Â鶹Éç

Once upon a time you used to have to wait ages for a review of public service broadcasting. Now they seem to come along like the buses on the high street here in Oxford: no sooner has one departed than another looms eagerly into view.

You might think this new review indicates an immediate crisis about to hit us. But turn on your TV and it's clear that the PSB eco-system is vibrant and productive.

The Christmas schedules were stuffed with good things with PSB values right at their core.

The Â鶹Éç offered not just what you'd expect: Oliver Twist, specials from Dr Who and EastEnders, Carols from Kings – but more specialist fare too. Fans of dance, for example, were offered Ballet Shoes, Dance Britannia, Darcey Bussell on the history of ballet – and Alesha Dixon winning Strictly Come Dancing.

And Â鶹Éç News on all its platforms kept us closely informed on the two big international stories – the aftermath of the Kenyan election, and the assassination of Benazir Bhutto. And I am pleased to welcome back ITV's News AT Ten.

Part of my own Christmas viewing was working through the pile of DVDs of shows you all saw earlier in the year. I finally caught up with that fine series The Street – commissioned by Â鶹Éç One, but made by ITV Productions, evidence of a thriving mixed economy.

And then there was the in-house triumph of Cranford – that wonderful, delicate exploration of a social system finding ways to cope with sudden, dislocating change while hanging on to its core values. Not a bad metaphor for the task ahead for public service broadcasting.

The challenges are profound: the reality of multichannel TV; convergence; changes in markets; and increasingly complex public expectations. But let's not overdo the gloom.

It can't have escaped your notice that PSB has just won a new friend in the shape of President Sarkozy. He's suggesting that what France needs right now is a French version of the Â鶹Éç. He sees this French Â鶹Éç as part of what he calls a "policy of civilisation".

I couldn't put it better myself…

The Trust wants audiences to be at heart of the PSB review

At the Trust we're approaching the PSB review as we do everything else – from the point of view of audiences. After all they pay for the Â鶹Éç through the licence fee: a privilege that we at the Â鶹Éç never forget.

So, as far the Trust is concerned this is not a debate about the interests of broadcasters. In our view it's not even about the interests of the Â鶹Éç, narrowly defined. It is – or it ought to be – a debate about the interests of audiences.

As this review gets underway I do have some concerns that in one important area the interests of the audience are not being taken fully into account. I'll come to that in a moment.

Audiences are evolving rapidly

First I want to consider the rapidly evolving nature of our audiences, in particular, their increasing complexity, and the impact this has on all PSBs, but particularly the Â鶹Éç.

The traditional nuclear family – the Oxo family of old – is in marked decline. Cohabiting couples are the fastest growing family group, and we see increasing numbers of lone parent families – and single person households.

Many people have a stronger sense of themselves as individuals rather than as parts of communities. Minorities are becoming more confident about asserting their needs. Britain is becoming much more culturally diverse. We see increasing numbers of people who identify with multiple communities – social, cultural or geographical. There's a rising demand for personalisation and customisation – for services crafted just for you.

The Â鶹Éç faces particular challenges here

Changes like these in the social and demographic makeup of Britain affect all providers of public services, but they place particular demands on the Â鶹Éç.

The Â鶹Éç cannot cherry pick its audiences as commercial broadcasters can. Because of the way it is funded, and because its Public Purposes mean that it has to engage with everyone in the UK, the Â鶹Éç has to find ways to reach all its audiences in all their complexity.

This doesn't mean that every programme or piece of online content has to satisfy every individual licence fee payer – although some kinds of Â鶹Éç output should appeal to very large sections of the audience.

But it does mean that every audience member must find enough they value from the Â鶹Éç to justify the licence fee and to provide the means by which the Â鶹Éç can engage with them in order to deliver its Public Purposes.

The big challenge the Trust has set Mark Thompson and his team is to provide distinctive, high quality services that set standards for all PSBs, that clearly demonstrate value for money, that, together, reach all audiences, and that deliver the Public Purposes. These are the Â鶹Éç's top priorities and, in my view, they are the route to securing continued public support.

The Â鶹Éç's six-year plan that we recently approved charts a strong way forward and acknowledges there is more to be done on many fronts.

Trust to review Â鶹Éç services for children and young people

One of the most important tools the Trust has to make sure that the Â鶹Éç stays true to audience expectations is the regular reviews we carry out of all Â鶹Éç services. We look in detail, at least once every five years, at every one of the 27 Â鶹Éç services. Currently we're reviewing bbc.co.uk, with the results due in spring.

Next in line will be Â鶹Éç services for children and young people – across all platforms.

