Ofcom chief hints BBC could be forced to share £3bn licence fee

Published on Saturday 19 July 2008 19:36

THE head of the broadcasting watchdog has given a strong indication the BBC might be stripped of part of its licence fee.

Lord Currie, the Ofcom chairman, has questioned one of the BBC's key arguments for keeping its exclusive right to 3bn of taxpayers' money.

The corporation has always argued that sharing the licence fee with other channels would make it difficult for viewers to know where their money is being spent. As the sole recipient of public money, it claims the BBC has a "unique link" with viewers.

However, Lord Currie said the special relationship was more of "an article of faith" than an "evidenced reality" as many viewers had no idea what the licence fee was used for.

In a speech delivered at London Business School, Lord Currie said the increasing number of the BBC's digital channels and services had created confusion.

The peer made it clear he was so far unimpressed by the corporation's attempts to head off a raid on the levy – and added that research showed many people are unclear about what the 139.50 licence fee is used for.

He said it was an "inconvenient truth" that there "is a sum of 800m over the lifetime of the current licence fee settlement which is not within the BBC's baseline" to help fund the costs of converting all televisions in the UK to receive a digital signal by 2012.

Viewers were not wedded to the idea that the BBC should receive all the licence fee money either, he said, citing research that showed "only 60% (of viewers] believe the licence fee funds the BBC's digital services, 50% its radio services, and only 40% of BBC online". A "significant minority" he added believe it already part pays for ITV and Channel 4.

His remarks follow a concerted attempt by the BBC to defend its sole entitlement to the licence fee, with the corporation arguing it would be bureaucratic to share out the cash with other broadcasters, and confusing for the public.

The attack on the BBC's arguments was coupled with hints of better news for both Channel 4 and ITV.

Channel 4, said Lord Currie, does face financial pressures and "to pretend that there is no problem is wishful thinking". It was Ofcom's clearest hint yet that the broadcaster will get some form of help, through cash or indirect subsidy.

Lord Currie's broadside came as Sir Michael Lyons, chairman of the BBC Trust, mounted a robust defence of the licence fee. He said the BBC contributes 6.5bn to the economy, about twice as much as it receives in licence fee payments.

Lyons, in a speech to the European Union, also claimed that far from the BBC squeezing the commercial sector, it acts as a catalyst for growth and helps it through lean times when rival channels are cutting back.

The BBC Trust estimates that the broadcaster contributes 5bn to the creative wealth of the country and another 1.5bn to the rest of the economy.