The bbc
trust’s review
and assessment
BBC Radio 4’s A History of the World in 100 Objects inspired additional content acrossother BBC services, and encouraged young and old to visit museums and go online
to research their own history. The picture shows a young family visiting the British
Museum, BBC Radio 4’s partner in this ambitious and original project.
TPart 1
BBC trust
Overview
1-1
year in brief
1-2	Chairman’s foreword
BBC Performance
1-6	Performance against
strategic objectives
1-8	Financial performance
1-10	Purposes
1-14	Service performance
1-17	securing Editorial
standards
1-18	Delivering value for money

Trust performance
1-22	real change for licencefee payers
1-29	The Trust’s plans for 2010/11
Governance1-32	The BBC Trustees
1-34 Audience councils
1-35 engaging with audiences
1-36 trading fairly
Inside the trust
1-40 internal governance“All of our efforts are intended to shape the BBC in theinterests of the public it serves. Licence fee payers tell us
they want high quality, distinctive programmes, value
for money and something for everyone. That is exactly
what we have worked to deliver.”Sir Michael Lyons, chairman

Less than

40p

Each licensed UK
household pays
less than 40 penceper day for all
BBC services

97%* source: BBc cross Media insight survey.

This year the individual licence fee was £142.50.
The monthly charge per licence fee was:
£1.35
(11%)

Gross efficiency savings £mProjected

2,000

548

2bn

08/09 09/10 10/11 11/12 12/13

Total

1,500

480

£0.67
(6%)
1,000

£2.01
(17%)
£7.85
(66%)

of the UK adult
population
use bbc services
each week*

Television
Radio
Online
Other

404
316

500

0

237

Through the efficient and effective collection of the licence fee, by reducing the cost of running how we manage our business year-on-year, andby selling and licensing programmes and content assets to companies in the UK and abroad, we strive to increase the amount of money available
to invest in delivering the right portfolio of programmes and services for UK audiences.

Trust expenditure
Trust expenditure £000
Trust expenditure as a percentage of BBC UK public services
spend has reduced to 0.30%
08/09
10,521*
09/10
10,502Trustee remuneration
Other operating costs* Restated for IFRS.

08/09
09/10

4,482
3,404

Regulatory fees
Market impact assessment fees

Staff costs
Restructuring costs

Trust Consultations

We hold consultations to understand what audiences, industry andothers think. These inform our decisions about the BBC’s services,and the priorities we set for the Executive.

Total responses
08/09
09/10

Ofcom fees £000

16,93935,310We completed nine public consultations in 2009/10 and received
a total of 35,310 responses from members of the public. These were:• review of on demand services• review of BBC One, BBC Two, BBC Four• service licence review of BBC Radio 2 andBBC 6 Music• review of BBC ALBA
• review of the BBC Red Button service• review of the BBC Editorial Guidelines• Project ‘Canvas’• BBC Election Guidelines• Party Election Broadcasts complaints procedure

Year in brief
2009/10: real change for licence fee payers

2. Investing in audience priorities
The BBC has to serve all audiences, which means
meeting a diverse and competing range of needs
and interests. We use our work plan to help identify
what really matters to licence fee payers so that we
can ensure the BBC focuses its efforts in these areas.
Examples in the past year include:

1. Re-shaping the BBC for licencefee payers
While we know that audiences value the BBC, they also
tell us that they want it to evolve constantly to reflect
their interests. This is the number one priority for the
Trust and underpins most of our work. Examples in thepast year include:

Extra £25.5million for children’s services
October 2009: Executive pledged additional budget
following the Trust’s recommendations on budgetarypressures in services for children.

Putting quality first
July 2009: challenged Executive to review BBC’s overall
strategy to determine how the BBC can most effectively
deliver its public service mission. March 2010: Executive’s
proposals received. Summer 2010: Trust’s interim
conclusions due. Autumn 2010: final report due tobe published.
Limits set for BBC Worldwide
November 2009: set tighter boundaries for commercial
operations while ensuring they continue to bringfinancial benefits to licence fee payers.
Making distinctiveness a top priority
During the year: conclusions from radio service
reviews showed that distinctiveness is a top priority
for audiences. February 2010: approved changes to
BBC Radio 2 to make it more distinctive.
Shaping debate about the future of public
service broadcasting
Summer 2009: played active role in Government’s
Digital Britain debate, setting out how BBC could
appropriately contribute to health of UK public service
broadcasting; argued for importance of protecting
licence fee and BBC’s independence.
Managing impact on the market
September 2009: confirmed that commercial
sponsorship would not be allowed for on-air BBC
events. October 2009: rejected Executive’s proposals
to set up a new venture to share the iPlayer with otherpublic service broadcasters.
For details of other activities that we have delivered against the 2009/10
work plan please see our website: www.bbc.co.uk/bbctrust.

TV on demand a step closer
December 2009: provisional approval for BBC joint
venture to develop a common standard to allow
viewers to watch on demand services on TV(Project ‘Canvas’).
£15.3million boost for local TV and radio services
July 2009: approved enhancements to local TV andradio services in the nations and regions, with extra£15.3million by 2012/13.
Giving licence fee payers a say on standards
October 2009: first ever public consultation on BBC’s
Editorial Guidelines to ensure BBC is meeting thehighest standards.
3. Delivering value for money
The Trust is determined that every licence fee poundshould be used as effectively as possible. This is more
important than ever in the current challenging economic
climate. Examples of how we have achieved this in thepast year include:
Major cuts to senior management pay bill
October 2009: approved proposals to cut senior
management pay bill by 25% and reduce numbersby 18% over three-and-a-half years.
Learning lessons from past building projects
February 2010: following NAO report into threemajor BBC building projects, Trust asked Executive toundertake immediate ‘health check’ of all existing major
projects to ensure they were being effectively managed.

1-1
Overview

The BBC Trust (‘the Trust’) exists to get the best outof the BBC for licence fee payers. That means listening
to what the public tell us then acting on it to ensure theyreceive the modern, responsive and representative BBC
that they want. Here are three areas in which the Trust
delivered real change for licence fee payers during
the year.

Overview

CHAIRMAN’S FOREWORD
We publish this annual report at a time of acute challenge
for the UK. In such times, it is more important than ever thatthe BBC lives up to the public’s expectations, remaining a beaconof impartiality and integrity, and underpinning our way oflife by supporting open, informed public discussion.

Overview

1-2

It is also critical that the BBC strains every sinew to deliver
value for money to licence fee payers; the Trust will workrelentlessly to ensure this happens.
Last year on behalf of the Trust I set out six commitments
for the BBC: upholding the highest editorial standards; serving
all audiences; to lead not follow in content; supporting public
service broadcasting; spending only what it needs to deliver its
public service remit; and protecting the BBC’s independence.
These commitments have underpinned all our decisions thisyear. In making decisions we have tested proposals rigorously,
formed conclusions based on research that draws on
audiences’ views and published all our evidence.
The BBC’s year
Turning to the BBC’s year, and what audiences told us. The
BBC is maintaining its position in the public’s affections, with
82% saying that they would miss the BBC if it wasn’t there. It
continues to reach almost everyone in the UK – 97%* – andperformance against our other objectives continues to movein the right direction. But there is further to go.
Squeezing every pound
It’s essential that we make every pound work as hard as
possible. During the year the Trust challenged the Executive
to reduce the senior management pay bill, resulting, over the
next three years, in savings of 25% and a headcount reductionof 18%. This builds on a three-and-a-half year pay freeze forthe most senior managers and an indefinite suspension of theirbonuses, alongside savings in top talent costs. We will not takeour foot off the pedal on these issues in the coming year.
Making outstanding programmes
The public judges value for money on the quality of the BBC’s
programmes and services. We’ve seen more high quality
programmes this year, with renewed emphasis on knowledge
and education. Wounded (BBC One), A History of the Worldin 100 Objects (BBC Radio 4), The Love of Money (BBC Two)and Enid (BBC Four) were amongst my favourites, along withsome outstanding coverage of current affairs, in particular therecession, the Haiti earthquake and the election build up.
But we still need more. The public tells us that too much ofwhat the BBC does is not yet distinctive enough – this will be
the BBC’s highest priority in 2010/11.

Revising editorial standards
The public expects the BBC to maintain the highest editorial
standards and to learn lessons from the past. This year the
Trust reviewed the BBC’s Editorial Guidelines with the helpof in-depth audience research and, for the first time, public
consultation on the changes to be made.
Reviewing the BBC’s commercial activities
Making sure that the BBC isn’t unduly influenced bycommercial considerations while ensuring it doesn’t use its
substantial economic power to damage others are importantparts of our job. We carefully examined the BBC’s trading
activities to ensure that they are consistent with its role as apublic service broadcaster.
Re-shaping the BBC for modern Britain
Along with the whole communications industry, the BBC
faces a very demanding future with ever increasing choice
in when and how we enjoy content. This raises big questions
about how the BBC makes use of its money. To help us set
clear priorities we launched a review of the BBC’s current
strategy, which I announced through an open letter to licencefee payers in September. We have consulted the public on the
Director-General’s recommendations to us and will publish
results this autumn. But I can say now that the Trust is clear:
the result must be a BBC that focuses on its public service role,puts quality and distinctiveness first, is tireless in ensuring value
for money and is clear about the behaviours appropriate forits publicly-funded status.
The strategy review is not the final chapter though. Rather
it is one significant step in a wider quest to ensure the BBC
is of a size and shape that allows all licence fee payers to feel itis delivering for them. No bigger than it needs to be, and intent
on using every penny of the licence fee to good effect.

Sir Michael Lyons
Chairman* see page 1-6.

Overview

1-3“Licence fee payers haveenormous trust in andaffection for the BBC. We arehere to get the best out of the
BBC on their behalf. That means
supporting and challenging
the Executive to ensure thatthe BBC repays that trust.”
SIR Michael Lyons
chairman

BBC trust:assessing
the bbc’s
PerfOrmance

the BBc has served audiences well this year with a broad rangeof high quality content across tv, radio and online, althoughpeople tell us that they would like to see even more distinctive
programming. the BBc is addressing audiences’ concerns aboutpast lapses in editorial standards, and has made good progress indelivering value for money.

BBC Radio Leeds presenter Adam Pope takes a range of views from the local community during an audiencephone-in. Phone-ins are an important part of nations and local radio, giving voice to people’s concerns andholding decision makers to account.

BBC performanceBBC
performance
1-5

BBc peRfoRMAnce

Performance against
strategic objectives
We believe that there is more to be done to increase thedistinctiveness of BBC output and the delivery of some ofthe public purposes. However, the BBC has performed wellin serving audiences this year in many respects.

Here we report for the second full year on the six objectives
set out in the Executive’s strategic plan, ‘Delivering Creative
Future’. This is the main way in which we judge the BBC’s
performance at a high level.
1. The BBC should increase thedistinctiveness and quality of its output.

BBC performance

1-6

Much of the BBC’s output is very high quality, althoughchanging audience behaviour is driving an increase in many
quality measures. We still believe that the BBC can do more
to be distinctive.
(Figures in brackets are for 2008/09)• average score out of 10 for the BBC being ‘high quality’remained at 6.4 (6.4)1• proportion of those agreeing strongly that the BBCis high quality rose slightly to 36% (34%)1• averageappreciation index (AI) for BBC television
programmes rose to 82 (80)2• averageappreciation index (AI) for BBC radio
programmes remained at 79 (79)2• average
quality score for BBC Online sites is 41 (–)3• proportion
agreeing strongly that BBC television
programmes are ‘original and different’ rose slightly
to 37% (36%)2
As a publicly-funded broadcaster, this is a major responsibility
for the BBC.
Over the past two years we have observed a change in TV
viewing behaviour which has had a positive impact on how
audiences regard the programmes they watch, but which has
also resulted in them feeling less positive about the overall TV
offer from the BBC and other broadcasters. Viewers are now
more likely to watch particular programmes and less likely towatch something just because the TV happens to be on. Thischange is the result of the near universal availability of digital
TV which offers more choice of channels, and also the growing
use of equipment like personal video recorders and online
catch-up services, such as the BBC iPlayer.
The recorded scores for the quality and originality of
programmes from all broadcasters have gone up, partly

because people are increasingly choosing programmes they
will enjoy watching. However, some audiences are less satisfied
with what’s on offer on television in terms of range and surprise.
And public expectations are always highest for the BBC
Our annual research into delivery of its public purposes, andthe more detailed recent reviews of BBC One, BBC Two and
BBC Four, reinforce our belief that the BBC can still do moreon its flagship, broad appeal services, as well as smaller niche
offers, to be distinctive from other broadcasters. It should takeadvantage of its secure funding to take more creative risks andbe more ambitious editorially.
Also this year we worked with the Executive to define what
distinctiveness really means for BBC output (see page 1-23),
and all editorial areas are now working to embed thesedefinitions in their work.
2. The BBC should maintain the maximum
reach consistent with its purposesand values.
BBC maintains reach well in excess of the 90% target.
(Figures in brackets are for 2008/09)• weeklyreach across all BBC services in 2009/10 was 97%(based on new measurement system)4• weekly reach across all BBC services in 2009/10 using
previous measurement system remained at 93%(93% in 2008/09)1
The BBC has a duty to serve all audiences. Only by reaching alarge number of people can it deliver its purposes. Our target
is for the BBC to reach at least 90% of UK adults with its
services each week. Reaching this very large number of people
is a clear sign that the BBC continues to produce programmes
and content that audiences value, and we commend the
Executive for this performance.
This year, we began using a new BBC survey, Cross Media
Insight, to measure reach. It is a more thorough way ofmeasuring how people use the range of BBC services
and therefore tends to record higher reach than theprevious methodology.

Further small signs of improvement.
(Figures in brackets are for 2008/09)• proportion of those who are ‘high approvers’ of the
BBC rose slightly to 38% (37%)1• proportion of those who are ‘low approvers’ of the
BBC remained at 12% (12%)1
There have always been varying levels of approval of the BBC
amongst the public in the different nations and regions, but
the BBC aims to serve all, regardless of their level of approval.
There is clearly still some way to go towards appealing tolower approvers. Young people’s (15-24 year olds) approvalof the BBC tends to be highest, and has risen a few points
over the past two years. People from higher socio-economic
groups (ABC1s) are also more likely to be high approvers of
the BBC.
4. The BBC should restore trust in its output.
There has been a gradual restoration of trust.
(Figures in brackets are for 2008/09)• average score out of ten for ‘I trust the BBC’ remains
at 6.0 (6.0)1• proportion of those agreeing strongly that ‘I trust theBBC’ rose to 31% (29%)1
We set this objective in response to a number of editorial
incidents in 2007 which had a tangible impact on audiences’
trust in the BBC. In last year’s report, we voiced a serious
concern that editorial controls and compliance in Audio& Music were inadequate, following the serious breach ofeditorial guidelines on BBC Radio 2. Since that point, we areencouraged to see that editorial controls and compliance havebeen strengthened across the BBC, with excellent progressin Audio & Music. Perceptions of trustworthiness have now
recovered to levels we saw before these incidents. As withapproval, trust tends to be higher amongst young people.

