´óÏó´«Ã½

´óÏó´«Ã½ Director-General

Accountability In A Time Of Change: speech given at Chartered Institute of Public Finance & Accountancy Annual Conference in Manchester

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The ´óÏó´«Ã½ is many things and, no doubt, different things to different people. But – despite the razzmatazz, despite the showbusiness – one of things it has always been – and in my view always should be – is a part of the wider public service.

But it's important to say, that perhaps even more than other public sector organisations, we often find ourselves operating in what are essentially private sector markets: for broadcasting talent, whether that means Saturday night entertainment or television or radio journalists; for rights; for services, from TV and radio transmission to Facilities Management; for specialist management expertise – CFOs don't come cheap!

The ethos of many of these markets is often unapologetically commercial. They're markets in which the talented and successful can command a real premium. The prestige and sheer creative opportunities available at the ´óÏó´«Ã½ mean that we can usually tempt people to work for us, or strike deals with rights-holders, at below the market rate. But if you want – and the public tell us they do want – Premiership highlights on ´óÏó´«Ã½ Television, say, or the best DJs on the radio in the morning, you can't wish the market away altogether.

So most days we're engaged in multiple, essentially commercial negotiations.

But we can never forget that the ´óÏó´«Ã½ itself is a not-for-profit organisation. That it exists for one purpose only, which is to serve the British public and our other audiences around the world with programmes which meet their expectations and deliver the public purposes which are laid out in our Charter.

One of those purposes is to support the national debate by reporting on and airing the great issues of the day with journalism of every kind. That purpose means that one of our duties is to hold other public bodies to account: whether that involves routine reporting on the news, debates in programmes like Any Questions? and Question Time, or through investigative journalism.

But as a part of the public service, the ´óÏó´«Ã½ has its own responsibility to be, and to be seen to be, accountable and it is this responsibility I want to talk about this morning.

What makes the topic timely for us, as I suspect for many of you, is the fact that the whole environment in which the debate about accountability takes place is changing with extraordinary speed. Public expectations about openness, trustworthiness and every kind of value for money are becoming more trenchant, more insistent and more vocal than ever before.

That was true even before the furore which followed the revelations about MPs' expenses in the Daily Telegraph, but those events have added even greater anger and urgency to the debate.

We know that because we hear the voices calling for greater accountability and transparency on programme after programme on our airwaves. But if you watch and listen to the ´óÏó´«Ã½, let alone read the newspapers, you will realise that – more or less uniquely among the UK's media players – the ´óÏó´«Ã½ often finds itself the subject of the call for greater accountability. When it comes to accountability, we are not just the reporters but the reported on.

In a moment, I'll turn to some of the wider ways in which we are trying to address the challenge of modern accountability. But I want to begin with the specific issue of openness and disclosure.

A more open ´óÏó´«Ã½

The ´óÏó´«Ã½ supported the introduction of Freedom of Information legislation and we are one of the biggest issuers of FOI requests to inform our journalism. FOI has helped us bring a wide range of significant new stories to the British public – from evidence about whether knife amnesties in London really do lead to a reduction in knife crime, to the incidence of drug use among Afghan police and its potential impact on their effectiveness.

As one of the main sources of news and information for most British households, we believe that compelling public bodies – within certain reasonable restrictions – to release information about their operations and use of public money is a good thing. Good in that it allows the public to see what is really going on inside these organisations. Good in holding them to account. And good also because more open institutions are more likely to be trusted and supported by the public. That's just as important at a regional and local as at a national level.

But from the moment the FOI Act came into force, the ´óÏó´«Ã½ as a public body itself became subject to it. FOI requests for information held by the ´óÏó´«Ã½ itself is likely to exceed two thousand requests this year. The numbers have been rising every year for the last three years and we expect that trend to continue.

There is an exclusion to the Act which applies to the ´óÏó´«Ã½ and the other public service broadcasters who are also within scope – the intention of this so-called 'derogation' is to protect the editorial independence and journalistic confidentiality of the programmes and services we deliver to the public. As many here will know, there are some other more general limitations in the Act, to do with commercial confidentiality, data protection, and Section 36, which deals with the effective running of a public body.

Within these limitations, the ´óÏó´«Ã½ has tried hard to meet the many FOI requests it receives. Indeed, today as on many previous days, we're publishing responses to several different requests.

