BBC needs realistic funding for switchover costs says Director-General
"Realistic funding" through a new, long term licence fee settlement is
essential if the BBC is to fulfil the Government's ambitious goal for digital
switchover laid down in the new 10 year BBC Charter, BBC Director-General Mark
Thompson said today.
"Few people outside the industry have registered the scale of task - or the
scale of the money required. This is a project of great size and intricacy. The
risks are formidable. If it is under resourced it will fail. It's a simple as
that - and the failure will impact on many millions of households," Mr Thompson
said in a speech at the Smith Institute.
"If all that was wanted in the new Charter was a steady-state BBC with the same
line up of services and the same level of quality, we could deliver that well
within our current resources.
"If you want a BBC which does no more than it is
currently doing, then a budget that reduces in real terms - RPI-minus - is the
A tough regime of productivity and cost reduction within the BBC over recent
years will release an additional £355m per year for new investment from
2008 - a total of £3bn over the next Charter.
Mr Thompson said recent
benchmarking and independent reports show the BBC is close to the "efficiency
frontier" and its proposals for continuous efficiency improvements should keep
But to deliver the full mission set out by the Government the BBC could only
fund 70% of the costs itself though savings and efficiencies, he said.
additional net investment to fund the rest of the plans that successive reports
have shown the public understands and is willing to pay for.
He said that the BBC's current licence fee bid could reduce to around RPI +1.8%
(from RPI +2.3%) if, among other factors, the broadcasting regulator Ofcom
decided not to levy a spectrum tax on the BBC over the next licence settlement
This would mean a licence fee of £149 in 2013/14 in today's prices, well
below the £162.66 that the recent Work Foundation report commissioned by the
Government says that licence payers would be wiling to pay.
This bid would still include the wider broadcasting industry costs of
switchover and building the digital transmission network for both TV and radio
as well as investment in planned new digital access services through on demand
The bid does not include the costs of targeted help for the most vulnerable
which need to be ring-fenced but that the Government have said will be paid
through the licence fee.
He added: "Historically the most powerful argument for a relatively long settlement has been a guarantor of the BBC's independence...
"Digital switchover will take place over the next seven years...
"The BBC's mission over the next seven years is crystal clear in the White Paper. There is a powerful case for settling the BBC's funding for the same period."
Mr Thompson stressed that, in the event of a low settlement, the new BBC Trust
would have to make some difficult decisions about what not to do, in the
interests of public value and the BBC's current £1bn a year investment in the
UK's wider creative industries.
He said: "We can't do everything. We can't rob existing core services to pay
He said that in the event of a low settlement, he would not
be able to recommend to the Trust that the BBC should go ahead with the
transformational plan for creativity and jobs in the North based around a new
broadcast centre in Salford.
"We would have to find other, more modest ways of
increasing our investment in the North."
In terms of public value he said: "Benchmarked against most of the public
sector, the BBC has demonstrated one of the strongest and most consistent
records of delivery.
"It is wrestling with many of the same issues as the rest of the public sector,
how to reform and modernise; how to drive efficiencies and improve quality at
the same time.
"But it's still a success story in terms of delivery, public
confidence and the ability to change and re-invent itself."
BBC Press Office