Broadcasting Press Guild

I gather your preference is usually a 10 minute speech. I hope you will indulge me if I speak for a little longer.

For those of you in a hurry and well-acquainted with the PSB review I have a simple message: the BBC Trust believes that, for the benefit of all audiences, the future of UK public service broadcasting cannot be left just to the BBC and Channel Four.

The Trust wants a sustainable future for PSB in the UK and we believe that quick fixes to today's problems will not provide the means to that future. Instead, the commercial players need new incentives to deliver public services. The BBC needs to strengthen its relationship with other media organisations; and it needs to come forward with new ideas to leverage its strength and security for the national benefit in ways which do not jeopardise its independence.

The Trust has challenged the BBC Executive to deliver ambitious proposals and we will not be interested unless they are significant and offer real public value, as well as demonstrable value to potential partners.

For those happy to take coffee, let me explain.

About a year ago I gave my first speech as BBC Chairman. It was whilst the BBC was still formulating its six year investment plan and I explained then that one of the challenges the Trust had set the Executive was this:

Is your programme of change radical enough to keep pace with the changing behaviour and the changing expectations of the public who pay for the BBC?

By way of example, based on evidence from audiences, I said the BBC had been too slow to recognise its out-of-London responsibilities and the Trust would continue to press the management to address this.

Now, I'm reminding you of this because tonight Jana Bennett will announce some dramatic changes in the way the BBC commissions and produces its network programmes outside of London. And I am using her announcement to illustrate a very important point.

The BBC management is responding to the Trust's challenge and showing it can change the way it operates. It is recognising how the BBC can add greater social and economic value in the media sector, the UK as a whole and its nations and regions, and it is making the changes necessary to realise that public value.

Not just token sticking plasters, but crucially a package of measures called for and approved by the Trust, to deliver sustainable and ongoing change. This is important and I shall explain why.

During this PSB Review I have sought to stress that the interests of the public must be at the heart of the debate. For their sake, we need sustainable solutions if we are not to find ourselves having these debates again two or three years from now, perhaps with even bigger price tags attached. That requires us to do three things:

• First, we must be clear what it is the public value about PSB – and I'm talking here about the unique contribution of each institution and their own independence.
• Second, we must not allow the debate to be about ‘quick fixes' to the delivery model as it exists now.
• Third, the BBC in particular needs to get its relationship with the rest of the industry right and look for new ways to collaborate. An imperative that goes well beyond this PSB debate.

Across all of these things, we need to face the broad issues shaping the communications industry: global competition, technology, convergence. We cannot address the issues of the future by looking back to the glories of a so-called golden age with three or four players.

So, you want to know what's my initial view on Ofcom's Phase II document and the path it charts?

I think there's much in the report to praise. Ofcom is making a brave attempt to air some difficult issues that many might prefer not to have to address. But overall, I think the document demonstrates there are questions still to ask and there is much more to be done to encourage ambition amongst the broadcasters themselves.

Let me be clear. I recognise the commercial PSBs are facing real financial pressures – along with many other businesses. But their immediate challenges should not be all which determines the future of broadcasting in this country. Hasty moves to dismantle structures which have taken decades to mature in return for a quick financial gain might look tempting at first glance, but they have a habit of coming back with a bite. Just ask those banks which used to be mutual building societies.

I am pleased that Ofcom now acknowledges ITV's heritage and value as a regional broadcaster. But I am sceptical about any suggestion that Channel 4 can suddenly take its place either in terms of its structure or in the public's hearts. Indeed, I question the scale of expectations being placed on Channel 4 full-stop.

We should all be concerned to safeguard that which makes Channel 4 special – not keep egging it on to do more. I think its move last week to withdraw from DAB was very difficult and disappointing for them and the future of digital radio, but it showed responsibility by their board.

I question the thinking behind a proposal to gift BBC Worldwide to Channel 4. Put aside for a moment whether this is actually legal, State Aid issues, and the merits of removing £100m a year of dividends back to the public via new BBC programmes. In what way might this make business sense for BBC Worldwide or Channel 4? I can see there could be some commercial deals that Channel 4 and Worldwide could do to the benefit of both, but Worldwide primarily exists to exploit the secondary rights of BBC public service programmes, not Channel 4. And besides, WW belongs to licence fee payers not Ofcom and not the government either.

I do worry that Ofcom has misunderstood the public's view of the licence fee. I've said before that my experience of the public's attitude to compulsory levies underlines two things: people don't much like to pay, but when they have to, they want to know what it's for and who's responsible for doing the spending.

Ofcom's own research shows that 87% of people recognise that the licence fee pays for the BBC in some form. Believe me, I know that is a very high recognition rate – and is a reason why the public has such high expectations from the BBC.

