麻豆社

Speech by Rona Fairhead, 麻豆社 Trust Chairman, to the 2016 Oxford Media Convention

My focus today will be on the 麻豆社's future.  But I can't begin to do so without referring first to the 麻豆社's past.

Last week, we published Dame Janet Smith’s report into the horrific sexual abuse carried out at the 麻豆社 by Jimmy Savile and Stuart Hall – often on children. The report is highly critical of the 麻豆社, and appropriately so. The 麻豆社 failed to protect all those who put their trust in it. It failed the victims, or survivors as many like to be known, its audiences, the public and its staff.

I apologised unreservedly to the survivors, and I want to do so again now. They have shown enormous courage in coming forward to talk about the traumatic experiences they suffered. Now, we must do everything we possibly can to prevent this ever happening again – this is the pledge that both I and the Director General have made to the survivors and to the public.

The 麻豆社 must restore the trust of the public and ensure that everyone – whether they work for the 麻豆社, at the 麻豆社, with the 麻豆社, or are just visiting the 麻豆社 – feels safe in the 麻豆社’s hands.

The victims cannot forget what happened to them.  Nor will we forget. 

We are mid-way through the process of Charter Review.  This speech feels almost like a half-time team talk. Not least because, let’s face it, this game got off to a bad start. Instead of the debate we were expecting about what the 麻豆社 should deliver to the British public, it began with a set of very abrupt decisions about funding. Without any kind of transparency or proper process. 

I have said repeatedly that, while I recognise the Government’s legal right to take the decisions it took, it was the wrong way to do it and I want to make sure there is no repeat. 

Our objective ever since has been to try to ensure that the next round of Government decision-making – about the Charter itself - is based on clear evidence and takes into account what the public – who pay for the 麻豆社 – want from the 麻豆社. That’s why we have commissioned such a substantial body of work to capture licence fee payers’ views – public consultations; extensive UK-wide polling; focus groups; and face-to-face seminars across the country.

We also commissioned and published a wide range of other expert advice and evidence – from KPMG’s study about the 麻豆社’s market impacts, to PwC’s assessment of the 麻豆社’s efficiency, and Kings College London’s work about protecting the 麻豆社’s financial independence.

It’s fantastic that so many people also responded to the Government's green paper. The findings published yesterday show huge public support for the 麻豆社 with over 80% saying they believe the 麻豆社 serves audiences well or very well. We welcome this publication, and I’ve received very clear reassurance from the Secretary of State that all the responses will be properly considered in their decision-making.

I hope we now don’t have too long a wait for a White Paper. Because I am very conscious of the amount of work that will still need to be done after that - to agree the detail of a new Charter and a plan to implement any changes. 

For the time being, Charter Review hangs over the 麻豆社: a cloud of uncertainty and unease. I dearly hope that cloud will have blown over by the end of this year, but that will require some clear decisions to be taken, and quickly.

The publication of Sir David Clementi’s report is a useful starting point. I will talk some more about this in a moment. But before doing that I also want to set out my stall for the forthcoming White Paper.  Because a lot still hangs in the balance. 

Even its strongest critics accept that the 麻豆社 is a great strategic national asset: a core piece of the UK's cultural, economic and democratic infrastructure.  Like any vital asset it needs to be sweated, but it also needs to be kept fit for purpose, and to be able to move with the times. So in the coming weeks, as we approach the White Paper, these are the principles that the Trust will be pushing for.

First, that the Government does nothing to undermine any aspect of July’s financial settlement.

Second, that the White Paper’s proposals are based on clear evidence about what the public want from the 麻豆社.

And third, that the Government takes concrete steps to provide better protection for the 麻豆社’s future independence. Let me take each of those in turn.

There must be no undermining or backtracking on the deal.

As I’ve said, the July funding settlement was far from ideal.  But it did at least set a clear financial framework. The terms state that the licence fee will rise in line with inflation unless the new Charter makes a fundamental change to the purposes of the 麻豆社 or the scope of its mission; or unless the 麻豆社 is clearly out of step with the public sector rate of efficiency.

It is clear from the public’s responses to both the Trust and the Government that there is no public appetite for fundamental change – in fact 56% of people say they want more from the 麻豆社, and only 7% say they want less.

