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Thompson expresses "real disappointment" at Licence Fee settlement
but welcomes privilege of certain funding
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The Â鶹Éç's Director-General today expressed "real disappointment" at the
Government's final licence fee level settlement but said it was a privilege to
receive and gave certainty in planning to create the best possible content and
services for all audiences.
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Mark Thompson said no commercial rival enjoyed that certainty of funding.
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While the Â鶹Éç
could argue the benefits extra funding would bring to the wider creative
industries as well as audiences, he said it was ultimately for the Government
to decide the level in the broader context of inflation and the wider public
sector. Ìý
He also welcomed the longer settlement at six years enabling efficient planning
for digital switchover, rapidly changing audience expectations and new creative
initiatives.
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"Our vision for the future, broadly endorsed by a Government White Paper, as
well as their own requirements and ambitions, especially around digital
switchover, plus not wanting existing, valued Â鶹Éç services to be squeezed as we
invest for the future, led us to bid for a settlement that would increase in
real terms.
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"The settlement announced today means the Â鶹Éç still receives substantial,
guaranteed income of more than £20billion over the next six years, which is
financial security denied to any other media player. But it leaves a gap of
around £2bn over the next six years between what we believed we needed to
deliver our vision and what will actually be available.
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"That's not a gap many organisations can swallow comfortably."
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Mr Thompson said there were three ways the organisation could now move to
reduce the gap:
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1 - Simply not make some new investments, do them later or do them more modestly;
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2 - Increase self help targets. This would mean: increasing licence fee
efficiencies in collection and evasion; maximising commercial revenues and
continuing reform, modernisation and productivity;
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3 - Move resources inside the Â鶹Éç from existing content and services to new
ideas.
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The Â鶹Éç's Executive Board and senior managers across the organisation would now
review investment plans in the light of the settlement and explore the options.
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The Executive will then make initial recommendations to the Â鶹Éç Trust who will
take decisions later in the year in the best interests of licence fee payers,
drawing on the framework of the Â鶹Éç's public purposes and public value.
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Mr Thompson said: "The Â鶹Éç faces challenges to find enough money to create the
fantastic content our audiences want.
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"After seven years of funding that has
grown in real terms, we now face not just a tight settlement but daunting
investment challenges in distribution, infrastructure and technology that risk
diverting money away from content creation.
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"These challenges call for some new thinking about how we produce content and
how we create value."
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Mr Thompson said that the Â鶹Éç's vision for content in the digital world,
Creative Future, was never fundamentally about spending new money:
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"It is about
flexing, adapting, liberating all content, but above all, content we already
make. It's about unlocking the full value of existing investment."
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Notes to Editors
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The settlement
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The Â鶹Éç asked for: RPI + 1.8% and £600m to fund the targeted help scheme.
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The Government is giving the Â鶹Éç
the equivalent of: RPI - 1.5% and £600m to fund the targeted help scheme.
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What does that mean in cash?
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Setting aside the costs of targeted help, digital switchover, Digital UK costs
and the costs of Salford (which total around £1.2bn) we were hoping to be able
to invest £2.8bn in our core and new programmes and services over the next six
years.
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We now have only £400m - a gap of £2.4bn in real terms. Since the
original bid we have identified a further £300m of self-help so the gap is
£2.1bn. This gap could have been higher if we had not undertaken the VFM
programme.
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Self help and efficiencies
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We're aiming to achieve net savings of 3.7% pa in our cost base between 2005-6 and
2012-13. Our existing VFM plans already mean cutting 3,800 posts and we're
committed to annual savings of 2.7% thereafter.
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And this follows a long
history of efficiency savings by the Â鶹Éç - by 2013 our average rate of
efficiency savings over the last 20 years will have been around 4% pa.
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Household growth had already been taken that into account in our bid.
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Commercial businesses
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Our plans included an increase in commercial dividends of £300m over the period. Even PKF thought that target challenging.
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Licence fee collection and evasion
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We've already reduced collection and evasion cost significantly and were
budgeting for a further £100m of savings over the period.
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Next steps
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The Executive are reviewing our priorities and will make
recommendations to the Trust. As with everything we do, we'll be focussing on
maximising public value.
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Â鶹Éç Press Office
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