This is taken from The Financial Times:

BBC in talks on borrowing limits over move north
By James Wilson
Last updated: November 4 2006 02:00

The BBC and the government are discussing the broadcaster's borrowing limits as part of talks over the licence fee settlement, which could make it easier for the BBC to fund short-term commitments including the move of several departments to the north of England.

Mark Thompson, BBC director-general, was meeting regional business leaders at Salford's Lowry museum, overlooking the 200-acre brownfield site where the BBC proposes to install departments including sport, children's BBC and Five Live.

He sought to assure regional business leaders that he remained committed to the project.

The comments follow an outcry from regional political and business leaders, prompted by a speech where he threatened that the move to Salford could be jeopardised if the government failed to agree a licence fee settlement of 1.8 per cent above inflation.

"I want to give you an absolute assurance today that if it is achievable we will achieve it," Mr Thompson said. "This is a project that I feel personally passionately committed to."

Mr Thompson said the "media city" development should be at least as big as currently planned, raising the possibility that more BBC staff could move north. He declined to discuss a meeting this week with Gordon Brown when the chancellor rejected the BBC's call for a licence fee settlement above inflation. But he said the government was being "kept abreast" of negotiations over the cost of the move.

He said yesterday the move to Salford would cost "hundreds of millions of pounds" in the short term. Until recently the BBC has estimated the cost at £400m but there is an expectation that the final figure will be lower. The director-general said the project would be cost effective in the long term.

"Our financial challenge is about affording it over the next few years at a time when we are involved in a number of large-scale activities that are cash-hungry and where the expenditure is front-loaded," he said.

The BBC has a borrowing limit of £200m, complicating any attempt to fund long-term investment. Mr Thompson said: "The future funding of the BBC is a question not merely of quantity but also duration and the borrowing environment in which the BBC operates."

Discussion of funding would "self-evidently" look at all those issues, he said. Regional development agencies say the private sector is taking on most of the risk in the project.

The BBC is expected to rent studios and occupy about one-third of the office space in the first phase of the "media city," which is set to create 10,000 jobs