The 麻豆社's success in achieving efficiencies over recent years is demonstrated by PwC's work. They found that the 麻豆社’s overhead costs - at 7.6% - are well below the public sector average of 11.2%. And that the 麻豆社 is on track to deliver £1.6bn cumulative annual savings by the end of the Charter.

The Government also committed to close what's become called the iPlayer loophole.  [And I am delighted that John Whittingdale has confirmed today that they are making progress.]

Let me also state very clearly that, in our view, the funding settlement rules out any future top-slicing of the licence fee, or any ideas for setting up contestable funds.  Any such step would amount to an additional cut in the 麻豆社’s income and therefore an unacceptable change to the financial agreement.

Our second principle is that the new Charter must do nothing that flies in the face of clear evidence about what the public think and want.

Since I took this job as Chairman of the Trust, I’ve been clear that those who pay for the 麻豆社 – the public - must have a real say. Three themes have come through strongly from all our evidence-gathering:

First, the public support the 麻豆社’s existing, broad mission. 85% support the aims of the 麻豆社 to educate, inform and entertain. And when people are asked to choose words that summarise what the 麻豆社 is there to do, they put ‘entertain’ at the top of the list.

At it’s very best, entertainment can inform and educate the audience too.  Look at Bake-Off.  Or Great Barrier Reef.  If ever there was proof that public service can be popular, yet distinctive, you see it in these shows.

There's no surprise that they have sold around the world, bringing 麻豆社 values, British values, to international audiences - and in return bringing back significant revenue to offset the cost of the licence fee.  Indeed, in 2014, commercial income effectively reduced the price of the licence fee by £10. A virtuous circle of public service.

Secondly, there is overwhelming public support for a universal 麻豆社. Almost 60% say the 麻豆社 should provide something for everyone who pays the licence fee. Only 8% disagree. Just over 2% of respondents to the DCMS consultation said that the 麻豆社 should not seek to be universal.

We propose that the requirement to provide a universal service should be inked into the next Charter.  Universality is not just about who pays for the 麻豆社, of course, but who values the services it offers.  The Charter must be explicit that those services need to reflect the varied interests of the whole UK population. They need to reflect the growing diversity of the UK but also bring all its parts together for key events and moments.

And universality means ensuring that 麻豆社 services remain within easy reach for all audiences, free at the point of use, on a wide and evolving range of devices and platforms.

Thirdly, audiences want the 麻豆社 to evolve. Two-thirds of the public believe it is important for the 麻豆社 to develop its services on new online platforms.  The world is changing around it. The opportunities offered by a universal online world are boundless, exciting, and sometimes even a little scary.  There’s room for all sorts of innovators in this world. But let's ensure that the 麻豆社 values that have served this nation so well over four generations can endure for our children's generation too.

That brings me to the final priority for the Trust in the coming months: to ensure better protection of the 麻豆社’s independence.

Nearly 90% say the 麻豆社's independence is important to them. Independence from governments, politicians, commercial pressure and vested self-interest. Editorial independence is obviously crucial. But so too is financial independence. Any teenager will tell you that you can’t be truly independent without it.

An independent report from Kings College, London concluded that the 麻豆社’s financial independence has been diminished over the last decade or so.  This was evident again in the July Budget settlement.

Our proposals to improve the 麻豆社's independence are as follows:

-      Enshrine in the Charter a formal process and timescale for setting the 麻豆社’s future funding.  We must do all we can to avoid any repeat of the last two funding deals conducted in a week or two behind closed doors. Today we’ve set out one idea about how this might work.  

-      Next, give the regulator the job of bringing neutral, evidence-based analysis into the debate about the 麻豆社’s funding, and to give advice – in public - to the Government

-      Give Parliament and the public a proper opportunity for debate before final decisions are taken.

-      Lastly, give the 麻豆社 an 11-year Charter – without any ‘break clause’ or substantive review point.  I know there are some people who argue for a 5-year Charter because of the pace of change.  But look at the way the current Charter has allowed the 麻豆社 to adapt to extraordinary change over the past ten years.