5. The BBC should increase the delivery of its
public purposes.
Despite the welcome direction of the BBC’s new strategy,
Putting Quality First, we believe that the pursuit ofgreater creative and editorial ambition should become
the Executive’s main strategic aim.
The BBC is required by the Royal Charter to promote a
number of public purposes across all of its services. Deliveryof the public purposes – and in particular working to address
performance gaps we identified in 2007 – has been a focus for
the Executive over the past three years.
Much work is being done in areas such as helping the BBC
improve its representation of the different nations, regions
and communities, and in creating a strategy which canpromote and support formal educational goals for children
and teenagers. We are keen to see progress in delivery of
the public purposes as a result of this work in future years.
The public’s expectation of the BBC in terms of providing
output that is distinctive and creative on all platforms remains
higher than its perceived delivery. Perceptions in this area areclosely linked with perceptions of the BBC’s value for money,
so we continue to believe that this should be the primary focus
for the Executive.
6. The BBC should deliver an improvement of
3% each year against its efficiency target.
Efficiency savings of £275million have been made this year
(net of costs). The BBC is on track to deliver the overalltarget, with a cumulative £468million savings (net of costs)
from the first two years of the five-year project.
Licence fee funding is a great privilege for the BBC and the
BBC has a duty to make sure that it spends public money as
efficiently as possible. Therefore, in 2007, we set the Executive
a cumulative efficiency target over the five-year period to
2012/13.
The Executive is reporting good progress against this target.
The BBC’s external auditors, KPMG, provide assurance eachyear on the value of the financial savings declared. We also
consider whether the savings achieved are real efficiency
gains – ie they have not adversely affected the performanceof the services the BBC is delivering. The BBC’s performancemeasurement framework is designed to ensure that we
can assess the BBC’s effectiveness in driving efficiency while
maintaining quality. Performance measures are currently
holding up well and we have no cause for concern in thisrespect from the efficiencies made to date.
Looking ahead: revising the strategic
objectives
As part of our approval of a new strategy for the BBC, we
will look at what the appropriate objectives should be andhow they should be measured. We will then report on thempublicly each year as we have done in the past two Annual
Reports for the existing objectives.

1-7
BBC performance

3. The BBC should maintain perceived
value among high approvers and should
increase perceived value among middle
and low approvers.

BBC Performance

Financial performance
The BBC is funded in a unique way, with most of its income
coming from the licence fee, paid for by households acrossthe UK. This funding gives the BBC exceptional privileges andwe have a responsibility to ensure this money is spent well.

BBC performance

1-8

Unlike profit-making organisations we are not focused on thebottom line. Instead we need to ensure the BBC delivers real
and tangible value for both the licence fee payer and the wider
UK economy. This translates into five key financial objectives
which provide a measure of our progress in creating anddelivering this value:• maximising the BBC’s income by collecting the licence fee
as efficiently as possible• making the BBC as efficient as possible, and providing goodvalue for money• maximising the returns the BBC makes on programmes
paid for by the licence fee• spreading the benefit of the licence fee across the wholeof the UK• ensuring the licence fee supports the wider
creative economy
The BBC’s performance against these financial objectives is set
out opposite and you can read a more detailed commentaryaround these in Part Two of this Annual Report.
Below we comment specifically on three areas where we havetaken a close interest during the last year. You can read more
about the activities we undertake to ensure the licence fee isspent wisely, and that the BBC achieves value for money, on
pages 1-18 to 1-19.

addresses the longer-term issues of affordability for licence fee
payers, such that the overall remuneration package offered tostaff costs no more than is necessary to secure a sustainable
and equitable strategy moving forwards.

Pension scheme
Part Two of this Report sets out the current position
regarding the financial position of the BBC Pension Scheme.
Like many such schemes, the current valuation has been
affected by significant changes in bond returns and forward
inflation assumptions, as well as changing life expectancy,such that the scheme is showing a large deficit. The BBC istherefore facing the challenge of reducing this deficit, in a way
satisfactory to pension scheme trustees and regulators, while
also ensuring the long-term affordability of the scheme. In
addressing this challenge, the Executive has announced plansto reform the BBC’s pension provision.
Pension provision is one part of the remuneration packagethat is offered to staff and is an operational, not strategic,
matter. Our interest in this concerns how the Executive

Licence fee collection
Last year we published a study on the collection arrangements
for the licence fee. We concluded that, in collecting the licencefee, the BBC must balance firmness with fairness and madea number of recommendations for improvement. We arepleased to note that the Executive has made good progressin implementing those recommendations, although there
remain some areas with longer implementation timescales
where actions are yet to be completed. One of the practicalconsequences of our review has been a redesign of theearly renewal reminder letters to be clearer, simpler andless accusatory in tone. We are also pleased to note, moregenerally, that by quarter three of 2009/10, complaints about
TV Licensing had fallen year-on-year by 17%.

Talent fees
At the start of the year we reviewed the progress that the
Executive had made in implementing the recommendations
from our 2008 report into the role of the BBC in the onscreen and on-air talent market. We concluded that progress
had been made but thought the BBC could, and should, go
further. We tasked the Executive with achieving further
substantial savings during the remainder of this licencefee period.
We are pleased to note that the Executive has already started
to deliver against this challenge. The Executive has, for the
first time, published details of talent costs in Part Two of
this Report. This table shows that the total spent on talent(artists, presenters, journalists and musicians) in 2009/10 was£7.7million less than in the previous year, with a 4.0% reduction
for the top tier of talent (those earning over £150,000).
The external auditors have provided assurance over thesenumbers that they have been compiled on a consistent basis
to the baseline defined in 2008/09. While the progress to dateis pleasing we expect to see further progress in future years.

T
Radio
O
O
T

Monthly charge per licence fee
£m
09/10

%
09/10

£m
08/09

%
08/09

2,351
604
199
406
3,560

66 2,346
17 5906178
11 335100 3,449

68
17
5
10
100

T
Radio
O
O
T

£
09/10

%
09/10

£
08/09

%
08/09

7.85
2.01
0.67
1.35
11.88

66 7.91
17 1.99
6 0.6011 1.13100 11.63

68
17
5
10
100

LICENCE FEE COLLECTION
More people are paying for their television licence online andby telephone which helps the BBC to keep down the costsof collection. This year, the combined cost of collection andevasion has once more been kept at 2007/08 levels.

BBC WORLDWIDE
BBC Worldwide increased its sales year-on-year by 7% andits profit was up to a record £147million. BBC Worldwide
returned £151million in dividends and programme investments
to the UK public services in 2009/10.

Licence fee collection/evasion %
07/08
08/09
09/10

BBC Worldwide sales £m
8.7
8.7
8.7

LICENCE FEE SPEND IN THE NATIONS
and regions
We set the Executive a target of making 50% of our
Network Television (by spend) outside London by 2016
with the amount spent in the nations reaching 12% in 2012
and 16% by 2016. We are making good progress towards
these targets.

BBC Worldwide statutory profit
before specific items, interest and tax £m
07/08 118
08/09 106
09/10 145*

TV programming spend by area as % of eligible spend

total nations
total outside london

916
1,004
1,074

07/08
08/09
09/10

%
09/10

%
08/09

11.7
37.7

7.9
34.9

2007/08 figures are uK GAAp. other years are ifRs.
* specific items are significant items which are highlighted by virtueof their size or importance to enable a full understanding of BBc
worldwide’s performance.

SPEND IN THE CREATIVE ECONOMY
Once more the BBC has spent more than £1.1billion in
the UK’s creative economy, commissioning programmes
from independents (40% and 14% of eligible television andradio content respectively) and collaborating with othercreative partners.
Chart 2-2
Spend in creative economy £m
07/08
08/09
09/10

479
435
460

Independent programmes transmitted
External programme facilities and resources
Acquired programmes transmitted

248
265
267

90
101
93

299
305
299

Artists and contributors(includes copyright – excluded from Table 2-10)
BBC performing groups

22 1,138
23 1,129
24 1,143

1-9
BBC performance

Breakdown of BBC spend

BBC Performance

Purposes
The BBC’s mission is to inform, educate and entertain. Under theterms of the royal Charter and Agreement, through its output,
the BBC must promote the following six public purposes:• SuStaining citizenShip and civil Society• promoting education and learning• Stimulating creativity and cultural excellence• repreSenting the uK, itS nationS, regionS and communitieS• Bringing the uK to the world and the world to the uK• helping to deliver the BenefitS of emerging communicationStechnoloGies And seRvices

BBC performance

1-10
1

How is the BBC performing?
Quite rightly, people have high expectations of the BBC, and
it is the Trust’s job to ensure that the BBC lives up to these
expectations. We measure the BBC’s performance against
each of the purposes by carrying out an annual audiencesurvey. In it, we ask how important each of the BBC’s public
purpose commitments is to audiences, and how well they
think the BBC is delivering these commitments. By comparing
these scores we can see whether the BBC is meeting audience
expectations in each area. We supplement the results of thissurvey with insights from our Audience Councils and withfindings from our other activities such as service reviews, aswell as other relevant research carried out by the Trust, theExecutive, Ofcom and Digital UK.
In our survey we also ask audiences to compare the BBC’s
performance against other broadcasters. This year, we foundthat, for each public purpose, the BBC is outperforming
these others. To an extent this is to be expected, given thatcommercial broadcasters are not required to deliver theBBC’s public purposes. Nevertheless, it shows that the BBC
offers something different.

1 Stranger danger: BBC children’s services ran a campaign to help children
become alert to the potential threats posed by strangers.
2 BBC Radio 4’s Today programme – just part of the nearly 14,000 hours ofnews, information and current affairs across BBC network radio each year.
3 Empire of the Seas – on BBC Two, BBC Four and BBC iPlayer – revealed thesurprising history of the Royal Navy.
4 Small Island was an acclaimed adaptation of Andrea Levy’s award-winning book– and a small part of the 980 hours of drama on BBC One alone last year.

1. Sustaining citizenship and civil society
Audiences have high expectations of the BBC’s provisionof news and current affairs. These are largely being met but
this is an important area and will remain a priority next year.
2

As well as supporting formal education, the BBC offers
content which builds people’s knowledge and skills across a
broad range of subjects. In contrast to formal learning, thiscontent is broadly meeting audiences’ expectations.
3. Stimulating creativity and cultural
excellence
The BBC’s most pressing priority is to provide output thatis distinctive and creative, since audience expectations inthis area are still not being met.
4

2. Promoting education and learning
The BBC plans to strengthen its educational content forschools and colleges to meet audiences’ high expectations.
3

The BBC has a responsibility to support formal education inschools and colleges. Performance scores for this commitment
are high relative to other purposes but expectations arehigher, particularly among parents with children under 18 whofeel that the BBC could do more in this area. The Executive
has been carrying out a strategic assessment of how formal
learning provision can be enhanced, and is due to submit
proposals to the Trust this summer.

Related to this purpose, the BBC has commitments to provide
distinctive and entertaining content as well as to cover andencourage participation in cultural activities. Last year wefound that improving performance in both these areas would
have the greatest effect on audiences’ perception of the BBC
offering value for money. However, our survey this year showsthat this area has the largest gap between expectation andperformance, with no significant change from the previous
year. Audiences expect output that is distinctive and creative
but, in many cases, these expectations are not being met.
The creativity purpose also includes a commitment tonurture and support UK talent. This is essential to quality anddistinctiveness, but there is a limit to how far our audiencesurveys can help us understand the BBC’s contribution to
UK talent. For this reason we intend to carry out targeted
research with industry stakeholders in 2010/11.
More work needed in television
Our service reviews of BBC Radio 1, BBC Radio 2 and BBC
6 Music showed that audiences feel that these stations makea significant contribution to the creativity purpose by playing
a wide range of music, particularly new and live music. While
radio appears to be meeting audiences’ expectations forcreativity, we have made recommendations to enhance theability of the popular music stations to deliver the purposes
and further build distinctiveness. Our service reviews of BBC
One, BBC Two, and BBC Four show that, while the channels
are performing well in many respects, the biggest single issue
for audiences is that there is not enough programming whichis ‘fresh and new’. They want the BBC to use the licence fee
to take more risks with new, distinctive programming, andbe more ambitious. Our initial findings on these services canbe found in a separate report on our website.

1-11
BBC performance

The BBC’s commitments in this area relate to news, current
affairs, and enhancing people’s understanding of the politicalprocess. In its strategy review proposal, the Executive identified
journalism as a high priority, a principle with which we agree.
Audiences rate the BBC highly in this area but expectations
slightly exceed performance so there is no room forcomplacency. Research carried out as part of our review
of BBC Radio 2 and BBC 6 Music indicated that both thesestations make an important contribution to citizenship. In
particular, BBC Radio 2’s The Jeremy Vine Show is effectiveat engaging lower-income listeners with current affairs content,
when other parts of the BBC often find it challenging to reachthis audience.

BBC Performance
purposes continuedR

I
I

4. RepResenting the UK, its nations, Regions
and commUnities
A

1

BBC performance

1-12

T

th
s
se
in
a
it
c
Campaigns and charitable appeals
tT
so
d
ca
h

U
A

1 Live concerts and sets are an important element of the BBC’s distinctive
music offer across radio and television. Picture shows BBC National Orchestra
of Wales at Cardiff’s Hoddinott Hall.
2 Fida Bassil (R) and Osman Ayfarah (L) from BBC Arabic television, the BBC’s
news and information channel in the Arabic language.
3 BBC iPlayer allows users to watch or listen to programmes they may havemissed – or want to experience again – enhancing the value of their licencefee. BBC Online will be reviewed in the coming year.

2

As part of this purpose, the BBC has a commitment toproviding international news services to audiences aroundthe world. It does this primarily through the BBC World
Service, which broadcasts in more than 30 languages to some
180 million listeners around the world. Last year our researchin this area covered BBC Hausa in Nigeria, Niger and Ghana
and BBC Urdu in Pakistan. Both these services are generally
perceived to be high quality by their target audiences.
Keeping in touch with the world
This purpose also includes commitments to keeping UK
audiences in touch with what is going on in the world, andgiving them an insight into the way people live in othercountries. Our research indicates that audiences rate the BBC
highly in these areas and these findings are consistent with
Ofcom data which tracks whether audiences feel particularchannels help them ‘understand what’s going on in the world’.
Both BBC One and BBC Two outperformed other public
service broadcasters against this measure last year.
6. Helping to deliver the benefits of emerging
communications technologies and services
The BBC is meeting expectations for its commitment tomaking engaging digital content available to audiences.
3

The BBC has a commitment to making content available
through digital media, such as mobile phones, interactive
television, digital radio and the internet. However, audiences
are not overly concerned about this purpose. Generally they
feel that the BBC’s performance is relatively low in this area
compared with the other purposes, but high enough to meettheir expectations. In our review of BBC Radio 2 and BBC 6
Music we concluded that BBC Radio 2 has been less successful
than other BBC stations at encouraging its audience to listen
digitally or go online. We therefore recommended that thestation should use its influence to promote the benefits ofdigital media so that groups that are hard to reach do not getleft behind.
One of our responsibilities is to make sure the BBC reaches
all audiences. As part of the strategy review the Trust is
considering what this means in practice and where the balanceshould be struck between pursuing new technology and filling
the gaps in coverage which exist in some parts of the UK.
Digital switchover
This purpose includes a commitment to support theswitchover to digital television, arguably the biggest change
to television since the introduction of colour. In the past year,
Wales, together with the South West of England and NorthWest of England, switched to digital and work continues
to meet the Government’s target to switch the wholeof the UK by 2012. The BBC also continues to expand its
national digital audio broadcasting (DAB) network and mostof the BBC’s digital-only radio stations continue to increase
their reach although audience levels are still low comparedwith analogue stations. The Executive’s strategy review
proposal included recommendations to close the digital radio
stations BBC 6 Music and BBC Asian Network. The Trust has
been consulting publicly on the Executive’s proposal and wewill report our conclusions in summer 2010.
Interacting with different media
The BBC also has a commitment to enabling audiences toaccess, understand and interact with different types of media.
In line with general views about this purpose, audiences
do not feel this aspect is particularly important. Scores for
performance were low, but met expectations. Having said
that, our research on media literacy this year indicates that,when people are encouraged to think more deeply about thissubject, most think that it is an important area for the BBC,particularly in relation to online safety and security. We will
therefore be carrying out further research on media literacy
in 2011.

