Government's £650m raid on BBC finances is a PR exercise which has played the public for fools

The last time Press Gazette did a count the BBC listed more than 200 communications contacts, but none were prepared to answer a simple question on Monday – what was the net impact of the Government raid on the BBC licence fee?

The BBC knew the answer of course (I assume the BBC would not agree a funding deal without doing at least a back of the a fag packet calculation on what the impact of that deal would be). But they weren’t telling me because it did not suit the narrative they were seeking to control. The Department of Culture Media and Sport was similarly tight-lipped about the real impact of the deal.

It suited the Government to look like it was taking an axe to the BBC finances and it suited the BBC to play the victim.

Chancellor George Osborne (pictured above) announced the move on Sunday morning's Andrew Marr Show on BBC One. The BBC has to "make savings and contribute to what we need to do as a country to get our house in order" he said, so would have to bear the £650m cost of providing free TV licences for the over-75s.

We (the media) swallowed it hook, line and sinker. The headlines on Monday reflected delight from BBC bashers and outrage from its defenders.

Only once this had sunk in was the BBC prepared to reveal the truth.

Yesterday Lord Hall, the BBC director general, told Radio 4 Today: “The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC.”

So far from being a raid on the BBC’s finances, the whole thing has been an elaborate PR exercise.

Free TV licences for the over-75s costs an estimated £650m a year, we are told.

But the Government is allowing the BBC to begin raising the licence fee with inflation and has promised to close the loophole whereby those who only watch the BBC iPlayer on their computers don’t need a TV licence. And the £150m of licence fee cash currently ring-fenced to subsidise broadband roll out will reduce to nothing over time.

Today the BBC press office was finally prepared to admit that the deal is cash neutral over time.

So the Government has been allowed to disguise a tax rise (future increases in the licence fee and an expansion in those who pay it) as an austerity cut on the BBC.

And the BBC has been able to hang on to its £3.7bn a year public subsidy while every other state-funded body (outside the NHS and schools) faces massive austerity cuts.

It’s all been an unedifying exercise in smoke and mirrors politics which has played the public for fools.

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