LONDON — The BBC has described the new license fee agreement, which will mean a 16% cut in real terms to corporation funds over the next six years, as “tough” but “realistic.”
The U.K. government confirmed that the fee will be fixed at its present £145.50 ($228), giving the BBC $5.65 billion a year, until 2017, as part of a public spending review that represents the biggest cuts in public services since 1945.
It is believed to be the first time that the fee, payable by all British homes that have a TV set, has been frozen since the 1950s.
As part of the deal, concluded in secret between BBC toppers and ministers during the past few days, the BBC has agreed to pay for a range of commitments costing around £340 million ($536.6 million) a year.
This will be funded, said the BBC, by making 4% efficiencies starting in 2013.
The commitments include: paying for the BBC World Service ($427 million a year); newsgathering outfit BBC Monitoring ($39 million a year); and Welsh-language web S4C ($157 million a year) from 2015.
Previously these were all paid by non-license fee funds.
Additionally the corp. has agreed to pay for new local media services, a pet project of U.K. culture minister Jeremy Hunt, to the tune of $39.4 million in 2013/14, and up to $7.8 million a year from 2014/15.
The corp. has also said it would reduce the amount it spends on website content by 25%, and keep it at that level for three years.
In a statement the chairman of the corp.’s sovereign body, the BBC Trust, Michael Lyons said: “This is a tough settlement, but it’s also a settlement that delivers certainty and stability for the BBC and license fee payers through to 2016/17.
“It reflects the centrality of the license fee in securing and safeguarding public service broadcasting.
“We recognize the importance of securing such a settlement at such an unprecedented time.”
Director-general Mark Thompson added that the new deal, which came as a total surprise to BBC staff when details of the arrangement began to leak Tuesday, was “realistic” and “secures a strong independent BBC for the next six years.”
Lyons and Thompson are relieved that an earlier plan to force the BBC to pay for the cost of free license fees for senior citizens aged 75 and over was dropped.
This would have resulted in a 25% cut to BBC coffers over four years.
While no BBC channels or services will have to be axed, further jobs losses look inevitable.
In an email to staff, Thompson said there would be “difficult choices” ahead for all employees.
Gerry Morrissey, general secretary of broadcasting union Bectu, said he was “alarmed” by the deal.
“It seems as if the BBC is now doing the government’s dirty work. They have thrown in the towel, so they will now have to justify the cuts to staff,” he said.
“How can you cut 16% off your costs without affecting jobs or services? Morale at the BBC is already at rock bottom, but now there is little or no confidence in the management.”