If I was naïve I might be surprised that top-slicing remains an option: it holds next-to-no support from within the industry and Ofcom's own research shows that 63 per cent of the public would rather have their money back when given the choice over how the current digital switchover funding might be used if it continued beyond 2012. The same survey showed that the next popular option was increasing access to broadband. Channel Four came some way behind and ranked equally with further investment in the BBC's own digital channels.

This is a tough debate to have, because it's hard not to sound protectionist about a guaranteed funding stream. Yet the principle benefits of independence and accountability which the current funding structure provides and which all broadcasters enjoy must be properly explained.

The risk that top-slicing could undermine broadcasting independence must not be under-estimated. In the case of the BBC, the public recognises its value lies in its independence and that means freedom from commercial pressure just as much as from political interference. Over at Channel 4, Five, and ITV, their different funding models create pressures of their own, but allow them freedom to act differently to a publicly funded organisation. These different funding mechanisms help safeguard everyone's independence and make an important contribution to plurality.

Sharing the licence fee with Channel 4 and/or others would inevitably require a new public body to distribute the money: a single institution which broadcasters would seek to please in return for funding – rather than their audiences. And even if the BBC was excluded from this new quango's control, what would happen if the demands from its customers outstripped its supply of ring-fenced licence fee? Could it, would it resist knocking on the BBC's door for a greater slice?

The future funding of public service broadcasting is a matter for Government and Parliament. But I see top-slicing as, at best, a diversion from the serious business of concentrating on sustainable solutions.

So, is that it then? Of course not. This is where it could get interesting.

As I said at the start, for the benefit of all audiences, the Trust wants a sustainable future for PSB in the UK. But achieving this goes way beyond just examining whether regional news or children's television need to be cherished, which of course they do.

We absolutely need all the existing PSBs to remain in the game – for all the reasons I've explained – and help them find new ways to make what's right for the public make sense for them. That can't rule out changes in ownership and structure and shouldn't exclude those who contribute to Public Service Broadcasting in different ways. We also need to reflect beyond even these groups to the impact of changing markets and technologies on the media sector as a whole. And consider what will be of most benefit to the citizens of the UK.

I would like the debate about PSB to be much wider than it is. But I think the broadcasters themselves have to generate their own ambition and stop looking to Ofcom for the answers, because more regulation is not what's needed. The United Kingdom creative economy is one of the world's most successful and everyone working within it needs to put that creative energy to serving the public better.

The BBC – funded by the licence fee – is an economic and creative force for good. It has to be worked as hard as possible to use its many advantages to the public's benefit. Already the UK creative economy enjoys an additional £5bn every year from the BBC. Can it deliver even more?

The Trust thinks it can. You've heard Mark Thompson speak about his plans for new partnerships, and greater cooperation and collaboration with the media sector. Some have questioned whether the proposals can make a difference. Is the BBC capable of partnering without suffocating? Does it understand that its waltz can look like a tango to others on the same dance floor?

First, let's not forget the BBC's long heritage of introducing new technologies for wider benefit – from colour television itself to DVB-T2 for HD. There's also a growing list of big budget co-productions such as Planet Earth with Discovery and Band of Brothers with HBO. And the launches of Freeview and Freesat would not have been possible without the BBC cooperating with partners.

As to its behaviour, the evidence is emerging that the BBC understands the problem and is doing something about it. The out-of-London plans are a clear example, and so too is the way in which the BBC management have embraced the Window of Creative Competition – the WOCC.

The Trust will continue to challenge the Executive to lead a new kind of internal culture at the BBC. Being more open, willing to listen and adapt to change is essential to success.

When Mark Thompson and his team come forward with their ideas, the Trust will not be interested unless they can meet certain tests.

We will want to know:

• Do the proposals really make a difference and produce a sustainable outcome?
• Do the proposals offer demonstrable value to prospective partners and other stakeholders?
• Do they represent a genuine offer, not excluding options which may involve a financial cost to the BBC – if that cost can be justified by public gain?
• Can we be sure that the principles of independence, accountability and delivery of the public purposes are not put at risk?

And most important of all:

• Are these proposals ones which we judge to be in the public interest?

I've said already today that the key issue, the really important element we must all focus on, is making changes to public service broadcasting which deliver a sustainable future. And this sustainable future needs to be to the public's benefit – and not just to the benefit of four public service broadcasters – though we do need all four.

The BBC has long been recognised as the cornerstone of PSB and this is a moment to restate its commitment to that position. The BBC is uniquely placed to be part – I stress part - of the solution to sustaining public service broadcasting and a thriving UK commercial media sector. It has a track record of doing so and it's the Trust's job to press it to rise to the challenges of today.

Ends