BBC director-general Tim Davie warns staff of job cuts after freezing of licence fee

BBC director-general Tim Davie is understood to have warned staff about job cuts after revealing the licence fee freeze will result in a £285million gap in funding.

Tim Davie, 54, reportedly told employees that the licence fee settlement, which will see the fee frozen at £159 for two years, would require the BBC to rethink its operational structure. 

Culture Secretary Nadine Dorries confirmed the licence fee would be frozen for two years, until 2024, after which it will rise in line with inflation for the following four years.

In an internal video conference, Mr Davie told staff that the headcount at the organisation would ‘probably’ get ‘slightly smaller, according to The Times. 

He said: ‘I’m going to be blunt — we’d rather have slightly less people here, but properly funded and in the right place.’

Tim Davie (pictured) reportedly told employees the BBC licence fee settlement, which will see the fee frozen at £159 for two years, would require the BBC to rethink its operational structure

BBC insiders are believed to have interpreted his comments as a warning about redundancies, while staff are said to be ‘upset, frustrated and depressed’.

Mr Davie reportedly said that staff should expect further details in April, when the company’s new financial year begins and the licence fee settlement is introduced. 

It comes after Mr Davie refused to rule out scrapping BBC Four and warned ‘everything’s on the agenda’ after revealing the licence fee freeze will result in a £285million gap in funding for the corporation.

He said the income from the fee by 2027 will be about £4.2billion based on the corporation’s assumptions around inflation and admitted that the settlement ‘will affect our frontline output, there’s no doubt about that’.

Mr Davie was asked whether BBC Four would survive, and said: ‘I’m not going to make specific recommendations now, we are going to take stock, we’ve got the settlement – that gives us certainty now. 

‘We will make clean decisions, what we need to do is just go through this year. We’re being prudent in the way we plan our finances.’

Culture Secretary Nadine Dorries (pictured) confirmed the licence fee would be frozen for two years, until 2024, after which it will rise in line with inflation for the following four years 

While being interviewed on a prime-time 7.50am slot on BBC Radio 4’s Today by Nick Robinson, Mr Davie was pressed on the future of BBC Four, BBC Two and Radio Five Live, and said: ‘I think everything’s on the agenda.’

Asked whether ‘channels might go’, he said: ‘Absolutely’. 

Mr Davie added: ‘People, clearly and rightly, are worried about what the £285million cut in terms of two years flat brings, but also, as an organisation, we need to reshape ourselves for a digital age. The media market is moving extremely rapidly.’

Mr Davie said the corporation felt it was being ‘listened to’ but given the licence fee was set by politicians ‘you are in the political swirl’, and he expressed disappointment at the freeze, saying ‘we would have liked to have seen an inflation rise throughout the period’. 

He told the Today programme: ‘Our estimate is, and just to set this clearly for everyone, by the year 2027, the licence fee income will be about £4.2billion based on our assumptions around inflation. 

‘Guessing games around inflation are obviously difficult. We estimate our settlement gives a £285million gap, but at the end of the period.’

He said the BBC has made ‘very good progress in terms of cutting costs that don’t affect the licence fee payers’ as the organisation is ‘utterly focused in making sure people get value for the licence fee’.

Mr Davie told the Today programme: ‘There is no doubt about it, we go first to those cuts where we don’t affect our output. Having said that, I think there are two factors now on why we’re disappointed in this settlement.

‘The first is the BBC has been through years and decades of below-inflation demands on its funding and that has led to … we are lean. We’re lean in terms of our support staff, we’ve got a team that comes from a commercial background.

‘I think we can be assessed by any means and you will get to a point, which I think we are, not at the place where you can never make cuts, but this will affect our frontline output, there’s no doubt about that.’

Ms Dorries told MPs yesterday that the corporation needed to ‘address issues around impartiality and group think’ and also added it was ‘time to begin asking those really serious questions about the long-term funding model of the BBC’.

She said the time had come to ‘discuss and debate new ways of funding’ the BBC but did not detail the Government’s preferred alternative.

