The BBC now and in the future Overview The draft Royal Charter signals far-reaching change at the BBC.The new BBC Trust which will replace the Governors has an explicit duty to represent the interests of licence fee payers.As a result, there will be much sharper separation between those charged with the oversight of the BBC and those charged with delivering its services. Another significant change is that, for the first time, the new Charter will include a definition of the public purposes of the BBC.These are:  Sustaining citizenship and civil society  Promoting education and learning  Stimulating creativity and cultural excellence  Representing the UK, its nations, regions and communities  Bringing the world to the UK and the UK to the world  Building digital Britain (helping to deliver the benefits of emerging communications technologies and services and taking a leading role in the switchover to digital television) However, some things, such as funding the BBC via a licence fee,will stay the same.This section outlines the current arrangements and the changes ahead. Licence fee Licence fee payers provide by far the greatest part of the money the BBC spends – including concessions there are 25 million – and the new governance structure (see below) will significantly strengthen the influence of licence fee payers in the direction of the BBC. The level of the licence fee is set by the Government. Parliament Parliament scrutinises BBC affairs through debates on the floors of both Houses and through select committee hearings, where BBC Governors – in future, BBC Trustees – and members of BBC management are called to account for the BBC’s performance.The Charter renewal process has been subject to parliamentary scrutiny throughout its course. The Royal Charter The BBC is incorporated under a Royal Charter that sets out the BBC’s objects and constitution. An accompanying Agreement sets out its obligations in greater detail.The current Royal Charter and Agreement are due to expire at the end of 2006.The new Charter and Agreement will run for ten years until the end of 2016 and licence fee funding will also continue for that period.The new Charter explicitly recognises the independence of the BBC. BBC governance The new draft Charter and Agreement impose radical changes on the governance of the BBC. Under the current Charter, there are 12 BBC Governors, appointed by the Queen on advice from ministers in accordance with Nolan principles that public appointments should be made on merit.All are part-time.They bring a broad range of experience and expertise to the BBC Board. National Governors for Scotland,Wales and Northern Ireland each chair Broadcasting Councils, and the Governor with special responsibility for the English Regions chairs the English National Forum.The views of people in the nations and regions on BBC programmes and services are made known through these bodies.The World Service and Global News Consultative Group gives the Governors an independent review of the range and quality of the output of BBC World Service and BBC World. Under the new Charter, the Board of Governors will be replaced by the BBC Trust and there will also be a new formally constituted Executive Board with its role and responsibilities defined in the Charter. The functions of the two bodies will be clearly separated with operational responsibility resting with the Executive Board.The Trust,as the body responsible for the strategic direction of the BBC, will scrutinise the strategies put forward by the Executive Board.The Trust will set Purpose Remits, issue Service Licences (see page 9) and hold the Executive Board to account for its performance in delivering BBC services against the terms and conditions of these documents. BBC Trust The BBC Trust will have ultimate responsibility for the licence fee. It will embody the public interest, represent the views of licence fee payers, safeguard the independence of the BBC and ensure that the BBC fulfils its distinctive public purposes.The Trustees will approve or reject broad BBC strategies, determine top-level annual budgets, and assess the performance of the BBC Executive Board and hold it to account.The Trustees will issue Service Licences setting out the remit and budget of each BBC service, and will commission Public Value Tests (see page 9) when the Executive Board proposes significant changes to existing services or the introduction of new services. There will be 12 Trustees, appointed by the Queen on advice from ministers in accordance with Nolan principles.The Trustees will include members dedicated to the interests of England, Scotland,Wales and Northern Ireland assisted by Audience Councils.The Trust will be expected to be open and transparent in everything it does, and actively to seek the views of, and engage with, licence fee payers. Its independence will be underpinned by a full-time Trust Unit, based on the existing Governance Unit (see page 8). Ofcom, the communications regulator, already regulates some aspects of the BBC and will continue to do so. For example, the BBC follows Ofcom’s standards and fairness codes (except for due accuracy and impartiality, which remain the sole concern of the Governors – and, in future, of the Trustees).Under the new Charter, Ofcom will conduct the Market Impact Assessments when the Trust