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 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.