From: Mark Thompson

Sent: 20 October 2010 14:26

Subject: BBC Licence Fee secured at current rate until 2017

This email is going to everyone

Dear All,

Today along with the BBC Trust, we've reached agreement with the Government over the level of the BBC's future funding. The licence fee will remain at its current level (£145.50) until the end of the Charter in the year 2016/17.

Back in August, I said in Edinburgh that the BBC should approach the next licence fee settlement in 'realistic' mood. This is a realistic settlement, one which will require the BBC to find stretching savings.

But it is also a settlement which offers the BBC a great deal of certainty over its funding. That is now fixed for more than six years. The settlement accepts that, for the rest of the Charter, the scale and scope of the BBC is a matter for the BBC Trust to decide, rather than the Government or anyone else. Instead of a long and uncertain licence fee setting process which some would have attempted to turn into a fundamental attack on the breadth of the BBC's services to the public, we have an agreement which will protect our editorial and operational independence all the way to the next Charter review.

There are some significant changes to what the BBC will fund:

· We will secure the future of the BBC World Service and BBC Monitoring, taking on the funding of the World Service from 2014/15 and BBC Monitoring from 2013/14, both until the end of the Charter

· We will provide £25m in 2013/14 and up to £5m p.a. from 2014/15 through a partnership fund to support local media initiatives, similar in scope to the partnership proposals explored with ITV last year

· We will help safeguard the future of Welsh language television broadcasting by extending the current partnership we have with the Welsh language channel S4C, along similar principles to the BBC Alba service in Scotland from 2013/14

These new commitments will add approximately £340m a year to our costs which will be found through making 4% efficiencies on our cost base each year from 2013/14 through to 2016/17, a total of 16%. This rate of savings is similar to that being applied to many other public bodies, including many who have received what are being described as favourable settlements in the Government's Comprehensive Spending Review. Nonetheless, it will require some difficult choices that will affect us all.

The idea of reaching an early multi-year settlement came from the BBC and negotiations on it began more than a week ago. Because of the work we had done for our ongoing strategy review, Putting Quality First, we were in a good position to carefully weigh the implications of the settlement and to inform the BBC Trust's final decision to accept it. Our next task is to develop detailed plans for the future based on this settlement.

This is a realistic deal in exceptional circumstances securing a strong independent BBC for the next 6 years. It means that efficiency and reform will continue to be key issues for us. But our focus remains providing distinctive, high quality programmes valued by the public. This deal will safeguard that until 2017.

All the best,

Mark Thompson

Director-General