Smith Institute Media Lecture, given at Westminster, London
Wednesday 11 October 2006
Delivering Public Value:
The BBC and public sector reform
Check against delivery
A few months ago I was at an international broadcasting conference. When it
was over I discovered that one of the other attendees – one of those seasoned
campaigners who knows the ways of the world – had spent the entire conference
asking my BBC colleagues one question about me: whose man is he? Is he
Blair's? Or Brown's? Or is he Cameron's?
Well, what an interesting question. Rather more interesting, I'm afraid, than
the answer they got: which is that things don't work quite like that over
here. In many, perhaps most European countries, the DG of the public
broadcaster changes when the Government changes. Politics suffuses everything – funding, governance, editorial choices.
We're so familiar with our system that it's easy to forget how unusual it is.
The BBC recently had a Chairman and a DG who had both been strong and public
supporters of the ruling party. In post they did everything in their power –
and ultimately lost their jobs – in an effort to demonstrate their and the
BBC's absolute independence from it. And the Government's reaction to the
debacle? In many countries that would have been predictable: place people, an
attack on funding, bullying, revenge. Here? If anything a sense of rallying -
around, not just from the Government but from all the political parties. No
phone calls, no arm-twisting.
And as for the BBC – well I know that some people worried that in the aftermath
of Hutton we'd lose our nerve and our spirit of journalistic independence. But
I don't see how you can look at our coverage of Iraq, Afghanistan, the loans
for peerages investigation or politics in general and argue that we're pulling
our punches. No, we live in a country where the main public service
broadcaster begins the final furlong in the licence-fee stakes with – as luck
would have it – a Panorama investigation into the husband of the Secretary of
This is the system working. But what makes it work? Independent governance and management. Strong institutional values. Strong public consensus.
A hypothecated and independent source of funding which the public understand and support. And the result? Well, many results – not least quite a few good programmes
and services. But the main result is public trust.
The BBC has its faults, goodness knows. It is still wrestling with many of the
same issues as the rest of the public sector. How to modernise. How to
reform. How to use the market. How to drive efficiencies and improve quality
of service at the same time. How to put the priorities of its users first.
But it's still a success story in terms of delivery, public confidence and the
ability to change and re-invent itself.
That's why a number of people have asked recently whether some aspects of the
BBC model could be usefully applied to other parts of the public sector.
I thought then that it might be useful to share with you a view of the model
from the inside. To explore how independence and autonomy influences the way
we approach the delivery of our mission. The way we think about internal
reform and value for money. I'll also examine some of the issues at stake in
the setting of the next licence-fee.
The idea of public value
But I want to begin with what has become the central idea in the BBC model –
which is the concept of public value. For us, public value is the sum of the
civic, social and cultural benefits the BBC delivers when it meets its public
An economist might describe it in terms of merit goods and positive
externalities. Perhaps a more compelling way to put it is like this: the
broadcasting space, the digital media space, is public space – a part of the
public realm just as much as our city and town squares.
This space could just be filled with private media, commercial content seeking
individual private consumers. But through the BBC and the other public service
broadcasters, this country has decided to make room, alongside a flourishing
commercial sector, for content which goes beyond private supply and demand and
which is directed at wider societal goals. Supporting democratic engagement,
culture, education, understanding between communities and between Britain and
Fine words. But do they really take us any further than the traditional
justifications for the BBC and the licence fee?
Well, I want to argue that the idea of public value has proven more liberating – and, in terms of developing strategy and running the BBC, more practically
useful – than anything that's gone before.
First because we realised it required a much more precise set of public
purposes. We proposed an initial draft in our manifesto Building Public Value.
After nearly two years of public debate, the Government settled on a final
formula in its White Paper. The BBC Trust, the Government and ultimately the
public should judge the BBC on its performance in delivering these public
But how do you track and measure progress against those purposes? We've
developed a new approach to performance management supported by a range of
objective evidence as well as subjective judgement. It is based around four
parameters: reach, quality, impact and value. RQIV.
