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| Worst week of BBC's life may be just a warm-up for bigger battles ahead | Worst week of BBC's life may be just a warm-up for bigger battles ahead |
| (34 minutes later) | |
| BBC1 once had a sitcom called The Worst Week of My Life. For the 92-year-old corporation, this week was it – but laughter was in short supply in W1A. | BBC1 once had a sitcom called The Worst Week of My Life. For the 92-year-old corporation, this week was it – but laughter was in short supply in W1A. |
| Related: BBC supporters say funding deal will cause cuts to jobs and services | |
| It began with a phone call from the culture secretary, John Whittingdale, to the BBC’s director general, Tony Hall, and ended four days later with the broadcaster saddled with the £750m cost of funding free TV licences for the over-75s. | It began with a phone call from the culture secretary, John Whittingdale, to the BBC’s director general, Tony Hall, and ended four days later with the broadcaster saddled with the £750m cost of funding free TV licences for the over-75s. |
| And this as the corporation was also dealing with news that it had lost control of the rights to the Olympics, the rejection by the BBC Trust of a proposal for a BBC1+1 channel and widespread criticism of its new BBC2 Wimbledon highlights programme. | |
| Lord Hall said the licence fee agreement, confirmed in the House of Commons on Monday, was the best deal in difficult economic circumstances. For its critics, such as the former BBC chair Lord Patten, it was a “quick and dirty deal”. The broadcaster and Labour peer Melvyn Bragg called it “completely and utterly wrong”. The shadow culture secretary, Chris Bryant, said the BBC “had a gun to their head and chose to get shot in the leg instead”. | Lord Hall said the licence fee agreement, confirmed in the House of Commons on Monday, was the best deal in difficult economic circumstances. For its critics, such as the former BBC chair Lord Patten, it was a “quick and dirty deal”. The broadcaster and Labour peer Melvyn Bragg called it “completely and utterly wrong”. The shadow culture secretary, Chris Bryant, said the BBC “had a gun to their head and chose to get shot in the leg instead”. |
| The corporation said this week’s deal would result in a 10% cut to its funding in real terms. It will try to make up some of the shortfall by asking over-75s to pay for their licence fee voluntarily, which it believes as many as 10% will do. | The corporation said this week’s deal would result in a 10% cut to its funding in real terms. It will try to make up some of the shortfall by asking over-75s to pay for their licence fee voluntarily, which it believes as many as 10% will do. |
| The Office for Budget Responsibility’s figures were more pessimistic, however, predicting a 20% real-terms dip in the BBC’s budget. The reality is likely to be somewhere in between. | The Office for Budget Responsibility’s figures were more pessimistic, however, predicting a 20% real-terms dip in the BBC’s budget. The reality is likely to be somewhere in between. |
| Cuts in channels and services appear inevitable, with BBC4 and the BBC News channel thought to be most at risk. The BBC Trust has already agreed that BBC3 will move online only. | Cuts in channels and services appear inevitable, with BBC4 and the BBC News channel thought to be most at risk. The BBC Trust has already agreed that BBC3 will move online only. |
| And having lost the Olympics to Eurosport and live Open golf to Sky, the pressure on the BBC’s budget for sports rights was further illustrated this week when it held on to Six Nations rugby union only by joining forces with ITV to thwart Sky. | And having lost the Olympics to Eurosport and live Open golf to Sky, the pressure on the BBC’s budget for sports rights was further illustrated this week when it held on to Six Nations rugby union only by joining forces with ITV to thwart Sky. |
| But what has really rankled with its critics is the backdoor nature of the licence fee agreement, the second deal in five years without any public or parliamentary debate. | But what has really rankled with its critics is the backdoor nature of the licence fee agreement, the second deal in five years without any public or parliamentary debate. |
| David Liddiment, who stood down as a BBC trustee after eight years last year, said the government “should be ashamed of themselves”. | David Liddiment, who stood down as a BBC trustee after eight years last year, said the government “should be ashamed of themselves”. |
| He said the BBC would see the deal as the “least worst option. If they defy [the government] and take them on, they will punish it and it will be even worse. Whether that’s right for the country and right for the licence fee payers is another matter”. | |
| Hall took the call from the culture secretary on 29 June informing him that the BBC would have to bear the cost of the over-75s’ TV licences, a bill currently covered by the Department for Work and Pensions. | Hall took the call from the culture secretary on 29 June informing him that the BBC would have to bear the cost of the over-75s’ TV licences, a bill currently covered by the Department for Work and Pensions. |
| In a series of meetings that followed, including one with Whittingdale and the chancellor, George Osborne, and one with Osborne alone, Hall and the BBC’s managing director of finance and operations, Anne Bulford, sought to wring concessions from the government in the face of this apparent fait accompli. | In a series of meetings that followed, including one with Whittingdale and the chancellor, George Osborne, and one with Osborne alone, Hall and the BBC’s managing director of finance and operations, Anne Bulford, sought to wring concessions from the government in the face of this apparent fait accompli. |
