How the BBC licence fee deal was done

Sir Michael Lyons told David Cameron that the BBC would not fund free TV licences for the over-75s.

As recently as late August Jeremy Hunt, the culture secretary, and BBC director general Mark Thompson were both saying publicly that licence fee negotiations would not start until the spring of next year. So how did the government and the BBC go from that to tying up a licence fee deal within the past two weeks – including a frantic final 48 hours of negotiations from Sunday?

The process that led to last night's deal to freeze the licence fee at £145.50 for six years, with the BBC taking on extra funding commitments including the World Service and S4C, began about a fortnight ago when the Department for Culture, Media and Sport started talking to the corporation about what part it could play in the coalition's comprehensive spending review.

The DCMS asked the corporation what "contributions" it could make. The DCMS was in turn being asked by the Treasury for a savings figure to put in its comprehensive spending review, announced today by the chancellor, George Osborne.

A game of hardball ensued, with the BBC realising that Hunt was not bluffing when he warned, at the MediaGuardian Edinburgh International Television Festival in August, that "The BBC has to live on the same planet as everyone else."

And so came a potential killer blow: shifting the cost of paying for free TV licences for over-75s from general taxation to the BBC licence fee, an idea the corporation first heard about at the end of May. At the time, the government denied to MediaGuardian.co.uk it was looking at the idea.

BBC sources admitted it was clever, as the corporation could not be seen to be denying the over-75s free TV licences. The principle of the Department for Work and Pensions paying for TV licences for the over-75s and then passing on the £566m cash to the BBC was introduced by the last Labour government.

By the weekend the government had also asked the BBC to consider taking over funding of the World Service, S4C and BBC Monitoring.

However, on Sunday the outgoing BBC Trust chairman, Sir Michael Lyons, drew a line in the sand, sending a letter to the prime minister, David Cameron, and his deputy Nick Clegg saying the corporation would not agree or accept shouldering the burden of the over-75 TV licences – essentially a "welfare payment".

Lyons shocked colleagues and the industry when he announced last month that he would be stepping down next year – after earlier saying he would seek a second term as BBC Trust chairman. But now he could afford to be more bullish in negotiations with the government.

The Liberal Democrats, led by Don Foster MP, were also concerned about the impact on the BBC's services and the principle of the corporation's independence being eroded if the corporation was lumbered with funding free TV licences for the over-75s.

But on Monday evening as Thompson was on the train home to Oxford it appeared there was no deal. Then came a call that the DCMS wanted to talk and he returned to London to speak to Hunt.

Yesterday talks with the government were being led at the BBC by Thompson, chief operating officer Caroline Thomson, strategy chief John Tait and Lyons.

Over at Bush House on the other side of London, Peter Horrocks, the director of the World Service and BBC Global News, and his team were also involved in the process.

Thompson met Hunt again yesterday and by the afternoon the idea of the BBC funding the World Service from 2014/15, rather than the Foreign and Commonwealth Office, was on the table.

One source said: "The plus side for the World Service being funded by the BBC is that often people around the world don't like the fact it's funded by the UK government. There will be streamlining that would come about anyway moving in with the rest of news into the new Broadcasting House, but at least it won't be squeezed by the FCO any more and it can be more integrated into the BBC."

Importantly for the BBC, MediaGuardian.co.uk understands that the deal will also essentially ensure the future of the BBC Trust is safeguarded until the end of the charter in 2016. And the DCMS will not put any new financial burdens on the corporation or its scale, leaving that for the trust to decide.

In return the BBC has had to swallow a licence fee freeze but was given the security of a six-year settlement, an outcome that "both sides were comfortable with as it was a similar length to previous ones", according to one insider.

However, there are many questions still left unanswered following the settlement. Last month Hunt warned that public disclosure about top stars' pay would form part of talks about the next licence fee settlement. Is that now off the agenda?

Thompson said in Edinburgh in August that he would be staying at the BBC to see through the next licence fee deal. He also told TV festival delegates in his MacTaggart lecture: "A pound out of the commissioning budget of the BBC is a pound out of UK creative economy. Once gone, it will be gone for ever."

Now that the director general has secured a six-year settlement – although at a price – will he leave earlier than expected?

By Tara Conlan.


Source:-
http://www.guardian.co.uk/media/2010/oct/20/bbc-licence-fee-negotiations

Good on you for initiating a worthwhile debate.    Should the DG go? Yes. Why? Because he's simply not a class act at a time when Auntie needs the best.
Should a channel be closed? Yes. BBC 3's figures don't add up. As someone pointed out on this forum this week, 2 and 4 are too similar. In a time of real austerity can we afford minority viewing figures?  It's the same with Radio 1....sell it, for goodness sake. Tell R3 people to give the listeners what they really want, i.e. what they have switched to Classic FM for......decent music.  Leave 6, think carefully about 7 (a lot of whose material would be enjoyed by the traditional R4 addict instead of some of the tripe currently served up after 6.30pm,) and - purely because of its social role, beef up local radio with real, paid journalism, not the exploitation of wannabes as it is now
Regional TV?   Here in France I choose Look North Yorkshire most nights because my other two local attachments, South and Humberside are so pathetic. Harry Gration and Christa are a fantastic combination backed up by real journos turning in real news stories. . Think about closing Nottingham and Hull. They duplicate other, better, output.
Web output? A lot of it is superfluous crap. On the other hand the education stuff is extremely valuable.   It's been mostly a channel for dumbing down and there never was any debate about whether the licence fee should have been diverted on such a massive scale.   Get rid of the magazine and raise the bar for editorial judgments. Much of the on-line journalism would not have been tolerated on newspaper weeklies a couple of decades ago.
IN France we are currently short of fuel...but the pain across the channel is much more severe. The UK is in real trouble.  The Beeb cannot afford to be profligate, extravagant, and arrogant any longer.  Get real.   But why is it that I have to aim my remarks at the huge number of admin/accountancy/management people?
It's because the folk who do the actual job are as good as ever and deserve better, much better.  Birt was a disaster and no-one has ever repaired the damage.