BBC loses license fee battle; gets 3%

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In what amounts to a major blow to the credibility of BBC director general Mark Thompson, the government has reportedly decided to go ahead with a far lower license fee settlement than called for by the BBC (HR 12/27).

According to sources close to the settlement, Treasury Secretary Gordon Brown has settled on a 3% increase in the BBC's £3.3 billion ($6.5 billion) annual license fee in 2007, followed by an increase of 2% per year over the next three years.

The figures fall far short of the BBC's call for a 5.7% increase each year through 2012, a figure it said would take into account the rate of inflation, currently running at 3.9%.

When the BBC made its original license fee bid at the start of the year, it called for a hike amounting to 6.4% a year for seven years. This was later revised downward to 5.7% after the government's independent auditors rejected the BBC's cost projections.

The BBC said that the license fee settlement has still not been concluded and that talks are continuing, but political sources are understood to have been briefed that a deal has been concluded.

"Discussions on the license fee settlement are continuing, and we await a decision and announcement in the new year," a spokeswoman for the pubcaster said. "Nothing will be formally announced until Parliament has returned from the Christmas break."

Reps for the Treasury and Culture departments did not return calls, but a Treasury spokesman quoted on the BBC said: "Pensioners couldn't pay any more than the (yearly) license fee of £131.50 ($257.25). The BBC must stand on its own two feet."

News of a modest license-fee hike is expected to result in redundancies, more repeats and cuts in program and channel budgets, according to BBC insiders, and leaves plans for broadband expansion in question.

Some 4,000 jobs — one in five of the entire BBC workforce — were cut under the "creative futures" scheme.
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