Reach means looking at usage of services across the population rather than
being a slave to audience share.
With quality, we've transformed the level of direct feedback from audiences.
We have a fifteen thousand strong internet panel called The Pulse. Every day
over five thousand of them answer a battery of questions about BBC output – not
just overall scores for quality, useful though those are for delivering
headline metrics, but detailed diagnostics.
In the case of impact, we're trying to go beyond immediate audience data to
gauge the wider effects of our output – in terms of public response and
participation, educational outcomes, critical reactions.
To judge value, we're using benchmarking and measures of perceived value to
take the debate from one solely about cost inputs to one which examines the
worth of content from the perspective of end-users.
After years of struggling with monstrous 'balanced score-cards' and KPIs, we
now set a small number of objectives, around five per division, focused on the
idea of public value, directed at delivery of the public purposes for licence
payers, and supported by the RQIV framework. When the NAO examined it
recently, they said it was ahead of anything adopted by any other public
Public value is also proving useful in addressing another issue: the balance
between the public benefits which a new BBC service might bring and the
potential disbenefits resulting from any adverse market impact. Again the
approach which the new BBC Trust will take will be evidence-based, working with
Ofcom's support, to arrive at a judgement of the net public value.
But, although public value is becoming something real inside the BBC, there is
a still a missing civic piece. Representative democracy gets periodic
opportunities to scrutinise and strategise about the BBC. Charter Review once
a decade, licence fee settlements more frequently than that. The CMS Select
Committee, the NAO, the PAC. Last Autumn alone there were 12 separate
Parliamentary Select Committee sessions looking at aspects of the BBC.
But there is also a case for more proactive and dynamic deliberative engagement
by the public themselves. At the BBC we routinely rely on audience and market
research – as well as several million calls, emails and letters from the
public every year – to inform decision-making. But the new BBC Trust should
look beyond that to new ways of stimulating a deliberative dialogue with the
public ahead of time to help it form its view both of public value and of
future BBC strategy.
The BBC delivers
The BBC's adoption of the idea of public value has piqued the interest of many
other public bodies. But it's not the principle reason why people argue that
elements of the BBC model may be more widely applicable.
That reason is the fact that, benchmarked against most of the rest of the
public sector, the BBC has demonstrated one of the strongest and most
consistent records of delivery, even as it becomes a smaller part of an
expanding, and increasingly competitive media market.
One of the questions that I'm sometimes asked in the context of our current
licence fee bid is: what did you do with the last increase you got? Why can't
you use some of that money to pay for digital switchover and the other new
proposals? Let's take a moment to look back over the past few years.
At the start of this licence fee settlement in the year 2000, the Secretary of
State Chris Smith wrote to the BBC with four new priorities:
first, the improvement of existing services, notably BBC ONE;
second, investment in the nations and especially in coverage of the new
third, investment in educational content, in particular expanding our
provision through the digital curriculum;
and fourth and most importantly, the first stage in the build-out of
The funding for these priorities was to come from two sources: the first and
larger was efficiency savings and other self-help measures, accounting for more
than 75% of the total; the second was an increase in the licence fee of 1.5% per
annum over and above inflation. Over the last six years we have generated
those savings and spent that increase on delivering against those priorities.
BBC ONE today has far fewer repeats than it did in the year 2000 – though still
more than either we or our audiences would like – and there's been a creative
renaissance on the channel. A new confidence in drama – Robin Hood, Jane Eyre,
The Street. The return of specialist factual output – and Panorama – to
This Charter debate has been remarkable for the lack of criticism of the BBC's
editorial direction. Governance, scope, market impact, funding: these have
been the topics. Not the success of the BBC in serving its customers and
shareholders, the UK's licence fee payers.
That in itself is unusual in a public sector body. I think it's a result not
just of the BBC's creative ethos, but of its ability – with its Governors, soon
to be Trustees, taking the lead – to self-correct as it goes along. The lack
of hands-on political oversight doesn't result in systematic poor performance
or strategic misdirection. On the contrary, the BBC tends to confront issues
and problems promptly.
