Grade wants independent panel to set licence fee

Michael Grade, the chairman of the BBC, has been accused of "using a sledgehammer to crack a nut" after suggesting the power to set the level of the licence fee should be taken away from the Government and handed to a new independent body.

Michael Grade, the chairman of the BBC, has been accused of "using a sledgehammer to crack a nut" after suggesting the power to set the level of the licence fee should be taken away from the Government and handed to a new independent body.

Mr Grade, who gave a robust defence of the licence fee as he unveiled the BBC's submission on the review of its Royal Charter, said that the panel should be similar to the Bank of England's Monetary Policy Committee, which sets interest rates.

He said the Government's decision to hand over control of setting interest rates to the committee had taken the politics out of the process, and suggested the same logic should be applied to the BBC.

"Imagine what would have happened if the licence fee decision had fallen in the middle of the Hutton inquiry? The present arrangement would have put the Secretary of State in an impossible position," Mr Grade said.

"While we are taking a root and branch look at the BBC, my personal view is we should have the debate about whether control over the level of the licence fee could be devolved to a specially convened body appointed by, but independent of government," he added.

"Depoliticising the licence fee settlements could be the final underpinning of the BBC's independence."

Chris Bryant, the Labour MP for the Rhondda and a member of the Commons Select Committee on Culture, Media and Sport said the suggestion was "using a sledgehammer to crack a nut".

"I don't think anybody has ever accused a Secretary of State of tiresome meddling in the licence fee. Secretaries of State, both Labour and Tory, have equally dealt fairly with the licence fee whatever the journalistic rows between the government and the BBC," Mr Bryant said.

Sharing the stage with the new director general Mark Thompson yesterday, Mr Grade launched a nine-point manifesto for the BBC in the run-up to the renewal of its charter in 2006 and beyond, promising the organisation would become more "open and transparent".

Innovations include a greater separation of the BBC's governors from management, the introduction of a public value test for new BBC services and plans to stop the corporation from being too London-centric.

Mr Thompson set out 2012 as a realistic date for "digital switchover" - two years later than the Government's current aim - and promised to build a "fully digital Britain".

The document - Building Public Value - also questions the very existence of the royal charter, asking whether there could be better ways of running the BBC, for example switching to mutualisation, trust status or establishing the BBC as a public interest company.

"The BBC has to change. The status quo is not an option," declared Mr Grade to a packed house at the Royal Institute of British Architects on London's Portland Place.

Leading figures from the media industry turned out to hear the BBC's vision for its future, including Sly Bailey, the chief executive of Trinity Mirror who is advising the Government's review of the BBC charter and Luke Johnson, the chairman of Channel 4 and until recently Mr Thompson's boss.

THE BOARD OF GOVERNORS

One of the criticisms raised by the Hutton inquiry was that the BBC's governors were too close to management. In an attempt to put more distance between them, the BBC is setting up a new Governance Unit, an independently staffed body offering expertise and support to the governors. Job adverts for the person who will be responsible for that body will appear at the weekend.

PUBLIC VALUE TESTS

All new services will be subject to a "public value test" by the board of governors, before they are launched. The four main criteria all BBC services must meet are audience reach, quality, impact and value for money.

A trial of the test has already been conducted on the BBC's online services, and some will shortly close as a result.

The governors will also be responsible for issuing a service licence to each part of the BBC setting out its remit and budget. Mr Grade warned that if targets are not met "top jobs will be on the line." The BBC has pledged to commission a major piece of independent research every few years to assess how well it is performing, involving up to 10,000 people.

MOVING OUT OF LONDON

"The BBC remains too London-centred," Mr Grade admitted. Over the next 10 years, the BBC aims to have 50 per cent of its public service employees based outside London. Manchester will become the broadcaster's main base outside the capital.

The BBC is also creating a new region in Milton Keynes, Britain's fastest growing town, and will introduce 10 minutes of local news in up to 60 new areas. Over the next decade the corporation has said it will invest £1bn outside London.

PROGRAMMING

Mr Grade said that "cynical, derivative exploitative programming" had no place in public service broadcasting. He said that audience ratings remained "part of the mix" for channels such as BBC1, they were only one measure of success.

Mr Thompson promised more drama and a more prominent place for culture on BBC1 and BBC2. The new director general said the BBC would never again miss its quota for commissioning programmes from the independent sector.

The submission also commits the BBC to restoring serious current affairs to television, particularly to BBC1.