Q111 Kitty Ussher: Was that fact taken into account when you decided not to go ahead with the power plant?
Mr Kane: I am not aware; I was not involved at that particular stage. I believe the consideration was in terms of the short-term costs and delivering a value for money solution.
Q112 Kitty Ussher: So you could not incur the short-term capital expenditure.
Mr Kane: Because there was no certainty in terms of building out the rest of the buildings and therefore the risk in terms of taking something which was unknown at that point was too great.
Q113 Kitty Ussher: Do you accept my point that had you been able to generate surplus electricity you could have sold that back thereby compensating for the fact.
Mr Kane: Yes and indeed the whole concept of the energy centre was to centralise existing plant. So we could achieve economies of scale, rather than having three different plant rooms in three different buildings we had one single energy centre where we used one consolidated set of kit, one maintenance team and as the BBC has to broadcast on a 24/7 basis, resilient power and cooling are critical to the overall broadcasting effort. Therefore having the maintenance team and everyone in one site, rather than having to run three different sites-
Q114 Kitty Ussher: I understand all that, but you have not quite answered my question. You said that had it been at full capacity you would have recouped the cost within five to seven years. What I am saying is that in fact you could have sold some of the surplus energy back into the pool.
Mr Peat: My understanding is that at the time the original plans were developed the full capacity of the CHP plant could have been used for the purposes which the original design intended it to be used. Given the change in the utilisation which took place fairly shortly after that stage, they could not use the full output of CHP, so they would have been dependent on what could be sold to the market, with, of course, far less certainty at that stage of what the price would be and whether there would be a continuing contract. Under those changed circumstances the economics did not stack up in the way they did under the original bid. Going forward, if further developments take place in the way that may happen over the next few months, we may be back to the stage where, just purely for the purposes of internal generation, it makes sense. If there is a possibility of selling excesses to the market, that will be an additional benefit for the BBC and for the licence payer.
Q115 Mr Williams: Sir John, coming to this issue of your status and I can think back to a couple of instances: the WDA, where as a result of your discoveries and this Committee's discoveries there was virtually a complete clean-out at the top; and I seem to remember another instance, where a lady chief executive lost her job as a result of information obtained by one of your auditors while he was actually carrying out the audit. Is it not a fact that in identifying areas which need investigation, the audit is often a useful source to you of guidance information as to where you should look for specific examination? Not having that audit access, you are dependent on the BBC letting you know what might need looking at.
Sir John Bourn: It is certainly the case that if you have full and free rights of access you can secure the kind of information you describe. To the extent that you work on a programme where you discuss and agree particular subjects, you do not have the full rights of access right across the board. What you say is right in that sense.
Q116 Mr Williams: Who was the Chairman at the time this contract was signed?
Mr Smith: The strategy was certainly agreed with Sir Christopher Bland in the chair, but I cannot remember whether he had moved on by the time of the execution of it.
Mr Peat: The strategy was agreed in 1998 and the first agreement of the Board of Governors to the full project was in June 2001.
Mr Williams: We could not hear the name.
Q117 Chairman: Was it Gavyn Davies or was it not?
Mr Smith: We are saying that we cannot quite remember exactly who was in the chair when the contract was signed, but the strategy for the property redevelopments and the securing of a partner was approved when Sir Christopher Bland was in the chair. Whether the execution of it was while he was still in the chair, or whether by then Gavyn Davies had arrived, we cannot quite recall. We shall provide the information in a supplementary note.2
Mr Thompson: The chairman changed in the middle of 2001 and we will come back to you on that.
Q118 Mr Williams: Not only the chairman changed, but the chairman's line changed and that is what we are interested in. Mr Gavyn Davies was an advocate of NAO access to you before he became a Governor and an opponent of NAO access to you after he became chairman of the governors. I just wondered whether it was coincidental or whether his subsequent experience influenced his thinking.
Mr Smith: Totally coincidental.
