BBC under fire over digital `tax'

A NEW digital television licence fee of pounds 1.99 a month, nearly pounds 24 a year, was recommended yesterday by a government-appointed panel of experts, provoking the biggest internal storm in British broadcasting for decades.

"The digital licence threatens the whole ecology of broadcasting in this country," Clive Jones, the chief executive of Carlton Television said. "There has always been a consensus around the main BBC licence fee, with commercial companies supporting it. That consensus is now under threat."

Last night the gloves were off in the fight to resist the proposal, made by a committee headed by the multimillionaire economist Gavyn Davies.

Other television executives agreed that hostility to the digital fee was running so high the television industry was prepared to attack openly the entire funding base of the BBC.

Important members of an alliance of television companies, including BSkyB, ITV, Cable and Wireless, Granada, Carlton, ONdigital, Pace, NTL, Telewest and United Broadcasting and Entertainment are preparing for a massive political campaign to prevent the measure being adopted by the Culture Secretary, Chris Smith.

Senior directors of the companies will meet today to discuss their strategy. They have employed a former Labour Party press officer, Mike Craven, until recently an adviser to John Prescott, to co-ordinate their lobbying campaign.

The new licence fee will come into operation in 2000, and will be dropped to 99p a month at the end of five years, as digital take-up expands. That will average at pounds 1.57 a month over seven years.

The committee also recommends BBC spending be scrutinised by the Government spending watchdog, the National Audit Office, and says the corporation should privatise its resources division, and 49 per cent of its commercial arm, BBC Worldwide.

The BBC will, under the proposals, achieve its aim of having the main licence fee linked to the Retail Price Index after 2002 - but overall the committee's recommendations fall far short of BBC demands.

The corporation had wanted pounds 650m a year extra to finance digital channels, but the committee delivered only between pounds 150m and pounds 200m.

The commercial television companies' proposed plans include contacting the 1.5 million people who have already subscribed to digital television, asking them to write to Chris Smith. The opposition group wants to address the Parliamentary select committee hearings on the future funding of the BBC, which are planned for November.

The chief executives of the companies will also be seeking meetings with Mr Smith and with Stephen Byers, the Trade and Industry Secretary.

"Tony Blair and Chris Smith have talked warmly about the digital future," the commercial companies said in a statement yesterday.

"They have encouraged us to invest in digital. Yet this poll tax will set back this new technology by years. Many existing customers could hand back their set-top boxes rather than pay this new tax to pay for channels they may not want to watch."

The Davies Committee struck back later. The fee had none of the traditional qualities of a poll tax, it pointed out. "This piece of spin-doctoring is entirely without foundation," Gavyn Davies said.

"The temporary digital supplement will only ever be paid by those who decide to go digital - voluntarily to migrate to digital television."