The BBC needs a new and robust system of governance to guarantee its independence

Most agree the BBC Trust is a busted flush, but that leaves a dilemma of finding a model of governance which provides the best guarantee for the BBC’s independence. Howard Davies writes there are two important issues to be resolved: one of process, making sure that any government decision is submitted to proper scrutiny; the other of substance, namely how the governance system is set up to carry out its key functions.

Credit: David Carroll CC BY-SA 2.0

The Government’s Green Paper on the BBC once again opens up the question of governance. Culture Secretary, Whittingdale himself has been categorical about the BBC Trust’s manifold sins. In a speech in 2013, he said: “I was always of the view that actually the BBC should be run in a traditional corporate structure with a board of directors with non-executives on it and it should be regulated by an external regulator, probably called Ofcom”. He sees such an arrangement as preferable to that put in place by Tessa Jowell a decade ago, whereby the Trust was an unclassifiable creature: half-regulator, half cheerleader.

Even before Whittingdale’s appointment it was clear that opinion in the Conservative Party was on the move, after five years defending Blair’s structure, especially during Chris Patten’s reign as chair of the Trust. During the election campaign, George Osborne told Radio Times that: “the Trust arrangement has never really worked. I’ve never understood why the BBC is frightened of regulation by Ofcom”.

So who is now left defending the Trust? Its chairman, surely? Well, not quite, as Rona Fairhead herself has realised that there is a “fault line in the blurred accountabilities” between the Trust and the BBC’s management it is supposed to oversee. She argues that the corporate governance responsibility should be in the hands of a new unitary board, with an independent chair and with the non-executives in a majority, as the UK corporate governance code now requires. Regulation should be handled by an external body.

Morale among Trust staff must now be low. Even their own chairman has abandoned them. All their hard work on public value has been set aside. But Fairhead was only accepting what had become inevitable. John Whittingdale’s parliamentary committee concluded in its 2015 report, The Future of the BBC, that the Trust should be abolished and be replaced by a unitary board and a public service broadcasting commission (PSBC). The committee went back to the formula proposed by the Burns Committee in 2004. With this degree of consensus on display, and an almost universal view that the Blair/Jowell scheme has been a decade-long disaster, what is left to discuss? Can we not simply get on with the change?

That may well be how things turn out, but there are two important issues to resolve, one of process and one of substance.

Previous Charter Reviews have been accompanied by an independent inquiry, designed to tease out the major issues and allow a process of public consultation. This time the new secretary of state has appointed a group of advisers, some of whom have firm views about the BBC’s mission. But it seems that their advice will be given in private. There is no mention of an independent collective report. Whatever emerges from this Charter Review needs to attract a degree of consensus support. There is a risk that whatever the government decides will not have been submitted to appropriate scrutiny.

Scrutiny and debate are important, because while the death of the Trust is almost universally supported there is less agreement on how its responsibilities should be reallocated. The Green Paper suggests two options: “a new standalone regulatory organisation, such as the public service broadcasting commission … and moving more regulation to Ofcom while abolishing the Trust.” Both would sit above a unitary board.

How should we evaluate the strengths and weaknesses of these two options? The BBC’s governance system needs to carry out three principal functions:

to promote operational effectiveness;
to provide consistent regulatory oversight, and
to judge the quality of the output.

Taking these functions in turn, the role of providing efficient decision-making and operational effectiveness would be the responsibility of the board independently chaired, and endowed with a majority of nonexecutives.

The other two elements are more problematic. A decade ago there was nervousness in Broadcasting House about the prospect of making the BBC subject to Ofcom. Some of those concerns have dissipated as Ofcom has demonstrated an ability to maintain its independence and reach well balanced views. But there remains uncertainty about precisely what Ofcom would do, and whether a separate public sector broadcasting commission (PSBC) would be preferable.

So what would a public sector broadcasting commission do, and how would it interface with Ofcom? The Burns Committee saw the commission as having an important role in funding. It would receive licence fee money and distribute it to the different broadcasters with a public service obligation. Obviously, the great majority of the money would go to the BBC itself in present circumstances, but some would be routed to S4C, Channel 4 and ITV, and perhaps elsewhere. That would give the PSBC an obvious locus in relation to quality, but without a view of competing offerings it would be difficult for it to decide on an appropriate funding distribution.

The Select Committee’s model is different. The PSBC would not be the principal funding channel, though “it could recommend withholding some funding from the BBC in cases where there was a persistent disregard for the views of licence fee payers”. That would still be a powerful sanction. There is a danger, though, that it could be used in retribution for a programme the government did not like.

My own preference would be for regulatory oversight to be undertaken by Ofcom. It is difficult to see how a regulator focused solely on the BBC can properly address market dominance questions. Similarly, it is impossible for the BBC to rule on complaints against itself. So while complaints should initially be handled by the Corporation, dissatisfied complainants should have access to Ofcom.

As for quality control, that would largely a matter for the BBC board itself, under PSBC oversight. That oversight would be far sharper if the body carrying it out had a credible sanction to deploy. I doubt whether the sanction proposed by the Select Committee of withholding funding in egregious cases would work easily in practice, which takes me back to the Burns model. I prefer an arrangement whereby the PSBC would recommend the allocation of licence fee funding between the BBC and others. A solution along these lines, with some contestability of funding, would be the best guarantor of a strong and independent BBC.

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This post originally appeared on the OurBeeb section of Open Democracy. It represents the views of the author only, and not those of Democratic Audit UK, the LSE Public Policy Group, or the LSE. Please read our comments policy before posting.

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Howard Davies is Chairman of the Royal Bank of Scotland and professor at Sciences Po in Paris. He was director of LSE from 2003 to 2011 and was a member of the Burns Committee on the BBC during the 2006 Charter Review.