BBC gets less than they wanted in License Fee Deal

[Teddy Bear]

The fact that there getting anything at all is a great pity, but good at least to see they're gettting less than they wanted.

BBC demand for £180 licence fee rejected
By George Jones, Political Editor
Last Updated: 2:39am GMT 22/12/2006

The BBC has been forced to accept a below-inflation increase in the licence fee over the next six years.

Tessa Jowell said she fought hard for the BBC

Gordon Brown, the Chancellor, has blocked the corporation's demand for increasing the £131.50 licence fee by 2.3 per cent above inflation, taking it to £180 by 2014.

It emerged at Westminster last night that the BBC, which receives £3 billion a year from the licence fee, will face a real terms cut in revenue as a result of the deal now being put to the Cabinet.

The increase in the licence fee has usually been above the rate of inflation, based on the Retail Price Index, currently running at 3.9 per cent.

However, at a time when Mr Brown is preparing for a tough public spending round, he has insisted the BBC must face similar discipline.

He is also concerned that substantial licence fee rises in the run-up to the election would be unpopular with voters, particularly as there is an increasing choice of channels via cable, satellite, freeview and even the internet.

The outline deal hammered out between the Treasury and the Culture Department would give the BBC a three per cent increase for the first two years, two per cent for the next three years and between zero and two per cent for the final year. The deal, which will run for six years from 2007-8, still has to be approved by Tony Blair.

Tessa Jowell, the Culture Secretary, has told Cabinet colleagues she fought hard for the BBC. However, she has been warning for some weeks that she expected the deal to be below that demanded by the corporation.

It will come as a blow to the BBC, which is facing high costs due to the switchover to digital television. However, it has faced criticism over high pay for presenters, including a reported £18 million three-year deal for Jonathan Ross.

Gerry Morrissey, assistant general secretary of the broadcasting workers' union Bectu, said he would be seeking urgent talks with the BBC and warned that if the reports were true, it could lead to heavy job losses and would hit BBC programmes.

And in The Times

BBC funding claim is rejected but licence fee will rise to £150
Philip Webster and Dan Sabbagh

The BBC was facing an era of austerity last night after losing its battle to win an above-inflation rise in the licence fee.
The deal means that the £131.50 fee will rise to £148.05 by 2012, by which time the BBC will be receiving about £600 million a year less than it would have done had its bid been accepted. The broadcaster will receive £2.5 billion less than it had hoped for over the next six years.



The corporation was told it must search for efficiencies, after Gordon Brown and Tessa Jowell, the Culture Secretary, agreed a six-year deal that will bring increases at below the rate of the retail price index.

Despite what officials said was a determined fight by Ms Jowell on behalf of the corporation, the formula means that there are difficult times ahead, industry sources said.

The licence fee will rise by 3 per cent in each of the next two years, 2 per cent in the following three years and between 0 and 2 per cent in the sixth year. The retail price index is currently 3.9 per cent. That will fluctuate during the six years but is unlikely to be lower than the figures agreed.

The arrangement has yet to be approved by No 10 or the Cabinet but seems certain to go through because the Culture Department believes it has the best deal that was available.

The corporation wanted a rise of inflation plus 1.8 per cent, while the Treasury was insisting on inflation minus 1 per cent. The sudden departure of Michael Grade as the BBC’s Chairman did not help its cause. Mr Brown has insisted that the BBC could not expect to be excluded from the disciplines facing the public in the 2007 spending review.

The BBC declined to comment, but indicated that it may issue a statement as it digested the news. Privately, commercial rivals said that they were pleased with the prospect of a below-inflation settlement, arguing that the BBC was inefficient and too powerful.

Ms Jowell announced separately this week a £600 million scheme to help older people with the costs of the switchover to digital television.


Greg Dyke has demanded access to the minutes of the meeting at which BBC governors decided to dismiss him as the corporation’s Director-General (Adam Sherwin writes). Mr Dyke, who has already requested access under the Freedom of Information Act, was giving evidence at the Information Tribunal, in Central London.