| Potentially the most significant was the government’s announcement that the licence fee – flat at £145.50 since 2010 – would rise in line with the consumer price index over the next charter period, beginning in 2017. | Potentially the most significant was the government’s announcement that the licence fee – flat at £145.50 since 2010 – would rise in line with the consumer price index over the next charter period, beginning in 2017. |
| Related: George Osborne forces BBC to pay for over-75s' TV licences | Related: George Osborne forces BBC to pay for over-75s' TV licences |
| But the deal remains dependent on BBC efficiency savings and “the conclusions of the charter review, in relation to the purposes and scope of the BBC”. | But the deal remains dependent on BBC efficiency savings and “the conclusions of the charter review, in relation to the purposes and scope of the BBC”. |
| Senior industry sources attributed the clause to Whittingdale, who will now oversee the review process, rather than Osborne, from whom Hall is said to have secured the link to inflation. | Senior industry sources attributed the clause to Whittingdale, who will now oversee the review process, rather than Osborne, from whom Hall is said to have secured the link to inflation. |
| “That phrase is like a landmine, a huge achilles heel,” said one industry source. “The nightmare scenario is that the BBC is subject to a double-dip attack – both financial and on scope.” | “That phrase is like a landmine, a huge achilles heel,” said one industry source. “The nightmare scenario is that the BBC is subject to a double-dip attack – both financial and on scope.” |
| The last time the Conservatives attempted to foist on the BBC the cost of free TV licences for older people, in 2010, the then director general, Mark Thompson, and the BBC Trust threatened to resign en masse. The government backed down but the BBC still had to take on a range of new funding responsibilities, including the World Service, effectively reducing the BBC’s budget by 26% in real terms. | The last time the Conservatives attempted to foist on the BBC the cost of free TV licences for older people, in 2010, the then director general, Mark Thompson, and the BBC Trust threatened to resign en masse. The government backed down but the BBC still had to take on a range of new funding responsibilities, including the World Service, effectively reducing the BBC’s budget by 26% in real terms. |
| But there are two vital differences between the backdoor deals done in 2010 and 2015: political support and a relatively strong BBC Trust, then led by the politically astute Sir Michael Lyons. | But there are two vital differences between the backdoor deals done in 2010 and 2015: political support and a relatively strong BBC Trust, then led by the politically astute Sir Michael Lyons. |
| Five years ago, the Tories were in coalition with the Lib Dems, described as “very, very helpful” to the BBC. Fast-forward to 2015 and the trust is a busted flush that even its own chair, Rona Fairhead, has suggested is not fit for purpose. | |
| Liddiment, a former ITV director of programmes and an associate of the Old Vic, warned of the impact of a weaker BBC on the UK’s creative industries, worth £77bn a year to the UK economy. | Liddiment, a former ITV director of programmes and an associate of the Old Vic, warned of the impact of a weaker BBC on the UK’s creative industries, worth £77bn a year to the UK economy. |
| “I do have real fears of long-term damage,” he said. “The ability to run amazing programming about the visual arts and opera, that is part of the infrastructure that supports the arts in this country. When the money gets thinner, the BBC will protect the services with the highest reach and the bits around the edges, where there is some of the most interesting and creative stuff, will suffer. | |
| “It’s hugely disappointing to see the charter review process undermined before it has begun by a settlement that presupposes a lot of things about the future of the BBC. It undermines the whole idea of the BBC as an independent body. It is a very sad day.” | |
| Other supporters of the BBC pin their hope on an unlikely source. “The prime minister is a strong supporter of the BBC,” said one senior industry figure. “I’d be surprised if he wants to go down as the PM who dismembered the BBC.” | Other supporters of the BBC pin their hope on an unlikely source. “The prime minister is a strong supporter of the BBC,” said one senior industry figure. “I’d be surprised if he wants to go down as the PM who dismembered the BBC.” |
| Hall was spotted having a cup of tea in the House of Lords last week with fellow peer Lord Inglewood, a former chair of the House of Lords select committee on communications. | Hall was spotted having a cup of tea in the House of Lords last week with fellow peer Lord Inglewood, a former chair of the House of Lords select committee on communications. |
| Looking tired, the director general continued to insist that he trusted the word of the chancellor on the inflation-linked licence fee. Charter renewal is not due until the end of next year. As one senior BBC source said this week: “This is only the warm-up.” | Looking tired, the director general continued to insist that he trusted the word of the chancellor on the inflation-linked licence fee. Charter renewal is not due until the end of next year. As one senior BBC source said this week: “This is only the warm-up.” |