BBC’s license fee plan would mean £144m budget cut

The BBC Trust is proposing that the UK license fee is frozen until 2013, which would mean an effective cut of £144 million in BBC budgets as it foregoes previously agreed increases.

The Trust, the body that oversees activity at the UK public broadcaster, has written to UK secretary of state for culture, Jeremy Hunt, outlining its plan. It said that having consulted with BBC management it has concluded that the ‘necessary savings can be made’.

BBC management, the Trust said, ‘made clear that the loss of £144 million will require some on-air changes, particularly at a time of continuing capital spend on infrastructure projects and digital switchover’.

In its letter to Hunt, the Trust said that BBC director general Mark Thompson and his team have started to identify how the budget cut could be absorbed and noted that work continues.

The current BBC license fee is £145.50 and the current settlement was agreed with the previous UK government in 2007.

The news comes in the same week as Sir Michael Lyons announced he would not seek to serve another term as BBC Trust chairman.

He said: “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.”

Chief executive for industry group Pact, John McVay said: “Pact recognises that during these difficult economic times that it is broadly right for the BBC Trust to make the decision not to increase the BBC licence fee for the next 2 years.

“However, we are alarmed at what impact this may have on the TV programme budget and the consequences that any further reduction will have on individual programme budgets, which are already under considerable strain as a result of the BBCs 5% year-on-year efficiency targets.”