BBC's Licence Fee Case

Mark Thompson's email to staff 11 October 2005

Today marks another important milestone on the way to realising our vision of a creative, open, digital BBC that provides fantastic value to all of our audiences. It’s also another step towards an on-demand, fully digital UK.

For the first time we’re making the BBC’s case for a new licence fee settlement in a completely open way, explaining how we can deliver value to all licence payers through brilliant content and services, how much it will cost and how much of the bill we can meet ourselves by transforming the way we think and work.

I’m sending this to you this morning before the Chairman and I go public at a press briefing and before the Culture, Media & Sport Select Committee hearing at 11am today.

We published our vision in Building Public Value last year. The Government’s Green paper endorsed our purposes and ideas to lead the next and most challenging phase of the digital revolution.

The vision is for high quality, original content and services available to everyone, for free, wherever they live, whatever their age or income. By committing to building out the digital TV and radio network we aim to achieve the true universality – access for everyone - that the early years of digital could not.

We also want to make sure that our content and services are available not just via TV, Radio and computers but also on mobile devices and on broadband.

MyBBCPlayer will make content available for up to seven days after first transmission and help open up the archive. We will also invest in High Definition TV to ensure it is available to everyone, not just those taking subscription services, and aim to ensure we represent the UK better than ever by investing more out of London and in local TV and radio services.

The vision will cost a total of £5.5 billion over seven years.

It’s a lot of money to ask the public to provide. But we believe we will be able to meet more than 70% of the costs ourselves without putting any more burden on licence payers. That’s why the Value for Money (VFM) programme we announced last December is so important and we need to continue to drive efficiencies, production effectiveness and commercial dividends hard through the next Charter.

The current three-year VFM plan will evolve into a long-term plan of continuous improvement. That’s challenging – especially since we want to increase quality at the same time. But the targets will be lower than in the first three years and will not lead to the same kind of major restructuring.

It means that we will be able to meet rising costs in broadcasting generally, continue our longstanding commitment to our pension, and fund some of the big ideas ourselves. To deliver the rest, we will need additional licence fee funding.

By contributing £3.9 billion ourselves, we are asking for a settlement of RPI+1.8% to close the £1.6 billion gap.

The Government has also made it clear they would like the BBC to support industry costs of Switchover such as the marketing costs of Digital UK (SwitchCo) and Spectrum Tax.

This adds another 0.5% taking the total bid to RPI +2.3%. In today’s prices that means an annual colour licence fee of £150.50 by 2013 – just £3.14 extra a year per household, excluding RPI, from the start of the next Charter.

It’s ambitious, but our vision is ambitious for our audiences too. The Green Paper very clearly states that there is an expectation that the BBC will play a leading role in the next phase of the digital revolution. Our audiences have high expectation of us and they themselves are driving incredible change by the way they want to find and enjoy what we do best.

The Charter enables us to exist and do what we do best. But we must continue to transform the way we operate to ensure we are providing the very best content, accessible to and valued by everyone across the UK.

The licence fee will help us achieve that vision to be the best creative digital broadcaster and content provider for audiences in the world.

I’m also interested in hearing what you think, and over the coming weeks and months I want to get out and talk to as many people as possible across the organisation.

Mark

Mark Thompson

BBC Director-General.

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