1-13
BBC performance

5. Bringing the UK to the world and theworld to the UK
The BBC is doing well on both fronts through the BBC
World Service and BBC One and BBC Two.

BBC Performance

Service performance
The performance of BBC services has been very strong overall
this year, reaching many audiences with high quality content.
We continue to encourage the Executive to be more ambitious
creatively and editorially in all output.

BBC performance

1-14

The Trust assesses the Executive’s performance in delivering
the BBC’s services and holds it to account. Here we reporton the BBC’s performance this year in the areas of:• television• radio• online• news• sport• the BBC World Service
TelevisionThis year we reviewed BBC One, BBC Two and BBC Four.
The reviews conclude in autumn 2010 but our interim findingson these services can be found on our website.
All television channels (BBC and other) have continued torecord increases in appreciation of individual programmes andperceptions of programmes being high quality and ‘original
and different’. Investigation of these increases by the Executive
has shown that the rises are at least partially due to changes inviewing behaviour, where digital choice and on demand options
are allowing audiences to become more selective in theirviewing and, therefore, more appreciative of what they watch.
However, we also know that access to a wider range of digitalchannels does leave many viewers feeling that television is lessoriginal and surprising overall. We continue to discuss this issue
regularly with the Executive as it lies at the heart of the BBC’s
ability to deliver its public purposes well. We are still keen to see
greater creative ambition and originality across all BBC output.

All television channels (BBCand other) have continued torecord increases in appreciationof individual programmes andperceptions of programmes
being high quality and ‘original
and different’.

We have seen encouraging signs that BBC Two is starting toprovide a more consistently distinctive offering, particularly
through its factual output, and accept that this may have some
impact on reach and audience share. While reach to the BBC
television portfolio and BBC One was relatively steady, BBC
Two reach fell slightly following several years of stability.
Our review of BBC Three in 2009 concluded that the channel
had developed into an important part of the BBC’s television
portfolio through its ability to reach younger audiences and its
role in commissioning programmes which take creative risks.
We are encouraged that BBC Three is continuing to innovatewith programming across all genres and by how many young
people watched and appreciated some of the channel’s factualand current affairs programmes. BBC Three continued to
grow its reach this year, and now performs well amongst its
young target audience. This, together with a lower budget
in 2009/10, has resulted in a significant improvement in BBC
Three’s value for money.
However, we note that use of the channel’s online andmultiplatform offerings remains relatively low and we will seek
further clarification of the role of online for BBC Three as we
consider the Executive’s strategy proposals this summer.
We are pleased to see that a very high proportion of BBC
Four’s programmes are regarded by viewers as high quality,
original and different and we note its role in providing very
high quality music and arts programming. As part of ourconsideration of the Executive’s Putting Quality First
strategy, we are looking at the future focus of the channel
in the TV portfolio.

RadioIn general, people are spending less time listening to theradio. Average hours of radio listening per person fell yearon-year, and this trend continues to be strongest amongst
young people.
Network radio
Despite this, the BBC network radio portfolio had a strong
year with slight increases in both reach and audience.
However we are concerned at the slow rate of growth for
DAB and note how this has affected performance of some
digital-only BBC services, particularly BBC Asian Network.
The Executive has proposed closing BBC Asian Network
as part of its strategy review. We will report our conclusions
in summer 2010.
Following our review of BBC Radio 1 and BBC 1Xtra lastyear, we have been monitoring their performance against
the challenges we set for the stations. We were encouraged

by operational changes which clearly aim to strengthen BBC
Radio 1’s focus on a young, rather than older, mainstream
audience, although these are yet to be reflected in any change
in the station’s age profile.
We note that BBC Radio 1’s performance in terms of serving
young people from ethnic minorities remains a challenge andwill continue to assess the success of the Executive’s attempts
to address this. It is important that BBC Radio 1 remains
relevant to a broad base of young people so that the station
can continue to promote the BBC’s public purposes widely.
We were encouraged by early signs that the changes weapproved to BBC 1Xtra last year – reformatted news output
and a new approach to offering ‘new music’ – are helping thestation deliver public value to its listeners.
We reviewed both BBC Radio 2 and BBC 6 Music earlier
this year. Subsequently, the Executive proposed closing
BBC 6 Music as part of its strategy review proposals.
Nations and local radio
The BBC’s radio stations for each of the devolved nations
which include stations that broadcast in Welsh and Gaelic, andfor localities across England, make an important contribution
to the BBC’s aim to represent the different communities of
the UK. However, the reach of many of these stations has
been falling, and we are now keen to establish their role andpurpose more clearly alongside the BBC’s UK-wide stations.
We will consider this, and many other issues, in our reviewsof these stations.
The Executive has proposed a new strategy for English
local radio which we are now considering. It would resultin increased investment in news-based output at breakfast,
mid-morning and afternoon drivetime, alongside more sharedcontent between local radio stations at other times.
Service reviews in 2010
Our programme of service reviews continues in 2010,
with reviews of BBC Radio 3, BBC Radio 4 and BBC 7
now underway and reviews of the BBC’s radio stations
for each devolved nation to start later in 2010.

The BBC network radio
portfolio had a strong yearwith slight increases in bothreach and audience.

Picture shows contemporary R&B singer Alicia Keys
performed live on Trevor Nelson’s show, simulcast on
BBC 1Xtra and BBC Radio 1.

1-15
BBC performanceChildren’s
The BBC operates in a market where investment in UKoriginated children’s content is falling. But at the same time
the BBC competes for children’s attention with establishedglobal broadcasters like Disney and Nickelodeon as well as
the expanding range of other types of entertainment.
When the Trust reviewed children’s services in 2009 wecommended their strong performance in this challenging
environment but also suggested some changes to ensurethat the BBC remains the cornerstone of high quality UK
children’s programming. This has led to an extra £25.5million
being allocated to children’s services over the next three years.
We are now considering a proposal for further investment
in children’s programming from the Executive as part of the
Putting Quality First strategy.
CBeebies has maintained its reach this year and continues tobe the most watched channel among young children. CBBC’saudience numbers fell slightly compared with last year, but theservice remains the most watched children’s channel in homes
with digital television. Perceptions of quality continue to bevery high for both channels, particularly for CBeebies, which
is very popular with both parents and children.

BBc peRfoRMAnce
seRvice peRfoRMAnce continued

The BBC World Service
continued to be rated highly
by audiences for quality
measures such as trust,objectivity and relevance.

BBC performance

1-16

OnlineBBC Online has now established itself as one of the BBC’s
most important services in terms of sheer numbers of regularusers and as a way of catching up with BBC programmes.
While online remains a very fast-changing market, we haveseen signs that its growth is maturing in line with the overall
broadband market, although usage of individual areas, such as
BBC iPlayer and the BBC’s mobile offerings, is growing strongly.
We are now considering the Executive’s plans to consolidate
BBC Online with the aim of reducing content spend by 25%.
News
Audiences continue to have a high regard for BBC News
overall, and perceptions of it being trustworthy, accurate andimpartial were all stable. Reach remained strong at 79% of UK
adults. We were pleased to see that the main news bulletinson BBC television and radio have either maintained orincreased their numbers and that usage of BBC News online
continues to grow. Both the BBC News channel and BBC
Parliament grew reach slightly this year.
We have considered the gradual decline in reach of current
affairs on television as part of our review of BBC One and
BBC Two and will be publishing our findings on this in our final
report in autumn 2010. We believe that maintaining the quality
and editorial integrity of current affairs output remains a very
high priority for the BBC, and we still expect mainstream
BBC services to engage a wide audience in a broad range of
in-depth current affairs programming.
In our review of services for younger audiences published lastyear, we found that the BBC was facing a growing challenge toengage young people with news, particularly those from lower
income households. Engaging all audiences with news is central
to how well the BBC delivers its citizenship public purpose and,while certain programmes such as BBC Radio 1’s Newsbeat
and the BBC One 8pm Update have helped to some extent,
this challenge remains a major one. We will continue to reporton it.

Sport
The performance of BBC Sport was strong this year with aslight increase in reach, helped by Formula One. Sport content
has been particularly popular on BBC Online, with mobile
access growing strongly. In our response to the Government’s
review of listed events, we supported keeping these events
as guaranteed for free-to-air broadcast as there is clear value
in their being enjoyed by large numbers of people. We also
thoroughly support the Executive’s principle that the BBC
should prioritise coverage of those sports and events whichhave greatest national resonance.
BBC World Service
The BBC World Service is funded by Parliamentary Grant-inAid rather than the licence fee. It reached 180 million people
last year, a decline on the previous year driven chiefly by falls
in listening to the shortwave radio service in key areas such as
India and Bangladesh. In general, BBC World Service stations
continued to be rated highly by audiences for quality measures
such as trust, objectivity and relevance.
As part of our programme of audience research on the BBC
World Service, this year we focused on BBC Hausa in Nigeria,
Niger and Ghana and BBC Urdu in Pakistan. Both services
are perceived by audiences to be providing high quality andcredible sources of news and information for their respective
areas. Exploring mobile access is key for each service as there
are some barriers to delivery for the BBC Hausa service which
can impact on the quality of the listener experience; and for
BBC Urdu, there remains a challenge to maintain the relevanceof this service for younger audiences.

Picture shows Owen Bennett-Jones reportingfrom Yemen.

Securing editorial standards
The public, quite rightly, expects the highest standards fromthe BBC. Upholding editorial standards is one of the Trust’s
most important responsibilities.

Handling complaints appropriately
The BBC has a formal framework in place to ensure thatcomplaints handling is clear, open, fair and efficient. The Trust
monitors the framework to make sure complaints are dealt
with appropriately.
• Key performance indicators:–– The BBC answered more than 220,000 complaints
between April 2009 and March 2010; 94% wereanswered within ten working days. This rises to 97%
when we include complaints that received an initialacknowledgement within that timeframe.
–– In the last year, the ESC dealt with 80 appeals, 48% of
which were handled within the target timeframe of 16
weeks from the acceptance of the appeal. This is up from
9% last year, but still falls short of our target. We will bemaking greater efforts to improve this next year.
–– The General Appeals Panel received 38 appeals, of which
28 were accepted and two of these were completed
within 60 days, reflecting the complex nature of a numberof them. While this is disappointing, significant progress is
expected next year.
• Mystery shopping: when we approved the complaints
framework in 2008, we said that we would do a ‘mystery
shopping’ exercise to test it in practice. We completed asmall pilot in 2009 and a larger scale exercise will take placein 2010, following which we will publish the results.

1-17
BBC performance

As well as setting the BBC’s Editorial Guidelines, the Trust,through the Editorial Standards Committee (ESC), ensuresthat they are adhered to by acting as the final arbiter in the
BBC’s complaints process. In the last year, the ESC dealt witha number of significant appeals including:• Reef
Television: we found that some programmes
made by Reef TV for the BBC, within the series Sun, Sea
and Bargain Spotting, Trash to Cash and Dealers: Put Your
Money Where Your Mouth Is contained unacceptable
practices which could undermine public trust in the BBC(such as members of staff making purchases as if they
were members of the public). The Trust required an on-air
apology and that new compliance measures should be inplace before Reef TV could work for the BBC again. The
affected programmes will not be rebroadcast.
• Panorama:the public and the BBC expect the highest
standards from Panorama, BBC One’s flagship current
affairs programme. However we found a serious breachof the BBC’s guidelines on accuracy and impartiality in
What’s next for Craig, in which the findings of a scientificstudy were not reported accurately. The Trust required
the programme to broadcast a correction and an apology.
• BBCRadio 1: a caller to the Breakfast Show had her
privacy breached when a guest in the studio, a memberof British band N-Dubz, made abusive calls to her having
obtained her number from a text screen in the studio.
The caller subsequently received an apology from the band
member and the BBC. The Trust was satisfied, however,that this occurred without the knowledge of anyone in the
programme-making team, and that the BBC had taken
action to ensure this could not recur.
• Mock the Week and The Most Annoying Peopleof 2008: appeals upheld about offensive references toreal people on these two programmes demonstrated acontinuing concern about the use of crude and humiliatingreferences. These followed complaints upheld in the previous
year in relation to the Jonathan Ross Show and the Russell
Brand Show. See page 1-24 for more on what the Trust has
been doing to ensure the BBC sets the highest standards.

BBC Performance

DELIVERING VALUE FOR MONEYAs Trustees, we are responsible for ensuring that the licence
fee is spent wisely, with the BBC receiving maximum value forevery pound spent.