The nations were the next priority – and again we've seen progress.
Comprehensive coverage of the new politics of Scotland, Wales and Northern
Ireland, but also better national services across the board. Within a few
years network production from the nations will have risen by 50%, to 17% of all
network production – in line with their share of UK population. Our next
priority is substantially to increase BBC investment in the rest of England,
especially in the North.
The third priority was education. I've already mentioned the massive
investment we've made in specialist factual output – programmes like Planet
Earth and Ancient Rome on TV alongside extensive commitments on both radio and
the web. But the centrepiece is undoubtedly the Digital Curriculum, or BBC Jam
as it is now called.
After a difficult and contentious birth, I believe this is shaping up to be one
of the most important services the BBC has ever launched. Over the past seven
years, the BBC's exam revision service Bitesize has grown to the point where it
is used by nearly three-quarters of all students taking GCSEs.
In time Jam may enjoy a similar reach. Not just because of its imagination and flair, but because it
has been designed wholly around children and can be used just as easily by
students and parents at home as in the classroom.
Jam has already had other benefits too. Professor Stephen Heppell from
Bournemouth University is a world class expert in online learning who has been
working as an independent advisor to the BBC. This is what he has to say of
the creative and technical process that has led to the launch of the service: "what Jam now offers is a uniquely agile, really quite organic, large scale
development model that is without equal anywhere in the world. My belief is
that we will need to document and share this agility – apart from the Jam
partners, the UK software industry lacks it and can learn so much from it. This
is an unexpected contribution."
The last of Chris Smith's priorities was digital. Over the past seven years,
the BBC has launched new TV and radio digital channels, invested heavily in its
web and interactive services and has driven take-up of several critical digital
platforms. Taken together the BBC's activities in these areas have had a
bigger impact on the UK's adoption of digital media than any other player.
The BBC rescued the digital terrestrial platform with Freeview. This autumn we
expect DTT to overtake satellite to become the UK's most popular digital
television platform. It is Freeview that has taken digital TV penetration to
70% - without it, digital switchover would be impossible.
The BBC's digital TV channels have also helped drive take-up. They've also
made their own creative contribution: Little Britain and The Mighty Boosh on
BBC THREE, The Thick of It and Fantabulosa on BBC FOUR. CBeebies and CBBC were a hit
with children and parents from day one.
In the same way in radio, a combination of strong new digital channels and a
total commitment to the platform have taken DAB to a tipping-point: eight
weeks ago Dixons announced that they will no longer be retailing analogue sets
through their online site as sales of DAB radios were 30 times higher.
But perhaps the biggest strides have been made on the web. At the start of the
year 2000, the BBC site had a total of half a million pages and received around
150 million page-views per month. Today the site consists of more than six
million pages and gets more than three billion page-impressions each month, a more
than twenty-fold increase. It is by some margin the biggest content-driven
site in Europe and one of the most highly regarded sites in the world. Again
though, one of its most important effects has been beyond the BBC, driving
take-up first of the internet, then broadband, then high-speed broadband.
In 2000, the Government asked the BBC to invest in high quality services to
pave the way for a fully digital Britain. We've done exactly that.
But while most sceptics acknowledge that the BBC has performed well, some claim
that the price for our success has been damage to the commercial sector through
the twin scourges of market distortion and crowding out.
But where are the examples? When a couple of our most prominent critics were
asked in public at the Edinburgh TV Festival to offer actual names and numbers,
what followed was a long and unaccustomed silence.
Even the causes celebres have proven a grave disappointment to our critics.
Oneword was said to be at risk from BBC 7's book readings. But Oneword was
bought by Channel 4 and is doing fine. RM, the educational software company
thought that even the vague threat of the Digital Curriculum would blight it
completely. RM is, I believe, in as healthy a financial position today as it
has ever been.
