It has been clear for months that the Davies panel on the financing
of the BBC was likely to recommend a new digital licence fee as the only
practical way of raising lots of extra money for the BBC.
Davies, the Goldman Sachs economist worth the odd pounds 100m or so, was
wedded to the device before he had even had a chance to discuss it with
his fellow panel members.
The commercial sector led by Granada is now planning a last-ditch
campaign to try to stop the proposal. The chance of success seems
slight. A strong chairman of a government inquiry usually gets his way
on fundamental desires; and anyway, there is no other obvious way of
raising significant new sums of money for the BBC over the next decade
or so. Like the move to colour, it is the most dynamic mechanism. The
amount goes up year after year as the digital television population
increases. It also has the merit of apparent fairness. Digital viewers
are getting more BBC services and this would stop the iniquity of the
majority with five channels subsidising the extra television choice of
more affluent viewers.
The disadvantages and risks posed by such a policy are, however, just as
great as the advantages. As Sir John Birt once observed to the Heritage
Select Committee, such a device would amount to a tax on innovation. The
comment at least proves that the BBC conspiracy to push through a
digital licence fee, while appearing publicly neutral on the issue, was
hatched relatively recently.
The two million families who will probably have digital by the time any
new licence fee could come into effect will not be amused, particularly
following the plethora of BBC ’ads’ saying there was no extra
The reaction of the rest of the population is difficult to predict. Such
a licence would be small compared with the more than pounds 300 in
benefits flowing from subsidised boxes. But not everyone makes such
rational calculations and the public demand for digital TV is not high.
How else can you explain the fact that Sky and ONdigital feel it
necessary to spend more than pounds 500m subsidising boxes.
Davies is concerned that as services proliferate the BBC proportion of
the whole will shrink. Therefore, the corporation must have more money
to keep up. Many of those who find themselves competing against the BBC
believe its proportion of the market, given its guaranteed pounds 2.2bn
a year funding, is already too large.
So what happens when the Davies’ panel report hits Chris Smith’s desk
with its recommended pounds 30 digital licence fee? There will be a deep
intake of breath and then everyone will go off for their summer
This will not be a decision to rush. A lot of very detailed
consideration and consultation will have to take place on such a
It could even be difficult to find the time to implement such a decision
in the current Parliament.
By then, there would be three million or even four million people to
piss off and that really would not be very good politics.
Raymond Snoddy is The Times’ media editor.