Building Public Value
Tuesday 29 June 2004
Ladies and gentlemen we live in a somewhat cynical world.
Someone once said that every ten years, come Charter Renewal, the BBC
gets the old time religion. Can't think who it was, no doubt some clever
clogs from Channel 4.
That film you've just watched tells another story.
One of the many surprising things I've discovered since
I became Chairman is the amount of truly public service work that goes
on in the BBC, year-in, year-out, charter renewal or no charter renewal.
Using our programmes and reputation to reach out
to communities beyond our core broadcasting remit.
I've been Chairman now for six weeks and this is the
moment to offer some thoughts from the boardroom.
We're here to launch the BBC contribution to the debate
over charter renewal and I would like to put the document we're publishing
today into a personal context.
A good deal of the thinking had been done by the Governors
before I became Chairman. I've added my thoughts. Mark Thompson, the
new Director-General, has added his.
It represents a consensus across the BBC, although part
two, which deals with governance, is of course exclusively the responsibility
of the board of Governors.
Our document is called Building Public Value. The
founders of the BBC knew all about public value. They believed that
broadcasting could make the world a better place.
More than 75 years ago, when the British Broadcasting
Company stood on the verge of becoming the British Broadcasting Corporation,
the first Director-General John Reith told his staff: "We have
tried to found a tradition of public service and to dedicate the service
of broadcasting to the service of humanity in its fullest sense."
In America, by contrast, they chose to use the new emerging
mass media largely as a new opportunity for advertisers.
Britain took a different path. It set out to build,
through public intervention, a new broadcasting infrastructure to reach
every household in the land.
Not just to give people wonderful entertainment. But
also, unashamedly, to build an instrument of public value.
That was then. It was an age of spectrum scarcity.
Today, with the possibility of unlimited spectrum, there
are those who look to a different model. A model not of public, but
private value. A digital world of limitless individual consumer choice
delivered by the market.
I have never believed this Utopia is anything but a
digital pipe dream.
Our task over the next year is to convince the British
public that the BBC's role in the new digital age of plenty is both
justified and necessary.
I want a BBC that delivers wonderful programmes that
offer something of value to everyone. And more
than that, a BBC that builds public value.
How can the BBC do that?
by underpinning civic life with trusted and impartial
news and information
by bringing British talent and audiences together
to enrich our culture
by offering learning opportunities for every
age across every medium
by supporting Britain's global position by being and remaining the world's
most trusted provider of international news
by enabling communities of place and interest
to take root and flourish
and by fostering the understanding that opens
the way to tolerance.
I hope and believe that we can all agree these are not
outcomes we can confidently expect the market to provide.
To achieve this, the BBC has to change. The status quo
is not an option.
In the new world of spectrum plenty it is supposed to
be harder to make the case for a publicly funded BBC.
I believe the opposite to be true.
The bigger and more intensely competitive market-led
broadcasting becomes - the tougher the ratings wars, the tighter the
budgets - the more necessary it becomes to have the BBC.
Television as provided by the market is changing out
of all recognition.
I cut my broadcasting teeth in the age of the old television duopoly
when ITV, believe it or not, ran Glyndebourne live on Sunday nights.
In peak time.
When there were South Bank Show specials. In peak time.
When there was World In Action and This Week. In peak
When there was Brideshead, News at Ten and yards and
yards of wonderful factual programming and single plays all in
In public service terms it was hard to distinguish the
BBC from its private sector competition. How the
landscape has changed!
In the new world of market-led multi-channel television,
programmes have become commodities.
Investment in high quality home-produced programmes
is being squeezed.
Audiences have morphed into consumers to be
delivered in bulk to advertisers or targeted for higher and higher subscriptions.
How long before a British television executive is asked
the question I was asked when I pitched a script to a network executive
in Hollywood: "Mr Grade, how many eyeballs will it deliver to the
But the BBC doesn't compete for commercial revenue.
That's the key difference between the BBC and commercial broadcasting.
The BBC has the privilege and the responsibility of
treating all licence payers as equals. Not as sub-demographic groups,
some of whom attract juicier rates from advertisers than others.
As commercial competition continues to intensify, and
commoditisation continues apace, there is an overwhelming case for an
independent and adequately funded sector of British broadcasting with
a lot more on its mind than simply winning every time period and maximising
returns to shareholders.
Ed Murrow, the most distinguished figure in American
broadcast journalism, said of television: "This
instrument can teach. It can illuminate. Yes, it can even inspire. But
it can do so only to the extent that humans are determined to use it
to those ends. Otherwise it is merely lights and wires in a box."