Why children and young people?

Well, the Â鶹Éç has to engage effectively with all its audiences if it is to deliver its Public Purposes. Children and young people are no exception.

And while Â鶹Éç services for children enjoy a high reputation, as Ofcom's research has shown, high quality British-made children's content in general is in some trouble.

The Trust wants to be sure that the Â鶹Éç is engaging with children as effectively as possible across all its platforms and is not in danger of following the retreat of its commercial competitors.

Where "young people" – as opposed to children – are concerned, the Trust wants to ensure that the Â鶹Éç's strong record of engagement with its youngest audiences continues as those audiences grow into adulthood.

We know that young people are among the groups it can often be hardest to reach. We know they are watching less television in general and less news in particular – raising questions about how well the Â鶹Éç can deliver its Public Purpose of sustaining citizenship among this audience.

We also know that what the Â鶹Éç offers young people has sometimes been the object of harsh criticism – not always well-informed, and sometimes voiced by commentators well past their own first flush of youth.

We believe that conducting a rigorous review, building a solid evidence base, is the best way of providing a firm foundation for future work to ensure that children and young people get the best possible service from the Â鶹Éç.

Trust calls for a fully informed debate on top-slicing before far-reaching decisions are taken

This seems to me the way we should approach the PSB review: identification of the significant issues, careful collection of evidence and assessment of audience needs, then a rigorous review and debate – and then, and only then, decisions on policy.

But I am concerned that in one area of the review some people are in danger of jumping to the decision stage before all the other stages have been completed – and in the process, short-changing the audience.

I'm talking here about top-slicing – the suggestion that a part of each licence fee should go to a body that would use the money to subsidise public service content from broadcasters other than the Â鶹Éç.

Now the future funding of other PSB providers is a serious issue, put forward by serious people and worth serious consideration. And on this, as on everything else, the Trust is open to an energetic debate.

But let me sound a note of caution here. Being open to debate means just that. It means: let's have a debate.

My concern is that, right now, top-slicing is being presented by some as the solution before the debate has been held – or even before the necessary work has been done to ensure the debate is fully informed. And that's not in the interests of our audiences.

So let me set out here what we in the Â鶹Éç Trust see as the key unresolved issues here.

First is the potential impact of the proposed change.

I think it is unarguable that top-slicing would represent a very fundamental change in the ecology of public service broadcasting.

The strength of that ecology lies not only in the strengths of each of its constituent parts but also in the way that they interact with one another.

The commercial PSBs and the Â鶹Éç compete, broadly speaking, for audiences, but not for revenue. The result is incentives for all the players to invest in high quality UK content, with – so far, at least – enough money from a diversity of sources to enable that to happen.

This has produced a good result for audiences.

But now the system is coming under strain as the downturn in TV advertising and the tight licence fee settlement put pressure on revenues.

So the question here must be: is this the right moment to put the system under further strain by changing the fundamental nature of the licence fee? Are we quite clear what the effects of that would be on the system as a whole?

That's the first issue. But there are others.

Ofcom has made a good start in clearing the ground for the discussion by identifying "five overarching questions" in its terms of reference for the PSB review. "Questions", note, not "answers".

But if we look at just one aspect of the issues raised there – the issue of plurality – then it becomes clear how much work has yet to be done before we can start to grapple with funding questions which may – or may not – include top-slicing.

Plurality – in other words, the belief that there should be a range of broadcasters from which audiences can get public service content – has much to be said for it.

Competition in the supply of public service content has worked to the benefit of audiences. The Â鶹Éç does not approach the debate with an aspiration to be the monopoly PSB supplier after switchover. I believe there is good reason to question whether that would be good for audiences – or for the Â鶹Éç.

But it's important that we are absolutely clear what we mean by plurality and what the challenges are likely to be after switchover.

For example: do we know what value audiences will place on the maintenance of a range of public service broadcasters after switchover?

Will they place greater value on some kinds of programming than on others? If so, on which kinds? How wide a range of PSBs or of public service content will they want? How can the costs and benefits of maintaining that range be properly evaluated? Work undertaken by the Audit Commission whilst I was there clearly demonstrates that while people value choice, they are not always willing to pay for it. What form does plurality need to take? Is it about institutions? Or channels? Or sources of funding? These are complex questions, and the work of exploring them still has some way to go.

And also is it possible for the Â鶹Éç to get better still at making a contribution to the diverse needs and choices of its audiences?

It's clear the answers won't be simple.

