Q91 Mr Bacon: So it is very hard to come up with a sustainable argument that it would apply to the BBC as a whole if Sir John were to audit the accounts of the BBC as a whole.
Mr Peat: But at the same time, the risk of any perception of damage or putting that independence at risk is so great that we reserve the right to consider whether there is any risk in particular instances and therefore, while happy to discuss any area for investigation by the NAO, we reserve that right to make the judgment at the end of the day.
Q92 Mr Bacon: If Parliament told you to, you would.
Mr Peat: We are subject to immense consultations with Parliament and we welcome that.
Q93 Mr Bacon: That is not an answer to my question. If Parliament told you to, you would.
Mr Peat: Yes, of course; that is where we would sort something out.
Mr Thompson: Yes; of course.
Q94 Kitty Ussher: With the greatest respect to the panel in front of us, could you perhaps give us an example of where an NAO Report had been perceived as affecting editorial independence?
Mr Peat: That is interesting. In fact it is very difficult to see where that could be the case, but it is so difficult to anticipate the exceptions. If one looked, for example, at the location of BBC News bureaux internationally and how that was working, would there be a risk that would be perceived as in fact getting into questions of policy of the BBC and independence, rather than in the efficiency of operating its services? I agree with you entirely that it is very difficult to envisage the circumstance where that risk applies, but given the enormity of the risk, if any risk were perceived to that independence, we do deem it important to reserve the right.
Q95 Kitty Ussher: For example, if the NAO wanted to do an investigation into the location of offices overseas, as you have just mentioned that example, purely on value for money grounds, which is the only remit they have, and they make certain recommendations and you say you cannot do that because of the need to reserve your editorial independence, surely that would be perfectly acceptable and everybody would understand.
Mr Peat: I should expect that if the Comptroller and Auditor General and his staff wished to discuss that possibility we should talk about what would make sense and what would not make sense and hope to come to an agreement as to an appropriate remit.
Q96 Kitty Ussher: Have they ever asked to investigate anything which you thought would be inappropriate?
Mr Peat: No; we have had no difficulties in agreeing the programme.
Q97 Kitty Ussher: You have been able to agree everything they have asked and you cannot think of any particular examples where there would be a problem, yet you still maintain that it is necessary to keep the right of veto.
Mr Peat: I do.
Mr Thompson: May I just say that one can read the point the other way, which is that under the present arrangements no suggestion that the NAO has made has been rejected? There is no suggestion that the BBC under the present arrangements has stopped the NAO from examining anything it wanted to examine.
Q98 Kitty Ussher: Exactly. The point which I am trying to make is that it seems fine. Where is the risk? I do not understand where the risk actually is. Every single thing which the NAO audits or does an investigation on obviously has objectives which are not purely financial, which is why whatever quango or government department exists in the first place, it has a particular remit. Please correct me if I am wrong, Comptroller and Auditor General, but what the NAO is trying to ensure is that that remit is carried out with the best value for money for the taxpayers and your remit is editorial independence and I cannot see where any threat would come.
Mr Peat: This is an experimental approach which has been under way for some time. As far as I am aware, it is working to the satisfaction of the BBC and, as far as I am aware, it has allowed the NAO to investigate the areas they have suggested and we have discussed. The experiment is working as agreed in the context of the Communications Act discussions and I believe that it can further develop to the mutual benefit of the NAO and informing the PAC and the BBC.
Q99 Kitty Ussher: May I unusually address a question to the Comptroller and Auditor General? Would you value a freer relationship where you could conduct your investigations in the same way as you would for any other public body?
Sir John Bourn: I should like to say first of all that I agree with what the Chairman of the Audit Committee and other members of the BBC team have said about the way the experiment has worked. They have accepted everything I have suggested and I think that it has gone well. From the position of an external auditor, there should be no limit on the freedom of choice and to the extent that there is that limit on the freedom of choice, I am not in the same position with the BBC as I am with all the government departments and executive agencies and the range of my responsibilities. I do not have the freedom to choose things myself and that is the nub of the issue. Certainly from my point of view the experiment has gone very well in the terms in which it was set.
Q100 Kitty Ussher: Do you feel that there are risks to the licence-fee payer of the current arrangement, of the current experiment?
Sir John Bourn: I see it essentially around what it is that an external auditor is. Here of course, as well as the Committee of Public Accounts and the Public Accounts Commission, we have Lord Sharman, when he looked at our access rights, recommending that we should have direct rights of access. The point is about the freedom of an external auditor to choose the subjects which he investigates, just as, currently, the external auditor of the BBC is KPMG and they have the right to choose what they look at. My belief is that if you are an external auditor, you should have the right to choose what you look at; that is where I am coming from and this is where the Committee of Public Accounts has been coming from.