Mr Peat: My understanding is that what Gavyn Davies said was that a committee of which he was chairman was of the view you have just expressed, but that was not his personal opinion. That is just what I have heard and I cannot speak for Gavyn Davies.
Chairman: I know the feeling. Do not worry.
Q119 Greg Clark: Mr Thompson, you are a new Director-General. You have a pretty down-to-earth manner. Do you not feel embarrassed to have to associate yourself with paper thin excuses for not having NAO scrutiny? Really the idea that scrutiny by the National Audit Office compromises the editorial integrity of the BBC is an insult to the intelligence. Is it not about time that these archaic ways and circumlocutions should be swept away. Would it not benefit the BBC and its standing in the country if it could go with the spirit of the age and just get normal and behave as any other public body does?
Mr Thompson: May I just come back to you on all of this? The BBC is not like any other public body. In particular, virtually no other-I cannot think of another-body has a constitutional arrangement of the kind the BBC does with a Board of Governors, to be replaced soon, we believe, by a BBC trust, which is charged by Parliament with looking after the BBC, absolutely maintaining the public interest and specifically holding the BBC to account in the matter of value for money. Unlike most public bodies and certainly unlike any government department, there is already a public body in existence with specific duties in this matter, duties which I have to say increasingly in recent years they have been taking seriously. As a manager of the BBC I am frequently the subject of entirely external scrutiny outside the Governors' value for money programme by external consultants and experts who are hired by the governors to examine management actions independently. That is the way it should be. Uniquely I think-I stand to be corrected-the BBC's constitution absolutely given it by Parliament, contains a body which has particular responsibilities to ensure value for money is being achieved and, secondly, also to guard fiercely the BBC's creative and editorial independence. It seems to me, as a relative newcomer to this fascinating and it would appear endless debate about the NAO and the BBC, that the issue is not about access for the NAO to the BBC, that is absolutely accepted and indeed the BBC welcomes the insights and input that the NAO are bringing. The issue is one about the precise terms on which they come in. My duty as the Chief Executive of the BBC is to work with whatever system of accountability Parliament in the end deem fit to judge on for the BBC, but I have to say that I do believe in the issue of editorial independence. However, as the Chairman of the Governors' Audit Committee has made very clear, so far we have encountered no issues at all of this kind and we will not foolishly or unnecessarily create problems where they do not exist, nonetheless they are important issues. That debate is taking place inside the House of Commons and more broadly. In some ways I am the last person in Britain to be asked to adjudicate on this matter. I believe, from everything I have seen of the current experiment, that there is neither any evidence that the NAO has been prevented from seeing any aspect of the BBC's activities, nor, I have to say, although there are many things in this Report from which the BBC can learn-and it would be quite wrong to suggest it, as some of the questioning has suggested today-has the NAO suggested in this Report that this project has been a problem. This is a project which has delivered on time, on budget and which we believe, and I think the NAO concludes, has been very effectively managed. I personally cannot see what problem there is with the current arrangements which you are seeking to fix.
Q120 Mr Bacon: Mr Peat, I have another question about the spirit of the age. I see that you are on the project committee for the conservation of the Rosslyn Chapel. I wanted to give you an opportunity to place on the record before Parliament an answer to the question: have you found the Holy Grail?
Mr Peat: I can assure you that we have resisted any efforts to dig up the floor to see whether it is there, because it is very good for visitor numbers to leave it as a question to be considered. If you wish to come, let me know and I shall make sure you have a full escorted tour.
Q121 Chairman: That concludes this session. It has been a very useful hearing and it has proved that the BBC has nothing to fear from the existing arrangement. I am sure that if all rights of access were granted, we should get even more light usefully shed on your functions. I hope you have noticed that we asked nothing about editorial content and have resisted asking about the £68 million you spent on your production of Rome. We have been very well behaved, have we not?
Mr Thompson: It has been a pleasure as always.
Chairman: Thank you very much.
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