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http://www.ex-bbc.net/cgi-bin/yabb/YaBB.pl >> News and Comment >> Licence fee wrinkle http://www.ex-bbc.net/cgi-bin/yabb/YaBB.pl?num=1165955660 Message started by Forum Admin on Dec 12^th, 2006, 8:35pm

Title: Licence fee wrinkle
Post by Forum Admin on Dec 12^th, 2006, 8:35pm

This is taken from The Guardian:

How much can Gordon afford?
When you consider what the BBC's licence fee bid would cost the government, it seems unlikely that Gordon Brown will give Mark Thompson a sympathetic ear.
by Chris Tryhorn
Tuesday December 12, 2006

The BBC faces an uphill battle to persuade Gordon Brown to allow it an inflation-busting rise in the licence fee - not least because the chancellor will have to foot a significant part of the bill himself.

At the moment, some 15% of the BBC's take from the licence fee is paid for by the government, which meets the cost of the 3.9m licences held by over-75-year-olds.

These figures have grown since the 2000-01 tax year, the first year the subsidy took effect after Mr Brown unveiled the headline-grabbing measure in his 1999 pre-budget report.

In that year, there were just 3.1m over-75 households, accounting for £307.7m and 13% of the total £2.37bn licence fee takings.

By 2005-06 there were 3.9m such households, generating £459.2m out of £3.1bn, or 14.8% of the total.

With demographic trends suggesting an increase in the number and proportion of over-75 households, the government is likely to bear an increasingly large burden of the BBC's funding.

This could be worth tens of millions of pounds by 2014, the likely end year for the BBC's forthcoming funding settlement.

Assuming consistent inflation of 3% and 25m UK households, by 2014 the licence fee will generate £4.04bn for the BBC, and £4.56bn if it gets its inflation-plus-1.8% deal.

If the over-75 households then account for 17% of the total - a reasonable projection on current trends - by 2014 the government would pay £687m to the BBC under an inflation-only deal - and £776m under the BBC's desired increase.

In other words, by refusing the BBC's current funding demands, Mr Brown would save the government some £90m a year by 2014 - and even more if he insisted on a licence fee deal pegged below the rate of inflation.

Of course he could shift the burden back on to the licence fee payer by removing the over-75s' subsidy, but such a volte-face would be politically risky, especially given the rise of the "grey vote".

If, as chancellor and PM-in-waiting, he has an eye on saving the government a significant amount of money, he is unlikely to look too kindly on the BBC director general Mark Thompson's appeals for Treasury largesse.