BBC trims market system: Birt cuts business units by half to reduce 'bureaucratic nightmare' for producers

THE BBC is making radical changes to its controversial 'producer choice' free market system of programme making, which staff have been complaining about bitterly since its introduction last April.

John Birt, the director-general, told reporters yesterday that the original 480 business units into which the corporation had been carved up when the system began will be cut by more than half, to less than 200, by next April.

Under the system, producers are obliged to pay for resources formerly provided free by the corporation, and they can buy them from outside suppliers if they can get them cheaper. Mr Birt, who has been the driving force behind the scheme, insisted yesterday that it had not failed but a review of the first three months had uncovered weaknesses.

'The principles are robust,' he said, 'but there is a continuing need to refine and develop them.'

Some producers have described the system as a bureaucratic nightmare. Among their complaints was that even the smallest transactions had to be paid for separately. With larger, more streamlined units this will change.

'We are moving to a much more coherent trading process,' Mr Birt said. 'There will be longer-term relationships and fewer sources of supply. After all, you don't pay your American Express bill every time you eat in a restaurant.'

Many of the business units have traded at a loss in the first six months of producer choice, to keep their prices competitive with outside suppliers.

Mr Birt said unprofitable units would not be closed down but would be merged and made more efficient.

Despite these difficulties, the system and other efficiency measures had saved the BBC more than pounds 100m in 1993-94, Mr Birt said. Without them, the BBC might not have been able to pay for the series of interviews with Baroness Thatcher, for new news bureaux in Rome, Rio and Cairo, for new comedy, children's and arts programmes and for 170 new jobs for journalists, particularly in the regions.

In 1994-95 an extra pounds 50m will be spent on programmes and an additional pounds 25m on top of that in 1995-96. However, the rationalisation process has already meant the loss of 4,600 staff jobs and the closure of 24 studios. More cuts are likely, although about 100 people on short-term contracts are to be put on the permanent staff after discussions with the Inland Revenue about their tax status.

Mr Birt was briefing reporters in the wake of Thursday's announcement that the licence fee would go up by pounds 1.50 to pounds 84.50 next year and be adjusted in line with inflation until the BBC gets its new charter in 1996. With him was Rodney Baker-Bates, finance director, who revealed that because some people have difficulty in paying the fee annually or quarterly, a system is being tested in Stoke-on-Trent that will allow weekly payments at Post Offices using a 'smart card'.

Robert Phillis, deputy director- general, said that as part of its search for ways of raising more money, the BBC was considering launching specialised satellite channels using material from its archives. But he confirmed that the plan to run a domestic all-news channel jointly with Rupert Murdoch's Sky News, originally pencilled in for next year, had been abandoned.

The BBC's World Service News is currently broadcast from Mr Murdoch's Star satellite service in Hong Kong although there are suggestions that Mr Murdoch may want to end the arrangement.