commissions Public Value Tests. BBC Annual Report and Accounts 2005/2006 The BBC now and in the future BBC Governance Unit Executive Board The Governance Unit supports the work of the Board of Governors, providing independent and objective advice. It will continue this service for the BBC Trust, renamed the Trust Unit.The Unit is independent of BBC management. Its director is appointed by the Board of Governors – in future, by the BBC Trust – and the Unit’s staff are outside the BBC management chain.The Unit provides support across a range of BBC activity including accountability to audiences, performance oversight, financial scrutiny, compliance, and complaints and appeals – both editorial and fair trading. In addition, the Unit uses external advisers for specific projects. For example, during 2005/2006, independent advisers carried out a review of coverage of the Israeli–Palestinian conflict, and accountants from PA Consulting advised on the progress of BBC management’s efficiency measures and scrutinised the BBC’s licence fee bid prior to its approval by the Board. The Governance Unit has a staff of 33. In 2005/2006, the total cost of the Governance Unit was £8.3million (£8.4million 2004/2005). This included £1.3million for the national and regional advisory councils (£1.2million 2004/2005). The Director of Governance is currently reviewing the Unit’s budget and resources against the responsibilities of the new BBC Trust. Under the current Charter, the operations of the BBC are managed by an Executive Board made up of BBC executive directors. It is chaired by the Director-General, who is the BBC’s chief executive and editor-inchief.The Executive Board answers to the Board of Governors, which appoints the Director-General. Under the new Charter the Executive Board will be reconstituted and strengthened by the appointment of a significant minority of non-executive directors, nominated by the Board and approved by the Trust.Their role is to support the Executive Board as ‘critical friends’ and to bring an external perspective and expertise to its work. The Executive Board will be responsible for the delivery of services, the direction of editorial and creative output, the operational management of the BBC, and delivering value for money. BBC The BBC’s 14 divisions produce or commission all BBC output.There are nine broadcasting divisions.They manage the BBC networks and their programme commissioning and production.These divisions are:  Television  Radio & Music  News  Nations & Regions  Sport  Factual & Learning  Drama, Entertainment & Children’s  New Media & Technology  Global News (including BBC World Service and BBC World) In addition, there are five divisions providing professional support:  BBC People  Finance  Marketing, Communications & Audiences  Strategy  Operations The BBC’s commercial subsidiaries – which sell goods and services around the world to maximise licence fee investment – are held under an umbrella company, BBC Commercial Holdings Limited:  BBC Worldwide Limited  BBC Resources Limited  BBC World Limited The profits these subsidiaries produce are returned to the BBC for investment in programme making. Television, radio, online Across the UK, the BBC operates eight television channels and ten radio networks, 46 local and national radio stations, and the interactive services bbc.co.uk and BBCi. Internationally,BBC World Service broadcasts on radio in 33 languages; BBC World delivers a global television news service; and the online site bbcnews.com offers news and audio for international audiences. BBC Worldwide also operates a portfolio of commercial television channels in international markets, some BBC branded, some operated as joint ventures with other broadcasters.These services are not supported by the licence fee but are paid for either by Grant-in-Aid from the Government or by advertising. In addition to broadcast and online services, the BBC works in the community in many different ways, including through BBC Children in Need which raises large sums to help disadvantaged children in the UK. 8 BBC Annual Report and Accounts 2005/2006 Delivering the BBC’s public purposes BBC Annual Report and Accounts 2005/2006 9 Purpose Remits For each of the BBC’s six public purposes (see page 6) the Trust will publish a Purpose Remit setting out high level pan-BBC priorities for the BBC in delivering the purposes and how success will be measured. In developing these remits the Trust will consult publicly. Service Licences The Trust will also issue Service Licences detailing the budget and remit of each BBC service, how they contribute to the delivery of the BBC’s public purposes, and how performance should be measured.All the licences will be published. Performance measurement framework To ensure that BBC services are delivered in line with remits and Service Licences, a new performance measurement framework has been developed.This is based partly on measuring licence fee payer perceptions and partly on empirical measurements of financial and audience data.The aim is to reach assessments that are objective, rigorous and transparent, taking into account four factors: reach, quality, impact, and value for money.  