MINUTES OF THE BBC TRUST MEETING. Held on Thursday 22 May 2008 in the Viewing Theatre, BBC Scotland, Pacific Quay, Glasgow

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1 MINUTES OF THE BBC TRUST MEETING Held on Thursday 22 May 2008 in the Viewing Theatre, BBC Scotland, Pacific Quay, Glasgow Present: Michael Lyons Chairman Chitra Bharucha Vice Chairman (Items 77 83) Diane Coyle Trust Member Dermot Gleeson Trust Member Alison Hastings Trust Member for England (Items 77 87) Patricia Hodgson Trust Member Rotha Johnston Trust Member for Northern Ireland Janet Lewis Jones Trust Member for Wales (Items 77 87) David Liddiment Trust Member Mehmuda Mian Pritchard Trust Member Jeremy Peat Trust Member for Scotland Richard Tait Trust Member In attendance Nicholas Kroll Director, BBC Trust from the Trust Sally Willson Head of Secretariat and Governance Unit: Phil Harrold Senior Adviser, Secretariat and Governance Christopher Woolard Head of Finance, Economics and Strategy Tina Stowell Head of Communications Fran O'Brien Head of Editorial Standards Mark Wakefield Head of Performance Items 80, 89, 92 Jon Cowdock Chief Strategy and Policy Adviser Items 83 and 86 Alison Bexfield Chief Financial and Compliance Officer Items 82 and 92 Alison Edwards Adviser, Secretariat and Governance Item 88 Gareth Barr Policy Analyst Item 90 Brij Sharma Senior Strategy Adviser For items: Items Mark Thompson Director-General Items Mark Byford Deputy Director-General Items Caroline Thomson Chief Operating Officer Items Zarin Patel Group Finance Director Item 88 John Tate Director, Policy and Strategy

2 Item 88 Gautam Rangarajan Head of Policy and Development Item 87 Nigel Chapman Director, BBC World Service Item 89 Pat Loughrey Director, Nations and Regions Items 98 and 90 Bal Samra Director, Vision Operations and Rights Item 90 James Lancaster Head of Rights and Business Affairs Item 90 Chris Waiting Strategy Manager, Public Policy Item 91 David Jordan Director, Editorial Policy Item 92 Nicholas Eldred Group General Counsel Item 92 Neil Land Chief Adviser, Public Policy 2

3 AGENDA 77. Minutes of the meeting held on 17 April 2008 and 23 April 2008 and Matters Arising 78. Committees and Audience Councils 79. Director s Report 80. Impartiality Report: Network News and Current Affairs Coverage of the Four Nations Of The UK 81. bbc.co.uk Service Review 82. Complaints Framework 83. Annual Report and Accounts 84. Value for Money Review: In House Commissioning 85. Director-General s Report 86. Quarterly Financial Report 87. BBC World Service Three Year Plan 88. Public Service Broadcasting Review Update 89. Network Supply Definitions 90. Talent Costs review 91. Editorial Compliance 92. Compliance Reporting 93. Items for Noting 94. Business Handling and Communications 95. Other Business 3

4 77 MINUTES OF THE TRUST MEETINGS HELD ON 17 APRIL 2008 AND 23 APRIL 2008 AND MATTERS ARISING 77.1 The Trust approved the minutes of the Trust meeting held on 17 April with one minor amendment. The Trust agreed to the proposed redactions. The Trust also approved the minutes of the meeting held on 23 April (Audience Council Day), and agreed to publication without any redactions 77.2 Members noted the matters arising from previous meetings. 78 COMMITTEES AND AUDIENCE COUNCILS 78.1 Members noted the reports from recent meetings of Trust committees and Audience Councils, particularly noting that the Finance and Strategy Committee had agreed terms of reference for value for money reviews into radio production efficiency and management of strategic contracts Members noted that the Trust s Remuneration and Appointments Committee had agreed a framework within which the Executive Board s Remuneration Committee would set Executive Director remuneration. 79 DIRECTOR S REPORT 79.1 The Director, BBC Trust spoke to his report, which highlighted business to be discussed later in the meeting and summarised recent activity that had been undertaken by the Trust The Trust noted the progress that had been made by the Trust Unit and management on streamlining board processes and procedures. 80 IMPARTIALITY REPORT: NETWORK NEWS AND CURRENT AFFAIRS COVERAGE OF THE FOUR NATIONS OF THE UK 80.1 The Chairman summarised the key conclusions of the independent review undertaken by Professor Anthony King into network news and current affairs coverage of the four nations of the United Kingdom. He noted that Prof. King had presented his report in detail to the Trust the day before. Members agreed that the independent review, along with research from Cardiff University and the British Market Research Bureau (BMRB) would form the evidence base for the Trust s report on this matter Members agreed that the report had highlighted the clear desire on the part of audiences to learn about all parts of the United Kingdom. The Trust was pleased that the independent review had concluded that the BBC s coverage was seen as fair and impartial. Members agreed that the analysis pointed out shortcomings in the BBC s coverage of the whole of the UK and that management action on this issue would be necessary. 4