I’m glad to see that these proposals have all been endorsed in one form or another in the last few weeks by Select Committees and former Chairs of Select Committees.

There is, of course, one other big risk to the 麻豆社's independence, and that concerns its future form of governance and regulation. That’s where the Clementi review comes in.

Clementi

I know this conference is one for cognoscenti of the never-ending debate about 麻豆社 governance and regulation.  You will therefore remember that I was here this time last year, discussing that very subject.

My proposal back then was for intelligent reform - to maintain the good parts of the current model and create a clearer separation between a 麻豆社 Board and an independent regulator. Happily, that’s what Sir David Clementi is now proposing, too – a strong Board and a strong external regulator. It’s a structure that we broadly believe can work.

But Sir David also raises questions in some places, and presents options in others. To ensure that a future system is clear and workable, and that the 麻豆社’s independence is assured, there is further work to do on these important details, to put more flesh on those bones of the structure he has designed.

And that needs to happen quickly.  In the coming weeks, we will work closely with the Government and will want to talk to Ofcom with the aim of getting things in place by the end of the year.  We will be setting out a detailed, formal response to Clementi’s report very soon. As we do that work, there are four important questions that we want to think more carefully about, which I will set out today.

First, how can we make sure the new system is as effective as possible?

The effectiveness of the new structure will stand or fall on the clarity of the relationships between the various parts – Government, Ofcom, and the 麻豆社. Sir David recognises this, and provides a very useful starting point on page 51 of his work, where he sets out the high level elements for the regime. The task is now for us to work through the detail about how these parts interact.

To take distinctiveness as an example – how would a definition in the Charter, flow through into more detailed requirements in the Operating Framework?  What level of detail would be in the Operating Licences ? What is the division between the 麻豆社 Board’s reviews of its services and Ofcom’s performance reviews ?

Another example is that Clementi proposes a ‘step in’ power for Ofcom where there is a breach of the licence. We will want to work out how exactly this power could be exercised and what remedies Ofcom could have?

Some other quick observations about the new unitary Board.

Clementi calls for a very serious commitment of time and energy from the NEDs on the 麻豆社 Board – as he says, close to the commitment expected of Trustees, in the current model.  Exactly what their duties are, and how they will be supported, needs to be worked through. 

He also calls for designated Directors for England, Scotland, Wales and Northern Ireland.  We support this proposal, and his view that all Directors need to contribute to the Board’s full set of skills, expertise and specialist knowledge.

Second, will future regulation have the confidence of the industry? The industry needs to understand the tramlines in which the 麻豆社 operates.

Much will depend on the details of the operating licences, which will need to balance the industry’s concerns with the 麻豆社’s need for creative freedom. One area of focus will be the process for scrutinising any new 麻豆社 service, or any potentially significant expansion of an existing service.

The detail is important here. As I’ve said before, there is agreement that the current public value tests have been successful in providing clarity and understanding to the industry, but there is scope for the current test to be shortened and made more flexible.

Clearly, there is a balance to be struck – between operational flexibility for the 麻豆社 and regulatory certainty for everyone else. 

Our initial view was such regulatory decisions would best sit with a body which is not the management of the 麻豆社. Clementi’s proposals could be made to work, but we believe there need to be appropriate safeguards, including a proper consultation process and publication, if there is to be the necessary transparency and rigour.

It is vital that the new system commands the confidence of industry, and we will be keen to hear their views on these proposals.

Thirdly, does the system ensure that the 麻豆社 continues to meet the highest editorial standards? Here again there is some detail to sort through.

There are three objectives that everyone, I think, agrees are desirable:

-      To remove the complications inherent in the current ‘dual regulation’ operated by the Trust and Ofcom.

-      To continue the principle of ‘broadcaster first’ – where complaints about the 麻豆社 (of which there are around 250,00 each year) go first to the 麻豆社 itself, but with an external regulator having a role in adjudicating a much smaller number of complaints at a later stage in the process.

-      To allow the 麻豆社 to set its own editorial guidelines, which could be more prescriptive than the code laid down by Ofcom.

The 麻豆社 and the Trust currently allow for complaints and appeals across a broader range of areas than Ofcom regulates.