The ´óÏó´«Ã½'s approach has meant that the expenses of senior managers like myself have been released on request for years, as well as much other data about salaries, expenses and ´óÏó´«Ã½ operations. The ´óÏó´«Ã½ Trust, our Governing body, and the ´óÏó´«Ã½ Executive model our Annual Report as far as possible on PLC best practice, and this too means regular annual disclosure of extensive information about executive remuneration, pension arrangements, bonuses, salary information for a wide group of senior managers as well, of course, as an independently audited comprehensive report on the ´óÏó´«Ã½'s operations and finances.

We've benchmarked ourselves both against other public bodies who are similar to the ´óÏó´«Ã½ – Channel 4, S4C and Ofcom are all examples of that – and against the public sector as a whole. We believe that our current policies on FOI and disclosure are at the forefront of our own sector and compare well with most of the other public bodies we've looked at.

Last autumn the ´óÏó´«Ã½ Executive decided to go further and to commit ourselves to regular routine publication of all the expenses incurred by members of the Executive Board. That publication schedule is due to start this September.

But public expectations for disclosure from every public body are clearly growing – especially in the wake of the controversy over MPs' expenses. I also believe that those MPs who have asked me and my colleagues the question – What about you? What is the ´óÏó´«Ã½ going to disclose? – have got a fair point.

We have covered the debate about the case for reform and greater transparency within the Palace of Westminster very extensively on ´óÏó´«Ã½ programmes and I believe that, certainly taking the output as a whole, we've done it fairly and proportionately. Nonetheless, it is quite reasonable for politicians and others to invite us to look searchingly into the mirror at our own practice when it comes to disclosure.

And there's another factor. The ´óÏó´«Ã½ has a relatively new constitution, itself designed to increase the organisation's accountability and responsiveness to the public. In addition to, and above, an Executive Board which has a mixture of executive and non-executive directors, there is a new sovereign body, the ´óÏó´«Ã½ Trust, which has the final say on the ´óÏó´«Ã½'s strategic direction and is the final arbiter on how well the ´óÏó´«Ã½ is doing in delivering its public purposes.

In recent weeks, the ´óÏó´«Ã½ Trust has strongly encouraged us to look at whether we could – and should – go further in our practice of routine disclosure. This morning I want to tell you about our intention to open up the ´óÏó´«Ã½ further, in what I consider to be a major step change in the information that we disclose to the public.

First, executive salaries. In future, we intend to publish an exact breakdown of pay, by name, not just for executive directors as now, but for two other groups: first the top 50 earners in ´óÏó´«Ã½ management, and second the top decision-makers, those with the greatest responsibility both for spending public money and for overseeing the ´óÏó´«Ã½'s services and operations. We have yet to define this second group precisely – and will take internal and external advice before we do so. There will of course be considerable overlap between the top earners and this second group. But the total number of managers in scope will be around 100 people beyond the executive board. To repeat, in each case, there will be full disclosure of remuneration by name.

In addition to this, we will continue to publish a table of pay of the whole senior management population at the ´óÏó´«Ã½ by salary band in the Annual Report as well as a table of our wider staff costs.

Second, executive expenses. We will extend our planned publication of expenses to everyone in this circa 100 group. Each quarter, we will publish full line-by-line expenses for each, as well as their hospitality and gift register. We will of course continue to entertain other FOI requests for information about management expenses, hospitality and so on.

Third, on-air talent and artist pay. The ´óÏó´«Ã½'s commitment to broadcast across a wide range of different genres means that we work with many thousands of actors, comedians, presenters, musicians, and writers every year.

Read the newspapers, and you could be forgiven for believing that entry-level pay for a presenter at the ´óÏó´«Ã½ is £6million a year.

In fact, the overwhelming majority of talent who work with us to help inform and entertain the public are paid pretty modestly. We issue around 250,000 artists' contracts each year. The average value of a contract is less than one thousand pounds.

But it's true that we do employ a small number of people who earn a great deal for what they do. The ´óÏó´«Ã½ Trust commissioned a report looking at the value-for-money the ´óÏó´«Ã½ delivers in its hiring and retention of talent, including top talent. This report, by Oliver & Ohlbaum, made some recommendations but concluded that in general we did have strong controls in place, did not overpay, indeed often were able to secure key talent at below market rates.

