Page last updated at 08:40 GMT, Thursday, 21 May 2009 09:40 UK

MPs reject freeze of licence fee

Andy Burnham
Culture secretary Andy Burnham opposes the freeze

MPs have rejected by two to one Conservative proposals to "freeze" the TV licence fee for a year.

In April the annual fee for a colour TV licence went up by £3 to £142.50 - a 2% rise, linked to inflation - under the terms of a six-year settlement.

The Tories said a freeze was needed next year if the BBC were to maintain public support in tough economic times.

Culture secretary Andy Burnham told the Commons: "Now is not the time to be ripping up the licence fee settlement."

'Never over-funded'

Torin Douglas
Torin Douglas, Media correspondent
After two days of fierce debate and scrutiny, we're still no clearer about the future of the licence fee. The outstanding question is whether part of the licence fee should be used for other purposes or broadcasters, so-called "top-slicing".

The BBC thought it had won the argument - but now it's back on the agenda in the run-up to publication of the Government's Digital Britain report.

The discussion centres on that part of the licence fee currently ring-fenced to support Digital Switchover. If some is left over after 2012, the Government has suggested it could help pay for the spread of broadband (which the BBC Trust is prepared to discuss).

Ofcom and ITV suggest it could be used to help subsidise local news on ITV (which the BBC won't accept). The BBC itself is proposing partnerships to help ITV, Channel 4 and local newspapers through their financial difficulties.

But it says "siphoning off" licence-payers' money and giving it to other causes and commercial players would be wrong.

The debate continues.

He added that the prospect of year-on-year funding for the BBC would "undermine" its work and "take away its creativity and stability".

Mr Burnham also said that while the BBC provided "good value" for licence fee payers, it should be "adequately but never over-funded".

Shadow culture secretary Jeremy Hunt said: "The BBC too needs to maintain its bond of trust with the British people.

"That means understanding that when times are tough, you don't just pocket the money allocated to you in happier times - you listen to people's concerns and you respond to the very changed economic circumstances of 2009."

The Conservative proposal for a one-year freeze in the licence fee was announced by party leader David Cameron in March.

He said the BBC and other public bodies needed to maintain public support in the current economic climate by doing more with less.

BBC Trust chairman Sir Michael Lyons said in a speech last night that the plan is "a recipe for curbing the BBC's editorial independence".

"The traditional system of multi-year funding agreements... underpins the BBC's editorial independence."

Sir Michael said the tradition of setting the licence fee for several years meant the BBC's journalists did not have to trim their reporting to the prevailing political wind.

During his speech, Sir Michael made reference to the usage of a potential surplus in cash allocated for the switchover to digital television in 2012.

'Wrong in principle'

Some of the licence fee has been set aside to help vulnerable groups with the change.

Sir Michael Lyons, chairman of the BBC Trust, discusses whether the BBC licence fee should be frozen

And it has been suggested that any leftover digital switchover money could be used to fund universal broadband as part of the government's Digital Britain plans.

But Sir Michael said research carried out by Ofcom suggested the public would like any surplus money to be paid back.

He said: "The licence fee should only be used to enable the BBC to deliver its public services.

"The digital switchover help scheme is consistent with that. The rollout and take-up of universal broadband may be consistent with that. We'll see.

"But taking licence fee payers' money and giving it to other causes and commercial players clearly isn't.

"It's wrong in principle, it undermines the BBC's accountability to licence fee payers, and it risks compromising the BBC's independence."

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