BBC faces the calamitous loss of a fifth of its income in the Budget – surely channels and radio stations will soon be under threat

As George Osborne prepares to hand the BBC a £650 million bill for free TV licences for over-75s, Ben Dowell asks what radical decisions the Corporation could be forced into to avoid being pushed "down the cliff"

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In 2010 even the suggestion was enough to prompt the BBC’s Trustees and then BBC director general Mark Thompson to consider resigning en masse. Now, the move that Thompson said in his memoirs would have pushed the BBC “down the cliff” looks like a dead certainty.

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Chancellor George Osborne has indicated that his budget on Wednesday will include plans for the BBC to pick up the £650m bill for free licence fees for the over-75s – meaning that the Corporation will have to fork out nearly a fifth of its annual £3.7bn licence fee income on what some critics regard as a welfare expense.

The decree, briefed by Treasury officials to the Sunday Times at the weekend, is likely to be phased in by 2017. As the Treasury seeks to make a promised £12bn of budget savings, the logic from the Government perspective is clear.

For Osborne’s number crunchers, more than half a billion pounds taken from a BBC often portrayed as bloated, management-heavy and in need of a trim is clearly perceived as low-hanging fruit when you are in the business of making welfare cuts from groups like children and the disabled. But the move could prove disastrous for the Corporation.

Already, the BBC is being required to shoulder massive cuts. A licence fee freeze since 2010 has seen its income plummet in real terms, forcing the Corporation to embark on making accumulated savings of £1.5bn by 2016-17 in its Delivering Quality First initiative. The BBC has also been forced to close BBC3, the popular youth service which is now migrating online, despite BBC management’s avowal that the decision is not one it would have liked to have taken.

So what next for the BBC?

It can try to fight the latest Treasury plan, claiming that it may have to cut a channel or radio station in the face of such a drastic reduction in income and hoping the public reacts. But the popular response to the closure of BBC3 –and the bid by Jimmy Mulville and Jon Thoday to buy the channel – has been relatively muted.

In any case, Osborne has already pre-empted this, telling the Andrew Marr show on Sunday that the new financial burden would not automatically result in the closure of services.

He pointed to the 2010 licence fee deal, where the BBC was asked to take on £500m of extra responsibilities, including the World Service and broadband rollout.

“I was told at the time by people ‘they’re going to shut down BBC2, they’re going to close Radio 4’. They always seem to pick the juiciest fruit on the tree,” Osborne said.

He also cited the BBC’s growth of its online services as something that is ripe for cutting.

“If you’ve got a website that’s got features and cooking recipes – effectively the BBC website becomes the national newspaper as well as the national broadcaster. There are those sorts of issues we need to look at very carefully.

“You wouldn’t want the BBC to completely crowd out national newspapers. If you look at the BBC website it is a good product but it is becoming a bit more imperial in its ambitions.” 

That may be the perception, but according to the actual figures the BBC’s online spend in 2013/14 was £174.4m –admittedly a lot more than the £117.8 million it has promised to reduce it to by 2017, but still not huge in the scheme of things.

But even if the BBC closed down its online operation entirely there is still the small matter of another half-a-billion pounds to save – around half the entire content budget of its flagship channel BBC1 (£1.02bn in 2013) and more than the total programming spend of BBC2 (£400m in 2013).

Somewhere, the BBC will have to make radical cuts.

The 1,000 proposed job losses from middle management announced recently are designed to balance the estimated £150m shortfall from those who avoid the licence fee by claiming they only watch online via iPlayer (Osborne’s offer to allow the BBC to charge for the use of iPlayer could recoup some of that but, given the practicalities involved, probably not all of it, and certainly not enough). Those savings are not intended to offset any losses from the over-75s move.

And anyway, the Corporation cannot keep salami slicing its existing programming infrastructure for much longer. The question now is, which channels or radio stations should we be prepared to lose? Something big will have to go. Either that or it really will be cliff time.

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