BBC's inflation-busting licence bid attacked

Parliament

MPs yesterday shot down the BBC's bid for an inflation plus 2.3% annual licence fee increase to meet the cost of its digital obligations. BBC chairman Michael Grade and director-general Mark Thompson earlier took the unprecedented step of releasing the corporation's detailed funding proposals for seven years from April 2007.

Evans questioned the need for the BBC to plough money into new digital services when existing digital channels such as BBC Three and BBC Four were watched by small audiences. "You say people want all these wider services but you know from the annual report that a number of these extra services you provide people just aren't watching."

Thompson said the increase was needed if the BBC was to meet the Government's wish, expressed in its Green Paper proposals on the corporation's future, that the BBC leads the digital revolution.

But Liberal Democrat MP Adrian Saunders questioned why licence payers were having to help meet the Government's expectations of the BBC. "The beneficiaries of digital switchover will not just be the BBC but also other private companies. Where is their contribution?"

Committee chairman John Whittingdale—who in July announced his culture, media and sport select committee would probe the Government's 2008-2012 switchover timetable—taunted Thompson, who as Channel 4 chief executive had said the BBC was swimming in a Jacuzzi of public cash. "Some might argue that the demands made this morning will result in a BBC with a swimming pool of cash," said Whittingdale.

Thompson is reportedly set to present the BBC's licence fee case to chancellor Gordon Brown next week. According to The Guardian, the Treasury favours a more modest approach, with the licence fee rising at just the rate of inflation. That could lead to a clash with Tessa Jowell's culture, media and sport department, which is understood to have backed an above-inflation increase.

Lovelace Consulting  |  12.10.2005

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