There is nothing wrong with the market, morally or economically.
The BBC still has a lot to learn from the private sector, particularly
about operating efficiency. And it will!
But there are different kinds of efficiency in broadcasting.
At one level, we all need to be efficient. To make sure
that resources are used to best effect. That applies to the BBC just
as much as to Sky, five, ITV and the rest.
But in the private sector, there is the unavoidable
extra dynamic of shareholder efficiency - the need to maximise profits
by generating the highest revenues at the lowest cost.
This efficiently delivers shareholders their rightful
return. But in the process, large areas of viewers' interests are ignored.
And risky investments in original programmes are shunned.
How can it be efficient in shareholder terms to put
money into unproven output when you can re-cycle existing formats so
But for public service broadcasting, there is another
form of efficiency.
This puts the viewers' and listeners' interests first.
It serves the citizen as much as the consumer. It adds home-grown quality
and value to all genres, across the board.
Some economic theorists believe the BBC stands in the
way of a free market in broadcasting. A market that, left to itself,
would offer viewers and listeners pretty much everything they could
Those who run this argument should get out more.
Go to the USA, the biggest, richest, most developed
free media market in the world.
Ask yourselves, is this what we want to swap the BBC
Is there a more depressing spectacle in broadcasting
anywhere in the world than American PBS on radio and television passing
round the begging bowl during pledge weeks? Is
this a risk we're prepared to take?
Be sure of one thing, once dismantled, all the queen's
horses and all the queen's men couldn't put 'auntie' together again.
When I was at Channel 4 I was
fond of saying: "It's the BBC that keeps us honest." I stand
by that still.
Now more than ever the BBC should be the standard bearer
of quality and culture in broadcasting. But culture in its widest sense.
Public service broadcasting is about more than live
relays from Glyndebourne, enjoyable though they are. All the recent
research, including Ofcom's, shows that licence payers have a very broad
definition of public service broadcasting.
It includes British comedy, sport, drama, natural history,
soaps as well as the arts, religion and high quality impartial
and independent journalism.
Licence payers expect range as well as home-produced
They do want an alternative to commodity broadcasting.
And they want it across the piece.
And let's not forget that the BBC serves a global audience
too. Its news services alone reach 185 million around the globe across
radio, television and the internet.
In a world of intolerance and instability, the BBC plays
a significant role in enabling informed global debate, and supporting
it with impartial and trusted news and information.
With the right funding settlement the World Service
will continue to build on that, and in doing so return a dividend to
Britain of enhanced reputation for the British way of doing things.
It's beguilingly easy to make sweeping statements about
the public value of the BBC. But how do we test
It really is the toughest question for the BBC. The
marketplace has the bottom line to measure success. What's the BBC's
Is it ratings? Well, ratings do have a part to play.
But ratings will always be a two-edged sword for the BBC.
If they go up, you're accused of dumbing down. If
you strive for quality, win lots of awards and critical acclaim but
ratings slip, then you're pandering to the metropolitan elite.
And for a channel such as BBC ONE offering broad
popular entertainment as its remit - ratings are part of the mix.
If BBC ONE's ratings fell below BBC TWO's, then BBC
ONE would be failing its viewers, who expect BBC ONE to offer popular
But the real issue is not ratings per se, but how they
The essence of successful public service broadcasting
is that it never patronises its audience, never offers them cynical,
derivative, exploitative programming.
At its best BBC ONE achieves its audiences with home-grown,
home-produced, innovative programmes that engage everyone from the reader
of the Times Literary Supplement to the reader of the Star. And does
it all in the same programme.
Spooks. EastEnders. D-Day. Only Fools and Horses. Walking
with Dinosaurs. The Canterbury Tales. And there are many more.
But it would not be acceptable for BBC ONE to set out
to buy ratings with commodity programmes and million-pound giveaway
Nor would it be acceptable to do it by turning successful
programmes into commodities: EastEnders twice a day seven days a week,
That's not what BBC ONE should do nor does it.
In judging the success of other services, ratings may
simply be misleading. If Radio 3's ratings suddenly shot up then something
would clearly very seriously have gone wrong.
In any case, the benchmark for the BBC as a whole will
never be ratings on a single day or a single week. It's the trend over
time that matters. And, crucially, it's reach.
Reach is the measure of the universality of BBC services.
And universality is one of the bedrock principles of the BBC together
with equitable treatment of all licence fee payers.
