This is taken from the Financial Times:

Viewers ‘would pay more for BBC’
By Andrew Edgecliffe-Johnson and Emiko Terazono
Published: September 14 2006 22:30

The BBC’s hopes of winning an above-inflation licence fee settlement were boosted on Thursday when research commissioned by the Department for Culture, Media and Sport found that the public would pay more than the BBC itself has asked for.

Tessa Jowell, secretary of state, will not decide on the level of the BBC’s funding for the next decade before November and has already indicated that the corporation will not receive the 2.3 per cent real annual increases it has called for above its existing £3bn annual public funding.

However, the research supports growing expectations that the BBC could secure an above-inflation settlement close to the 1.5 per cent real annual increases it has received for the licence period that ends in April.

The study, conducted by the Work Foundation, concluded that people were on average prepared to pay £162.66 a year at today’s prices by 2017 compared with the current licence fee of £131.50. This was above the BBC’s own pitch, which would equate to a £154 licence fee at current prices.

“Our bid was better value than I realised,” Mark Thompson, director-general of the BBC, joked on Thursday, adding that people’s willingness to pay remained “pretty buoyant”.

Ms Jowell told a Royal Television Society conference the public would fund new services proposed in the BBC’s licence fee bid such as “very local” news and further online educational activities. “But the research also revealed that the public won’t hand over a blank cheque. Digital do-it-all simply isn’t on the agenda,” she added.

She highlighted a further finding that 75 per cent of the 7,000 people surveyed supported funding new services through subscriptions rather than via increases in the licence fee. “People . . . want more choice over what they pay,” she said.

The white paper on the BBC’s future ruled out subscriptions for the next decade but Ms Jowell hinted that new funding mechanisms could be considered for the following licence fee period.

The government has challenged the BBC’s assumptions about the cost of moving some operations to Manchester, and for an expected “spectrum tax”.

Mr Thompson agreed that aspects of its bid had changed.

The bid is being scrutinised by the National Audit Office.

Mr Thompson said the BBC had commissioned two pieces of research to submit to the NAO and the DCMS. The first would examine the BBC’s spending on content compared with that of other broadcasters while the second would look at the total cost of running the BBC compared with other public organisations.