Mark Thompson called the government’s attempt to offload the cost of providing TV licences for the elderly 'wholly unacceptab
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ThE MaStEr
2010-10-25
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BBC 'close to meltdown' before last-minute licence fee deal
BBC boss Mark Thompson insists settlement with government strengthens corporation's independence
Monday 25 October
Mark Thompson called the government’s attempt to offload the cost of providing TV licences for the elderly 'wholly unacceptable'.
The BBC was preparing to "go to war" with the government last week over the coalition's plans to force the corporation to shoulder the £556m annual cost of TV licences for the over-75s, the Guardian has learned.
A last-minute compromise in which the BBC offered to take on additional funding responsibilities including the World Service and most of Welsh-language broadcaster S4C's budget also avoided talk of a mass resignation among members of its governing body, the BBC Trust.
The deal, which will see the licence fee frozen at £145.50 until 2017, was agreed last Tuesday after 48 hours' of frantic negotiations. But more details have emerged about how close the BBC came to a constitutional crisis, with one senior insider describing the organisation as "close to meltdown".
In MediaGuardian tomorrow the BBC director general, Mark Thompson, argues that the deal strengthens the broadcaster's independence. He never saw the issue of independence as a resigning matter but he did call the government's attempt to offload the cost of providing TV licences for the elderly "unjustifiable and wholly unacceptable".
The BBC management stress that further cost savings are likely to fall heaviest on executive jobs rather than content.
Thompson says that the deal, that will see the corporation seeking a 16% cut from its budget in the next four years "will mean a leaner BBC, one which operates with fewer managers and with much simpler processes and structures."
A wholesale review is to be carried out although the furore, and eventual collapse, of plans to close BBC 6 Music has made senior management wary of closing services. Executive pay is also unlikely to be a high priority.
He writes as details emerged of how close talks with the government had come to collapse. Sir Michael Lyons, the trust's chairman who has already announced his decision to stand down next year, wrote a sternly worded letter last Sunday to David Cameron and Nick Clegg against what he saw as a breach of the BBC charter. "We will resist it to the utmost," he wrote.
On Monday Thompson, Lyons and their BBC negotiating team feared the worst, said the insider. "A war scenario would have gone into place if they'd gone for the over-75 option. The BBC would have gone into meltdown and we were starting to think about what that might look like."
But the BBC is understood to have gained the support of Don Foster, the Lib Dem culture spokesman, as well as senior members of the junior coalition partner.
The Liberal Democrats are thought to have played a part in persuading the government not to impose the cost of over-75s' TV licences on the BBC. Thompson was on his way home to Oxford on Monday evening and was called back to London, where negotiations resumed at the Department for Culture, Media and Sport, continuing into early last Tuesday morning. The deal was concluded later that morning.
As part of the agreed settlement, the BBC is take on the running of the World Service and BBC Monitoring, most of S4C's budget, and provide funding for local TV rivals. BBC News is likely to see cuts in its newsgathering operation once the merger with the World Service takes place.
Thompson describes the deal as "tough" but says that compared with other government departments, the BBC got off relatively lightly. He rejects the suggestion that comparing an organisation funded by the licence feepayer rather than general taxation is already allowing independence to be compromised.
"That 4% annual efficiency rate is a benchmark across the public sector with some bodies facing much deeper cuts. Anyone who believes that the BBC could have achieved a licence fee settlement at any stage, and under any government, which would have called for lower efficiency targets than other public bodies were facing, is deluding themselves … The settlement is in keeping with the times,"
The new licence fee settlement strengthens BBC independence in other ways. Under the deal the government accepts that, until the end of the BBC's royal charter in December 2016, the question of the scale and scope of the BBC should be entirely a matter for the corporation's own governing body, the BBC Trust.
"But just as importantly it lifts the BBC out of a moment of potentially dangerous political and financial uncertainty, giving it the stability and confirmed independence it needs."
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