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MPs demand rigorous shakeup at top of the BBC

Financial and editorial “mistakes” made by the BBC have prompted an influential cross-party group of MPs to call for the abolition of the broadcaster’s governing body in a wide-ranging report into the funding and future of the corporation to be published in the Commons on Thursday.

The culture, media and sport select committee recommends that the BBC should be subject to much more rigorous oversight and criticises the broadcaster for its handling of executive pay and payoffs, the Jimmy Savile affair and the false allegations made against the late Lord Macalpine.

In an 166-page report, the MPs recommend replacing the BBC Trust, currently responsible for regulation and oversight, with a single board while creating a more rigorous public service broadcasting commission to act as an external watchdog.

Additionally, the MPs recommend giving unrestricted access to the National Audit Office, the government auditor, to check the BBC’s financial accounts – access that the corporation has long resisted.

The report by the committee said there was no realistic alternative to licence fee funding in the short term, although it should be extended to cover the iPlayer “as soon as possible”. The report also called for non-payment of the £145.50 licence fee to be decriminalised.

John Whittingdale, the Conservative MP who chairs the committee, said: “The trust has failed to meet expectations and should be abolished. It remains far too close to the BBC and blurs accountability rather than it being a sharp and effective overseer of the BBC’s performance as a public service institution … An organisation of the size and cost of the BBC must be subject to the most rigorous independent scrutiny.”

Ben Bradshaw, a Labour committee member and former culture secretary, added: “The trust is a busted flush and needs to go. The regulatory structure wasn’t fit for purpose [when it was launched in 2007] and hasn’t been fit for purpose since.”

The proposed public service broadcasting commission will have the power to withhold licence fee funds but Whittingdale called this a “very unlikely scenario”.

A spokesperson for the BBC Trust said: “This report highlights a number of issues and challenges that the trust recognises and that we are seeking to address, and we agree that there must be robust internal governance and independent regulatory oversight of the BBC.” The report was a “thoughtful and considered early contribution” to charter negotiations, she added.

BBC executives also welcomed the report, and particular some of the comments around the future of the licence fee. James Purnell, BBC director of strategy and digital, who is also a former Labour culture secretary, said: “We welcome the fact the committee says the licence fee should be modernised – something we’ve argued for ourselves. The committee points out there are different ways you could do that. Any options would need careful consideration and I’m sure this will all be debated in the Charter review and we look forward to that.”

In launching the report, Whittingdale said: “Over the last few years the BBC has suffered from a succession of disasters of its own making, yet it remains a widely admired and trusted institution, and fulfils many important functions both at home and abroad. However, when an organisation is in receipt of nearly £4bn of public money, very big questions have to be asked about how that money is provided and spent, and how that organisation is governed and made accountable.”

In response, Purnell said: “We wouldn’t disagree that there have been mistakes made.”

Negotiations for the next BBC charter renewal are set to begin in earnest after May’s general election leaving just 18 months before the current charter ends in December 2016. The committee also called on the government to set up an independent review panel before the election similar to the Burns review.

Whittingdale, who stands down in May after chairing the committee for 10 years, called the 166-page report a “magnum opus”. The report questions the scope and scale of the corporation, suggesting that it should leave programmes that could just as easily be made by competitors to rivals – and singled out criticism that the BBC had spent millions of pounds on bought-in formats, such as Saturday night’s talent show The Voice.

In what could be a significant fillip for local newspapers, the committee also suggests that local media could be treated as part of the existing spending quota allocated to independent television production companies with the BBC potentially paying for local stories. “I am worried about the parlous state of local newspapers which is quite dangerous for local democracy,” said Whittingdale. “We should consider using part of the proceeds of the licence fee to support local newspapers directly.”

A majority of the MPs voted to continue with the the licence fee funding system at least until 2026, when the BBC’s next royal charter expires. Only one Tory MP voted against the recommendation regarding funding, in a show of cross-party support for the fee which has been criticised

Whittingdale said: “In the short term there’s no realistic alternative to the licence fee. There is a long term case for subscription but we can’t do that immediately.”

On Wednesday, the BBC was criticised by the chair of the parliamentary public spending watchdog for the “shocking” sale of Television Centre in west London to a consortium that Margeret Hodge claimed was “clearly a tax avoidance scheme”.

Hodge also said the fact that the BBC chair, Rona Fairhead, an HSBC non-executive director, was chair of the bank’s audit and risk committee during the time the bank’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, “does raise issues” for the corporation.

The BBC Trust declined to comment on Fairhead and HSBC. Trustee Nicholas Prettejohn said the BBC was enaged on any specific due diligence about Fairhead.

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