5 80.3 The Trust discussed the findings of the review and the independent research and agreed that a report from the Trust would be developed and approved by members offline. It was noted that the Executive would present their initial conclusions to the independent review to the Trust later in the meeting and that this would assist to inform the Trust s report on the matter The Trust agreed that due to the importance of this issue, and recognising that the BBC has a particular responsibility to serve the whole of the UK, it would seek a formal action plan from the Executive Board in response to the Trust s conclusions The Trust agreed that, if possible and practicable, the BBC s Audience Councils should be invited to play a role in the ongoing monitoring of progress once a plan had been agreed with the Executive. 81 BBC.CO.UK SERVICE REVIEW 81.1 The Trust s Head of Performance introduced the final report of the bbc.co.uk service, noting that this was the first of the Trust s rolling programme of service reviews. He noted that the review had been carried out by the Trust Unit, utilising independent research and in house expertise. The Trust s Audiences and Performance Committee had overseen the review He outlined the three principal conclusions of the review, which were: o bbc.co.uk was an excellent service that was highly valued by users and made a strong contribution to delivering the BBC's public purposes. o As bbc.co.uk developed and responded to the fast-changing online market and the demands of users, it was essential that the service remained distinctive and the boundaries in which it operated were strong enough to make this a reality. The review recommended that the Trust restructure the bbc.co.uk Service Licence and apply the distinctiveness criteria to all parts of the service. o bbc.co.uk should continue to develop to meet changing customer needs. However, it was recommended that the Trust should not approve new investments without further scrutiny and until confident that improved management controls were in place to ensure better financial accountability and editorial and managerial oversight The lead member of the Trust for the review, Patricia Hodgson, noted the quality of the service and said that despite concerns over governance, which required urgent action by the Executive, bbc.co.uk provided a high quality service to licence fee payers and was a valued part of the BBC s portfolio of services. She also noted that the review had sought to establish the service s performance within the context of the wider market and had directly addressed issues raised by other providers Members discussed the need for the Executive to ensure appropriate editorial management was in place as part of its response to improving the governance of the service. The Trust noted the potential issues caused by the fact that bbc.co.uk is both a service in its own right as well as a distribution platform for other services The Trust accepted the final report and recommendations of the service review and 5

6 agreed that it should be published. Members noted plans for publication, including briefings with stakeholders, staff and the media. 82 COMPLAINTS FRAMEWORK 82.1 The Trust s Head of Editorial Standards introduced the paper, which set out a new framework, and accompanying procedures, for the BBC s handling of complaints. She noted that the Trust was required under the Charter and Agreement to establish a complaints framework The framework had been developed in consultation with all the relevant Trust committees, which would take a role in assessing complaints at the final stage. She also noted that a public consultation had been conducted on the draft framework and that amendments had been made following input from stakeholders and licence fee payers. The draft framework was also amended following further input from operational areas of the BBC as well as further legal advice Members noted that the Trust s Editorial Standards Committee would continue to take a lead role in overseeing the complaints processes overall The Trust approved the final framework and procedures, delegating responsibility to Chitra Bharucha and Mehmuda Mian Pritchard to sign off any final changes prior to publication. The Trust also approved the draft explanatory statement for publication The Trust approved the appointment of the Trust s Head of Finance, Economics and Strategy, and Head of Editorial Standards as Appeals Adjudicators to consider appeals on behalf of the Trust relating to the Digital Switchover Help Scheme The Trust noted that a committee of two members would be established to hear appeals on general complaints. Terms of reference for this committee would be presented for approval in due course. 83 ANNUAL REPORT AND ACCOUNTS 83.1 The Head of Finance, Economics and Strategy introduced the paper, which provided an update on development of the BBC Trust s part of the annual report and accounts. Members also noted the information provided by the Director-General regarding the Executive Board s part of the report The Trust discussed the outline structure and the key themes to be included in the report. Members noted that the Trust committees had been developing content for the relevant sections Members noted that the final report would be presented to the Trust for approval in June. 6