Warning of ‘inevitable’ cuts to programmes as a result of the licence fee freeze, Mr Davie said today: ‘Inevitably, if you don’t have £285million, you will get less services and less programmes. I still think the BBC can offer extraordinary value for the £13 a month. We can do that.’  

He said he thinks the organisation is in a ‘good place’ following an ‘excellent Christmas’ and that iPlayer is doing ‘brilliant business’ for the BBC in terms of numbers.

‘We’re not just going to put aspic round linear services or say we’re going to keep doing exactly the same thing. So we need to reshape the business,’ he added. 

Outlining whether he thinks the BBC should take on a subscription model, Mr Davie said the ‘principle of universality is absolutely the debate here’.

He added that the broadcaster could transform into a commercial operation, but if it did ‘it will not do what it does today’. 

‘We have built an incredible creative industry here in the UK, and we’ve got a universal broadcaster that is admired around the world,’ Mr Davie told Radio 4.

‘That is because it serves the British public and all the British public… the principle of universality is absolutely the debate here.’

He also said that if the publicly-funded broadcaster became even largely subscription-based rather than completely subscription-based it would have a huge change to its content.

In an internal video conference, Mr Davie told staff that the headcount at the organisation would ‘probably’ get ‘slightly smaller, according to The Times (file photo of BBC logo) 

Mr Davie said: ‘Once you’re trying to serve a subscription base and a commercial agenda – and, believe me, I’ve run commercial businesses – it is a completely different situation, because suddenly you are doing things that are there to make profit and make a return to a specific audience.’

Asked if he agrees with the debate that the licence fee is ‘over’, he said: ‘I think the debate is more centred around ‘Do we want a universal public service media organisation at the heart of our creative economy, which has served us incredibly well?’ And if we want that, we have to support a publicly-backed and not a fully commercialised BBC.’

Mr Davie also said bosses were in final discussions over the funding of the BBC when the Government announced the freeze.

He told Radio 4: ‘We were in the final knockings, to be fair, and I think we had a long process where we made the case for investment in the BBC.

‘So this wasn’t a shortened process, as such, by more than a few days, but, certainly, as the Speaker of the House observed, it was an interesting way of announcing it. But now we’re very clear on what the settlement is.’

He added that the broadcaster understands the pressures on household incomes as the Government’s reasoning for the freeze but that it is still disappointed with the news.

‘We are disappointed,’ he said. ‘We would have liked to have seen an inflation rise throughout the period. We’ve got four out of six years, and on we go. I would say having certainty of income for six years… is very material for us.’  

The licence fee plans will take effect from April 1, 2022, and later this year, the Government will ‘start to consider the overall governance and regulation of the BBC’, as part of the mid-term review of the BBC Charter, it was announced on Monday.

The Department for Digital, Culture, Media and Sport announced that it planned to cast its gaze to the future and given the changing broadcasting landscape due to streamers and video on demand, the Government will ‘separately consider whether the licence fee will remain a viable funding model for the BBC’. 

Chancellor Rishi Sunak (pictured) is said to have hit out at the speed of the announcement about the £159 annual levy, which was revealed in the Mail on Sunday

But Rishi Sunak and other senior ministers are leading a revolt over the licence fee plans, despite Boris Johnson throwing his weight behind the move.

The Chancellor is said to have hit out at the speed of the announcement about the £159 annual levy, which was revealed in the Mail on Sunday.

He is also said to be unhappy at Culture Secretary Nadine Dorries over a lack of consultation with ministers beforehand on a matter with financial implications, according to the FT.

Ms Dorries tweeted at the weekend that the fee settlement running to 2027 would be ‘the last’. 

But in an announcement in the Commons on Monday she had watered down her language to simply say the current settlement would be reviewed then.

The Sun today said that Work and Pensions Secretary Therese Coffey also voiced her unhappiness at Cabinet yesterday over the way the announcement –  which has pensions implications – was handled. 

It was part of a raft of right-wing populist measures announced under Operation Red Meat and rushed out to aid the PM as he faces widespread anger over Partygate.

Mr Johnson has enthusiastically thrown his weight behind axing the licence fee before the end of the decade.

The Sun reported he told Cabinet: ‘we can’t expect people to keep paying a licence fee just because they own a TV.’