BBC performance

1-18

Our role is to ensure that the licence fee is spent in ways thatmeet audiences’ expectations and deliver value for money.
Our Finance and Compliance Committee oversees the BBC’s
financial and business performance, keeping a close eye on
its financial needs and how it spends its income. We focus
on four areas:• setting financial budgets and objectives• monitoring operations• risk management• specific reviews
1. Setting financial budgets and objectives
Each year we formally review and question the BBC’s finances
and, once our questions have been answered and changes wefeel necessary have been made, we approve the BBC’s annual
budget and its longer-term financial plans. As part of this wereview, and, if necessary, amend, the level of individual service
budgets as set out in their service licences. You can find thecurrent service budgets on our website.
Where we consider it appropriate, we may also set financial
objectives to guide the way the Executive manages operations.
In 2007 we set targets for efficiency savings at a pan-BBClevel and also specifically concerning talent fees and senior
management pay.
2. Monitoring operations
We monitor the ongoing financial position of the BBC
through regular reports from the Executive. We also request
information on specific areas in which we have an interest, forexample compliance with service licences, licence fee collection
activities and the digital switchover, and on those areas where
we have previously set specific efficiency targets.
• Compliance with service licence budgets: in
2009/10, all but two services complied with their licencebudgets. Services are permitted to spend within a boundarythat falls up to 10% up or down from the stated baselinebudget. The lower limit is included as a trigger for the Trustto consider whether the delivery of the service against
its remit would be affected if spending were to be cut
significantly. The Trust will however welcome underspending
where this is due to genuine efficiencies that do not impact

on the service provision, as was the case with the HDTV
service which has seen significant savings in contract costs.
We were more concerned by BBC Radio 3’s overspend,which resulted from a previous misclassification by the
Executive of some expenditure being outside the service
licence regime when the baseline budget was set. Thisbaseline has now been amended and therefore we do
not expect to see this happening again.
• Licence fee collection: the Trust has a specific duty
to ensure that the collection of the licence fee is ‘efficient,appropriate and proportionate’. Last year we undertook adetailed study of collection arrangements and made somerecommendations for improvement. This year we have beenmonitoring the Executive’s progress in implementing theserecommendations and we report further on this on page 1-8.
• Digital switchover: the Government and Ofcom
are responsible for the switchover of the UK to digital
broadcasting, but asked the BBC to help certain vulnerable
groups in society adjust to the switchover through thetargeted help scheme. Our role in this is to ensure that the
Executive’s operation of the scheme provides value formoney. To date the scheme has spent less than forecast
due to lower take-up than expected. The money that is
not spent is ring-fenced as it is not available for BBC use.
During the year the DCMS and the BBC agreed how
such underspends will be returned to the DCMS.
• 3% efficiency target: we report on the BBC’s progressagainst this target on page 1-7.
• Talent costs: Last year we set the Executive a target toachieve substantial savings in talent fees over the remainderof the current licence fee period. We report further on
progress against this target on page 1-8.
• Senior management pay: during the year we set the
Executive a target to reduce substantially the amount spenton senior manager pay (see page 1-25). It is too early to reportprogress against this target as yet but we will revisit it in
future years.

3. Risk management
Each year we review the BBC’s risk management activities
to make sure that the Executive is adequately identifying andaddressing the key operating risks facing the BBC. We do
this by looking at regular risk management reports and byquestioning the Executive, the external auditors, internal
audit and the Audit Committee.
Occasionally matters arise that we feel require a more detailed
review. Last year we asked the Executive to provide us withassurance on the current status and quality of management
reporting across the BBC’s public services. The external
auditors reviewed the BBC’s systems, assessing them against
those of other organisations. While there are no problems
that require urgent attention, the auditors have indicated areasin which the BBC could develop its systems further.

Picture shows singer Alesha Dixon performing at thisyear’s BBC Radio 1’s Big Weekend.
*NAO report on major events.

“The BBC delivered coverageof all six major events ontime and largely within final
budgets.”*• Major
estates projects: this study looked at the BBC’s
management of the Broadcasting House, Pacific Quay andSalford Quays projects. It reviewed whether the projects
are being delivered in line with the original plan made at thetime resources were committed, and in line with the mostrecent budget and timetable update.
–– The study found that there were significant failings inphase one of Broadcasting House (already reported
extensively) which was approved in 2003 and deliveredin 2006.
–– The study confirmed the Trust’s own findings that since
the BBC Governors, and subsequently the Trust, firstintervened directly to bring the Broadcasting House
development back on track, the BBC has significantly
improved its management of major estates projects.
–– The study found that Pacific Quay (completed in July2007), was completed on time and on budget (against
the increased building scope revised investment caseapproved in July 2005).
–– The study found that Salford Quays is currently on timeand on budget, and on track to be fully operational in late
2011. The first building was handed over to the BBC in
September 2009, a month earlier than planned.
–– The study overall identified a number of recommendations
for improving the management of major projects. We
accepted these and agreed with the Executive a plan for
their implementation. We also required the Executive toreview all major capital projects against the best practicehighlighted by the NAO to ensure that any lessons
learned were taken fully on board across the BBC.

1-19
BBC performance

4. Specific reviews
We undertake a rolling programme of value for money (VFM)
studies, mainly commissioned from the National Audit Office(NAO). These studies provide us with an independent checkon the Executive’s activities.
This year we commissioned two studies from the NAO: theBBC’s management of its coverage of major sporting and music
events, and the BBC’s management of three major estates
projects. You can find full reports on these studies, including
our recommendations and resulting action, on our website.
• Major sporting and music events: this study lookedat the effectiveness of the BBC’s management once thedecision to cover an event had been taken. The study
examined six events: the Beijing 2008 Olympic Games; the2008 UEFA European Football Championships (Euro 2008);
The Championships, Wimbledon; the Glastonbury Festival
of Performing Arts (Glastonbury); the BBC Proms; and BBC
Radio 1’s Big Weekend.
–– The report made a number of positive findings, but also
identified some areas where the BBC could improve its
processes. The Trust was encouraged that several of thepoints identified were already being implemented as theNAO carried out its study.
–– The NAO’s report found “The BBC delivered coverageof all six major events on time and largely within final
budgets. Whilst the BBC uses experienced production
personnel to deliver its coverage, the BBC has recognisedthat the absence of a formal documented control
framework or a formal planning procedure may have
exposed the BBC to unnecessary risks. The BBC has
now put more formal planning processes in place.”–– The Trust accepted all the recommendations arising fromthe study and agreed with the Executive a plan for theirimplementation. The Executive will report back to us
on progress.

BBC trust:
Supporting andchallenging
the executive
The Trust is here to get the best out of the BBC for licence fee
payers. This year we have acted decisively in supporting andchallenging the Executive to deliver high quality programming andservices, and ultimately to ensure that every pound of the licence
fee is spent wisely to deliver the best value for our audiences.
Major work this year includes:• reach or distinctiveness? Or both?
• challenging unacceptable behaviour on-air• radical pay reform for senior management• new limits to the BBC’s commercial services• a step closer to internet-enabled TV for all• giving the public a say in the future of the BBC
Glastonbury is just one of the many UK and international festivals and events covered by BBC services
each year.

Trustperformance

Trust
performance
1-21

TrusT PerfOrmanCe

Real change for licencefee payers
Our mission is to get the best out of the BBC for licence fee
payers. The impacts of a challenging economic environment
have been at the front of everyone’s minds over the last year,
and, at the Trust, we are no exception.

Trust
performance

1-22

Delivering value for money has been central to all our work,in particular our service reviews of BBC Radio 2 and BBC
6 Music, the review of executive pay, our testing of the
Executive’s proposals for Project ‘Canvas’ and our assessmentof BBC Worldwide’s impact and activities.
We have also heard a lot about what audiences value in theBBC. High standards, quality and distinctiveness have been
key themes, and these have fed into our review of the BBC’s
Editorial Guidelines.
The media world is constantly changing, and the BBC must
constantly evolve to continue to deliver the best value forlicence fee payers. Against this backdrop, we announced
a full-scale review of the BBC’s strategy, inviting the public
to have their say on its future.
As Trustees, we are proud to be both guardians andchampions of licence fee payers’ interests. During our work
this year, we have aimed always to have been guided by thiscentral responsibility.

Reach or distinctiveness?
Or both?

Trust reviews BBC Radio 2 and BBC 6 Music

WHAT IS DISTINCTIVENESS?
Audiences frequently tell us that they value the BBC
for its distinctiveness – in other words, that it provides
something different from other broadcasters. Where
there are criticisms, they are often to do with people’s
disappointment that the BBC has not been distinctive
enough. But what does distinctiveness really mean for
the BBC? Over the last year the Trust has worked with
the Executive to define what we mean by the term,
and created a clear set of criteria by which to judge
the BBC’s activities.
Four values
We distilled distinctiveness into four values which we believe
underpin the BBC’s core commitment to quality. They
derive from the fact that the BBC enjoys the great privilegeof public funding, which allows it to pursue the following
four values to an extent that commercial organisations
often cannot:• high editorial standards: the public expects the
BBC to set the highest standards of fairness, accuracy
and impartiality.
• creative and editorial ambition: the BBC has
the freedom to take risks, innovate and challenge.
• range and depth: because everyone who watches
television must have a licence, the BBC is required toprovide for the widest range of tastes and interests,
and to a depth that meets audiences’ needs.

For BBC 6 Music we set a different challenge. While thestation is clearly highly distinctive, its reach is very low.
This is compounded by low awareness – just 20% of theadult population know it exists. We therefore concluded
that BBC 6 Music should raise awareness and increase its
audience, appealing to a greater range of people, without
losing its distinctiveness.
The recent proposal by the Executive to shut down
BBC 6 Music has, in fact, given BBC 6 Music a big publicity
boost. We will be considering the public response tothat proposal in due course when we decide the futureof the station.
May 2009• Trust launches service review of BBC Radio 2 and BBC 6 Music
with public consultation and audience research
July 2009• public consultation ends
February 2010
• Trust publishes its conclusions•U K-focused content and indigenous talent:the BBC is required to reflect all parts of the UK and
has the freedom to nurture new, indigenous talent which
can be risky.
This better understanding of distinctiveness is guiding theTrust’s consideration of the Executive’s strategy review,
although there is more work to be done. In particular, theTrust has requested more information from the Executive
on how these core values apply to the different kindsof output and how we might best measure the BBC’s
distinctiveness. We will report further on this work in
next year’s Annual Report.

Picture shows Father Brian Darcy’s Sunday Half Hour on BBC Radio 2.

1-23
Trust
performance

Service reviews are an essential part of our work. We
look at each service at least once every five years to makesure that they are fulfilling their remits; that the remits
remain relevant for delivering the public purposes; and that
ultimately, licence fee payers feel they are getting good value.
Last year the Trust carried out a comprehensive review
of BBC Radio 2 and BBC 6 Music receiving some 4,700
responses to our public consultation. We found that BBC
Radio 2 is the most listened to station in the UK, and is highly
regarded. BBC 6 Music is well-liked by listeners, althoughthese are relatively few in number.
Reviewing the two radio stations resulted in certain
challenges for each. BBC Radio 2’s widespread appeal wastempered by audiences’ belief that content in peak-time
was not as distinctive as that in off-peak. We concluded that
BBC Radio 2 should use its size and influence to address thisimbalance, even if that were to mean some loss of audience.
There were also concerns from the commercial sector thatthe station was targeting younger audiences, while its remit is
to appeal to all ages above 35. We have asked BBC Radio 2
to ensure that the average age of its audience does not fall
and that the station should look at how it might cater betterfor the needs of those aged over 65.

Challenging unacceptablebehaviour on-air

Trust tightens standards and compliancein line with public attitudes

As society changes, what is deemed acceptable inbroadcasting also changes. However, being funded by thelicence fee, the BBC is, quite rightly, expected to upholdhigher standards than other media organisations. Indeed
some groups of the public look to the BBC to upholdstandards that they see being eroded elsewhere.
In the last year, the Trust has brought to its conclusiona significant body of work around editorial standards,
prompted by breaches of the BBC’s Editorial Guidelines
in 2007, 2008 and 2009, the Ross/Brand incident being
amongst the most serious and also the most publicised.
The complaints we received, along with the nature of thebreaches themselves, led us to require the Executive to dosome research into what the public considers acceptable interms of taste and standards, and also a review of editorial
compliance within Audio & Music.

Trust
performance

1-24

What’s acceptable to the public
The Trust supports the BBC in taking risks as part ofcreating the most distinctive and entertaining programmes,
but also expects the highest standards. We recognise that
there is always a tension between not unduly restricting
creativity, and making sure that content is not unduly
offensive. This was a concern echoed by the public during
the taste and standards research. People did not want the
BBC to become too cautious but, at the same time, theyfound the humiliation of real people unacceptable.

EDITORIAL GUIDELINES AT A GLANCE
The BBC’s Editorial Guidelines outline the standards
we expect, regardless of the medium. They aredesigned for everyone who makes content for theBBC, including independent production companies
working for us, to help them deal with difficult
editorial decisions. They also form the framework
against which complaints are considered. The
Guidelines cover:• truth and accuracy• impartiality and diversity of opinion• editorial integrity and independence• serving the public interest• fairness• privacy• harm and offence• children• accountability

This message was fed into the review of the Editorial
Guidelines that took place in the latter half of 2009and into 2010.
Following the guidelines
The other big issue was compliance with the Editorial
Guidelines, which apply to all BBC programming. Audio& Music was the main area of concern following theRussell Brand Show breaches and the failures in runningcompetitions exposed in 2007 and 2008. Following thechanges we required in 2008, we did an independent
follow-up review of compliance in 2009 which showeda real change in culture, although we did note that someof the requirements had been unduly stringent.
Checking we got it rightThe consultation and research we did around the new
Editorial Guidelines was very useful in checking that we
had got the balance right. We required the Executive toinclude wording in the Guidelines to address the concernthat ‘unduly intimidatory, humiliating, intrusive, aggressive
or derogatory remarks must not be celebrated for the
purposes of entertainment’. The responses confirmed that
this was the right approach and met the expectations the
public have about the standards they expect from the BBC.
November 2008
• Trust requires Executive to research taste and standards in light of aseries of breaches of the BBC’s Editorial Guidelines, most notably the
Ross/Brand incident and also announces it will independently review
compliance in Audio & MusicMay 2009• Executive reports to Trust results of taste and standards research;
this feeds into review of the BBC’s Editorial Guidelines
September 2009• Trust publishes findings that offence was caused by Mock the Week
and The Most Annoying People of 2008
• Trust approves the draft Editorial Guidelines for public consultation
October 2009• public consultation and audience research on the draft Editorial
Guidelines begins
February 2010
• audience research on Guidelines concludes
March 2010
• Trust publishes report into compliance in Audio & Music
Summer 2010
• new Editorial Guidelines to be approved by Trust for autumn publication

Radical pay reform forsenior management

Trust acts to cut remuneration budget
In February 2009, against a backdrop of severe economic
difficulties, we outlined a challenge to the Executive Board toreform the BBC’s approach to pay for senior management.
We believed that it was right that, as a major public service
organisation, the BBC showed leadership on this issue.
In October 2009, following discussion with the Executive
Board, we announced a radical new strategy to reducesignificantly the pay bill for senior management.
The Trust’s job is to get the best out of the BBC for licencefee payers, and this means delivering value for money.
How much the BBC pays its people is of course a big
part of that. Our approach has to strike a difficult balance
between ensuring the BBC pays enough to attract the best
people to deliver the distinctive, high quality service thatlicence fee payers expect, whilst meeting licence fee payers’
expectations that the BBC will offer value for money.
We believe that the outcomes of the review will achievethat balance.
It will be a priority for us in the coming year to ensure that
the Executive Board delivers the testing targets for senior
pay reduction that we have agreed.

