Licence fee to be frozen for two years to 2013


The BBC Trust today announced that it has proposed to Government that the licence fee should be frozen at its current level of £145.50 for the remaining two years of the current settlement, through to March 2013. This would mean taking an estimated £144m out of planned BBC budgets.

Under the terms of the current multi-year settlement, the BBC is entitled to a two per cent increase in 2011/12, with the amount for 2012/13 to be determined within the range of zero to two per cent.
But the BBC Agreement also requires the Trust to keep the financial needs of the BBC under review to ensure that the Executive Board is not authorised to spend more public money than is needed to appropriately fulfil the BBC's responsibilities.

Given the exceptional pressures that the current economic climate is placing on licence fee payers, the Trust asked the Executive in June to scrutinise its budgets and assess whether short-term savings could be made.

The aim was to work out whether the BBC would be able to forego any increase in the licence fee for the next two years, while also planning prudently to meet its commitment to return to a zero borrowing position by the end of the current licence fee period and to maintain the broad pattern of current services.
The Executive presented its findings to the Trust earlier this month. They made clear that the loss of £144m will require some on-air changes, particularly at a time of continuing capital spend on infrastructure projects and digital switchover. Nevertheless, the Trust concluded that there are ways of making the necessary savings while keeping any on-air impact within acceptable limits. Detailed work continues on how to implement those savings.

The proposal to freeze the licence fee was made in a letter to the Secretary of State.

BBC Trust chairman, Sir Michael Lyons, said:
"The Trust remains committed to the principle of ring-fenced multi-year licence fee settlements. It is a key part of the BBC's independence that the Government grants such settlements and does not re-open them before they come to an end.

"However, we also recognise that the British public is facing an exceptionally tough financial climate. In June, as part of the Trust's role in ensuring value for money at the BBC, we asked the Executive to see if they could make further savings on top of the existing three per cent year-on-year efficiencies, so that the BBC does not ask licence fee payers to pay any more than they need to for BBC services.
"A freeze in income will not be pain-free, and this decision was not taken lightly. But the Trust is satisfied that the BBC can manage the impact while continuing to deliver the range of programmes and services that the public loves."

In addition, there is a pan-BBC review under way to establish what level of long-term efficiencies can be found after 2013 – including whether new structures and working cultures could help to reduce the BBC's cost base.

The Trust will be assessing and interrogating this work in the coming months, in the run-up to discussions about the next licence fee settlement, and it has asked the NAO for any assistance it can give.


Source:-

BBC Press Statement.
http://www.bbc.co.uk/bbctrust/news/press_releases/september/licence_fee.shtml