The BBC’s director-general has warned he was not able to ringfence the budgets for the World Service or local democracy reporting scheme under the latest licence fee settlement.
Tim Davie also said he was “surprised” by the announcement that the licence fee is set to end in five years and that he had not known in advance that the most recent licence fee negotiation would be his last.
Culture Secretary Nadine Dorries announced this month that the latest BBC licence fee settlement, set to last until 2027, will be the state broadcaster’s last, meaning there are six years to find a new funding model to replace the one it has used since its inception 100 years ago.
Dorries also said the licence fee was set to be frozen at the current rate of £159 until April 2024 and rise in line with inflation for the four years after that.
Davie was asked during a parliamentary Public Accounts Committee meeting on Wednesday if the announcement by Dorries had caught him off-guard.
Of the freeze, Davie said “it was a surprise to see the nature of the announcement and in that particular moment” as he had not been told the exact day the news would be put out.
He added: “The more long-term observations about the future of the licence fee and our model, while utterly appropriate while coming to the end of the charter, were surprising in that regard.”
Davie went on: “In regards to the settlement, I’m disappointed we’ve got two years flat. Though on balance households are under enormous pressure, and I think you have to recognise that.”
When asked by the committee if he had been aware while negotiating the next licence fee that it was going to be the last time the BBC would be doing so, Davie simply responded “no”.
Davie added: “We’re pleased to have six years of certainty… six years of financing where we can plan…
“I happen to think that the licence fee for a long time has been an outstanding way of operating… we have a precious system here with good universal support and we should be very careful about thinking our way through the future. But it’s not a close-minded [approach] at the BBC, it’s open to having discussions.”
Davie added that the licence fee is “not without its faults but when you look around the world and look what we’ve done [it’s worthwhile]”.
He later clarified that he did think the BBC needed to change to adjust to the changes that have occurred across the cultural industries.
Davie said he had agreed with “gritted teeth” to the total sum of the new licence fee settlement, which meant he was unable to ringfence the budget for either the BBC World Service or the BBC’s local democracy reporting service as the corporation seeks to cut costs and deliver more value-for-money to users.
On whether the BBC would reduce its funding of over £250m per year given to the World Service, he said: “It will be evaluated. It’s not off the table.
“There’s no version of events where the World Service is not an important part of the BBC. It’s whether we’re investing the full £254m from the UK licence fee money [into] it. That’s the only debate.”
In the past, BBC World Service funding has been ringfenced in government negotiations, Davie said, but the settlement thus far only commits to put “significant investment” into the service.
Of the local democracy reporting service, which sees the BBC fund 165 local democracy reporters across the UK to report on local authorities for partner newsrooms, Davie said: “I’m very proud of the local democracy reporters… it’s a priority but what you’re not going to get from me here is that every area of the BBC has protected status.”
He added: “We’re going to invest in local heavily and we have got to try and find out if we have the money to do that. But I can’t say no area isn’t going to be [cut back].”
The director-general also told MPs that if the loss of the licence fee led to excessive cuts to BBC content, it could undermine both democracy and the economy.
“I worry that if we dismantle this, I honestly think we will be doing a disservice not just to our culture and democracy but to the economic health of our cultural industries,” said Davie.
He said the cultural industries in the UK saw growth at four times the rate of the overall economy before Covid and were vital in providing hundreds of thousands of jobs.
Davie told the committee that 90% of the UK population uses the BBC in some way every week, for an average of 18 hours, and that it was the biggest UK media company for the 16 to 34 age bracket.
Former BBC chairman Lord Grade of Yarmouth, now a Conservative peer, told the House of Lords on Tuesday that bosses at the corporation should watch their own news bulletins highlighting the cost of living crisis before moaning about a lack of funding.
“I wish those at the BBC who asked for more money from the Government would watch their own news bulletins and read and see what is going on in the news bulletins about whether people have to make the decision to heat or eat, the increased use of food banks.
“There is a complete lack of reality about what’s going in Britain with this regressive tax.
“I believe in the BBC, I stand with everybody in this House who supports the BBC, but this is not the time for them to be asking for more money.”
He said Dorries’s decision to start the debate on what people want from the BBC and how it is paid for is a “very good step in the right direction and very timely”.
Picture: Parliament TV