Pay reform key points• 25% reduction in senior management pay bill overthree-and-a-half years• significant reduction in senior manager posts: 18%
over same period• Executive Board: pay freeze for a further three-and-a-halfyears; indefinite suspension of bonuses• senior management/directors: pay freeze and suspensionof bonuses for a further two years• new pay strategy for senior management across the BBC

EXECUTIVE BOARD REMUNERATIONREPORT 2010
1. Director-General
The Director-General is the BBC’s Chief Executive Officer,
the editor-in-chief and Chairman of the Executive Board.
We set the Director-General’s remuneration.
Our approach to the Director-General’s remuneration
is to provide a package that attracts and retains a personof the calibre required to undertake this demanding roleand provide effective leadership. The Director-General’s
remuneration consists of a base salary, a pension and theoption to be considered for a performance-related bonus
although, along with all executive directors, the bonus
element is currently suspended. The Director-Generalis provided with a chauffeur-driven car which he uses
principally for business journeys in London; he is notentitled to a personal car or fuel allowance.
This year, in line with the pay review proposals agreed in
October 2009, the Director-General, Mark Thompson, did
not receive an increase to his base salary or a performancerelated bonus. The next possible pay review will be inAugust 2013.
The Trust undertakes an annual performance assessmentof the Director-General. He continues to meet his
objectives and we believe that he brings energy andcreativity to the leadership of the BBC.

non-executive Directors are not financially dependent
on the BBC.
Each non-executive Director receives a base fee (currently£35,700 pa); the chair of each committee receives anadditional fee (currently £5,100 pa). The Senior Independent
Director receives an additional fee of £10,200 pa. The
non-executive Directors are reimbursed for expenses, andany tax arising on those expenses is settled directly by theBBC. The Trust reviews non-executive Directors’ fees
every other year; the next review is due this year, to comeinto effect in January 2011.

2. Non-executive Directors
The non-executive Directors receive a fee determined by
the Trust, which reflects the complexity of the role and thetime required. Fee levels are set with reference to rates
paid by other UK corporations, but at a level such that the

February 2009• Trust requires Executive Board to review remuneration
October 2009
• Executive reports back• Trust agrees proposals• implementation begins
July 2013• implementation complete

Trustperformance

3. Executive directors
Within a strategy set by the Trust, the Executive Board’s
Remuneration Committee determines the individual
remuneration of executive directors and presents a formal
report assuring us that this strategy has been followed.
On reviewing this year’s report, we concluded that our
strategy had been followed, and therefore accepted theCommittee’s assurance on this matter.
As described above, in October 2009 the Trust agreed
a significant reduction in the cost of senior management
across the BBC’s public services. This included a new
strategy for senior management pay, which will result in aclearer focus on the BBC’s approach to pay as a publiclyfunded institution.
The performance of the executive directors is a matterfor the Director-General. The Executive Board’s
Remuneration Committee Report can be found in thedownload section at www.bbc.co.uk/annualreport.

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New limits to the BBC’scommercial services

Trust reviews BBC Worldwide

Trustperformance

1-26

By securing a commercial return for the BBC’s valuable
content, BBC Worldwide brings substantial financial benefits
to licence fee payers and to the wider UK creative economy,
as well as promoting and strengthening the BBC’s reputation
overseas. Making sure the BBC’s main commercial arm does
not veer from its remit and remains properly aligned with
the BBC’s public service interest, while being sensitive toother commercial concerns, was at the heart of the Trust’s
review of Worldwide, launched in July 2008.
Our review took longer than expected, because we wanted
to take account of the Digital Britain report, which included
the Government’s intentions for Worldwide. However by
the end of this financial year, the Trust was in a position toannounce a series of changes to give Worldwide clearerboundaries and focus its activities, particularly in the UK
market, without stifling its ability to remain a thriving,profitable entity.
Review’s main themes• changes in governance structure to serve public purposes
and reduce potential conflicts of interest between the
Executive and BBC Worldwide• endorsement of concept of a commercial arm tomaximise the BBC’s assets for the benefit of licencefee payers• confirmation of ‘first look’ arrangements, whereby
Worldwide has the opportunity to acquire BBC rights
before they are offered to competitors, but more
benchmarking to ensure pricing is fair
• focusing BBC Worldwide’s activities on exploiting valueof BBC’s own intellectual property• exit from activity not in keeping with the BBC brand• end to mergers and acquisitions unless there are
exceptional circumstances

Picture shows Antiques Roadshow, a format that has been successfully sold abroad.

July 2008• Trust launches review of BBC Worldwide
March 2009• Trust publishes interim report; formally suspends review pending
outcomes from the Government’s Digital Britain work
September 2009• Trust announces changes to governance of BBC Worldwide
November 2009
• Trust announces new limits to BBC Worldwide’s activities

SNAPSHOT OF BBC WORLDWIDE
BBC Worldwide is the main commercial arm anda wholly-owned subsidiary of the BBC. Its purpose isto enable the BBC to maximise the value generated
by content owned and paid for by licence fee payers.
As part of the BBC, Worldwide’s activities must:• fit with the BBC’s public purposes as set out in
the Royal Charter• be commercially efficient• not jeopardise the good reputation of the BBCor the value of the BBC brand• comply with the BBC’s Fair Trading Guidelines andavoid distorting the market
Key facts• 2009/10 figures: profits of £145million (before
specific items) on statutory revenues of £1,074million• investment of more than £1billion in the UK creative
industry over the last five years• areas of business:–– channels–– content and production–– digital media–– sales and distribution–– magazines, children’s and licensing–– home entertainment–– global brands

A step closer tointernet-enabled TV for all

Assessing the BBC’s role in Project ‘Canvas’
In November 2008, the Executive requested the Trust’s
permission to form a joint venture with partners to help
enable the delivery of internet-enabled television. The
proposal, known as Project ‘Canvas’, would allow viewers
to watch on demand services such as the BBC iPlayer andother internet content on their televisions, by setting acommon standard for set-top boxes and other devices.
This ambitious idea fits well with the Trust’s challenge tothe Executive to bring the benefits of the BBC’s public
investment to the whole public service broadcasting sector.
As for any new public service activity for the BBC, theTrust’s role has been to assess whether it would deliver the
public purposes, and the impact it could have on the market.
This has involved a public value assessment, a market impact
assessment, and a number of public consultations. It has alsomeant engaging with interested parties across industry tohear their views at several stages such that our assessment
could be as rigorous and well informed as possible.
Public value assessment
The Trust’s public value assessment concluded that ‘Canvas’
would have a high public value, and would be consistent
with the BBC’s public purposes, including helping deliverto the public the benefits of emerging communications
technologies and services. In summary, its value is based onbringing on demand television into the living room througha common technical standard. It could also help drive
broadband take-up.

November 2008
• Executive seeks Trust approval for participation in Project ‘Canvas’
February 2009• Trust launches public consultation on the BBC’s proposals, including
audience research
February – December 2009• Trust assesses public value and market impact implicationsof the proposals
July 2009• Trust publishes additional information on Project ‘Canvas’
December 2009
• Trust gives provisional approval to BBC’s involvement in Project ‘Canvas’• Public consultation on provisional conclusions begins
February 2010
• Public consultation ends

Project ‘Canvas’ partners*

Market impact assessment
The Trust concluded that ‘Canvas’ would potentially haveboth positive and negative impacts on a number of markets.
Positive impacts identified included growing the market for
TV on demand content, residential broadband access, andset-top boxes and integrated digital television, as well as
strengthening the competitive position of the DTT platform.
The negative impacts included effects on the DVD rental
and retail market, initiatives for platforms to develop theirown user interface, as well as a likely impact on Sky andVirgin’s revenues.

Trust
performance

1-27

Provisional conclusions
Therefore, in our provisional conclusions, we proposed
certain conditions to minimise the negative competitive impact
on the wider market by ‘Canvas’, whilst ensuring the fulfilmentof the BBC’s public purposes and taking into account its otherobligations under the Royal Charter and Agreement.
As we publish this Annual Report we are preparing
to announce our final conclusions.
INSIDE PROJECT ‘CANVAS’• Aim: to create an open, internet-connected
TV platform• Partners: BBC, ITV, Channel 4, five, BT,
TalkTalk, Arqiva• Delivery: a set-top box and a simple user interface* At time of publication.

giving the puBliC a sayin the future of the BBC

TruST lAuNCHES puBlIC CoNSulTATIoN
oN THE BBC’S NEW STrATEgy

Trust
performance

1-28‘The public picks up the bill for the BBC, and it is right thatit constantly evolves to meet their expectations,’ said sir
michael lyons.
The BBC is inviting input from the public on what its future
should look like. in the past, certain assumptions haveprevailed about the role of the BBC in the uK’s broadcasting
industry and our society as a whole. The recent fullscale review of the BBC’s strategy challenged traditional
thinking and looked at what the size, scope and role of
the BBC should be in today’s ever-changing broadcasting
environment – and asked the public what they thought.
The Trust posed five broad questions to the Executive incarrying out the review:• how can the BBC best maintain quality and distinctiveness?
• where, if necessary, could its focus be narrowed and its
scale reduced?
• what will a fully digital BBC look like?
• can the BBC better define the ‘public space’ it provides?
• how can the BBC create most value from its scale?
THEMES For A FuTurE BBC
The core vision of the executive’s proposals of a BBC
focused on quality content and enduring values, keeping
open a public space for all, is one we endorse wholeheartedly. We also endorse the central principles put
forward for achieving that vision, which are:• putting quality first• doing fewer things better• guaranteeing access• making the licence fee work harder• setting new boundaries

G

Our central concern – and the focus for further work – hasbeen how far the strategy will deliver these five principles,
and whether there are alternative or better ways ofdelivering them than those outlined in the proposals. The
public’s views are crucial in determining the action we taketo shape the future of the BBC.
July 2009• Trust challenges executive to complete full-scale review of BBC’s strategy
September 2009
• Chairman publishes open letter to licence fee payers
March 2010
• executive submits proposals to the Trust• Trust publishes proposed strategy for public consultation
May 2010• Trust commissions audience research• public consultation concludes

WHAT AuDIENCES SAy
audiences tell us that:• they are proud of the BBC and see it as trustworthy• they want it to be strong and independent• they are willing to pay for it – but expect good value
from the licence fee• they want their money to be spent on high quality
programmes• they want more programmes that feel new
and different
These views have been central to our thinking whenreviewing the executive’s proposals for the future of
the BBC.

TrusT PerfOrmanCe

The Trust’s plans for 2010/11
Our biggest priority is the BBC-wide strategy review
as outlined opposite.
This table summarises our other planned work for the year. Full details are available on our website.

Value for money
We will commission value for money
studies in the management of:a) the production of continuing
drama (soaps)b) the BBC’s digital media initiative
as well as an independent review of
the BBC’s process for managing theacquisition of sports rights.

Impartiality review
We will review the impartiality of theBBC’s science coverage.

Service reviews
The Trust has a duty to review andconsult on each BBC service at least
once every five years. In 2010/11 wewill review:

Commercial activities
We will set a three-year rolling strategy
for BBC Worldwide alongside thebroader strategy review.
Fair trading
We will carry out our first reviewof the BBC’s fair trading policy andrelated codes.
Programme supply
We will carry out a second review ofthe ‘window of creative competition’.
We will consult on our review of the
supply of radio programmes fromindependents and publish the findings.
S4C partnership
We will enter into a new strategic
partnership with Welsh channel S4C.

Audience Council priorities
Our Audience Councils advise us aboutaudiences’ views and concerns. Following
their advice we will be looking at theseissues:a) universality of access to BBC services– we will consider how audiences
across the UK are best served acrossthe BBC’s servicesb) portrayal – we will investigate
perceptions of how people are
portrayed in the BBC’s output andwork closely with the Executive
to ensure that the BBC is meeting
audiences’ expectations.
Equality
Following the enactment of theGovernment’s Equality Bill in April 2010,
we will work with the Executive todevelop the BBC’s single equality scheme
and consult with stakeholders.

a) Radio• BBC Radio 3• BBC Radio 4• BBC 7• Nations radio–– BBC Radio Wales–– BBC Radio Cymru–– BBC Radio Scotland–– BBC Radio nan Gàidheal–– BBC Radio Ulster/Foyleb) Television (begun last year, to becompleted this year)• BBC One
• BBC Two
• BBC Four
• BBC Red Buttonc) Online
We reviewed BBC Online in 2008,
and our review this year will be of
the effectiveness of the management
controls that were created as partof the recommendations from theoriginal review.

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Trust
performance

Executive pay
We will track progress against thetarget of reducing senior management
remuneration by 25% by July 2013.

Review of the complaints
framework and procedures
We will review and consult on the BBC’s
complaints framework and associatedprocedures. We will carry out a second‘mystery shopping’ investigation into how
complaints are treated when they reachthe BBC.

E

ffectively
promoting the BBC’s
public purposesUpholding licencefee payers’ interests

S

tewardship of thelicence feeBBC trust:working on
behalf oflicence fee
payersThe BBC Trust, as the governing body of the BBC, is separate
from the Executive which manages the BBC’s day-to-day
operations. Our job is to represent licence fee payers andmake sure the Executive delivers the high quality programmes
and services the public wants, while ensuring that the BBC
is accountable and open. We also protect the independenceof the BBC from commercial or political influence.

Members of the public take part in one of the Trust’s public consultations.

Governance

Governance

1-31

GOvErnanCE

SIR MICHAEL LYONSCHAIRMANCHITRA Bharucha
VICE CHAIRMAN

Diane coyle

Anthony Fry

Alison Hastings
ENGLAND

Dame Patricia
HodgsonRotha Johnston
NORTHERN IRELAND

Janet Lewis-Jones
WALESDavid Liddiment

mehmuda mian

Jeremy peat
SCOTLAND

Richard tait

Richard ayre

Governance

1-32

For more information on the Trustees, their former careers and experience, please see our website www.bbc.co.uk/bbctrust.

The BBC Trustees
The 12 BBC Trustees are part-time and come from a variety ofbackgrounds, bringing a wide range of experience to theBBC. Amongst the Trustees we have a Chairman, Vice Chairman
and National Trustees for England, Scotland, Wales andNorthern Ireland.

Chitra Bharucha MBE (Vice Chairman)
Chairs Remuneration and Appointments Committee andAudience Councils Committee; lead Trustee for international
news; co-lead Trustee for complaints. Other roles: Trustee,Marie Curie Cancer Care.
Diane Coyle OBE
Chairs Strategic Approvals Committee; led the Trust’s TV
services review and the assessment of Project ‘Canvas’. Other
roles: Economist; member, Migration Advisory Committee;
member, Independent Review of Higher Education Funding;visiting professor, University of Manchester, Institute of Politicaland Economic Governance.
Anthony Fry
Scrutinises the BBC’s commercial activity on behalfof the Trust. Other roles: Senior adviser, Evercore Partners;
chairman, Dairy Crest; non-executive director, Control Risks;
non-executive director, LL Online; board member, Edinburgh
International Television Festival, English National Opera;
Chairman of Development Board, School of Oriental
and African Studies.
Alison Hastings
Trustee for England (chairs Audience Council England).
Other roles: Media consultant; vice president, British Boardof Film Classification; retained consultant, Camelot; retained
consultant and trainer, Press Complaints Commission.
Dame Patricia Hodgson DBE
Lead Trustee for learning; led the Trust’s engagementwith commercial learning providers. Other roles: Principal,
Newnham College, Cambridge; non-executive director,
Competition Commission; member, Higher Education
Funding Council for England.