Yes, the BBC represents a colossal public intervention in the market. Yes, it
is vital that the BBC Trust, working with Ofcom, scrutinises management
proposals for potential distortion when new services are considered. The fact
remains that, having spent around 30 billion pounds of the public's money
in the present charter period, and despite the Barwise, Gardam and Graf
reports, despite Ofcom's work – not to mention the public and private claims of
numerous commercial lobbyists – no one has come up with a single evidenced
example of any BBC service having seriously damaged competition in the relevant
market. Not one.
And of course back in the real world, nobody even claims it. In all the tens
of thousands of words written about ITV, no one even pretends that that
network's creative and managerial tribulations are somehow the fault of the
Productivity and reform
But the BBC's services are only one half of the story. Over the past seven
years, the organisation has had to face up to another agenda – one which is
shared by virtually every other part of the public sector. This is the agenda
of modernisation and reform; of the opening up of public sector requirements to
private sector solutions; of continuous productivity improvements and value for
I don't believe we have always been as consistent in this field over the past
seven years as we have been with our strategy and our services. But we have
been a lot more successful than we've been given credit for – and here too
there may be some learnings from our experience for other public bodies.
The BBC I rejoined as Director-General in June 2004 was already embarked on a
value for money programme – one based on the self-help targets set by the
Government as part of that 2000 settlement. But the need to free up resources
to invest in our – and the country's – digital future led us to look at the
scope for increasing productivity and efficiency across the BBC. Very simply,
I thought there was more we could do.
With the passage of time, it is easy to forget the scale of the change which
has followed from that review two years ago. By March 2008, gains in
efficiency and productivity will have enabled the BBC's public service
headcount to reduce by 3,800 people or 19% of the total. 2,500 more left when
we sold divisions like BBC Technology and Broadcast which we thought would
thrive better – and deliver more savings – in the open market.
One effect of this, and of the BBC's increased commissioning of independent
production for TV, radio and the web, is that 45% of the licence fee is now
passed straight out of the BBC in contracts to major suppliers. The BBC is
partnering the market wherever it makes sense in terms of creativity,
effectiveness or value. We've moved further and faster on this route than
almost any other part of the public sector.
As a result of these changes, we're on track to deliver more than £350m
of annual savings by the end of the current three year value for money
programme. That's over £3bn during the next Charter period.
This is a stretching and difficult programme of reform. And we believe it is
taking the BBC to the frontier of productivity in broadcasting.
Over the past year we've been engaged with other broadcasters in a benchmarking
study looking at our and their TV programme prices. The study was undertaken
on the basis of strict confidentiality and I can't talk about the other
participants or about their programmes. What I can tell you is that the study
suggests that over 80% of the BBC's television programmes were around or below
the industry average. Of those that weren't, some were in what you could call
the Planet Earth category where we're clearly going for something of
exceptional ambition. The rest we'll look at closely.
But the critical point is that the comparisons were made before the present
three-year value-for-money plan which is removing an additional
15% from programme prices.
Our critics often claim our prices are out of line with the market. This study
suggests that this is simply not the case.
Nor is the BBC's approach to pay inflationary. This year's award was half a
percent below the run-rate of inflation and it's been tight for the past few
years. The executive pay-bill has been coming down as the number of directors
reduces. And despite the headlines, individual executive pay is typically much
lower than the market: I get about a third as much as the chief executive of
ITV, for instance. Pay for stars – again the source of much alleged outrage –
is included in those programme prices I quoted a moment ago: prices that
compare very well with the market.
I believe we can demonstrate that – especially after the abrupt correction of
the past few years – we are firmly back on track in terms of productivity and
cost reduction. But as we take cost out, audiences tell us they believe the
quality of our services is going up not down.
The BBC's mission in the next Charter
So we're not in bad shape. And, if all that was wanted was a steady-state BBC
with the same line-up of services and the same level of quality, we could
deliver that well within our current resources.
But that is not the prospectus before us. Instead of steady-state, the
Government has laid down four ambitious strategic goals for the new Charter
first, a step-change improvement in existing services;
second, a further substantial shift of investment and creative
commitment to the nations and regions;
third, the development of on-demand, mobile and other new digital
and fourth, massive BBC engagement in the Government's broader digital
agenda – in particular, analogue to digital TV switchover.
