore further in the year ahead.

In the months ahead we will complete our review of the BBC's services for children, and will start the same for those aimed at young people. Also this year we will review the arrangements for collecting the licence fee.

Speaking personally, this has been a year when I have been privileged to make contact with licence fee payers around the UK and to begin to understand the strength of their feelings – positive and negative – about their BBC. It's also been a year when I have been able to meet more of the people who make the BBC the cornerstone of public service broadcasting in the UK. I recall in particular attending the Sony Radio Academy Awards earlier this year and the delight in the faces of World Service staff as they won award after award – a well-deserved industry accolade for a service that brings great credit to Britain around the world.

We will continue to set testing challenges so the BBC can demonstrate it is value for money, is high in quality, and distinctive from what else is on offer. Achieving all this is essential for it to remain the cornerstone of public service broadcasting in the UK.

Sir Michael Lyons
Chairman
19 June 2008