Appendix 3: Statement of Policy on Alternative Finance
Clause 75(1) of the Framework Agreement requires the Secretary of State to pay to the BBC the whole of the Licence Revenue (the amount paid by licence fee payers) or such lesser proportion as may be agreed with the Treasury.
Clause 75(2) provides that the BBC can use the Licence Revenue to pay for "any activities properly carried on by the BBC" subject to a number of exceptions. The exceptions listed in Clause 75(2)(a) mean that the Licence Revenue cannot be used for
- activities carried on for the purposes of the World Service;
- activities carried on for the purposes of any Commercial Service;
activities carried on for the purposes of performing
Under Clause 75(2)(b) Licence Revenue cannot be used to fund activities carried on for the purposes of a BBC Service if the BBC Service is one which is partially funded by:
- a pay-per-view system; or
- any other alternative means of finance.
unless the Secretary of State has given prior written approval. For the purposes of clause 75(2)(b) an activity will be "carried out for the purposes of a BBC Service" if it is "within the scope of" the service licence authorising the Service (Clause 75(4)(a)).
When deciding whether a BBC Service is partially funded by "any other alternative means of finance" (which would preclude the use of Licence Revenue to carry out activities for the purposes of that Service without Secretary of State prior written approval) certain means of finance are not "alternative means of finance" (Clause75(5)). If these means of finance are used to fund a Service, Licence Revenue can be used to pay for activities carried out for the purposes of that Service without requiring prior Secretary of State consent. These means of finance are:
- funds from the operation of the commercial services (Clause 75(5)(a));
- funds from the Open University (Clause 75(5)(b));
- funds from any co-production agreement (Clause 75(5)(c));
- funds from co-funding by non-commercial bodies for output in minority languages and other limited circumstances but only where the use of funds to pay for the Service is compatible with a statement of policy approved by the Trust and the Secretary of State (Clause 75(5)(d));
- funds from competition prizes and other awards made available by any one or more third parties under the terms of a framework approved by the Trust (Clause 75(5)(e)); and
- funds derived from any other arrangement under which any activity, facility or event (a) featured (in whole or in part) in BBC output or (b) used (in whole or in part) to support the creation of BBC output, is carried on or provided with support from or in cooperation with a third party or parties in order to share the costs of carrying out, providing, using or mounting the activity, facility or event and, the use of such funds is compatible with a statement of policy approved by the Trust and the Secretary of State (Clause 75(5)(f)).
As detailed in the fourth and last bullet point of paragraph 6 above, in the case of partial funding of BBC Services by:
- non-commercial bodies (Clause 75(5)(d));
- the sharing by third parties of the cost of carrying on or providing, with support from or in cooperation with those third parties, any activity, facility or event featured (in whole or in part) in BBC output or used (in whole or in part) to create BBC output (Clause 75(5)(f)),
a statement of policy setting out the principles according to which it is appropriate for those BBC Services to be (part) funded by these means needs to be put in place and approved by the Trust and the Secretary of State.
- Legal Framwork
- BBC Policy with Regard to External Relationships.
- Activities Covered by this Policy Statement
- Activities falling under Clause 75(5)(D) (Co-funding and Co-funding Partnerships)
- Activities Falling under Clause 75(5)(F) (Public value Partnerships and Sponsored BBC Events)
- Public Value Partnerships
- Sponsored BBC Events