In practical terms universality and equity mean that
since everyone pays the licence fee, everyone must get back from the
BBC something they value and regularly.
Of course there will always be some things of value
that can't be measured. Not even by Ofcom. But
that doesn't mean we shouldn't try.
It's no longer acceptable for the BBC to define public
service broadcasting as whatever the BBC chooses to broadcast.
So in the future we will use a new set of measures against
which the Governors will assess the public value of everything the BBC
does. The details are in our document.
Some of these measures are quantitative. But some are
At some point, assessing public service broadcasting
does have to be an outside informed judgement call.
But it won't just be the Governors' call. Licence payers
will be part of the jury too.
We will consult them regularly. And every few years
we will commission a significant piece of independent research, involving
up to 10,000 respondents, to assess how we're doing and to assess the
public value of the BBC.
And here's a twist - we will publish the results.
We have also developed a new tool to ensure the BBC
is single-mindedly focused on serving the public interest. We've
called it the Service Licence.
The Governors will issue a Service Licence for each
and every BBC network and channel - across radio, television and online.
The Service Licences will set out in some detail: remit,
objectives, and budgets.
And I want to make clear today one particular element
they will definitely specify.
The Governors will require serious current affairs to
be restored to its proper place and prominence across the BBC, including
How that's achieved is not for the Governors to determine.
Our job is to set the remit, management's job is to fulfil it.
The Governors will hold management to account against
these licences. And if the conditions aren't met, it will not be a case
of "assistant heads must roll". Top jobs will be on the line.
One virtue of this new system will be that the BBC will
finally be able to analyse sweeping accusations of dumbing down.
If there is a problem with the output we will be able
to drill down precisely to where it lies.
The BBC is a great institution. But, as you may have
noticed, it does have the ability to shoot itself in the foot from time
One self-inflicted wound has been has been its failure
to meet the 25% independent quota.
It made it look as though the quota wasn't taken seriously.
It gave comfort to those who accuse the BBC of arrogance.
But worse, much worse, it denied licence payers access
to some of the best programme-making talent much of it trained
within the BBC. We will not let this happen again.
As Governors, our job is to represent the public interest.
In this case, it's to ensure licence payers get the best programmes
regardless of who makes them.
The BBC needs both in-house and independent producers.
But we must ensure that independents are not disadvantaged in the process.
We have therefore asked management to review the BBC's
commissioning needs and production base across all media and report
their findings to us.
Some say this is not enough. Why does the BBC need to make any programmes?
Why not turn the BBC into a publisher/broadcaster on the lines of Channel
Well I've worked in both and I don't think it would
serve the public interest.
I've already highlighted the market dynamic towards
commodity programming. But there's another dynamic and it's pushing
broadcasting in the same direction.
This is the casualisation of employment in broadcasting.
Casualisation is leading to derivative ideas. You give
the commissioners what you think they want, not what you are passionately
dying to make and believe in. Because you're desperate for the work.
Somewhere in British broadcasting there has to be a
bedrock of sustainable talent with time to think, to observe, to absorb
what's going on in the world outside broadcasting and to turn that experience
into programmes of challenge, ambition, quality and innovation. Innovation
does not come from watching other channels.
But in return for the huge privilege of secure funding
that this implies, the BBC has to be able to demonstrate it is spending
the licence fee prudently in the public interest.
And it has to be able to do that openly and transparently.
In this, as in other areas, it's no longer acceptable
for the BBC to give any appearance of being sole judge and jury of its
We have asked management to carry out a series of urgent
Now BBC reviews have sometimes been about confessing
failings in order to avoid action but mostly to bamboozle the Governors.
Not this time.
Independent outsiders with relevant expertise are being
drafted onto these reviews. The Governors will publish the findings
and ensure management acts on them.
We have also asked management to review the BBC's commercial
Where does the public interest really lie? What businesses
does the BBC really need to own? Are there better ways to earn a proper
return for licence payers' investment?
Then there is the question of value for money across every BBC activity.
How can more be achieved here? How we can reassure licence
payers that the BBC is as lean and mean as it can be? This too, is an
issue the Governors have asked management to review urgently.
We have also asked management to look hard at where
the BBC is based.
The BBC is paid for by licence payers across the UK
and the geographical spread of its operations should better reflect
the country it serves.
The BBC remains too London-centred. That must change.
One of the biggest questions we're considering is the size and scale
of the BBC.
Should it expand further? Or should it now consolidate?
The Governors' view is that imperial ambitions
are a thing of the past.
The most urgent priority is not further expansion, but
completing the challenge of creating a fully digital Britain.