Rotha Johnston CBETrustee for Northern Ireland (chairs Audience Council,
Northern Ireland); chairs Finance and Compliance Committee;
lead Trustee on property issues. Other roles: Partner, Johnston
Partnership; non-executive director, Allied Irish Bank (UK) plc;
Pro-Chancellor, Queen’s University, Belfast; member, JIGSA.
Janet Lewis-Jones
Trustee for Wales (chairs Audience Council Wales); lead Trustee
on fair trading. Other roles: Chair, Membership Selection Panel,
Glas Cymru Cyf (Welsh Water); trustee, Refugee and MigrantJustice, Maytree Charity and Mid Wales Chamber Orchestra.
David Liddiment
Chairs Audiences and Performance Committee; led theTrust’s review of BBC Radio 2 and BBC 6 Music.
Other roles: Non-executive director, All3Media; associate,
Old Vic Theatre Company.
Mehmuda Mian
Lead Trustee for equality and diversity issues; co-lead Trustee forcomplaints. Other roles: Non-executive director, Independent
Safeguarding Authority; associate director, Lokahi Foundation.
Jeremy Peat
Trustee for Scotland (chairs Audience Council Scotland); lead
Trustee for the value for money programme (2009 programme
included estates and major events). Other roles: Chairman, BBC
Pension Trust Board; director, David Hume Institute; member,Competition Commission.
Richard Tait CBE
Chairs Editorial Standards Committee; leads Trust’s work on
editorial standards and compliance. Leaves on 31 July 2010.
Other roles: Professor of Journalism and Director, Centre
for Journalism Studies, Cardiff University; Vice President,International News Safety Institute.
Richard Ayre
Joins Trust on 1 August 2010.

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Governance

Sir Michael Lyons (Chairman)
Other roles: Chairman, English Cities Fund; Chairman
designate, Participle Ltd; non-executive director, Mouchel plc,
Wragge & Co, and SQW Ltd; Chairman, Tindal Street Press;
governor, Royal Shakespeare Company.

GOvErnanCE

Audience Councils
Audience Councils in England, Scotland, Wales and Northern
Ireland, chaired by the Trustee for that nation, exist to makesure that licence fee payers across the UK have a say in the workof the Trust and therefore the future of the BBC.

Councils are recruited to reflect the diversity of the UK, andmembers are volunteers. They listen to the views of licencefee payers, and advise the Trust on matters of topical concern.
They are consulted on proposals for new services and on
how well the BBC is delivering its public purposes. Each year
they suggest ways of improving BBC services, based on what
audiences have told them (‘audience priorities’).
Listening to audiences
Councils held more than 60 meetings with licence fee payers
across the UK, some from specific audience groups such as
ethnic minorities, young people and the business community.
Some meetings focused on particular issues like theGovernment’s Digital Britain report, while at others audiences
raised issues of concern to them.

Governance

1-34

Performance against audience priorities
for 2009/10
Councils welcomed progress made in 2009/10. The BBC
increased the number of television programmes made outside
London, and commissioned research to check whether
improvements were being made in news coverage of thedevolved nations. New guidelines on the BBC’s editorial
standards were developed. Following the Trust’s rejectionof plans for enhanced local web coverage, the BBC madeimprovements to coverage in the nations and regions, andbegan audience research on the provision of news for audiencesin Scotland. The Trust will also undertake specific work to see
how the BBC might better portray the diversity of the UK.
Advising the Trust
The Councils gave us advice on major developments affecting
BBC audiences from the reviews of BBC Radio 2, BBC
Television, and free-to-air listed events, to the proposal
for internet-connected digital television (‘Canvas’) and theGovernment’s Digital Britain report. Audiences support‘Canvas’, but want the technology that delivers it to be easy
to use. On Digital Britain, Councils emphasised that licence fee
payers valued the sense of ownership they feel from paying a
fee in return for the BBC’s services.

Delivering the public purposes
Audiences felt the BBC made progress this year but that there
were still areas for improvement. Councils in Scotland, Walesand Northern Ireland welcomed the decision to release forre-use Welsh, Scottish and Irish Gaelic learning resourcesfrom the former BBC jam, and said that those nations should
be represented better on both network and local services.
Audience Council England said that ethnic minorities wishedto see more positive role models for younger members of
their communities. All Councils reported that audiences wantmore innovation in BBC services.
Priorities for 2010/11
Current priorities for licence fee payers include seeing more
fresh ideas from the BBC, and for the BBC to do more to
represent UK contemporary society accurately. Audiences arealso concerned that not everyone can access all BBC services,
especially DAB and broadband. These issues informed thestrategy review launched by the Trust earlier in the year.
The Trust will also consider the issue of access in our reviewsof radio in the devolved nations and we have started a project
to find out how the BBC might better portray the full diversityof the UK’s nations and communities.
Further details of the Councils’ advice can be found in theCouncils’ own annual reviews.

Engaging with all audiences
Only by listening to what audiences think and building theirviews into our decisions can we make sure that the BBC truly
serves licence fee payers and delivers what they want.

The licence fee, unique to the BBC, is designed to ensurehigh-quality output, free at the point of delivery, available to all.
But it means that everyone who watches television must havea licence, whatever they think of the BBC. So the Trust has aparticular responsibility to ensure everyone is served as well as
possible. To do this we carry out a programme of work thathelps us understand what audiences think.

Equality and diversity
We believe that, to represent licence fee payers mosteffectively, the BBC should reflect the diversity of the UK
population. In December 2009, we received the first annual
report from the Executive on its progress in implementing
the BBC’s diversity strategy across BBC activity. These annual
reports will make it easier for us to monitor progress.
One of our ongoing concerns is the proportion of staff atsenior levels from black and ethnic minority backgrounds.
Our report, Observations on the Promotion of Equal Opportunities
in Employment, notes that the Executive has many initiatives
underway to work towards increasing this, but at 5.7%, thisfigure still falls short of our target of 7% to be achieved by
2012. We will continue to monitor progress on the actions
we have set out in our report, and on progress towards
meeting this target.
The BBC also has legal duties to promote equality and toeliminate unlawful discrimination across disability, gender andrace in respect of certain ‘public functions’, which include TV
Licensing, arrangements for digital switchover and some of
our own regulatory functions. We publish equality schemes
explaining how we do this, and this year we reviewed them,including commissioning research involving disability, race andgender organisations. Work has begun across the BBC on asingle equality scheme which will be published in 2011; this willconsolidate the existing schemes and add actions for sexual
orientation, age and religion.
As the Trust, we need to make sure we consider equalityand diversity in our own operations and behaviour. This
year we made good progress, seeking input into our workfrom a range of people as we reviewed the BBC’s services.
We completed equality impact assessments for all major
reviews to ensure that our activities are inclusive and do
not discriminate against any groups.

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Governance

Understanding what audiences think
As well as the advice we get from our Audience Councils,
we invite the public’s views about decisions we need tomake through consultations. For example, we consult whenreviewing a BBC channel or when the BBC wants to launcha new service. This year we redeveloped our website with adedicated area for consultations. We know that not everyone
has easy access to the internet, however, so we also use on-air
trails and leaflets to publicise consultations and encourage
participation. During 2009/10, more than 35,000 people
took part in Trust consultations.
We also conduct rigorous research to ensure we hear froma wider range of licence fee payers than those who take partin consultations. We explore issues in more depth, using
qualitative research such as workshops, groups or interviews,
while surveys allow us to understand the strength of certain
views amongst the whole population. For example, ourannual Purpose Remit Survey is a key tool we use to measurepeople’s views on the BBC’s delivery of the public purposes.

GovernanceTrading fairly
Our duty is to ensure that the BBC fulfils the public purposes
set out in the Royal Charter; conducts its commercial trading
activities fairly; and does not use its economic power in waysthat might stifle enterprise or initiative from elsewhere.

The BBC plays a pivotal role by helping to stimulate, develop
and sustain investment in high quality broadcast content.
Without the positive impact of the BBC, other parts ofthe creative sector, ranging from the UK film industry toorchestras and language services to the nations, could begreatly diminished or lost. The BBC generates significant andstable investment, particularly important during periods of
economic downturn, giving critical mass to many creative andbroadcasting companies and the sector as a whole.
We know people value a wide choice of content on radio,
TV and online. Whilst maintaining that breadth in the
public interest, we also ensure that the BBC is a fair player
in the wider UK media market. We do this by scrutinising
new proposals from the Executive for their economic andcommercial impact, and ensuring that all the BBC’s activities
comply with our fair trading regime.

Governance

1-36

Scrutinising new proposals
When the BBC wants to launch a new service, an importantpart of our job is to consider its potential effects on thewider market. For any significant change to one of the BBC’s
UK public services, we carry out a public value test (PVT) in
conjunction with Ofcom. PVTs are designed to ensure thatboth public value and market effects are considered, and theytake into account the views of all interested parties, including
others in the market. When we make a decision we publish
it and the reasons behind it. We did not conduct any PVTs in2009/10. The Trust can also call in other cases if, for example,
we think there may be evidence that these may constitute asignificant change to an existing service. The Trust scrutinised
several other BBC activities in this way during the year.
We apply the same principles to public service activities thatare not classed as services, for example the BBC’s participationin ‘Canvas’ (see page 1-27).
The Trust also oversees the BBC’s commercial services.
These are separate from the BBC’s public services and are
not funded from the licence fee. These services are subject todifferent requirements, but they must comply with the BBC’sfair trading regime and they must not distort the market.

Overseeing fair trading arrangements
The BBC recognises that it plays a unique role in the media
market. It abides by UK and European competition andstate aid rules, and by its own statement of policy on fairtrading as required by the Royal Charter. The Trust holds the
Executive Board to account for compliance with this policy.
This fair trading regime is designed to ensure that the BBC’scommercial and other trading activities are conducted fairly
and to minimise any negative impact on the market. We
review this policy and its operation at least every three years.
The BBC’s current fair trading policy and the Trust’s relatedcompetitive impact codes came into effect on 1 July 2007.
Accordingly we will be reviewing them during 2010, including
consultation, to consider how they might be improved in thecontext of the evolving media market.
Compliance
Responsibility for day-to-day fair trading compliance by the BBC
and for handling fair trading complaints lies with the Executive
through its Executive Fair Trading Committee. For more
information see www.bbc.co.uk/info/policies/fairtrading.
Responsibility for monitoring fair trading compliance and forhandling fair trading appeals lies with the Trust’s Finance andCompliance Committee (FCC). The FCC gains assurance in a
number of ways that the controls and procedures designed toensure the fair trading policies have been applied throughout
the BBC have been followed. These include regular reportsby the Executive to the committee, reports from theindependent fair trading auditors (see opposite), and fromits own work in hearing appeals on fair trading matters.
2009/10 appeals
In 2009 the FCC considered two fair trading appeals and,exceptionally, took one complaint directly rather than referring
it back to the Executive’s Fair Trading Compliance Committee.
The FCC partially upheld elements of all three appeals on
points of process. The FCC was disappointed to note thatthe common theme in these findings concerned the lack of aproperly documented competitive impact assessment by the
Executive. The FCC required the Executive to improve its

Independent audits
The Trust is advised by independent fair trading auditors andadvisers. The independent auditors conduct an annual fairtrading audit to determine whether the BBC has establishedand applied a system of internal controls which provides
reasonable assurance that it has complied with the fair trading
policy, competitive impact codes and fair trading guidelines.
This audit includes a wide programme of reviews, tests andevaluations across all BBC divisions. The opinion of the auditors
is set out below.

Independent fair trading auditor’s report to the BBC
Trust for the year ended 31 March 2010
We have audited, in our role as the BBC’s fair trading auditors, thesystem of internal controls established within the BBC to provide
the BBC with reasonable assurance that the BBC Executive(the Executive) has complied with the requirements of its Fair
Trading Policy, Competitive Impact Codes and the Fair Trading
Guidelines (‘the Fair Trading Arrangements’) for the year ended
31 March 2010.
Our instructions for this engagement, including the scope ofwork to be undertaken, were agreed with the BBC Trust’s
Public Value and Fair Trading Committee and subsequently the
BBC Trust’s Finance and Compliance Committee (FCC). These
instructions include agreement that our audit should be conductedin accordance with the International Standard on Assurance
Engagements (ISAE) 3000, agreement on the limit of our liability
in respect of this work, and agreement that our duty of care in
respect of this work is solely to the BBC Trust (the Trust), as a body.
We are satisfied that the agreed scope of our audit was sufficient
to enable us to express the opinion set out below.
Respective responsibilities of BBC Trust, BBC Executive
and fair trading auditors
The Trust is responsible for ensuring that the Executive trades
fairly. It is also responsible for preparing the section within the
BBC’s Annual Report entitled ‘Overseeing fair tradingarrangements’ which includes a statement on fair trading.
The Executive is charged by the Trust with establishing andoperating a system of internal controls designed to ensurecompliance with the BBC’s Fair Trading Arrangements for theyear ended 31 March 2010, including identifying and assessing risks
that could threaten fair trading, and designing and implementing
responses to such risks.
As the BBC’s fair trading auditors, it is our responsibility to form
an independent view, based on our audit work, as to the extent
to which the BBC has established, and applied, a system ofinternal controls which provide reasonable assurance that it hascomplied with the requirements of its Fair Trading Arrangements
for the year ended 31 March 2010. We have reviewed specificdecisions reached by the BBC on fair trading issues only in so far
as this is necessary to form an opinion on the application of thesystem of internal controls. We have also reviewed whether the
Trust’s statement on fair trading reflects our findings of the BBC’s
compliance with its system of internal controls and we report if
it does not.

Our opinion has been prepared for, and only for the Trust, as abody, in accordance with our instructions which were agreed with
the Trust Unit of the BBC on behalf of the FCC. We do not, ingiving this opinion, accept or assume responsibility for any otherpurpose or to any person other than the Trust or the Executive towhom this Report is shown, or into whose hands it may come, andno other person shall be entitled to rely on our opinion, save where
expressly agreed by our prior consent in writing.
Our approach
We have performed a reasonable assurance engagement as
defined in ISAE 3000. The objective of a reasonable assurance
engagement is to perform such procedures as to obtain
information and explanations which we consider necessary
in order to provide us with sufficient appropriate evidence toexpress a conclusion on the BBC’s compliance with its Fair Trading
Arrangements for the year ended 31 March 2010.
Our work consisted of enquiry and testing to enable us to form aview as to whether an appropriate system of internal controls wasin place. We also reviewed the processing of a sample of materialtransactions to provide us with reasonable assurance that thesystem of internal control had been applied.
Inherent limitations
As with any system of control, it is not practicable to ensure thatno errors or irregularities have occurred without being detected.
Our audit work was designed to give the Trust reasonableassurance as to the adequacy of the system of internal controls
which were in place and being applied to deliver compliancewith the requirements of its Fair Trading Arrangements for theyear ended 31 March 2010. Further, because fair trading issues
require judgements which ultimately might be tested in a courtof law, competition authority or elsewhere, there is always a riskof challenge even where the system of internal controls has been
followed and decisions have been taken with the greatest care.
OpinionBased on the results of our procedures, in our opinion the BBC
has established and has applied a system of internal controlsthat provide reasonable assurance that it has complied with therequirements of the Fair Trading Arrangements for the year ended
31 March 2010.
Deloitte LLP
Chartered Accountants
London16 June 2010

1-37
Governanceprocesses in this area and asked the independent fair trading
auditors to report back as to whether these improvements
had been made. The FCC has received adequate assurance
from the auditors to this effect. Details of appeals and findings
can be found on our website.