After a period in which we have seen significant inflation in top talent pay, the market has turned and we have committed ourselves to reducing the amount we spend on top talent progressively over the next few years. On the ground, we are already finding that in many cases we can negotiation reductions when contracts come up for renewal.

It has been our view that it does not make sense for the ´óÏó´«Ã½ to disclose individual talent fees. Why? We operate in an industry where confidentiality is the norm and in which, if the ´óÏó´«Ã½ was the only broadcaster forced to reveal these fees, there is a real danger that on-air talent would migrate to other broadcasters and independent producers, leaving the ´óÏó´«Ã½ and the public service programming it produces, the poorer.

Our experience suggests that disclosure of this kind is likely to lead, not to better value for money, but to fresh upward pressure on pay.

And of course our own on-air artists are not public decision-makers or public officers of the ´óÏó´«Ã½. They are freelancers who often work for multiple creative players. They are not the kind of individual public servant which the FOI Act envisaged disclosure about.

The case against disclosure of individual artist's contracts and fees is one that the Information Commissioner has consistently supported and it is one which we continue to believe makes sense.

But we recognise that the public have a legitimate interest in how much the ´óÏó´«Ã½ spends on talent, including top talent – and moreover that they have every right to hold us to account for actually delivering on our commitment to reduce the amount of the licence-fee which goes on top talent.

So in future we will disclose the total amount we spend on talent as a whole and do it each year so that the public can monitor the direction of travel over time.

The fourth change is to look again at our current practice of redaction – to use that curious, but now rather fashionable word. I believe that we have always taken a responsible and justifiable approach in deciding what information to exclude, but I have asked all of my colleagues to ensure that they only remove or anonymise information when it is absolutely essential. As a result, from today I believe that those who make FOI requests of the ´óÏó´«Ã½ will see fewer redactions than in the past.

Fifth and finally, we will commit ourselves to look systematically for further ways in which we can open up the workings of the ´óÏó´«Ã½ to the public at large. We will take that discussion to the Executive Board and the ´óÏó´«Ã½ Trust.

Taken together, we believe that this package of disclosure represent a very significant advance in openness at the ´óÏó´«Ã½ and will place the ´óÏó´«Ã½ where it should be, which is at the frontier of disclosure practice in the public sector.

The broader question of accountability

But of course, disclosure is only one part of the broader challenge of accountability for the ´óÏó´«Ã½. It's not just about demonstrating that money is spent wisely. It's about achieving ongoing efficiencies in how we do our work so that we can deliver more for each public pound.

I've already touched on a second important topic, which is governance. The ´óÏó´«Ã½'s new governing body, the ´óÏó´«Ã½ Trust, takes its responsibility to ensure accountability to the licence-payer very seriously indeed.

The Trust, for instance, regularly asks external and independent panels of experts to scrutinise different areas of the ´óÏó´«Ã½'s output to ensure that they meet the highest standards of impartiality and value for money.

But the Trust has also laid out a challenging set of strategic goals for the ´óÏó´«Ã½ – and here too they scrutinise us regularly to ensure that we are actually meeting those goals.

Here the task is simultaneously to improve current services and current delivery of the public purposes, to make the ´óÏó´«Ã½ more distinctive, more focused on quality now – and, at the same time, to transform the organisation and its services so that it successfully migrates into the digital future. All this to be achieved by using productivity, organisational reform and the better allocation of resources, to deliver formidable cash-releasing efficiencies.

In recent years, that has meant a massive and wrenching process of change in the ´óÏó´«Ã½. 7,200 jobs have gone so far and there are still 1,200 more to go – a bigger programme of restructuring and redundancy than has been announced by any other broadcaster, public service or otherwise. Although it is a public organisation in the middle of a commercial media sector which is experiencing real pain, the ´óÏó´«Ã½ is not immune.

We knew that we could only find the resources to maintain the quality of existing services and pay for developments like iPlayer if we dug deep for productivity gains and other efficiencies.

And we have. Since 2005 we have released a cumulative total of £524million in efficiencies which have been ploughed back into programmes, into new digital services and into the massive task of digital switchover, where the ´óÏó´«Ã½ is not just meeting its own costs, but having to meet the costs of the Government's targeted help scheme and the industry-wide marketing costs.