That is what will enable the BBC to deliver its version
and vision of universality.
This is not to say the BBC will remain set in aspic.
Technological change is offering us new means of delivering
our content in ways that work better for our audiences. The public interest
demands we explore them.
But the BBC must also take account of the legitimate
interests and concerns of the rest of the industry.
Where new avenues are contemplated then the Governors
will insist that a public value test is applied before we will give
That test will include an independent assessment of
the potential impact on other players in the market.
Turn now to the other big question. How should the BBC
be paid for?
It has to be the licence fee.
Woody Allen said he wasn't keen on the idea of growing
old until he considered the alternative.
Advertising means commercial pressure and the narrow-market
- the narrow market view of efficiency. And in any case it would impoverish
the whole sector.
Direct taxation means political pressure and intervention.
Subscription would force the BBC to concentrate on those
programmes that bring in the biggest subscription revenue with the least
Range would narrow. And slowly but surely a subscription-funded
BBC would adopt the characteristics and limitations of the market.
However you cut it, anything other than the licence
fee changes the nature of the BBC and dilutes the interests of our audiences.
But I do believe there is one change to the licence fee we need to think
about. That is the way the level of the licence fee is set.
Is it right that this lies solely in the hands of the
Government of the day? How does that fit with
a truly independent BBC? Is it a responsibility
that Government necessarily wants?
Imagine what would have happened if the licence fee
decision had fallen in the middle of the Hutton Inquiry?
The present arrangement would have put the Secretary
of State in an impossible position.
The first significant action the Labour Government took
was to hand over control of setting interest rates to the Bank of England's
monetary policy committee. By doing so, they took the politics out of
While we are taking a root and branch look at the BBC,
my personal view is that we should have the debate about whether control
over the level of the licence fee could be devolved to a specially convened
independent body appointed by, but independent of, Government.
De-politicising the licence fee settlements could be
the final underpinning of the BBC's long term independence.
There are calls for the licence fee to be top-sliced. To be shared with
those commercial broadcasters who still carry some public service obligations.
Or for a portion to be put into a separate fund for
which all broadcasters could bid contestable funding as it's
My view on this is clear.
If the Government want to hand a public subsidy to Channel
4, ITV and others, then I'm delighted that shareholders should have
such a pleasant windfall.
But it's got nothing to do with the licence fee.
The licence fee is there to pay for a BBC that operates
only in the public interest.
Licence payers understand this.
Top-slicing would mean licence payers would no longer
know exactly what they were paying for. It would work against our aim
of building a transparent and accountable relationship with licence
It is a very bad idea.
On the day I was appointed Chairman I made it clear
that the BBC's system of governance needed radical reform. May I explain
now what I meant.
Let me begin by clarifying what I mean by governance.
Governance is not the same as regulation.
Regulation is about rules about quotas, guidelines,
producer codes, and so on.
As Governors we are responsible for some of the BBC's
regulation too. But governance is not about regulation.
It's about stewardship. Stewardship of the money. And
stewardship of the public interest.
This is the great difference between the BBC Governors
Ofcom has no responsibility for anybody's money. The
Governors by contrast have the stewardship of more than three billion
pounds a year.
As trustees of the public interest we have to put the
public first in everything that we do.
That means that we as BBC Governors have to establish
a clear separation from BBC management.
That has not always been achieved.
I have no problem with the Governors being champions
of the BBC. But that is a very different thing from the Governors being
champions of BBC management.
We can't allow that distinction ever to become blurred.
Some of the changes I have already mentioned demonstrate
our determination here: the service licences; the rigorous application
of the public value test; the regular large-scale public survey; and
the new approach to performance-measurement.
In addition, we will create a distinct and properly resourced governance
In the past, Governors have sometimes had to assess
the performance of management largely on the basis of information supplied
The new unit will be a resource of wholly independent
advice and expertise.
The annual report will change too: no longer part-owned
by management, but wholly-owned by the Governors.
The vehicle through which we publicly hold management
to account on behalf of the licence payers.
The annual report we will publish in a few weeks' time
shows the direction in which we are moving and
there is more to come.
Once these reforms are in place, with the Governors
properly resourced and their separation from management crystal clear,
then I very much hope it will no longer be necessary for the Government
to have to launch review after review of what the BBC does.
It must be the Governors' job to scrutinise the BBC.
If we don't do it properly and independently of management
then that's the time for the Government to step in.
Of course some will say the BBC governance system is
simply beyond reform.
