Letter: Cash-strapped BBC

Sir: In your enthusiasm to say how well we'd done in building up our cash balance ("BBC cash pile may stop rise in licence", 18 June), you overlooked a couple of points.

Our cash balance (pounds 235m) and the savings we managed to chalk up last year (pounds 105m) are already earmarked for funding our core services and preparing for digital take-up. Although we are determined to get a further 20 per cent out of the system in savings over the next five years, these reserves will quickly be eliminated.

The BBC is as committed as ever to its public service purpose: that of delivering to licence payers the best possible range of programmes and services. The challenge is that we face below-inflation licence fee settlements which start in the next two years (of RPI minus 1 per cent and 2.5 per cent respectively).

The impact of these is serious for public service broadcasting at a time when the industry is expecting strong growth in consumer interest in digital.

JOHN SMITH

BBC Director of Finance

London W1