The Clementi report recognises this difference.  He recommends that Ofcom’s Code be extended so that accuracy and impartiality rules are applied, as they are now, to all 麻豆社 programmes, not only to news and current affairs.  He leaves open the question of regulation of online and the World Service.

We also think that the 麻豆社 should continue to be free, if it wishes, to go beyond Ofcom’s Code. As things stand, for example, the 麻豆社’s Editorial Guidelines  regulate the process of programme making not just the programme itself. So that, for instance, journalists are required to ‘double source’ a news story – not something that is required under the Ofcom Code.

We believe that to meet public expectations of the 麻豆社, it will be important that whenever someone is not satisfied with the 麻豆社’s response to a complaint in any area – including online - they still have the option of pursuing it with an outside body. We would not want to see this right to complain drop through the cracks.

This leaves a further knotty question that needs more thought.

Finally, will the new structure keep the 麻豆社 independent? I have two general concerns here, about how the new system will be implemented.

My first concern is about the scope for excessive Government or Parliamentary involvement in the way the 麻豆社 is regulated.  Any independent regulator needs to have very clear discretion to take decisions – for example to set or amend licences for 麻豆社 services.

It must be able to do so without Government involvement – and to act within a clear framework that the 麻豆社, the market and the public can all understand.  It needs to be constituted in a way that limits the scope for political pressure to be put on the 麻豆社 through its regulator or through changes to the rules that the regulator applies.

The Clementi model calls for a form of regulation that is specific to the 麻豆社 and different to the model applied by Ofcom to other broadcasters.

We agree. And we think this means the regulator needs to have a new set of powers and duties that are tailored to the new framework and to the 麻豆社.

The questions are: where should these rules be set out, and how should they be applied? One option would be to use a new Act of Parliament to amend Ofcom’s powers and duties to provide for all the detail of the regulatory scheme that Clementi envisages – similar to the sort of legislation that was used when Ofcom took on postal regulation. 

An alternative would be to look at whether a Charter could provide the necessary powers – either the 麻豆社’s Charter or, even, a separate Charter. 

The appeal of this option, in practical terms, is that a Charter can be drafted more swiftly than primary legislation, and therefore this approach would give the Government a greater chance if it wants to resolve things in the time available before the current Charter expires.  This is one issue we will giving much more thought to in the coming weeks.

The second concern is about appointments to the Board.  The Chair of the 麻豆社, and the other Non-Executives, will in future be much closer to editorial and creative decision-making than I and the Trustees currently are.  Indeed, whereas we are explicitly forbidden involvement in editorial or operational decisions, the Unitary Board will be explicitly responsible for them. 

Any appointments process therefore needs a greater degree of independence from Government – and the report recommends that a number of them be appointed without any Government involvement at all.  He also envisages some appointments by Government but sets out two alternatives for the 麻豆社 Chair and Vice-Chairman.  Our view is that the process needs to be carefully designed so that any Ministerial involvement is proportionate and appropriate.

In conclusion

The key principles for good governance don’t change:

• The 麻豆社 must be and be seen to be independent.
• There must be proper scrutiny over how the 麻豆社 spends public money.
• The public themselves must have a say – in particular because they pay directly for the 麻豆社 through the licence fee.

In addressing these key principles, the Trust has no institutional stake in this debate.  We have made it clear that we want intelligent reform. As the Clementi report recognizes, the current governance model has brought some important improvements. It has brought greater transparency and accountability to the 麻豆社, and better scrutiny of 麻豆社 proposals. It has given the public a stronger say in the way the 麻豆社 is run. 

Any future model needs to build on those strengths – and to address the clear weaknesses.

For the rest of this year, we will do whatever we can to use the benefit of this experience and expertise to help design a new system and work through the critically important detail. We will need to build consensus for this intelligent reform across the industry and the political spectrum.

But our primary focus throughout the whole of this process must be to continue to ensure that the public voice is heard. We will continue to be vociferous in representing their views and ensuring tomorrow’s 麻豆社 will deliver what matters to audiences – a strong ambitious 麻豆社, that takes risks, is distinctive and representative, open and efficient, independent and accountable. Then we would have a 麻豆社 that can be cherished by future generations.