Let's take each in turn. The Government has been very clear in the quality
improvement it wants to see. Fewer repeats. An elimination of low-cost,
derivative factual programmes. Every programme to meet stringent public
This isn't just the Government's priority. It's the public's. The DCMS
recently commissioned an independent report from the Work Foundation into the
public's willingness to pay a higher licence fee for more and better BBC
services. Seven thousand people took part. A big majority said that they were prepared
to pay a bigger licence fee. Indeed the average amount they said they'd pay
when the heard about the BBC's plans was £162 in today's money, well above the
BBC's own bid. Investment in more quality content was one of the most popular
proposals in the study.
That's relevant because, perhaps to state the obvious, the kind of output the
public normally associate with quality – original drama and comedy, specialist
factual programmes, investigative journalism – cost a lot more on average than
those they don't. To replace one hour of low-cost programming with one hour of
something like Planet Earth on one channel each week would cost £150m or
more over the next Charter.
We plan to meet the Government's second priority – the nations and regions – by
better local and regional services and by a redistribution of network spend and
creative commitment. Both potentially have wider economic and social benefits.
One of the reasons that our plans for Salford have been greeted so
enthusiastically in the North is that our partners see the BBC's potential move
as a catalyst for much broader development of the creative industries, not just
in Greater Manchester but in the whole region.
The third heading is new digital services. Not new channels this time, but new
ways for the public to find and enjoy the content they've already paid for. At
home and on the move. When and where it suits them. So: investment in our
on-demand application, the BBC i-player, in digital infrastructure, in search
Some people say of course: why can't you make up your minds? Why don't you
either stick to your existing services, or, if you're so keen to embrace the
future, why not cut some existing services and use that money to pay for these
But it's an inevitable and demonstrable fact that different groups of the
population are moving at different speeds in this digital revolution.
While millions have already adopted broadband, millions of others still rely
wholly on current analogue services. To deliver value to all licence-payers,
the BBC has no choice during this transition but to ride both horses at the
same time. This is why the Government has chosen both to support the BBC's
plans to develop on-demand, mobile and other new applications while also taking
care to insist that we maintain every single existing service. But doing both
has obvious cost implications.
The fourth and final Government priority for the BBC is also the most expensive
one. This is building digital Britain, the centrepiece of which is the
colossal task of switchover from analogue to digital television. Paying for
our own costs. Paying some of the rest of the broadcasting industry's costs.
Paying for the so-called targeted help scheme of subsidy to vulnerable groups
to help them migrate to digital.
Few people outside the industry have registered the scale of the task – or the
scale of money required. We've just signed a contract for one of the essential
elements in TV switchover – the procurement of the build-out of DTT or Freeview
transmitters to extend digital terrestrial coverage to the whole of the UK.
This one contract is for £1.8bn and it covers just some of the BBC's own
Digital switchover is an enormous upgrade of national infrastructure. I
believe it's the right policy – most developed countries are on a similar track
as the UK and for similar reasons. Switchover supports the BBC's goal of
universal access to its services. That's why, to us at least, using the
licence fee to fund so much of it is legitimate.
But be under no illusion. This is a project of great scale and intricacy. The
risks are formidable.
If it is under-resourced, it will fail. It's as simple as that – and the
failure will impact on many millions of households.
Of course some of those who have been lobbying in private and public against
our licence fee proposals do not wish the Government's plans for digital
switchover well. Sky, for instance, is implacably opposed to them. They
believe that the build-out of digital terrestrial is quite unnecessary and that
those people who can't currently get Freeview or cable should simply be told to
use Sky if they wish to convert to digital.
The licence fee is the main funding mechanism for switchover. If you want
switchover to be abandoned or to fail, what better place to start than to try
to use your influence – that influence which Rupert Murdoch boasts about so
freely in this week's New Yorker – to put a squeeze right now on the licence
The current bid
Digital switchover, investment in quality, nations and regions, new digital
applications. That is the context in which the current debate about the future
level of the licence fee should be seen.