For example, the supply of public service content is no longer the monopoly of public service broadcasters as formally defined. To give just one illustration: Sky provides public service content on its news channel and on its arts' channel and it does so for its own commercial purposes.

The market, in other words, provides some degree of plurality without the stimulus of regulation or public funding. This must not be overlooked in this debate. And particularly so when some of the current commercial PSBs seem to be losing their appetite for continuing to deliver a wide range of public service content as currently required.

We need to work through all the implications of this and other issues before we can even start to consider issues of funding.

But let us say the work has been done, and let us assume that the answer is that some plurality of public service supply should be supported after switchover. Would it not, even then, be quite a leap from there to the conclusion that direct public funding is the answer?

And a still greater leap from that conclusion to the conclusion that top-slicing the licence fee is the right source of that funding?

Where questions of funding are concerned the ultimate decision lies, of course, with the government. And the Secretary of State will be carrying out his own review of PSB funding once the Ofcom PSB review is completed, so there is still quite a road to travel.

Would top-slicing threaten Â鶹Éç accountability to its audiences?

But let me put on record here some further questions about top-slicing that need clear answers.

The first is this: what weight should we give to the real risk that top-slicing poses to the accountability of the Â鶹Éç to its audiences?

The licence fee establishes a clear and vividly straightforward relationship between audiences and their Â鶹Éç.

The licence fee payer knows exactly where the money is going and who to hold to account. This is very rare in the complex arrangements by which we fund public services in this country.

All my earlier work on the funding of local services underlined 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.

The licence fee delivers a degree of accountability that works strongly in the interests of audiences. As far as the Trust is concerned we would like to see this degree of transparency increased, not diminished.

Should we not think very carefully indeed before diluting or blurring the clarity and directness of the current licence fee arrangements?

Would top slicing threaten the Â鶹Éç's ability to deliver the Public Purposes?

The second question is this: could the Â鶹Éç deliver its Public Purposes if top-slicing resulted in a significant reduction in its funding?

Parliament has given the Â鶹Éç a role that goes well beyond its function as a commissioner, producer and transmitter of wonderful programmes.

Through the Public Purposes the Â鶹Éç is expected to play an important role in shaping the future of the UK – through its educational activities, its contribution to civil society, through its duty to stimulate creativity, to represent the nations and regions of the UK, to bring the world to the UK and the UK to the world, and so on.

These Public Purposes can't be taken lightly. The Â鶹Éç is not just a publicly paid-for ITV. Its responsibilities to its audiences are much bigger.

In any debate over switching funding away from the Â鶹Éç we must ensure that a proper value is attached to the Public Purposes and a proper assessment made of the potential cost to the UK if the Â鶹Éç were less able to deliver them.

Proponents of top-slicing tend to talk about an "enhanced licence fee": in other words the current licence fee with some new money on top to subsidise non-Â鶹Éç broadcasters.

But how likely is it that any government would sanction a higher licence fee for this purpose? And, just as important, how likely is it that the public would be prepared to pay it? Particularly for services which up till now they have perceived as free?

And if there is no new money and the new subsidy is to be funded by reducing the Â鶹Éç's income, how big a risk does that pose to the Â鶹Éç's ability to deliver the Public Purposes as laid upon it by Parliament?

The public need to have an absolutely clear answer to this question: would weakening the Â鶹Éç's ability to deliver its PSB mission in order to help other broadcasters deliver theirs really serve the interests of its audiences?

Broadcasting, as I have already suggested, has a complex ecology and before we sign up to chopping back one part of the forest, let's be clear what the benefits might – or might not – be for the eco-system as a whole.

Let me repeat: these are questions for debate. The Trust has no interest in blindly defending the status quo. One of my early statements, as Chairman, was that I do not see myself as a gladiator for licence fee. But by the same token, it is in no one's interest – certainly not the interests of the audience – to advocate radical change without first exploring in detail all the potential consequences.

PSB debate should not be the forerunner of increased regulation

Let me make one final plea.

I hope that this debate does not end in more regulation.

In my previous life, including my time at the Audit Commission, I've learned that it is extraordinarily hard for regulators to resist the temptation to increase the scope of their regulation.

I hope that, when Ofcom comes to make its recommendations and the Secretary of State comes to make his decisions, that won't be the outcome here.

It's a well accepted economic truth that in an over-regulated economy the regulated can start to believe their real job is to satisfy the regulator not the customer.

The principle applies to broadcasting as much as to any other kind of economic activity. It would not be in the interests of audiences if the PSB review became the forerunner of increased regulation.

Let's not forget that audiences are at the heart of this debate. Let's ensure the debate fully reflects their interests.