Royal Charter

The usual arrangement for large companies in the UK is for them to be incorporated as public liability companies (plc) with their shares traded on the stock market and a well defined governance structure with regular reporting to Companies House.

Of the UK’s public sector broadcasting companies ITV (ITV plc) and STV (STV Group plc) have such a structure. Channel 5 is a limited liability company (Channel 5 Broadcasting ltd) owned by Viacom inc. Channel 4 and S4C are statutory corporations reporting to parliament.

By contrast the BBC operates under a Royal Charter, which is renewed every 10 or 11 years, and so is responsible to the Privy Council. The current charter came into effect on 1st January 2017, see  BBC Charter, and expires on 31st December 2027. This is a bizarre and arcane structure for a global media behemoth with a total annual income of £4.8 billion. There is no shareholder or parliamentary oversight of its activities. If the BBC was a plc company, the Savile scandal is unlikely to have happened as the eventual revelations would have impacted its share price, with the directors ultimately risking prosecution for such a failure of governance.

The House of Lords recognised the issues with the BBC’s structure during the Royal Charter review of 2005/06 and recommended it be converted to a statutory corporation like Channel 4. See: House of Lords Select Committee on the BBC’s Charter Review (section 33)

Leading up to the Royal Charter review of 2005/06, the House of Commons Culture Media and Sports Committee also recognised issues with the Royal Charter and in their paper A Public BBC (section 246) recommended “the BBC should be placed on a statutory basis by Act of Parliament at the earliest opportunity”.

Unfortunately these recommendation were not adopted at the time and the BBC remains operating under its Royal Charter.

The government obviously sees the advantages of the BBC being a Royal Charter. They can continue the myth of the BBC being independent from government whilst having direct control over its constitution through the Privy Council (only ministers of the day participate in the Privy Council’s policy work), effectively bypassing both parliamentary and public oversight.

This was abundantly clear in the shabby, behind closed doors deal in July 2015 to settle the licence fee and transfer arrangements to fund the over 75s licences from the Department of Work and Pensions to the BBC. See: Letter from George Osborne and John Whittingdale to Tony Hall

Royal Charter Review

The previous Charter expired at the end of 2016 and was reviewed by the Department of Culture, Media and Sport (DCMS). They undertook a public consultation which sought input in 19 areas related to the BBC’s purposes, scope, funding and governance. They received 192,564 responses, a higher figures than expected due to the campaign by the 38 Degrees organisation whose members submitted 177,000 of the responses. The DCMS summarised the responses in their paper published in March 2016: BBC Charter Review Public Consultation-Summary of Responses

The overall view seemed to be satisfaction with the BBC with no major changes proposed except 68% of responses recommended an expansion in services. The DCMS published the resulting white paper on 12th May 2016—A BBC for the future: a broadcaster of distinction and then translated the paper into what is now the current charter.

BBC Organisation

Under the previous charter which expired at the end of 2016, the BBC had a two-tier board structure. At the top level there was the BBC Trust which was responsible for the BBC’s strategy, governance and regulation. The head of the Trust was appointed by the government through the Privy Council, together with eleven other members of the trust.

The Trust oversaw the work of the Executive Board led by the Director-General who was responsible for the operational management of the BBC.

This two-tier structure could lead to conflicts between the two boards over who was responsible for what, especially in challenging times. Additionally the Trust undertook governance and regulation whereas best practice is to separate these functions.

As part of the 2015/16 Charter Review the government commissioned a review of the BBC’s Governance and Regulation, appointing Sir David Clementi to undertake the review. The resulting report published in March 2016 recommended the BBC should have a single board with the role of regulation being given to OfCom. See Clementi Review

This is now the organisational structure of the BBC operating under its current charter, albeit the full structure of the unitary board and with OFCom as regulator will only kick in from 3rd April 2017. The new single board will be chaired by David Clementi who, although he has no broadcasting experience, has in depth knowledge of the BBC’s organisational structure and governance challenges from his previous review work.

Royal Charter