BBC digital licence fee debate divides cabinet

A cabinet rift has developed over the proposal for a digital licence fee to enable the BBC to expand into digital television.

A cabinet rift has developed over the proposal for a digital

licence fee to enable the BBC to expand into digital television.

Some senior cabinet ministers are backing the proposals while others are

concerned that a fee would damage the growth of digital television in

the UK.

The division has delayed the Government’s response to the report by a

panel, chaired by the economist, Gayvn Davies, which recommended the

digital levy last year.

An announcement had been due this month, but it has been put off until

next month to allow ministers more time to resolve their


It is understood that Stephen Byers, the trade and industry secretary,

has backed warnings by commercial broadcasters that the Davies plan

would harm digital TV take-up.

Chancellor Gordon Brown is worried that the proposed levy, dubbed a

’digital poll tax’ by its critics, would be politically unpopular if it

was set too high.

But Prime Minister Tony Blair and Chris Smith, the culture secretary,

are said to be more sympathetic to the idea of a digital licence


So is Peter Mandelson, the Northern Ireland secretary, who took a

different line to Byers when he was at the Department of Trade and


Government sources said on Wednesday that ministers had reached an

agreement in principle that the BBC would need extra resources and were

now discussing the scale and method of ensuring it could expand into


Three options are still under discussion in Whitehall: a digital licence

fee as proposed by Davies for people who opt for digital; an increase in

the BBC licence fee for all licence payers; and a mixed system under

which there would be a small rise in the licence fee and a smaller

digital levy than that recommended by Davies.

Ministers have rejected the idea of a pounds 12-a-year digital levy on

the grounds that this would be expensive to collect in relation to the

amount of revenue that would be raised.

If the cabinet opts for a digital levy, it is expected to set it at a

level below the pounds 24-a-year figure proposed by Davies - possibly at

around pounds 19. But some ministers believe it is more likely that the

cabinet will reach a compromise by backing a mixed system.

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