7 84 VALUE FOR MONEY REVIEW: IN HOUSE COMMISSIONING 84.1 The Head of Finance, Economics and Strategy introduced the report, which was the latest report from the Trust s rolling programme of value for money reviews. He noted that the Trust s Finance and Strategy Committee supervised the programme of reviews under authority delegated to it by the Trust The study, undertaken by Ernst & Young LLP, looked at BBC Vision s processes for commissioning in-house productions in order to provide insight into the way in which these processes deliver value for money and to provide recommendations for improvement. Members noted the broadly positive outcomes of the study The Trust noted the report, including the study from Ernst & Young and the response from BBC management. Members agreed that the report would be presented to Parliament and published on the Trust s website. 85 DIRECTOR-GENERAL 85.1 The Director-General introduced his report by providing his assessment of the recent performance across the BBC s services. He particularly noted the recent success of BBC radio at the 2008 Radio Academy Awards He updated the Trust on various industry matters, including the work being progressed by the Executive to implement the Trust-approved plans for providing high definition television on Freeview. He also noted the ongoing concern in the market regarding the future of the Digital Audio Broadcasting (DAB) platform The Deputy Director-General updated members on recent events in the BBC s journalism, including recent high-profile political stories. He also informed the Trust about a recent attack on the BBC s Baghdad bureau and noted the safety and security procedures the BBC has in place The Deputy Director-General provided his initial assessment of the independent review into network news and current affairs coverage of the nations undertaken by Professor Anthony King. He noted that Prof. King s review would inform a broader Trust report on the matter and outlined the management s initial views on the actions suggested for BBC management. He acknowledged the seriousness of the issue and spoke of the actions that the BBC management were already taking, or planned to take, in response. He agreed to provide a written interim response on behalf of BBC management for publication with the Trust s report, prior to a full plan from the Executive Board in July. 86 QUARTERLY FINANCIAL REPORT 86.1 The Group Finance Director introduced the quarterly financial report from the Executive Board, noting that the Trust s Finance and Strategy Committee had reviewed the report in detail. She also noted that this report provided the preliminary results for the year ending March

8 86.2 She noted that the year end results were positive and in line with budget. The audited results would be provided to the Trust in the Annual Report and Accounts The Group Finance Director noted that the Executive would present a formal report to the Finance and Strategy Committee the following month on those services which had exceeded the 10% tolerance on their service licence budget allocation. She said that these were largely due to allocation of central costs, rather than overspend on direct programming costs and advised that the service licence budgets were currently being audited. Members noted that the Trust would need to consider whether a Public Value Test was necessary for those services that had breached their budget threshold The Trust discussed the impact of current market conditions on the BBC s financial position and the factors being considered to mitigate risks where possible The Trust accepted the quarterly financial report from the Executive Board. 87 BBC WORLD SERVICE THREE YEAR PLAN 87.1 The Director, World Service introduced the paper which set out how the World Service planned to implement its three year plan following agreement with the Government to its funding for the period. He noted that the plans had been scrutinised by the Trust in January 2007 prior to the BBC submitting its funding proposal He noted that the funding settlement with Government was relatively favourable and provided addition funds for vernacular language television both to launch a Persian TV service and to increase the output of the Arabic TV service from 12 hours to 24 hours a day and for engaging with Diaspora communities across the United Kingdom He confirmed that implementation of the plan would require some changes to the current suite of services provided by the World Service and the Executive Board was recommending to the Trust that the Romanian service be closed as part of this restructuring The Trust discussed the proposal and agreed with the recommendation of the Executive that the service should be closed. It was agreed that the Chairman would write to the Foreign Secretary to seek the UK Government s approval for the closure The Trust noted the successful launch of the Arabic TV service and was satisfied that the proposed three year plan would support the World Service in its aim to be the best and most respected provider of international news in the world. 88 PUBLIC SERVICE BROADCASTING REVIEW UPDATE 88.1 The Chief Operating Officer introduced the item, which presented for the Trust s 8

