Revealed: the botched affair between government and the BBC

18 Aug 2015  |  Raymond Snoddy 
Revealed: the botched affair between government and the BBC

Last month's negotiations between the government and the BBC were far more intense and potentially malign than has been previously realised, according to a soon-to-be-published book.

The details of the negotiations between the government and the BBC, which eventually led to a "deal" in early July, show a remarkable degree of ideological motivation and downright incompetence.

The BBC had to warn that major imminent service closures would be inevitable unless the government backed down on its initial insistence that the BBC would have to accept the more than £650 million funding of free licence fees for the over 75s without any guarantee in advance of compensation.

The BBC found itself forced to spell out to Chancellor George Osborne exactly what the consequences of his intransigence would be.

Just before the Summer Budget the BBC director-general Lord Tony Hall warned that:

- BBC Two would have to close
- BBC Four would also go
- All of the BBC's local radio stations, which provide an important media outlet for local MPs, would be taken off the air
- And, in a further blow to the nations and regions, the national radio news services for Scotland, Wales and Northern Ireland would be shut down.

Tony Hall made it as clear as possible to the government that the "threat" was not some sort of negotiating ploy but a realistic assessment of the state of the BBC's finances that would follow if the government decided not to modify its stance.

The BBC has virtually no powers of borrowing and would have simply run out of money if the most urgent action was not taken.

The Corporation was facing a financial hit of close to £1 billion - the cost of the over 75s - and on the very day that the negotiations came to a head, the announcement of a £150 million black hole in the BBC finances.

It had been caused by more people than expected using the "loophole" to watching BBC programmes on catch-up TV such as the iPlayer without paying a licence.

That Thursday, 2 July, must have been one of the most intense days in the history of the BBC.

The book, The BBC Today: Future Uncertain, also carries contributions from Jon Snow, Lord Michael Grade, and Rona Fairhead, who chairs the BBC Trust.

It had all started so differently. The BBC had successfully fought off the over 75s threat five years earlier when the majority of the BBC Trust made it clear they intended to resign unless the government backed down. Only two members said they would not resign - former banker Anthony Fry and Patricia Hodgson, who now chairs media regulator Ofcom.

The Trust had also successfully fought off a "scale and scope inquiry" - but at a considerable cost.

In return the BBC had to agree to a frozen licence fee for six years, plus taking on the costs of running the World Service, the Welsh Fourth Channel, the Caversham Monitoring service, the set-up costs of of local television and make a £150 million a year contribution towards improving broadband coverage in the UK.

Before the General Election the BBC had been repeatedly assured that the over 75s cost would not be imposed and then the call came from Culture Secretary John Whittingdale on Monday 29 June to Lord Hall and Rona Fairhead.

The person who comes worst out of another sorry saga in the history of BBC-government relations is the Culture Secretary John Whittingdale."

The government had taken a final decision that the BBC should take on the cost of the free licence fees. Any compensation, or mitigation, as it came to be called, would have to be part of the negotiations over a new Royal Charter which will not get under way in earnest until next year.

Unless something was done the BBC could face financial meltdown because there were no guarantees of any kind that it would receive compensation at all. But it was very difficult to even contemplate resignation because it seemed, at least in theory, that there was all still to play for in the charter review talks. The government simply did not get the seriousness of the situation or the imperative of the numbers.

Throughout the week the BBC made its financial position clear but ran into a reluctance by Treasury officials to believe the BBC was not crying wolf. After all, last time hadn't the BBC absorbed all the extra obligations without a need to cut any significant services?

After four days of negotiations the only concession that Whittingdale came up with was a £50 million a year reduction in the broadband obligation. It was then that the BBC decided it had no option but to propose to go public with the plan to close BBC two and BBC Four and the radio services.

The closure might have been announced on Summer Budget day but more probably the day after something that might even have embarrassed Whittingdale.

The actual closures would not have been immediate but could not have been long delayed because the BBC could not afford to keep spending money on services for which there was no financial provision.

It was only then that the government accepted the long series of "mitigations", including the potential of unfreezing the licence fee in line with the consumer price index, although conditions have been imposed.

Rona Fairhead believes she can trust the word of British Cabinet ministers. Others are not so sure given what has happened in the past. Then there was the decision to phase out the broadband cost and phase in the free licence fee obligation and to do something about the licence fee loophole.

The person who comes worst out of another sorry saga in the history of BBC-government relations is the Culture Secretary John Whittingdale.

The Chancellor had effectively had to intervene to sort out, eventually, the mess Whittingdale had created - or was instructed to create.

Lord Patten may be a former chairman of the BBC Trust but he has been a Tory Cabinet minister and Conservative grandee a long time before that.

Whittingdale was, Lord Patten said on Radio Four - a "teenage ideologue."

As a political put-down, it's up there with Denis Healey likening being attacked by Geoffrey Howe to being savaged by a dead sheep.

Lord Patten is right. And anyone who thinks anything valuable is at stake here on the future of the BBC should actively oppose the views of the teenage ideologue who most unfortunately, and much to his own surprise, has become Culture Secretary and therefore in a position to mindlessly damage an important British institution.

The BBC Today: Future Uncertain, edited by John Mair, professor Richard Tait and professor Richard Keeble, is published 15 September.

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James Leahy, Freelance Writer, Self-employed on 23 Aug 2015
“How exciting it would be to come across a Conservative who was committed to conserving our most valuable institutions rather than destroying them!”
Mike Newman, Consultant, Mike Newman Consulting on 19 Aug 2015
“What would be so dreadful about a BBC much reduced in scale? I have never understood the rationale for the proliferation of TV and radio channels. And don't start me on efficiency! I know it is a favourite of the tabloids but why does the BBC send so many people to Glastonbury, the Olympics, the World Cup etc. And while I admire and use the BBS website I don't understand why a public broadcaster feels it has to provide somthing so comprehensive and on such a scale”