Committee of Public Accounts


Press Notice No. 3 of Session 2004-05, dated 3 February 2005


THIRD REPORT: THE BBC'S INVESTMENT IN FREEVIEW (HC 237)

Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today:

"Our Report on Freeview, resulting from the Comptroller and Auditor General's first ever value for money examination of how the BBC spends money from the licence fee, clearly demonstrates the value of independent scrutiny. But it is not acceptable that the Comptroller and Audit General still does not have full rights of access to the BBC.

"The current interim arrangements under which Freeview was reviewed are a step in the right direction. But the Comptroller and Auditor General must be given a free hand in selecting subjects for scrutiny and the ability to report his findings directly to Parliament. Subjecting value for money in the BBC to full independent scrutiny would in no way undermine the BBC's independence from Government. Our aim is not to rewrite the storyline of Eastenders but simply to ensure that the BBC is as accountable to Parliament as any other organisation spending public money.

"Regarding Freeview, we found that, overall, the BBC's investment has ensured that an impressive four million viewers have the service. It was also clear that the BBC must act to dispel viewer confusion about the service and to explain the reasons for current gaps in coverage."

Mr Leigh was speaking as the Committee published its 3rd Report of this Session, which examined the BBC on its achievements to date from investing in Freeview and on priority areas to address as Freeview goes forward.

The Committee had taken evidence from the BBC on the basis of a review by the Comptroller and Auditor General and the BBC Governors' comments on that review.

Freeview, which was launched in October 2002, is the brand name for a package of subscription-free digital television and radio services, including the BBC's channels, which can be received through a television aerial (digital terrestrial television). The BBC plans to spend between £128.4 million and £138 million on Freeview up to 2014 to ensure that people can, and are aware they can, receive BBC digital services without paying a subscription fee. The BBC is also investing in Freeview to increase the number of licence fee payers watching the BBC's digital services and hence to improve the value for money these services offer.

The BBC's digital services are also available on satellite and cable, although the BBC sees Freeview as the key influence on increasing overall digital take-up and expects that Freeview will be in 9.4 million homes by 2014. The Government is planning to switch off analogue terrestrial television signals and ensure that everyone who currently receives the public service channels (BBC 1, BBC 2, ITV1, Channel 4, S4C and Five) in analogue can receive them in digital. Following discussions with the public service broadcasters, the Government has stated that 2012 may be the most appropriate date for the completion of digital switchover, and that this switch from analogue to digital could start in 2007.

The Committee found that by investing in Freeview, the BBC has succeeded in ensuring subscription-free access to its digital channels is available on digital terrestrial television. When ITV Digital went into administration in 2002, there was widespread uncertainty about the future of digital terrestrial television. The BBC's investment helped ensure that digital terrestrial television continued and was available subscription-free. Nearly four million homes now have Freeview.

One in four households cannot get Freeview because of gaps in coverage. The gaps are due to local topographical difficulties and the need to ensure that digital signals do not interfere with analogue signals. The Freeview website and promotional literature should explain why Freeview is not currently available in some areas and the potential for future increases in coverage, depending on plans for switchover from analogue to digital television.

The BBC should establish whether subscription-free satellite could satisfy in a cost-effective way the demand for its digital channels in areas where Freeview is currently unavailable. The BBC needs to identify whether there is a case for a new satellite service, which could offer near universal coverage, bearing in mind that BSkyB launched a new subscription-free satellite service in October 2004.

The BBC should establish whether set-top aerials and not just roof-top aerials will be able to receive digital terrestrial television after digital switchover. Freeview is not usually available to licence-fee payers relying on set-top television aerials because digital terrestrial television signals are not strong enough. The BBC believes that after digital switchover, when the power of digital signals can be increased, digital terrestrial will work on televisions with set-top aerials. The BBC should carry out early field tests to establish whether licence fee payers will be able to use set-top aerials to receive digital terrestrial television after digital switchover.

The BBC should publish value for money indicators for subscription-free digital television. Driving the market for and improving take-up of free to air digital television forms one of the BBC's key objectives. The BBC identified cost per household as a value for money measure for Freeview, but it needs to revise the take-up estimates it produced prior to launching Freeview as these have been significantly exceeded, and include the cost of increasing the coverage of digital terrestrial television.

In taking evidence from the BBC, the Committee also considered the question of the Comptroller and Auditor General's future access to the BBC.

The Committee found that the BBC's spending is not subject to the full independent scrutiny, and accountability to Parliament, that rights of access for the Comptroller and Auditor General would provide. The interim arrangements covering the period up to 2006 are a step forward. But, as the Committee said in its response to the public consultation on the BBC Charter Review, the Committee has long pressed for the Comptroller and Auditor General to be given full rights of access to the BBC to provide full accountability to Parliament for the public money it receives. He would then be able to decide what to examine and when, on the basis of a full and independent assessment of value for money risks.

The BBC's activities need to be carried out in accordance with the highest standards of probity, propriety and value for money. Under the Royal Charter the Governors must satisfy themselves that these standards are being maintained. Recognising the Governors' role, this Committee would expect to take evidence from them in its future examination of the BBC's spending, as it did in the case of Freeview.

Note for Editors

The Comptroller and Auditor General's review was carried out under an arrangement agreed in 2003 between the Government and the BBC in the context of Parliament's consideration of the Communications Bill. Under the arrangement, the BBC Governors' Audit Committee and the Comptroller and Auditor General agreed a programme of value for money reviews, to be carried out by the National Audit Office, covering the period up to December 2006, when the current BBC Charter expires. The Comptroller and Auditor General submits reviews to the BBC Governors' Audit Committee which, in turn, presents them to Parliament.


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