Reach is a measure of usage. It records the percentage of the population who view, listen to or use a service for a given time over a given period (for the BBC, usually 15 minutes over the course of a week). Reach differs from the traditional audience measure: share. Share is the percentage of the total audience watching or listening to a particular channel or service over a given period of time. However, reach is generally accepted as a better measure of universality and therefore more appropriate to the BBC, which has always made universality (for everyone and freely available to everyone) one of its key principles.  Quality is largely a measure of audience perception, but also includes some empirical data. It is tracked through surveys that record the proportion of the audience who believe a particular programme or service is of “high quality” and contains “fresh ideas and approaches”. Assessments of quality also include empirical measures of originality in the sense of the proportion of hours that are new and UK-originated.  Impact is another measure of audience perception. It is tracked through surveys that record the proportion of the audience who believe a particular programme or service is “enjoyable” and “stimulating”. Impact attempts to measure the effect that BBC output has on enriching the lives of individuals and citizens.  Value for money is primarily an empirical financial assessment. It is measured in two ways. One is to divide the total cost of a programme or other output by the number of viewers, listeners or users to produce a cost per viewer/listener/user. The second way is to divide the total cost by the number of viewing or listening hours to produce a cost per viewer/listener hour. Broader measures are also taken into account, such as audience perceptions of how wisely the BBC spends the licence fee. The new performance measurement framework started to come into use in autumn 2004 and continues to be developed.The framework was assessed by the National Audit Office in 2005. When the new Charter is in force, the new measurement framework will form the basis for the BBC’s Annual Report. Public Value Test Public Value Tests will be applied by the Trust if BBC management wishes to introduce new services or make significant changes to existing services. The tests are a recognition that while BBC services aim to create positive public value, they may also impact the market.The tests will assess the potential positive public value of the proposed change and weigh it against an assessment of its potential negative market impact. Only if the potential public value created outweighs the potential negative market impact will the Trust agree to the proposed change being implemented.The Market Impact Assessments will be conducted by Ofcom and overseen by a joint steering group including Ofcom and the BBC Trust.The Trust will publish the evidence and reasoning behind its decisions. Public value survey In addition to regular performance monitoring, the BBC Trust will, every three to five years, commission a major independent survey involving around 10,000 respondents.The surveys will provide valuable indicators of important trends and needs.The Trust will publish the results, together with any action they choose to take as a result. Board of Governors The BBC Governors, led by the Chairman of the BBC, represent the public interest.They hold management to account and ensure the BBC’s independence.They are appointed by the Queen on advice from ministers in accordance with Nolan principles that public appointments are made on merit.The Governors are accountable to licence fee payers and to Parliament. Under the new BBC Charter, the Governors will be replaced by a new body, the BBC Trust (see page 6,The BBCnow and in the future). 1 2 3 4 5 6 7 8 9 1210 11 10 BBC Annual Report and Accounts 2005/2006 1 Michael Grade CBE Chairman BBC Chairman since May 2004 and Chairman Designate of the BBC Trust since March 2005. Chairman of Pinewood Shepperton and Chairman of Hemscott Group both since 2000, Director of Charlton Athletic FC since 1997. Former journalist and theatrical agent. At LWT from 1973 to 1981, latterly as Director of Programmes; President, Embassy Television in Hollywood from 1981 to 1984; at the BBC from 1984 to 1987, latterly as Managing Director of Television Designate; Chief Executive, Channel 4 from 1988 to 1997; at First Leisure Corporation from 1997 to 2000, latterly as Chief Executive; Chairman, Camelot from 2002 to 2004; Director, SMG from 2003 to 2004; at The Television Corporation, latterly as interim Chairman from 2003 to 2004. Broadcasting Press Guild Harvey Lee Award for outstanding contribution to broadcasting 1997. Fellow of the RTS and BAFTA, and Vice-President of BAFTA since June 2004. Born 1943. 2 Anthony Salz Vice-Chairman Vice-Chairman since August 2004. Chairman of the Fair Trading Compliance Committee; Chairman of the Remuneration Committee and member of the Finance and General Purposes Committee. Until January 2006 joint senior partner of the law firm Freshfields Bruckhaus Deringer, continuing as a partner until April 2006. Chairman of the Tate Gallery’s Corporate Advisory Group from 1997 to 2002 (continuing as a member of that group) and a trustee of the Tate Foundation.Trustee of the Eden Project. A director of Habitat for Humanity GB.Trustee of the Paul Hamlyn Foundation. Born 1950. 