This is taken from the Financial Times:

BBC under increasing pressure to publish revised licence fee bid

By Jean Eagleshamand Emiko Terazono
Published: September 4 2006 03:00

The BBC is coming under increasing pressure from opposition parties and commercial rivals to publish a revised licence fee bid, following significant changes to some of the underlying cost estimates.

The Conservatives and Liberal Democrats told the Financial Times the corporation needed to provide much greater clarity on its latest forecast for costs over the 10-year period of its new charter, to allow better scrutiny of its "over-the-top" bid.

The government is preparing the ground for scaling back the BBC's initial bid for an annual licence fee increase of 2.3 per cent over inflation. Tessa Jowell, culture secretary, is expected later this month to publish research on how high a fee the public is willing to tolerate.

She will also issue shortly a report by the National Audit Office on benchmarking the BBC's efficiency drive against other broadcasters. The work follows criticism in a government-commission report from PKF, the accountancy firm, that the corporation has delivered only "marginal" efficiency savings and should get a less generous licence fee increase than it is seeking.

Opposition parties argued that political realities meant the government was bound to award the BBC much less than its initial bid, which would take the licence fee to £180 a year by 2014.

"There's no doubt the bid throws in not just the kitchen sink but the washing up liquid as well: it's clearly over the top. The BBC has gone too far and needs to be rowed back," Don Foster, the Liberal Democrat culture and media spokesman, said.

Hugo Swire, shadow culture secretary, argued: "We all know that the BBC has put in for this very high increase and is not going to get it because it's politically unacceptable for Tessa Jowell to give it."

The decision on the licence fee - originally due to be finalised this spring, but now not expected until later this year - has been complicated by changes to some of the underlying components of the initial bid.

The cost of the proposed relocation of several of the corporation's divisions to Manchester has come down from the initial estimate of £600m to £400m, with some BBC regional officials suggesting the revised figure is still too high. Ms Jowell has referred to the BBC's "rather elastic" costing of the move.

Another significant change to the bid stems from an announcement by Ofcom, the broadcasting regulator, that the spectrum tax - the amount the BBC has to pay to the government for use of the broadcast spectrum - will not come into effect until 2014. The corporation's bid includes £300m in spectrum tax as part of a "£1.6bn funding gap" between 2007 and 2014.

Rival broadcasters have also questioned the BBC's forecast £705m digital transmission costs, stating that the bid includes costs of services, such as the BBC iPlayer on-demand catch-up service, that have yet to be approved.

Opposition parties said such changes reinforced the case for greater disclosure of the costs underpinning negotiations between the government and the broadcaster. "We would like to see the BBC's reworkings of its licence fee figures being made public," Mr Foster said.

But the BBC appears determined to resist pressure to publicly restate its bid. At last month's Edinburgh International Television Festival, Caroline Thomson, in charge of strategy at the BBC, told the conference delegates: "We launched our bid this time last year and some of the figures have changed. The cost for [the move to] Manchester has come down a bit, but what we can't do is to have a running commentary. Our overall bid stands."

Media executives expect the government to approve a licence fee settlement of annual increases above inflation, although not as much as the BBC has initially bid for. One said: "The general view is that they will get RPI plus 1.5 per cent."

The corporation's governance, as well as its funding, is set to come under renewed political scrutiny this autumn. The BBC is this month interviewing for members of the new trust being set up to replace its board of governors.

John Whittingdale, the Conservative chairman of the culture media and sport select committee, told the FT the appointments were "one of the most important decisions" affecting the BBC's future. "If the [appointees] are genuinely independent, everyone will be somewhat reassured. If it's the same old people, there will be scepticism," he said.