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24 September 2014
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Michael Grade

BBC Chairman


Statement by Michael Grade at DCMS seminar on models of governance


Friday 3 December 2004
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When I became Chairman of the BBC I did not do as defender of the status quo.


My manifesto was urgently to review the whole governance system, beginning with a comprehensive appraisal of its weaknesses.


Needless to say, I was delighted to find on my arrival that the Board was already engaged in just such an appraisal.


Together, and with the help of friends and critics alike, we identified four key weaknesses that needed to be urgently addressed.


They are:


The Board's vulnerability to management capture


A lack of clarity about the Governors' chief responsibilities - regulators or defenders of management?


A lack of transparency, particularly in complaints


Poor public accountability


The strategy we set out in Building Public Value is radical in addressing these four weaknesses.


Management capture


Up to now the Governors have only had access to a very limited resource to provide independent advice and analysis of management proposals.


That's changed.


We're now building a Governance Unit staffed by experts in a range of fields, from performance monitoring, to broadcast strategy and economics and with access to a wide range of external advisers


It's already having an impact


This week saw the culmination of three months work in which the Governors have scrutinised the four major reviews currently underway which will have radical implications for the BBC and therefore licence-fee payers.


We have taken expert, external advice


We have challenged management on their thinking and their assumptions


We support management's strategy to deliver the vision of Building Public Value which Mark Thompson will be speaking about next week


And we have now asked them to bring to us more detailed plans, which will be subject to external, independent validation and audit before the Governors sign-off the Director General's proposals


Our only concern in this process has been to ensure that whatever the outcome of the reviews, the licence fee payer receives a better service.


This ability to be separate from management and yet also engaged is what marks out the BBC's unique system of governance.


It is worth preserving for one simple reason - it is the only way that we can establish a direct link between the interests of the public and the actions of the management.


Clarifying the Governors' role


Many people say the Governors are inevitably torn between their duties as regulators and their duty as Governors to defend BBC management.


I've never seen it as the job of Governors to defend BBC management - rather, it's their job to defend the BBC for the licence fee payer.


But it really is a false dichotomy to see the Governors' job as regulator as incompatible with that of governance.


In commercial companies there is an inevitable tension between regulation - which is in the public interest - and governance, which is in the interest of shareholders.


In the case of the BBC the public are our shareholders and for that reason regulation and governance work best when they work together - that's exactly what we've been doing this week, ensuring the objectives we agree with management are effectively and efficiently delivered by them. This is what makes the BBC different.


The reforms we are putting in place are therefore focused on establishing clear distance between the governors as custodians of the public interest and the management.


To that end:


We're introducing Service Licences next year, setting out clear, objective criteria by which we - and the public - will be able to judge their performance


We'll carry out a regular cycle of reviews of services which we'll publish


We'll apply the Public Value Test to any new service or major change to any existing service to make sure it really is in the public interest


We can say more about the detail of these reforms later


That's a start but we need to go further. We're now drafting the idea of a Governors' Protocol:


This would set out the different ways in which the Board would be required to act independently of management

For example, always reaching properly objective conclusions on management proposals

It should be incorporated into the new Charter


and would be backed by an annual, independent performance appraisal of the Board's work that we would publish.


Complaints


We take seriously the criticism that there is a lack of transparency about the complaints system within the BBC, particularly in terms of programme complaints and Fair Trading.


To outsiders it can look unduly loaded in favour of management.


Both Richard Tait and Anthony Salz are considering radical proposals for reform at the moment.


These include both structural change and the involvement of external advisers.


We are not yet in a position to outline detailed plans but we are committed to ensuring that:


The Governors maintain an effective audit of the suitability of management systems for assessing complaints


That as ultimate arbiters on complaints the Governors operate a system that is scrupulously fair in hearing views of both complainant and management


Public accountability


We believe that there is more that we can do to strengthen our links with licence fee payers.


We are currently looking at the possibility of:


A 'virtual' Annual General Meeting that would link up licence fee payers around the country in a conversation with Governors

This might use interactive technology to build an element of voting into the proceedings on key issues, the results of which would feed into the annual report

We are also piloting new ways of engaging with licence fee payers that will see them, for the first time, have direct input into the BBC's corporate objectives


In conclusion


It would be a serious mistake to underestimate the scale and effect of the radical reforms we have introduced.



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