But the efficiency story is by no means complete. We can only meet our obligations over the coming years by achieving further very substantial savings. In TV, for instance, we are targeting a 5% net reduction in programme prices each year for the next five years – a cumulative saving of more than 20%. Across the ´óÏó´«Ã½ we will be making savings of £1.9billion in this Licence Fee period.

This is an environment where pay restraint at every level must make sense. In this year's pay round, staff earning below £60,000 got a flat rate increase of £450. Staff on £60,000 will not have any general increase at all. We have suspended all bonuses across the organisation.

I say this not to claim that ´óÏó´«Ã½ faces the same scale of financial challenge as some of our commercial colleagues. We don't. But the picture of a ´óÏó´«Ã½ swimming with cash and people and able to make additional savings at the drop of a hat is one which I submit is simply out of date.

We will protect programmes and services over the next few difficult years. As far as we can, we will also protect jobs and our investment in independent production and in the digital future. We can only do those things because we began the difficult process of reform nearly five years ago. And even so, the economics are tight.

But neither you nor the rest of the public will have to take my word for it. The definitions of both productive and allocative efficiencies have been worked out with the help of the National Audit Office. Each year our independent auditors will use those definitions to determine whether the ´óÏó´«Ã½ is meeting its efficiency targets or not and the results will be published in the relevant annual report. The NAO will return to deliver its own assessment of our efficiency programme in due course.

The value for money reports commissioned by the ´óÏó´«Ã½ Trust from the NAO and other independent experts will continue to be laid before the House of Commons Public Accounts Committee who can and do call ´óÏó´«Ã½ Trustees, myself and other management colleagues to give evidence whenever they want. Add to that regular appearances by the Chairman of the ´óÏó´«Ã½ Trust, Sir Michael Lyons, myself and others before the Commons Culture, Media and Sport Select Committee, not to mention appearances before the Scottish Parliament and Welsh Assembly, and you can see that scrutiny from politicians across our democratic system is also part of the story.

Perhaps the final piece in the accountability jigsaw is the press. The Editor of The Observer newspaper recently interviewed me and as part of the piece had the joy of trailing me for the day. It was one of those unusual quiet days for the ´óÏó´«Ã½ with no major stories running about us or our programmes – so my guest was astonished to discover that the press cuttings for the ´óÏó´«Ã½ for that single day still ran to almost 100 pages! By the way that's not in the least unusual, indeed over the last week our corporate press cuttings was 600 pages.

Put together press scrutiny of the ´óÏó´«Ã½ – probably more intense than for any institution beyond Government, Parliament and the political parties – the NAO and the select Committees, statutory and other regulatory obligations of which, of course, FOI is just one, Ofcom the media regulator, and our own activist sovereign body the ´óÏó´«Ã½ Trust, and it is hard to think of many public bodies which are more subject to accountability than we are.

It is clearly time-consuming and expensive and often uncomfortable, but does it lead to better decision-making and the better use of the public's money? My answer to that is a clear yes. It is what the public want – indeed what they demand – but I believe that in the end it helps rather than hinders the task of building a ´óÏó´«Ã½ which really responds to them and inspires them with great programmes and services.

I began by saying that in some ways we are a rather unusual part of the public service. I would certainly not claim that the lessons we've learned, or the reforms we are applying, would necessarily work for everybody represented in this room. But some of the themes I've talked about – a presumption of the public's right to know, a presumption therefore in favour of disclosure unless there is a powerful case against, the need not just to use resources wisely but to demonstrate publicly that that is what you are doing – these themes do perhaps apply more widely.

All of us – including relatively well-funded parts of the public sector like the ´óÏó´«Ã½ – face some difficult years. The wider downturn and the level of public indebtedness will inevitably colour the entire climate for public spending decisions. But I believe that public bodies will weather this period most successfully if they can bring the public with them. That in turn will depend on taking the public's new expectations on openness and accountability seriously and making real and substantive changes in order to meet them.

A few miles away from us here this morning we are building a new state-of-the-art broadcast centre for the North of England. In many ways ´óÏó´«Ã½ North represents our broader vision of the future. A vision of an open ´óÏó´«Ã½ that is part of the community and works for those who pay for it. A ´óÏó´«Ã½ that is transparent. A ´óÏó´«Ã½ that is dedicated to delivering more and more public value. Thank you.

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