Quote:BBC director general says licence fee deal will strengthen independence

Settlement will mean leaner BBC with focus on high quality content

http://www.guardian.co.uk/media/organgrinder/2010/oct/25/bbc-mark-thompson-comment

Britain will have a strong and independent BBC for the foreseeable future. That's the main consequence of last week's licence fee settlement. Indeed, the BBC's operational and editorial independence will actually grow as a result of the deal. It wasn't what media observers expected. Indeed it was a result which seemed very much in doubt a week ago today, when we were told ministers had decided to make the BBC take on the financial burden of free licence fees for the over-75s – something which the BBC would have found not just financially disastrous, but constitutionally unacceptable. And yet it's true.

So how did it happen? Two weeks ago the government approached the BBC executive and the trust with the suggestion that the World Service be transferred to the licence fee. We responded by making it clear that such a move could only be considered in the context of an overall licence fee settlement. We believed it was perfectly possible to conclude such a settlement in a week. That was possible because both BBC management and the BBC Trust had already given a lot of thought to the BBC's future. Our strategy, Putting Quality First, had given us a fresh direction and a clear set of priorities. We had a sophisticated model of the BBC's finances ready to run. As a result, we and the government were able to compress many months of analysis and negotiation into a few hours.

There is no question that the settlement is tough. It calls for the BBC to make 4% of efficiency savings for each of the last years of the charter period. These savings will inevitably involve difficult choices. Yet it would be wrong to claim that the efficiencies show that the BBC is being singled out for special punishment. That 4% annual efficiency rate is a benchmark across the public sector with some bodies facing much deeper cuts. Anyone who believes that the BBC could have achieved a licence fee settlement at any stage, and under any government, which would have called for lower efficiency targets than other public bodies were facing, is deluding themselves.

Nor, in my view, would it have been right for the BBC, as the UK's national broadcaster, to argue that it should have been untouched by the wider pressures facing the country. The settlement is in keeping with the times. In deciding how we work within it, we will do everything we can to ensure that it is non-content spend that is reduced. And I expect the BBC Trust to want to consult licence fee payers on the direction and nature of any changes.

It will mean a leaner BBC, with fewer managers and much simpler processes and structures, which focuses above all on ensuring as much of the licence fee as possible is directed to high quality content. That won't be easy, but it's right both for the BBC and for its audiences.

And the deal will fundamentally change the relationship between the BBC and the government. Until now, the BBC has always been part of government spending reviews, because two of its services – the BBC World Service and BBC Monitoring – have been paid for by direct government grant. Last week's settlement will see them transfer in a few years to the licence fee. That's a good thing for a number of reasons.

The BBC will never again find any of its services in scope for general spending reviews. From now on, the funding of World Service and Monitoring will be agreed in separate licence fee negotiations which will give them longer settlements and greater security than they have enjoyed before. Just as now, the foreign secretary will have to agree BBC proposals to open or close services. But the BBC will have complete editorial and operational independence over these services and, for the first time ever, international audiences will know that the services are funded not by the UK government, but directly by the British public. That's likely to increase further their already high reputation for independence and trustworthiness.

There are practical advantages as well. In a couple of years, the World Service will be leaving Bush House and joining BBC News, our home news service, in a single news hub in Broadcasting House. With a simple funding model our news operation will be simpler to operate and will enable us to spend more on journalism and less on management and unnecessary duplication. But we will make sure that it also enables us to preserve and enhance the unique and irreplaceable character of the BBC World Service.

The new licence fee settlement strengthens BBC independence in other ways. Under the deal the government accepts that, until the end of the BBC's royal charter in December 2016, the question of the scale and scope of the BBC should be entirely a matter for the corporation's own governing body, the BBC Trust.

There are those who had wanted to turn next year's planned licence fee negotiation into a mini charter review, opening up fundamental questions about the size and range of the BBC's services. That in itself would have been an attack on our independence. The whole point of 10 year charters is to allow a proper debate on such matters once a decade and then to protect the BBC from politicians continuously chipping away until the next charter comes up for review.

For the enemies of public service broadcasting and for the army of consultants and media commentators who had been looking forward to months of seminars and research projects, the fact that the settlement has been reached so quickly and straightforwardly may come as something of a disappointment. But for the BBC and its audiences, it means that – instead of a long period of distraction and debilitating uncertainty – we can get on with our day job of serving the public.

The government also guarantees that no further burdens or obligations will be placed on the BBC or the licence fee during the present charter period beyond those set out in the agreement. Top-slicing of the kind that was proposed in Lord Carter's green paper Digital Britain, which was commissioned by the last government, is explicitly rejected.

Many questions remain. How will the new local media pilots work and how will the BBC partner with them? How can the BBC support S4C and help it find a sustainable future without compromising S4C's own proud tradition of creative independence and its special relationship with the Welsh independent production sector? These are real challenges, but we are confident we can find solutions which are fully consistent with the BBC's public purposes and with the trust's special duty under the charter to ensure that the licence fee is spent in ways which further those purposes.

In the end, the success of this licence fee settlement will be judged by the public on the basis of the quality of the services they receive from us between now and the middle of the decade. I believe that, despite the challenges it poses, the settlement will allow us to maintain that quality. But just as importantly it lifts the BBC out of a moment of potentially dangerous political and financial uncertainty, giving it the stability and confirmed independence it needs to fulfil its mission.

And in the midst of so much change and upheaval in UK and global media, it means that Britain will continue to have a strong and fiercely independent public broadcaster of scale and scope for many years to come.