Should the BBC submit to the same disciplines as the rest of the public sector?
Yes. Should it deliver like-for-like services with year-on-year cash-
releasing savings? Yes of course it should.
If all that was wanted was a steady-state BBC, RPI-minus – a licence fee
falling in real terms – would be the right settlement.
But, as I've emphasised in the past few minutes, that is not the mission we
have been set.
Broadcasting is an area of public policy, like health and education, where the
Government has wanted to do a lot more than the status quo. Under Chris Smith
and under his successor Tessa Jowell, a vision has developed of a digitally
enabled Britain, in which the benefits of the new technology – not just more
choice in entertainment, but more opportunities for engagement, education,
community involvement – are available to everyone.
And it's working. Tangibly, demonstably working – though, as the White Paper
makes clear, we're only half way there.
But inevitably this is a vision which requires net investment. And because the
Government believes that the BBC should play such a central creative and
financial role in delivering the vision, the BBC too needs net investment.
It was for this reason that the Government decided to give the BBC an above RPI
settlement in the year 2000. It is for this reason they need to do the same
Of course the BBC should be set testing efficiency and productivity targets.
More than 70% of the money we need to deliver the White Paper and Agreement can
be found through self-help. But it can't all be found.
An updated bid
It is one year to the day since we set out our licence fee bid in public – the
first time the BBC had ever done that. We did it so that there could be an
open and transparent debate about the BBC's funding. We also did it so that
the cost of the Green Paper proposals could be considered alongside the
After all, it's generally not a good idea to order a three-course meal at a
restaurant before checking you've got the money to pay for it.
In practice sign-off of the proposals has moved faster than detailed engagement
on their financial implications. This is about more than simply the quantum of
the licence fee. Any settlement must factor in the large and lumpy capital
costs of digital switchover. These either require a licence fee which
increases sharply in the years when the outlay is greatest or a different
approach to the BBC's ability to borrow – or some combination of the two.
Then there is the length of the settlement. Historically the most powerful
argument for a relatively long settlement has been as a guarantor of the BBC's
independence. Around the world, PSBs who have to go cap in hand to governments
every few years inevitably find that direct political interference increases.
But this time there is a powerful second reason. Digital switchover will take
place over the next seven years. The financial commitments, the infrastructure
build out, the targeted help scheme, all have a seven year horizon. The BBC's
mission over the next seven years is crystal clear in the White Paper. There
is a powerful case for settling the BBC's funding for the same period.
At the time we announced the bid we said it was inevitable that the figures
would move. Since then some – like our estimates on our pension costs – have
gone up. Others – like the proposed move to Salford – have come down. Over
the past year BBC Governors have kept up the pressure on us to refine and,
where possible, reduce the costs of our proposals.
Although some costs, particularly some of those associated with switchover are
still uncertain, the net impact of that work has been to bring our bid down.
If Ofcom decides that it would not be appropriate to levy Spectrum Tax over the
settlement period, then our bid – which a year ago today stood at RPI plus 2.3%
– will be locked off this autumn at around RPI plus 1.8%. Targeted help
remains outside these numbers, as it has all along.
So: a bid for a for a licence fee that grows in real terms. But a licence fee
which the Government's own research suggests that the public are prepared to
But what happens, I'm sometimes asked, if you don't get the money you're asking
for? What will drop off the end of the list then?
Again, I believe the answer should begin with public value. The BBC – and in
particular the new BBC Trust – is charged with delivering the maximum possible
public value with the resources available to it. If those resources are
insufficient, then it should use the BBC's public purposes and the framework of
reach, quality, impact and value to prioritise. The preferences of the public
themselves should weigh heavily with the Trust. It's also possible that some
proposed new services will fail their Public Value Tests and therefore will not
So a definitive answer to the question will only be possible when the new Trust
and Executive Board have got down to work and started to prioritise and operate
the new approvals process.