9 consideration a draft response to the Ofcom Public Service Broadcasting Review. She noted that the response was a joint response on behalf of the Trust and the Executive Board, which had been developed by a steering group jointly chaired by herself and the Director, BBC Trust The Trust discussed the primary themes of the response, including the importance of partnerships and ensuring a sustainable platform for public service broadcasting in the future The Trust noted the progress that had been made on the BBC response and agreed that the working group of members would continue to engage in the response as it developed ahead of a final version being presented to the Trust for approval in June. 89 NETWORK SUPPLY DEFINITIONS 89.1 The Chief Operating Officer introduced the paper which provided the draft text of a statement for the Trust s approval. The statement set out in further detail the position agreed by the Trust at its April meeting, in which it agreed that the BBC would move to the Ofcom definition for network production from the Nations and reach a target of 17% spend under that definition by 2016, with an interim target of 12% by The Trust discussed the draft statement and agreed that further minor amendments would be required. The Trust delegated approval to the Chairman to agreed the drafting changes and noted that, once finalised, the statement would be published by the Trust The Chief Operating Officer noted that the television network supply strategy and implementation plan would be presented to the Trust in July. 90 TALENT COSTS REVIEW 90.1 The Trust s Head of Finance, Economics and Strategy introduced the report, which included the findings of an independent review of the BBC s role in the UK s market for on-air and on-screen talent. The independent review by Oliver and Ohlbaum Associates Ltd had been undertaken to inform the Trust s conclusions on this matter. It had been instigated by the Trust in response to concerns being expressed from a number of stakeholder groups regarding the BBC s approach to talent pay The Head of Finance, Economics and Strategy advised the Trust of the main conclusions from the independent review, which were: o There was no evidence that the BBC was paying more than the market price for leading TV talent when it competed with rivals to secure their services. In some cases, the review stated, the BBC may well be paying less than the market price for that talent. o There was no evidence that the BBC was systematically pushing up prices in the talent market. Where high rates of inflation did currently seem to exist in the BBC this was largely due to market forces at work in the rapidly changing UK TV 9

10 and radio markets. o The BBC had a number of systems in place to ensure that it achieved value for money in its negotiation of talent fees, and had strengthened these processes in recent years He also noted however that the findings of the independent review suggested that there was room for improvement in the BBC s practices which, if implemented, could achieve better value for licence fee payers in some of its deals with talent. It was recognised that fees paid to talent were an area of concern for many licence fee payers Members agreed that the BBC could do more to achieve value for money by improving some of its processes, and in particular by a more consistent and systematic approach to gathering independent data and subjecting deals to more rigorous challenge. The Trust agreed that a more systematic approach could be applied to using the BBC's bargaining power in respect of levels of exposure that can be offered to talent by the BBC The Director, BBC Vision Operations and Rights accepted the report on behalf of the management. He noted that the report recognised the wide range of connections audiences had with talent across the BBC. He said that while there was further work to be undertaken in this area, to be led by the Executive Board, the report would provide greater confidence to licence fee payers and stakeholders about the Corporation s place in the talent market The Trust discussed the findings of the independent review, noting that in areas where there are few direct comparisons, for example in some parts of network radio, that judgments on talent pay would necessarily be more complex The Trust accepted the report and the draft Trust conclusions and agreed that the Trust s conclusions would be further developed prior to publication and approved offline by the Chairman and Jeremy Peat. 91 EDITORIAL COMPLIANCE 91.1 The Deputy Director-General introduced the item, which consisted of two parts. The first was the Executive Board s annual report to the Trust on Editorial Compliance and Complaints and the second was a paper seeking the Trust s formal approval for the proposed Interactivity Technical Advice and Contracts Unit The Director, Editorial Policy outlined the key components of the annual report on Editorial Compliance and Complaints, noting that the Trust s Editorial Standards Committee had reviewed the report in detail. He acknowledged the serious editorial breaches that had occurred during the past twelve months and noted the measures that had been put in place to guard against repeats of such activity The chairman of the Trust s Editorial Standards Committee noted that the committee had reviewed the report and was recommending that it be accepted by the Trust. Members noted that the Trust s review of editorial controls and 10