BBC trust:
openness andtransparency

The Trust is responsible for getting the best out of the BBC forlicence fee payers. As important as what we do is how we doit. We ensure that our processes are as open and transparent
as possible. As well as the information we publish each year inthis Report, we report extensively on our work via our website,where we publish our reports and findings in full. We aresupported in our work by the Trust Unit, professional staff
who give us independent and objective advice on our duties
and responsibilities.

Trustees and senior BBC managers meet regularly with members of the four Audience Councils to
discuss the issues that matter to audiences and licence fee payers across the UK. The picture shows one
such meeting with the Audience Council Scotland.

Inside the trust

1-39

INSIDE THE
TRUSTINSIDE THE TRUSTInternal governance
As BBC Trustees we are committed to upholding the highest
standards of corporate governance.

How we operate
The duties and responsibilities of the Trust are outlined in
the BBC’s Royal Charter and accompanying Framework
Agreement. Supporting these documents we have establisheda series of protocols, which provide more detail on how wewill carry out these duties and responsibilities and, where
necessary, the duties and responsibilities of the Executive
Board. You can find all of these documents on our website.
Our regular business is undertaken in monthly meetings ofthe full Trust. At these meetings we make decisions related
to our duties and responsibilities and consider proposals fromthe Executive Board. We publish the minutes of our monthly
Trust meetings on our website.
Our work plan
Each year we publish our annual work plan. We get input
from the Audience Councils about the issues that matter toaudiences to help us determine what the priorities in our planshould be. You can find a summary of our 2010/11 work planon page 1-29, and the full plan on our website.
Openness and transparency
We take particularly seriously our Royal Charter requirement
to operate openly and with transparency – we see this as partof our commitment to licence fee payers. On major pieces ofwork we consult publicly and expressly ask for the views oflicence fee payers, the industry and those who will be affectedby a proposal. We use our website as well as other means toencourage people to respond, making sure that there are plentyof opportunities for people to make us aware of their views.

Inside the trust

1-40

After we make a decision we publish our conclusions clearly
along with the evidence that has been used to reach them.
We explain our decisions to licence fee payers, the industry
and to those within the BBC who may be affected. We also
publish the costs of our major pieces of work.
The Trust Unit
We are supported in our work by the Trust Unit, which
provides independent and objective advice, calling on outside
experts when necessary. The Unit is made up of BBC staff
who are independent of the Executive and report directly
to us. It includes professional staff with expertise across a
range of disciplines, including corporate governance, policy
development, audience research, financial and performance
analysis, economics and law. The Unit advises Trustees on
their duties, manages the Trust’s supervisory and regulatory
functions and provides the Trust with independent
assessments of proposals from the Executive Board. Most
Unit staff are based in London, others are based in offices
in Belfast, Birmingham, Cardiff and Glasgow.
Trust committees
We do much of our work through seven committees, which
can make certain decisions on behalf of the Trust as a whole.
You can find the terms of reference for each of the Trust’scommittees on our website. Attendance at committee
meetings is published on page 1-46.

Finance and Compliance Committee
Rotha Johnston (Chair)
Anthony Fry
Dame Patricia Hodgson
Janet Lewis-Jones
Jeremy Peat

The Audiences and Performance Committee (APC) oversees
the performance of all of the BBC’s public services on behalfof the Trust and monitors how the BBC (services in the UK
and the BBC World Service) is delivering its public purposes as
outlined in the Royal Charter.
Drawing on audience research, the APC assesses theperformance of the BBC’s services against the criteria set out
in the service licences, using data provided by the Executive
Board and independent analysis undertaken by the Trust Unit.
A key responsibility of the APC is to oversee the Trust’s
programme of service reviews. The Trust undertakes aservice review of each of the BBC’s UK public services at least
once every five years. We report separately on this year’s
service reviews earlier in this Report.

The Finance and Compliance Committee (FCC) undertakes
the Trust’s responsibilities on matters of finance, value formoney and compliance.
The FCC scrutinises the BBC’s annual budget from the
Executive Board before it goes to the full Trust; approval
from this committee is required for any significant financial
investment. The FCC also manages the Trust’s programmeof value for money studies and is responsible for ensuring thatrecommendations from the reviews are implemented by the
Executive Board.
The FCC oversees the Executive Board’s compliancefunction (with the exception of editorial compliance, which isoverseen by the ESC) and monitors internal controls and risk
management. It also considers appeals regarding fair trading,
TV Licensing and the Digital Switchover Help Scheme.

Editorial Standards Committee
Richard Tait (Chair)
Chitra Bharucha
Anthony Fry
Alison Hastings
David Liddiment
Mehmuda Mian

Strategic Approvals Committee
Diane Coyle (Chair)
Dame Patricia Hodgson
Rotha Johnston
Jeremy Peat
Richard Tait (until February 2010)David Liddiment (attending in his capacity as chair of the
APC, and only for matters relating to service approvals)

The Editorial Standards Committee (ESC) is responsible,
on behalf of the Trust, for establishing the BBC’s editorial
standards and assessing all the BBC’s services for compliancewith these standards.
Editorial standards are enshrined in the BBC’s Editorial
Guidelines which the ESC commissions from the Executive
Board. The ESC is the final appeal body within the BBC indetermining whether these Guidelines have been followed.
The ESC also manages the Trust’s programme of
impartiality reviews.

The Strategic Approvals Committee (SAC) considers
proposals from the Executive Board for new services orchanges to existing services, except those proposed as part ofa service review (which are considered by the APC). The SAC
determines whether a public value test (PVT) is required andadvises the Trust accordingly.
The SAC manages any PVT or other consideration of a
proposal from the Executive and makes recommendations
to the Trust on possible outcomes.
The SAC also oversees the BBC’s commercial strategy andany detailed commercial business plans being proposed to
the Trust for approval.

1-41
Inside the trust

Audiences and Performance Committee
David Liddiment (Chair)
Diane Coyle
Alison Hastings
Dame Patricia Hodgson
Mehmuda Mian

INSIDE THE TRUSTINTERNAL GOvERNANCE CONTINUED

Remuneration and Appointments Committee
Chitra Bharucha (Chair)
Anthony Fry
Sir Michael Lyons
Janet Lewis-Jones

The Remuneration and Appointments Committee(RAC) manages the Trust’s responsibilities concerning
Executive Board remuneration and appointments. The
RAC oversees executive remuneration strategy and makes
recommendations to the Trust on the pay and benefits of
the Director-General and the non-executive Directorsof the Executive Board. However, pay and benefits of theexecutive directors are determined by the Executive Board’s
Remuneration Committee, which consists entirely of nonexecutive Directors.
Audience Councils Committee
Chitra Bharucha (Chair)
Alison Hastings (Trustee for England)
Rotha Johnston (Trustee for Northern Ireland)
Janet Lewis-Jones (Trustee for Wales)
Jeremy Peat (Trustee for Scotland)
The Audience Councils Committee (ACC) brings together
the four national Trustees to oversee and co-ordinate thecontributions of the BBC’s Audience Councils as advisory
bodies to the Trust. Its role is to ensure that issues identified
by the Audience Councils are dealt with appropriately by theTrust and that the Councils work within their remit. The ACC
also approves membership of the Audience Councils.
General Appeals Panel
Membership is not fixed. The Panel consists of two
Trustees and is generally chaired by the Vice Chairman(Chitra Bharucha).

Inside the trust

1-42

The General Appeals Panel is also a committee of the Trust,
although it meets only when required to hear complaints andappeals on behalf of the Trust that do not fall into one of theBBC’s specific procedures. You can find more information
about the BBC’s complaints procedures on our website.

ASSESSING OUR OWN PERFORMANCE
Every year we review our own performance, including
the performance of each committee, and summarise ourfindings in the Annual Report. This is a requirement that we
set ourselves in our own Standing Orders, published on our
website, and is also recommended by the Combined Codeon Corporate Governance.
This year we undertook this exercise internally, with thesupport of the Trust Unit. Through the review we reflectedon the operation of the Trust and its committees and on
how the Trust is carrying out its business and fulfilling its
remit. We discussed the outcomes of the exercise at the fullTrust meeting as well as in each committee. The Chairman
also interviewed all Trustees individually and discussed theeffectiveness of each Trustee in undertaking his or her duties
and responsibilities.
We believe that we undertake our supervisory and regulatory
roles effectively. We take seriously our duty to make decisions
in the best interests of licence fee payers, and we believe thatthe decisions we have made this year have achieved outcomesin line with these. In particular, we have progressed somemajor issues of concern to them in the overarching strategy
review and through specific initiatives such as the review of
Executive remuneration. Meanwhile our reviews of specific
BBC services are beginning to deliver real change and makethe BBC’s output more distinctive.
We have also identified a number of areas to focus on further
in the year ahead. These include continuing to ensure thatthe BBC delivers value for money, and that the outcomesof all our work are effectively communicated within the BBC
and externally.

COSTS OF RUNNING THE TRUSTThe Trust is funded from licence fee money. As such, running
the Trust efficiently is very important.
Two years ago we committed to keeping the Trust’s direct
expenditure to not more than 0.35% of the BBC’s UK public
service spend. We are pleased to report that we haveagain met this commitment, with Trust direct expenditure
representing 0.30% of the BBC’s UK public service spend –a slight decrease to that achieved in 2008/09. In absoluteterms, our total expenditure has fallen significantly. This ismainly attributable to the reduced fees payable to Ofcom,
which has not undertaken any market impact assessment
work for the Trust this year. Ofcom has also refundedsome fees relating to 2008/09 and earlier, following its own
finalisation of its costs for those years.
We set out below the Trust’s direct expenditure statement
and the external auditors’ report on this statement.

Table 1-1

Trust relative spend
2009/10%

2008/09
%

0.30

0.31

Note

2009/10£000

2008/09*
£000

1
2
3
4
5, 6

730
4,749
5,023
–
10,502

741
4,756
4,716
308
10,521

2009/10£000

2008/09
£000

3,521
(117)
3,404
13,906

3,571
911
4,482
15,003

Direct Trust expenditure as % of BBC UK public services spend

Table 1-2

Statement of Trust expenditureO
O
Total Ofcom fees payable by Trust
Total Trust expenditure

78Notes to the statement of Trust expenditure
1. The remuneration received by each Trustee is shown in the table on page 1-45. The figures in the table above include the Trustees’ fees, taxable benefits and social security costs.
2. Staff costs include wages and salaries, social security costs and employer’s pension contributions.
3. Operating costs include direct expenditure on activities such as research, legal advice, other specialist advisory services and the Trust’s engagement activities and stakeholder events.
4. The restructuring spend in 2008/09 resulted from a review of the way in which the regional Audience Councils are serviced. This resulted in a reduction in the number of staff required.
The change was implemented during 2009/10.
5. The expenditure shown above for the Trust represents direct external spend by the Trust. The Trust also made use of shared services provided by the BBC public services. These
included property provision, finance, HR and information services.
6. Of direct Trust expenditure, £1,320,000 (2008/09: £1,539,000) relates to spend on our activities in the four nations, which primarily covers support for the four national Audience Councils
and the 12 regional Audience Councils.
7. Ofcom allocates its costs of television and radio regulation to the BBC and the other UK commercial and public service broadcasting channels. The Trust pays the BBC’s share of that
allocation based on an estimate from Ofcom for the year.
8. Ofcom Market Impact Assessment (MIA) fees cover Ofcom’s direct and indirect costs in undertaking the MIA for the public value tests in the period. One MIA was completed in 2008/09(local video) but none was undertaken in 2009/10. During 2009/10 Ofcom reviewed its costs and refunded the Trust for some past fees charged on MIA work.
9. The cost classification between categories in the statement above has been slightly amended in 2009/10 compared with that used in the previous year. In particular Trustee social security
is now shown within Trustee costs rather than operating costs. This means the Trustee costs shown above will not equal those shown in the remuneration table on page 1-45. The amountshown above is a more complete representation of Trustee costs. Expenditure for the comparative period has been adjusted accordingly for consistency.
* The 2008/09 numbers have been restated to comply with International Financial Reporting Standards (IFRS) in order that they are comparable with the 2009/10 numbers. The effect is toincrease staff costs by £4,000 in 2008/09 by inclusion of a holiday pay accrual.

1-43
Inside the trust

Trustee remuneration costs
Staff costs
Other operating costs
Restructuring costs
Direct Trust expenditure

INSIDE THE TRUSTINTERNAL GOvERNANCE CONTINUED

Table 1-3

trust people
Trust staff numbers have reduced slightly year-on-year reflecting
the effect of the restructuring in the staffing of the english regions
support that took place in 2009.
Note

averageper year2010

averageper year2009

1
2, 3, 4

no.
12.0
eFt
68.1

No.
12.0
eFT
70.2

Trustees
Trust Unit staff

Notes
1. ‘EFT’ means equivalent full-time numbers.
2. The majority of Trust Unit staff are based in London, with 18.7 EFT (2009: 21.8) basedoutside London providing support to the work the Trust undertakes in the four
nations; Wales, Scotland, Northern Ireland and England.
3. prior to July 2009, staff providing support to the 12 regional Audience Councils were
not direct employees of the Trust although their staff costs were fully reimbursed by
the Trust. During July 2009, following a restructuring of how the audience councils
were served, the remaining staff required to support the regional Audience Councils
transferred to being employed directly by the Trust. For comparison purposes thesestaff are included in the headcount numbers above for both years.
4. Within the Trust Unit staff, 14% come from black or minority ethnic backgrounds,
7% are disabled and 68% are women (2009: 9%, 5% and 68% respectively).

Director and senior manager remuneration
Nicholas Kroll, Director, BBC Trust, is the chief officer of
the Trust as specified in the BBC’s Royal Charter. He is theprincipal adviser to the Trust and chief executive of the Trust
Unit. His base pay for 2009/10 was £238,680 (2008/09:£237,900) and the aggregate of his emoluments to 31 March2010 was £282,609 (2008/09: £282,648). Along with othersenior managers, he will not receive a bonus for 2009/10(2008/09: nil). He is a member of the BBC Pension Scheme.
The Trust Unit has 13 senior managers in addition to the
Director. The table below shows Trust senior managers’
headcount by base salary as at 31 March 2010. Where staff
are part time, the full-time equivalent salary is given. For boththe years shown, senior managers were not eligible to receivea discretionary bonus award. They were also not eligible forany annual pay review in 2009/10. The increase in headcountyear-on-year reflects timing differences in filling two vacancies
created by staff departures prior to 31 March 2009.
Table 1-4 

Senior manager headcount by salary band

Salary band

Under £70,000£70,000 to £99,999£100,000 to £129,999£130,000 to £159,999
Total

Inside the trust

1-44

Report of KPMG LLP to the BBC Trust (‘the Trust’)
In accordance with the terms of our engagement letter dated
3 June 2008, we have examined the above expenditure statement(‘the Trust expenditure statement’) for the year ended 31 March2010 which has been prepared, further to the requirements of the
BBC Royal Charter dated October 2006, by the Trustees and istheir sole responsibility. The Trust expenditure statement has been
prepared by the Trustees applying the recognition and measurement
requirements of International Financial Reporting Standards.
Our responsibility, in accordance with the terms of our engagement
letter, is to form an independent opinion, on the basis of thework performed, and to report our opinion to the Trust. Our
examination was substantially less in scope than an audit.
Our report has been prepared for the Trust solely in connection
with the Royal Charter. Our report was designed to meet theagreed requirements of the Trust and particular features of ourengagement determined by the Trust’s needs at the time. Our
report should not therefore be regarded as suitable to be used

31 March
2010

31 March
2009

4
6
2
1
13

4
5
1
1
11

or relied on by any party wishing to acquire rights against us otherthan the Trust for any purpose or in any context. Any party otherthan the Trust who obtains access to our report (or any part ofit) will do so at its own risk. To the fullest extent permitted by law,
KPMG LLP will accept no responsibility or liability in respect of ourreport to any other party.
In our opinion, the expenditure as shown in the Trust statement
has been accurately extracted from the books and records of theTrust on the basis of the stated assumptions included within theNotes to the Trust expenditure statement.

