Letter to the Chairman from Rt Hon Jeremy
Hunt MP, Secretary of State for Culture, Olympics, Media and Sport
Thank you for your letter of 17 February.
I am grateful to you for providing the opportunity
for me to contribute evidence to the Committee's report on the
BBC Annual Report 2009-10 and the licence fee settlement. I will
respond under your two headings.
The discussions with the BBC on the licence fee arose
from discussions undertaken by Government in the context of the
Comprehensive Spending Review. Officials in my department informed
the BBC on 11 October that the Government was assessing the scope
for the BBC to take financial responsibility for some areas of
spending currently covered by the Exchequer. Transferring the
funding of TV licences for those aged 75 and over and the World
Service from the Government to the BBC were two of the options
These options arose from Ministerial discussions
and, in line with the Coalition's approach to policy making, both
Liberal Democrat and Conservative Ministers were involved.
I attended four meetings with the BBC in the course
of securing the licence fee settlement and met the Chair of the
Trust in one of these meetings. The Chair did not personally attend
all the meetings but I was satisfied that those with whom I was
dealing had the full authority of the BBC and were in close contact
From the initial discussions with the BBC on the
BBC's contribution to reducing the fiscal deficit, it quickly
became clear that it was in the interests of both parties and
of licence fee payers to finalise a new licence fee settlement.
During the course of discussions, we discussed several issues
including the scale and scope of the BBC's commercial activities
and the future carriage of public information broadcasts.
Given the scale and pace of the spending review and
licence fee agreement discussions, it was not practical to have
in-depth discussions with all interested parties or undertake
an indepth impact assessment. However, during four years as a
frontbench spokesman for media issues I have publicly set out
my views on the BBC and direction of travel in relation to the
licence fee and had thought long and hard about these issues.
My priorities were to secure a contribution to reducing the fiscal
deficit and to ensure that the deal represented excellent value
for money for licence fee payers in line with the principles I
had previously articulated. I am delighted that the settlement
achieved all of those objectives.
The outcome of these discussions is reflected in
the settlement letter that I sent to the Chair of the Trust on
This letter covers both the policies agreed and the additional
funding responsibilities. The calculation of a 16% saving over
the four years is expected to be achieved through the BBC absorbing
these additional responsibilities coupled with a freeze in the
level of the licence fee until 2016-17.
The BBC Trust set out its view on issues relating
to the future scale and scope of the BBC, in light of the BBC's
strategy review completed last year. The BBC's position was confirmed
in a letter to me of 21 October from the Chair of the Trust.
I do not believe I have changed the parameters for
future negotiations between the BBC and Government or restricted
in any way the Government's ability to negotiate in future. The
deal represents excellent value for money for licence fee payers
who will pay less in real terms for their TV licences between
now and 2016-17. In particular, licence fee payers will benefit
from the transfer of the World Service to licence fee funding
as this will increase the BBC's ability to maximise scope for
sensible efficiencies and economies across the whole of the BBC
family. Licence fee payers will continue to have access to the
From 2014-15, the Government will relinquish control
over the funding of the World Service but, as now, the written
approval of the Foreign Secretary will be necessary for the opening
or closure of any foreign language service.
In response to your question about supporting non-BBC
services, the settlement means that the licence fee will be used
to support non-BBC services to a far greater extent than at present.
Some of the provisions in the BBC Agreement need
to be amended to give effect to the changes arising from the licence
fee settlement. On 14 February, I laid in Parliament an amendment
to the BBC Agreement that ensured the BBC Trust can decide to
use licence fee money to contribute to the cost of restructuring
the World Service ahead of it transferring to the licence fee
in 2014-15. The BBC was keen for this amendment to be made as
soon as possible in order to give them as much time as possible
to plan for the changes.
My officials are working closely with those at the
BBC on amending the text of the existing Agreement, where it is
necessary to do so, to give effect to the other changes and I
expect to make an announcement on the amended Agreement as soon
as possible. This will cover the arrangements in relation to local
television and the roll-out of superfast broadband, as well as
implementing the other changes set out in the letter of 21 October.
The Agreement is an agreement between the Secretary of State and
the BBC and, therefore, changes have to be made by mutual consent.
I do not intend to consult on the amendments to the
Agreement, in that the amendments are formalising what has already
been agreed with the BBC in the licence fee settlement. The one
exception to this is in relation to the new partnership arrangement
with S4C. I proposed the new arrangements in relation to S4C because
the existing funding model is unsustainable in its current form
and it was in the best interests of the future of Welsh language
broadcasting, to which I am fully committed. In taking forward
the work to implement the new partnership that is described in
the settlement letter, my officials are in discussion with the
BBC and S4C and have sought views from other parties, including
independent producers in Wales and officials from the Welsh Assembly
Rt Hon Jeremy Hunt MP
Secretary of State for Culture, Olympics,
Media and Sport
9 March 2011
13 http://www.bbc.co.uk/bbctrust/assets/files/pdf/news/2010/sos_letter.pdf Back