BBC Resources Ltd considered again
The BBC Board of Governors are considering revised proposals to incorporate the BBC Resources Directorate.
Union representatives have sent an open letter to the Governors before their meeting on 22 January, the text of which is reproduced below:
Open letter to the Governors of the BBC from the Joint Unions
We are writing to the BBC's Governors in order to urge great caution in their deliberations over the incorporation of BBC Resources which we understand is again to be considered by the Board.
On previous occasions we have expressed our concerns about the impact that Resources Ltd could have on the coherence and integrity of the BBC, and our fears that the move could herald a future privatisation. There is already a view that it would increase the cost of programme-making within the BBC.
Our worries about the uncertainty and distress that this would cause to the staff have been borne out by experience within the last year of smaller-scale transfers of BBC staff to the private sector which have caused widespread anxiety in the departments affected.
Although many months have elapsed since the plan for incorporation was first raised, most staff remain unconvinced that the creation of Resources Ltd is necessary or unavoidable. This is not to say that the BBC's staff oppose change - many of the innovative developments and new services introduced in the past few years have been welcomed enthusiastically by the workforce.
However, there have been so many twists and turns in the arguments supporting incorporation that internal observers have been left with the impression that Resources Ltd, instead of being critical to the BBC's future, is simply a solution looking for a problem.
Initially, we heard that Limited status was necessary to allow Resources Directorate to borrow money for investment. In a year when the Corporation benefited from the sale of BBC Transmission, this argument carried little sway.
Next, staff were asked to accept that the BBC's Charter put a de-facto embargo on Resources Directorate undertaking the level of non-BBC work that all parties agree will help to stabilise its finances. This claim was quickly seen to be flawed, not only because Resources had happily carried out commercial work for several years previously, but also because other Directorates had well-advanced plans for commercial activity, apparently uninhibited by any Charter restriction.
Subsequently, difficulties under European and UK competition laws were cited as being the problem that incorporation would solve - the Treaty of Rome and imminent UK legislation on anti-competetive behaviour were said to bar the BBC from entering into contracts with commercial customers for provision of resources.
The debate over incorporation has thus been moved into the arena of legal interpretation and fine print. Without becoming lost in maze of legal detail, we would like to outline two crucial aspects of competition law that should be fully explored by the BBC's Governors, before they resign themselves to the creation of Resources Ltd. as an inevitable precursor to commercial activity.
Under European law, sections 92-94 of the Treaty of Rome, which cover state aid, have been qualified by last year's Treaty of Amsterdam, in particular by a Protocol on public service broadcasting. This provision permits state funding of public broadcasters even if it impacts on trading conditions and competition, provided this is not contrary to the public interest. The Protocol was welcomed at the time as a major victory for Europe's public service broadcasters, and has been drawn to the attention of the Director General.
Although the Treaty has yet to be ratified by the UK, the delay is purely a matter of Parliamentary timetabling, and there is no problem of policy over the Protocol itself.
In the UK it is true that a draft Bill exists which redefines the legal treatment of anti-competitive behaviour, founded on Articles 85 and 86 of the EC Treaty (and not the sections on state aid). New rights of prohibition will be available to government regulators when addressing cartels or operators with a dominant market position. Undoubtedly, the legislation will cause enterprises, both public and private, to examine their commercial practices.
However, in a section of the Bill dealing with public policy (Schedule 3), the government will have the right to exclude any activities they see fit from the various prohibitions if there is a compelling reason of public policy to do so.
In our view, these two legal provisions, if invoked, will enable BBC Resources to continue with commercial activity as an integral part of the Corporation, albeit under the scrutiny of the government's regulators.
If this is not the case, then the putative legal difficulties addressed by incorporation will face every area of the BBC which seeks to enter trading contracts with outside entities. This must pose an important question: will the BBC be forced to fragment into a series of semi-autonomous Limited companies in order to function in the increasingly competitive and commercial media world? Moreover, what is the future of the licence fee if the BBC is perceived to be a holding company, rather than a public corporation?
The decision on incorporation therefore sets an important precedent for other parts of the BBC, both in interpretation of the law, and in the rationale adopted for future managers making decisions on the Corporation's structure.
As we have drawn to the Governors' attention previously, there is little support for the incorporation of Resources among the BBC's programme-makers and technicians. We hope that you will acknowledge their reservations by rejecting the proposal for BBC Resources Ltd., at least until every possible effort has been made to establish a legal framework to allow the Directorate to remain within the Corporation, while engaging in the external work which appears necessary to balance its accounts.
Once again, we are grateful for this opportunity to put our view directly to the Board of Governors, and ask you to give consideration to the new legal arguments which have emerged since incorporation of Resources was first mooted.
BECTU/NUJ/AEEU