3 Deborah Bull CBE BBC Governor since August 2003. Member of the Governors’ Programme Complaints Committee and the Remuneration Committee. Principal Dancer, Royal Ballet from 1991 to 2001.Director,Artists’ Development Initiative, Royal Opera House from 1999 to 2001. Creative Director, ROH2 since 2002. Former member of Arts Council England. Has written and presented programmes and series for BBC Television and BBC Radio, including The Dancer’s Body in 2002, and published books on the arts and nutrition. Born 1963. 4 Sir Andrew Burns KCMG The BBC’s International Governor since July 2005. Member of the Audit Committee. Non-Executive Director of J P Morgan Chinese Investment Trust since 2003 and Chairman of the Council of Royal Holloway, University of London since 2004. Former diplomat – posts held include Ambassador to Israel 1992–1995, Deputy Under Secretary of State FCO 1995–1997, Consul-General Hong Kong and Macau 1997–2000, High Commissioner to Canada 2000–2003. President Canada UK Colloquia and Chairman Hestercombe Garden Trust, both since 2004. Born 1943. 5 Baroness Deech DBE (Ruth) BBC Governor since October 2002. Member of the Audit Committee and the Fair Trading Compliance Committee. Independent Adjudicator for Higher Education since 2004. Principal of St Anne’s College, Oxford from 1991 to 2004, having been a Fellow and Tutor in Law there since 1970.Honorary Bencher of the Inner Temple, a Mandela Rhodes Trustee, and Fellow of the Royal Society of Medicine. Former Chairman of the Human Fertilisation and Embryology Authority. Born 1943. 6 Dermot Gleeson BBC Governor since November 2000 (reappointed August 2004) and BBC Trustee Designate. Chairman of the Finance and General Purposes Committee; member of the Audit Committee; Alternate Chairman of the BBC Pension Scheme Trustees. Chairman of M J Gleeson Group plc. Chairman of the Major Contractors Group from 2003 to 2005. A former director of the Housing Corporation and of the Construction Industry Training Board.Former Head of the Home Affairs Section of the Conservative Research Department and a member of Christopher Tugendhat’s cabinet in the European Commission 1977 to 1979. Born 1949. 7 Professor Merfyn Jones The BBC’s National Governor for Wales since January 2003. Member of the Fair Trading Compliance Committee, the Governors’ Programme Complaints Committee, and the Councils and Advisory Bodies Committee. Historian and broadcaster. Professor of Welsh History at the University of Wales, Bangor, specialising in the modern and contemporary history of society and politics in Wales. Pro-Vice- Chancellor of the University from 1998 and Vice-Chancellor from 2004. Author of a number of books and articles. Born 1948. 8 Professor Fabian Monds CBE The BBC’s National Governor for Northern Ireland since August 1999 (appointed for a second four-year term from July 2003). Member of the Governors’ Programme Complaints Committee, the Fair Trading Compliance Committee, and the Councils and Advisory Bodies Committee. Chairman of the trustees of BBC Children in Need. Specialist in communications, information systems and entrepreneurial studies. Chairman of the Northern Ireland Centre for Trauma and Transformation in Omagh. Former Chairman of Invest Northern Ireland and former Pro-Vice-Chancellor of the University of Ulster. Born 1940. 9 Jeremy Peat The BBC’s National Governor for Scotland since January 2005 and BBCTrustee Designate. Chairman of the Audit Committee, member of the Finance and General Purposes Committee and of the Councils and Advisory Bodies Committee. Chairman of the BBC Pension Trustees. Panel member of the Competition Commission and Director of the David Hume Institute. Former Group Chief Economist at the Royal Bank of Scotland. Former economic adviser to the Treasury and the Scottish Office.Visiting Professor, Edinburgh University School of Management; Honorary Professor,Heriot Watt University; Fellow of the Royal Society of Edinburgh; member of the Council of the Scottish Economic Society. Born 1945. 10 Angela Sarkis CBE BBC Governor since October 2002. Member of the Governors’ Programme Complaints Committee. Independent consultant; member of the House of Lords Appointments Commission, and adviser to the Department for Education and Skills on teacher workload management and school leadership. Former non-executive director on the National Offender Management Board at the Home Office. Former Chief Executive, Church Urban Fund and former Vice-President of the African Caribbean Evangelical Alliance. Chairman, NCVO Diversity Project and a founder member of the Social Exclusion Unit. A former trustee of BBC Children in Need. Born 1955. 11 Ranjit Sondhi CBE BBC Governor since August 1998 (appointed for a second four-year term in August 2002) with special responsibility for the English Regions. Chairman of the English National Forum and of the Councils and Advisory Bodies Committee. Senior Lecturer at the University of Birmingham’s Westhill College.Trustee of the National Gallery and Chairman of the Heart of Birmingham Primary Care Trust.Previous positions include Deputy Chairman of the Commission for Racial Equality and member of the Independent Broadcasting Authority and the Radio Authority. Born 1950. 