It should be done away with, handed over to Ofcom, or
given to some new public service broadcasting regulator.
The manifest independence of the BBC is a key element
in the value the public derive from the licence fee.
While the Royal Charter may not be the only constitutional
form that can guarantee that independence, we tinker with it at our
It is no accident that for more than three quarters
of a century the BBC's independence has survived sometimes ferocious
Our governance system has given us that strength and
And our resulting independence is a key part of the
benefit licence payers expect in return for their licence fee.
The BBC's current Royal Charter ends in 2006. We would
welcome a debate about the nature of the constitutional arrangement
that replaces it.
Mutualisation, trust status, establishing the BBC as
a public interest company, another Royal Charter let's talk about
it, let's examine all of these ideas.
But any new constitutional arrangement must guarantee
the same degree of independence as the current Royal Charter.
One aspect of the new arrangement in particular it's
crucial to get right. That's the term of the new charter, or whatever
might replace it.
The present charter runs for ten years. I don't think
there's any case for the next term to be any shorter.
No doubt some will say ten years is too long when technology
and the marketplace are changing so rapidly.
But that's exactly why 10 years is not too long.
Ahead of us we have digital switchover. A transformation
of Britain's broadcasting landscape.
It is right that the BBC should be expected to lead
We need stability to plan the transition in an orderly
Moreover, in doing so we will invest very large amounts
of licence payers' money in a new digital transmission network.
The licence payers are entitled to a proper return,
which will take time.
Any shorter renewal term brings other problems too
in planning investment, in attracting and retaining the best staff,
in maintaining continuity.
The effect would be to weaken our ability to put the
public interest first.
I spoke earlier about the core values of universality
and equity that underpin the BBC.
There is a third core value: accountability.
The BBC record here is patchy.
The BBC has always been rather closed as an institution.
Its record in listening to external criticism and responding candidly
has been uneven.
Sam Chisholm when he was at Sky used to say to me: "Michael,
dealing with the BBC is like dealing with the laundry. Nothing ever
That is changing.
You will have noticed that last week the BBC published
the whole of the Neil report on the editorial lessons of Hutton.
When we say open and transparent, we mean open and transparent.
It's a widely accepted principle that the real litmus-test
of any organisation is how it deals with complaints from the public.
We will shortly publish details of a new system for
dealing with complaints from our licence payers.
It will put in place much tougher controls to ensure objectivity, fairness
Ladies and gentlemen, in building public value we are setting out a
programme of very significant change right across the BBC.
We're already starting to make many of those changes.
And if you ask what the most important change is, it
is this: that any perception that the BBC is sole judge and jury of
its own performance will be a thing of the past.
As a publicly owned and publicly accountable institution
there must be no room for doubt that the BBC's agenda is seen to be
dictated by the public interest.
The principles that must underpin the BBC are: universality;
equity; and - in some ways most important of all - accountability.
A BBC available to everyone, delivering value to everyone,
and open to everyone.
I said at the start this was our contribution to the
Charter Renewal debate. It is just that: a contribution.
Not the last word. The BBC does not lay claim to a monopoly
of wisdom on its own future.
But let me say this.
All our reforms are worthless if the BBC doesn't continue
to attract and train the best and brightest British talent and make
the BBC the place where the best talent wants to work.
Because without that talent creating wonderful output
across television radio and online there is not a hope that the BBC
will command public support for an extension of its public funding and
We can think up all kinds of effective ways of improving
governance, and sharpening up regulation, and driving efficiency, and
bearing down on costs and we have.
But when it comes down to it: it is all about the content,
isn't it? And it always will be, whatever technology delivers.
It's not my business as Chairman to choose or to schedule
My days of commissioning The Singing Detective from
the Head of Drama - Jonathan Powell - in the loo at TV Centre are over.
But rest assured, I will use whatever experience I have
to make sure that everyone who works for the BBC, in-house or independent,
The programmes the BBC makes and commissions, in whatever
genre and for whatever service, and for whatever audience, must be clearly
labelled 'only from the BBC'.
No clones, no exploitation, no patronising tones or
formats, nothing, that dreaded word in creativity, 'safe'.
Everything we present to the licence payers must aspire
to be original, inventive, risky, imaginative, relevant and must
be made with a conviction that stamps a BBC public service ethic indelibly
There is even room for some mindless entertainment
provided it is as original as I'm Sorry I Haven't a Clue.
To keep the rest of broadcasting honest, we must be
honest with ourselves, and about ourselves.
I commend this document to you.
Thank you for listening. I now
hand over to Mark Thompson.