Scott Cormack
For and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants, 8 Salisbury Square, London, EC4Y 8BB
16 June 2010

TRUSTEE REMUNERATIONFees
Our fees as Trustees are determined by the Secretary ofState for Culture, Media and Sport, and reviewed annuallyby his department. In 2009 the DCMS recommended a 1.5%
increase in fees for members of the Trust. We considered thisrecommendation but decided not to accept any increase, inline with the fact that the BBC froze pay for senior managers
over the same period. This is reflected in the table below.
Members of the Trust do not receive severance pay or othercompensation for loss of office.
Expenses
We are reimbursed for expenses incurred on BBC business,
which include travel, accommodation, work-related meals
and hospitality. The expenses we are entitled to claim aregoverned by the Trust’s Code of Practice, which is publishedon our website. Every six months we publish a full list of all

expenses incurred by each Trustee as well as the services
booked centrally for Trustees by the Trust Unit.
Some of our expenses and support services are classed as
taxable benefits by HM Revenue and Customs and this figure
is published in the remuneration table; any tax arising on
expenses incurred is settled by the BBC.
Chairman’s benefits
Under the terms of his appointment, the Chairman,
Sir Michael Lyons, is eligible to participate in a pension schemewith benefits that mirror those of the BBC Pension Scheme.
Sir Michael has elected not to participate in this scheme,
hence the BBC has made no pension contributions for him.
Instead, he receives life assurance at a similar level of cover tothat of Pension Scheme members. He also receives private
medical insurance cover at the same level as BBC senior
managers. Other than the Chairman, Trustees are not eligible
to participate in the BBC Pension Scheme or receive private
medical insurance.

Table 1-5

Trustees’ remuneration
The remuneration of the members of the Trust during the year is shown below:
Taxablebenefits
£000

Total
2009/101
£000

Total
2008/09£000

Start Date

End Date

143
77

61
1

204
78

213
79

1 May 07
1 Nov 0630 April 11
31 Oct 10

41
41
41
41

0
0
0
0

41
41
41
41

42
42
42
42

1 Nov 06
1 Nov 06
1 Nov 06
1 Jan 06

31 Oct 10
31 Oct 10
31 Oct 10
31 Dec 10

36
36
36
36
36
36

0
0
0
0
0
0

36
36
36
36
36
36

37
15
36
36
36
36

1 Nov 06
1 Nov 08
1 Nov 06
1 Nov 06
1 Nov 06
1 Aug 04

31 Oct 10
31 Oct 12
31 Oct 10
31 Oct 10
31 Oct 10
31 Jul 10

–
600

–
62

–
662

21
677

1 Nov 00

31 Oct 08

Appointment term

As noted above, Trustees did not accept any fee increase for 2009 and their fees for 2009/10 are therefore the same as for 2008/09.
The higher taxable benefits figure for Sir Michael reflects the fact that the Chairman’s office is located in London and he lives in Birmingham, therefore his travel to London andaccommodation when in London on BBC business is classed as a taxable benefit. Sir Michael also received life assurance and private medical insurance costing £4,817 and £2,398
respectively for 2009/10 (2008/09: £4,354 and £2,277).
3
Anthony Fry was appointed as a BBC Trustee on 1 November 2008; accordingly his fees for 2008/09 relate to the period 1 November 2008-31 March 2009.
4
Dermot Gleeson finished his term as a member of the Trust on 31 October 2008.
1
2* These Trustees all had taxable expenses less than £500 and consequently have been rounded to £nil on the table above. The total amounts claimed by these Trustees amounted to £2,329.99.

1-45
Inside the trust

Chair and Vice Chair
Sir Michael Lyons2
Chitra Bharucha
National Trustees
Alison Hastings*
Rotha Johnston*Janet Lewis-Jones*
Jeremy Peat*
Trustees
Diane Coyle*
Anthony Fry3
Dame Patricia Hodgson*
David Liddiment*
Mehmuda Mian
Richard Tait*
Former Trustee
Dermot Gleeson4
Total Trustees

Fees
£000

INSIDE THE TRUSTINTERNAL GOvERNANCE CONTINUED

Register of interests
Our Code of Practice requires us to maintain and publish aregister of all external interests that might be seen to affectour ability to perform the duties of a BBC Trustee. This
register includes declarations of all positions of employment,
directorships and voluntary positions as well as interestsof close family members, if relevant. The Trust’s registerof interests is published on our website.
Reporting regulations
The BBC is exempt from the requirements of the Large
and Medium-sized Companies and Groups (Accounts andReports) Regulations 2008 and those of the Financial Services
Authority but, where relevant, we have prepared this Reportas if those requirements apply. The section on remuneration
received by Trustees is audited.
On page 1-42 you will find information about the Remuneration
and Appointments Committee and on page 1-25 our strategy
for Executive Board remuneration.

Trustees’ attendance at meetings
Trustees’ attendance at Trust and committee meetings forthe period 1 April 2009 to 31 March 2010 is shown below.
A calendar of full Trust meetings and their minutes, and theterms of reference for each committee, are published on
our website.
For more information about the committees and their
responsibilities, see pages 1-40 to 1-42.

Table 1-6

Meeting attendance table

Inside the trust

1-46

Number of meetings
Chairman
Sir Michael Lyons
Vice Chairman
Chitra Bharucha
National Trustees
Alison Hastings(England)Rotha Johnston(Northern Ireland)
Janet Lewis-Jones(Wales)Jeremy Peat
(Scotland)
Trustees
Diane Coyle
Anthony Fry
Dame Patricia Hodgson
David Liddiment
Mehmuda Mian
Richard Tait

Trust

Audiences andPerformance
Committee

Editorial
Standards
Committee

Finance andCompliance
Committee

Strategic
Approvals
Committee

Remuneration
andAppointments
Committee

Audience
Councils
Committee

GeneralAppeals
Panel1

16

11

14

14

13

4

5

6

16/16

–

–

–

–

4/4

–

–

15/16

–

13/14

–

–

4/4*

5/5*

6/6*

15/16

11/11

13/14

–

–

–

5/5

–

16/16

–

–

14/14*

12/13

–

5/5

–

16/16

–

–

14/14

–

4/4

5/5

–

16/16

–

–

13/132

13/13

–

5/5

–

14/16
15/16
16/16
15/16
13/16
11/16

10/11
–
11/11
10/11*
7/11
–

–
10/14
–
13/14
11/14
13/14*

–
11/14
14/14
–
–
–

13/13*–
13/13––
10/113

–
4/4
–
–
–
–

–
–
–
–
–
–

–
–
–
2/2
5/5
1/1

Notes:
1
The General Appeals panel does not have a constant membership.
2
Jeremy peat did not attend one Finance and Compliance Committee meeting due to a potential conflict of interest.
3
In February 2010 Richard Tait ceased to be a member of the Strategic Approvals Committee.
* Denotes committee Chairman.

Statements of responsibilities in respect of theannual report and accountsa) Statement of Trust responsibilities in respect of theannual report and accounts
The BBC’s Charter requires that an annual report and statementof accounts is prepared in two parts, Part One by the Trustand Part Two by the Executive Board. The Executive Board’s
responsibilities are detailed in the Governance section of Part
Two of this annual report. In summary, the Executive Board is
responsible for preparing the financial statements and statementsof compliance with applicable corporate governance codes andremuneration regulations, and delivering these to the Trust withinPart Two of this annual report. The Executive Board has prepared
the financial statements in accordance with International Financial
Reporting Standards as adopted by the EU (EU IFRS), reflecting
the fact that EU IFRS are widely used in the UK, are being adopted
in the public sector, and that their use would be permitted under
the Companies Act 2006. These financial statements are audited
by external auditors.
In preparing its associated corporate governance disclosures, theExecutive Board has elected to comply with the 2008 Financial
Reporting Council Combined Code and the disclosure provisionsof the Companies Act 2006, and, where applicable, the Financial
Services Authority Listing Rules which apply to a company quoted
on an EU regulated market.
In order to comply with those requirements, the annual reportmust include disclosures on the governance arrangements of theTrust as well as those of the Executive Board. These disclosures,
which are audited, are the responsibility of the Trust, and areincluded in Part One of this report.
The Charter also requires the Trust to prepare a statement of its
expenditure and include it within Part One of the annual report.
b) Statement of disclosure of information to auditors
The Trustees who held office at the date of approval of thisannual report and accounts confirm that, so far as they are eachaware, there is no relevant audit information of which the BBC’s
auditors are unaware; and each Trustee has taken all the steps thatthey ought to have taken as a Trustee to make themselves awareof any relevant audit information and to establish that the BBC’s
auditors are aware of that information.
This statement was approved by the Trust on 16 June 2010.
1-47

Sir Michael Lyons
Chairman
16 June 2010

Inside the trust

Attendance at Audience Council meetings andother committees
The Royal Charter establishes Audience Councils in eachof the nations to advise the Trust on delivering its public
purposes and how well the BBC is serving licence fee payers
in different parts of the UK.
The Audience Councils are chaired by the respective National
Trustee. National Trustees’ attendance at Audience Council
meetings for 2009/10 was:
• Alison Hastings 7/7• Rotha Johnston 11/11• Janet Lewis-Jones 11/11• Jeremy Peat 11/11
Diane Coyle and Jeremy Peat represent the Trust on theMarket Impact Assessment Joint Steering Group with Ofcom.
There was only one meeting during this period, which theyboth attended.
Jeremy Peat is chairman of the Board of the BBC Pension
Trust Ltd, the corporate trustee of the BBC Pension Scheme,
which meets six times per year. He is separately remunerated
for this role. Further details are available in the BBC Pension
Scheme Annual Report and Accounts.
The Trust set up an ad hoc appeals panel three times between
1 April 2009 and 31 March 2010. Committee membership
included Chitra Bharucha, Diane Coyle, Dame Patricia
Hodgson, Rotha Johnston, Mehmuda Mian, Jeremy Peatand Richard Tait.

Contact usContacting the BBC
If you wish to find out more about the BBC’s year –including full financial statements and each service’s
performance against its Statement of Programme Policy,
as well as other public commitments, please visit
www.bbc.co.uk/annualreport.
The report is also available in Welsh and in audio version.
If you want information or to know more about how the
BBC is run please visit www.bbc.co.uk/aboutthebbc.
For tickets to shows, tours and events please visit
www.bbc.co.uk/showsandtours.
If you have a comment, appreciation or complaint
about BBC programmes and services please visit
www.bbc.co.uk/feedback.
Or write to BBC Audience Services,
PO Box 1922, Darlington, DL3 0UR
Comment line tel: 03700 100 222*
Other queries tel: 03700 100 123*
Textphone 03700 100 212*
Lines are open 24 hours a day, seven days a week.
Calls may be monitored or recorded for training purposes.
Last year the BBC had over 3.3 million contacts withthe general public.

BBC TrustIf you have any comments or questions about thework of the BBC Trust you can contact us by post,
email, or telephone.
BBC Trust Unit
1st Floor
180 Great Portland Street
London W1W 5QZ
Telephone: BBC Information line 03700 103 100†*
Textphone: 03700 100 212*
Lines open Monday to Friday between 9.30am and 5.30pm.
Email: trust.enquiries@bbc.co.uk
BBC Audience Councils
The Audience Councils in England, Scotland, Wales andNorthern Ireland, help the BBC Trust to understand theneeds and concerns of audiences throughout the UK.
To contact the Audience Councils:
Audience Council England
Email: audiencecouncil.england@bbc.co.uk
Audience Council Scotland
Email: acs@bbc.co.uk
Audience Council Wales
Email: acw@bbc.co.uk
Audience Council Northern Ireland
Email: audiencecouncil.ni@bbc.co.uk† Calls maybe recorded for training purposes.
* 0370 numbers are ‘UK wide’ and cost no more than calls to 01 or 02 geographic numbers.

Credits

Photography
The following images have been licensed to the BBC
under the PACT agreement. The independent production
companies named as Copyright Holders are: page 1-11
Small Island © Ruby Television Production; page 2-6 QI ©
Talkback THAMES; page 2-7 My Life In Verse © Wall toWall; page 2-8 Mrs Mandela © Diverse Productions; page2-14 Hamlet © Illuminations Media/RSC and Alphablocks ©
Magic Lantern; page 2-35 The Bubble © Hat Trick, Mad Men© AMC, The Lives of Others © Lionsgate and On Thin Ice© Twofour Productions; page 2-36 The Gruffalo © Magic
Light Company, Wallander © Left Bank Pictures/Yellow Bird,
Ashes to Ashes © Kudos; page 2-50 Mastercrafts © Ricochet;page 2-51 Who do you think you are? © Wall to Wall; page2-52 Natural World © AGB Films, Outnumbered © Hat Trickand Occupation © Kudos; 2-54 Timmy Time © Aardman
Animations; page 2-55 Horrible Histories © Lion Television;
page 2-70 Charlie and Lola © Tiger Aspect Productions andLife © Norbert Rottcher; and 2-105 Winston Churchill ©
Rainmark Films.
The copyright for all other photographs in this book lies
with the BBC.
Mike Abrahams took the picture for the main Annual
Report cover and the pictures on pages 1-3, 1-4, 1-26,
1-32, 1-34, mobile phone on page 1-35, 1-40, 1-41, 1-42,
1-43 2-4, image 2 on page 2-7, 2-8, 2-9, 2-12, 2-16, 2-24,
image 4 on page 2-28, 2-30, 2-32, 2-40, 2-45, 2-46, image 2
on page 2-47, image 2 on page 2-52, image 4 on page 2-57,
2-60, all images on pages 2-61 and 2-65, ; 2-74, all images
on pages 2-76 to 2-80, 2-84, 2-85 and 2-86; page 1-15 byAndy Shephard; page 1-16 by Farhana Haider; page 1-20
by Sarah Barney; page 1-22, page 1-35 couple watching TV
and page 2-44 mobile phone by Janie Airey; page 1-28 byTrevor Aston; page 1-38 by Alan Peebles; page 2-19 The
Now Show by Karen Robinson; page 2-20 Jez Nelson by
Adrian Weinbrecht; and page 2-64 Bang Goes the Theory by
Jennifer Burgess. Satellite image of UK on the Part One flap
© NEODAAS/NERC/University of Dundee.

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