And yet some things are clear. The proposals in the bid for investment in
quality content, for better local services – in particular the idea of local TV
– and for on-demand and other new digital applications all score very highly in
the Government's willingness to pay research. Nearly 60%, for instance,
supported the idea of local TV.
Now clearly, local TV is not something the BBC has to do: after all, we and
the public have survived without it for the past 80 years. Nevertheless, in
addition to strong public support, it also now has the backing of many
politicians and community leaders who have seen it in action in our West
Midlands pilot. They recognise that it goes straight to the public purpose the
BBC has been set to help citizens and communities engage with each other and
with the big issues that affect them. It's a powerful and cost-effective new
way of building public value.
Again, one could scale back on the plans to invest in quality content. Replace
fewer repeats. Cancel the proposed investment in children's content.
It's worth asking though: who would benefit? Some commercial broadcasters
certainly believe that they would. But not the independent sector. Not the
freelance or craft sectors. Not the wider creative industries. Because when
commercial revenues are volatile, the investment in Creative Britain which the
licence fee represents becomes more not less important - £1bn a year
flowing through the BBC into the wider creative industries. ITV investment in
British children's programmes is in full retreat. Is this really the right
time to prevent the BBC from investing a little more?
In fact I believe it is more likely that, in the event of a low settlement, the
Trust will focus on those proposals which – though very important – are lower
on the public's list of priorities.
As I think almost everyone knows, I am very committed to the vision we have for
a new broadcast centre in Salford. I believe it is right for the BBC. Right
for the UK's creative industries. Right for the North – indeed for the whole
It's an idea which began three years ago as a classic BBC grand projet – with
an estimated price to match. We've transformed the proposal since then, worked
with the private sector and local and regional stakeholders and come up with
what we believe is a transformational plan for creativity and jobs in the
But from the start, the BBC's Governors have made it abundantly clear that they
would only approve the case for Salford if it could demonstrate robust value
for money, and the licence fee settlement made it affordable.
I am sure that the Trust is likely to take the same view. Indeed, in the event
of a low settlement, I would not even be able to recommend it to them. We
would have to find other, more modest, ways of increasing our investment in the
Finally, there is the question of digital infrastructure and the enormous
investment that requires. We believe passionately in our digital mission and
in the universality of service which switchover promises. We're prepared to
work very hard at releasing cash from our existing licence fee to make it
But the licence fee is not an endlessly stretchable rubber-band. We are at or
very close to the efficiency frontier. The targets we have signed up to in our
bid will themselves be difficult to achieve.
We can't do everything. We can't rob existing core services to pay for
switchover. In the event of a low settlement, the Trust will face some
difficult choices about delivering the mission set out in the White Paper.
It's now more than two years since Michael Grade and I arrived at the BBC.
During that time, the roles of Chairman and Director-General have become more
distinct and separate. Scrutiny and challenge of BBC management is more
systematic and rigorous – behaviourial changes that will become structural and
irreversible when the new Trust is formed.
Nonetheless, it's also true to say that Michael and I both returned to the BBC
with similar priorities in mind. Reform and modernisation of a great but
sometimes complacent institution. A spirit of openness and accountability, not
just to stakeholders and policy-makers but to audiences and licence-payers. A
focus on what the BBC really stands for – above all the excellence of its
services – and on the unique ways in which it can build public value. A
determination finally to guide this sometimes cussed, sometimes eccentric, but
also precious and utterly irreplaceable Ark through the waters of change.
The work is just begun. But it's well begun. We have as clear and bold a
strategy for the future as any media organisation I know. We've shown that we
won't shirk from difficult or unpopular decisions if they are in the interests
of audiences and our long-term future. We're building new bridges to the rest
of the creative industries.
I have no doubt that Michael and the new Trust will pursue the path of reform
and engagement vigorously during the new Charter. So too will I and the BBC's
But reform needs support. And an important part of that support is realistic
funding. The public has shown not just that it trusts the BBC model and that
it understands the concept of public value. It has shown it's prepared to pay
for it. That's a message which I hope the Government will now heed. Thank