12 Richard Tait CBE BBC Governor since August 2004 and BBC Trustee Designate. Chairman of the Governors’ Programme Complaints Committee. Professor of Journalism and Director of the Centre for Journalism Studies, Cardiff University. Former Editor-in- Chief of ITN and Editor, Channel 4 News. At the BBC, edited Newsnight,The Money Programme and the 1987 General Election results programme.Vice-Chairman, International Press Institute; Fellow, Society of Editors and the Royal Television Society. Born 1947. BBC Annual Report and Accounts 2005/2006 11 Executive Board The Executive Board manages the operations of the BBC. It is chaired by the Director-General.The Executive Board answers to the Board of Governors, which appoints the Director-General.The Executive Board is supported by three sub-groups: the Executive Direction Group, the Journalism Board and the Commercial Board. Under the new BBC Charter, a significant minority of non-executive directors will be appointed to the Executive Board (see page 6,The BBC now and in the future). 1 2 3 4 5 6 7 8 9 1 Mark Thompson Director-General since June 2004. Chairs the Executive Board and the Executive Direction Group, made up of all the BBC’s divisional directors. Previously Chief Executive, Channel 4 since 2002. Former BBC positions include Director of Television; Director of National & Regional Broadcasting; Controller BBC Two; Head of Factual; Head of Features; Editor, Panorama, and Editor, Nine O’Clock News. 2 Mark Byford Deputy Director-General since January 2004. Chair of the Journalism Board which brings together all the BBC’s journalism at an international, UK, national, regional and local level.Trustee of the BBC Pension Scheme. Former BBC positions include Director,Global News and World Service; Director of Regional Broadcasting; Head of Centre, Leeds, and Home Editor, Television News. 3 John Smith BBC Chief Operating Officer since June 2004, responsible for all the BBC’s commercial and resourcing subsidiaries, as well as leading its property strategy. From March 2005, also Chief Executive Officer of BBC Worldwide Limited. Formerly BBC Director of Finance, Property & Business Affairs. AccountancyAge Financial Director of the Year in 2001. Non-executive director at Severn Trent plc and Chairman of their Audit Committee. Previously with British Rail Group, overseeing demergers. Member of the Accounting Standards Board until November 2004. 4 Jenny Abramsky CBE Director of Radio & Music since April 2000. Responsible for BBC Radio 1, 2, 3, 4, Five Live, BBC Asian Network, BBC 6 Music, 1Xtra, Five Live Sports Extra, BBC 7, television classical music, Music Live, the BBC Proms and the three BBC orchestras based in England. Previous BBC positions include Director of Continuous News; Director of Radio; Controller, BBC Radio Five Live; Editor, Radio News & Current Affairs, and Editor, Today. 5 Jana Bennett OBE Director of Television since April 2002. Responsible for the BBC’s television channels – BBC One, BBC Two, BBC Three and BBC Four; related interactive programming; and overseeing content on the UKTV joint venture channels and BBC America and BBC Prime. Previously General Manager and Executive Vice- President at Discovery Communications Inc. in the US; Director of Production at the BBC; Head of BBC Science; Editor, Horizon, and Senior Producer on Newsnight and Panorama. 6 Tim Davie Director of Marketing, Communications & Audiences since April 2005. Responsible for all the BBC’s marketing, publicity, press and PR, audience services and audience research activities.Trustee, BBC Children in Need since September 2005. Director of Freeview and also Digital UK. At PepsiCo from 1993, latterly as Vice-President, Marketing and Franchise, PepsiCo Europe. Joined Procter & Gamble’s marketing department in 1991. 7 Ashley Highfield Director of New Media & Technology since October 2000. Responsible for bbc.co.uk, interactive television services, new platforms (broadband, mobile, etc), the BBC’s technology portfolio, technical innovation, and research and development. Previously Managing Director of Flextech Interactive, the pay-television company’s new media division. Former positions include Head of IT and New Media for NBC’s European Channels. 8 Zarin Patel Group Finance Director since January 2005. Responsible for financial strategy, planning, control, corporate reporting activities and licence fee collection. Trustee of the BBC Pension Scheme. Former BBC positions include Head of Revenue Management and Group Financial Controller.Trained as a chartered accountant with KPMG, where she spent 15 years before joining the BBC in 1998. Governor, University of the Arts London and member of their Audit Committee. 9 Caroline Thomson Director of Strategy since April 2005, incorporating previous responsibilities as Acting Director, Strategy and Distribution since December 2004, and Director Policy and Legal (formerly Public Policy) since May 2000. Lead Director of the Charter Renewal Task Force since June 2004.Trustee of the BBC Pension Scheme. Director of Freeview and also Digital UK. Non-executive director of The Pensions Regulator. Former positions include Director of Strategy & Corporate Affairs, BBC World Service; Commissioning Editor, Science and Business at Channel 4, and political assistant to Roy Jenkins. Stephen Dando, former Director, BBC People, announced his resignation in January 2006 and left the BBC in April 2006. Jeremy Nordberg was appointed Acting Director during the recruitment of a new Director.