11 compliance, considered by the Trust in April, had assessed the Executive s implementation of the measures following the significant editorial breaches during the year On complaints, members noted that the volume of complaints had become stable year on year, with the BBC receiving around 124,000 stage 1 complaints during the year 2007/08, almost the same as the previous year. Members also noted the improved turn around times for handling complaints during the early stages of the complaints process The Deputy Director-General introduced the paper seeking the Trust s approval for the establishment of the Interactivity Technical Advice and Contracts Unit, which was one of the actions proposed by the Director-General following editorial breaches during the year. He noted that the Trust s Editorial Standards Committee and the Public Value and Fair Trading Committee had both reviewed the initial proposal and, with minor amendments, the Executive were now presenting the proposition for the Trust s approval The Trust noted that the Unit would provide specialist advice, set standards and processes and handle all future contracting of premium rate phone suppliers on BBC programmes. It would be used by both in-house and independent producers and would provide verification and audit of telephony and other interactive services. The Trust approved the proposal as presented by the Executive Board, noting that the establishment of the Unit was endorsed by Ronald Neil in his independent review of editorial compliance and controls for the Trust. 92 COMPLIANCE REPORTING 92.1 The Executive presented the following reports to the Trust, which form part of its annual compliance reporting: (a) Annual Compliance Report (b) Annual Review of Compliance with Four Commercial Criteria (c) Report on Provision of Equal Opportunities (d) Report on Provision of Training The Group General Counsel introduced the Annual Compliance Report, which was a detailed assessment of compliance activities across the Corporation and included the Executive Board s own recommendations following its review. The Trust discussed the key areas of risk, noting the action that the Executive Board had taken to mitigate these risks and take action where necessary. The Group General Counsel also updated the Trust on action that had been taken to provide greater assurance in the area of data protection Members agreed that the Annual Compliance Report was reassuring and demonstrated good control by the Executive. The Trust noted the action being taken by the Executive Board in risk areas and accepted the report The Chief Operating Officer introduced the Executive Board s annual review of compliance with the four commercial criteria for 2007/08. She noted that it was a requirement of the Trust s protocol on commercial services that the Executive 11

12 submit a report to the Trust including a formal opinion on compliance with the four commercial criteria. The review included separate reports from the BBC s three commercial businesses BBC Worldwide, BBC Resources and BBC World with an overarching assessment from the Executive Board. The Chief Operating Officer stated that the Executive Board was satisfied that the BBC s commercial activities were compliant with the four commercial criteria. The Trust noted the new commercial activities that had undergone a formal four criteria assessment by the Trust during the past year In line with the Trust s original approval, the Trust requested additional information from the Executive Board on how Lonely Planet is achieving its objective of leveraging extra value from the BBC's intellectual property that BBC Worldwide exists to exploit The Trust accepted the Executive Board s annual review of compliance with the four commercial criteria The Director, BBC People introduced the reports on the Executive s provision of training and arrangements for promoting equal opportunities. He noted that these reports to the Trust were required under the BBC Agreement and that interim reports on both matters had been reviewed by the Trust in January The Trust accepted the reports from the Executive, noting the progress that had been made in both areas The Trust discussed the draft observations on each of the reports and agreed that these should be published alongside the reports from the Executive, as required by the BBC Agreement. Members agreed that the reports would be published on the Trust s website. 93 ITEMS FOR NOTING 93.1 The following items were noted: - Mobile Strategy: Update - Minutes of Trust Committees and Audience Councils - Note of offline approvals (Editorial Standards and Premium Rate Services) - Documents for Sealing 94 BUSINESS HANDLING AND COMMUNICATIONS 94.1 The Trust discussed the communication of matters considered at the meeting. 95 ANY OTHER BUSINESS 95.1 There was no other business. 12