For 64 years the World Service has been the jewel in the crown of British broadcasting. But now its supporters fear we may be witnessing the slow death of one of our best-loved national institutions
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One evening late last month, a defiantly cheerful wake was held aboard the Queen Mary, a floating bar moored on the Thames close to Waterloo Bridge in London. Some 200 staff of the BBC World Service from nearby Bush House had gathered to mourn the Topical Tapes department, killed off in the name of corporate efficiency.

The closure meant the loss of 16 jobs - a consequence of pressure on the BBC to slim down - yet mourning was officially discouraged. Speeches were rigorously barred, so as not to provoke excessive sentiment and nostalgia. The guests had drunk the free-bar dry before 10pm. After that they paid for their own drinks, and a hard core was still there well after the scheduled finishing time of midnight.

Topical Tapes was the kind of thing Bush House used to do well. Talks and reports on matters of interest to an international audience were recorded and air-freighted - none of your new-fangled satellite communication - to more than 60 small radio stations in remote parts of the English- speaking world. A blend of the weighty and light-hearted, the tapes covered arts, books, science, current affairs and much else. The aim was a shelf- life of about three weeks, so they were not in truth tremendously topical, but that did not seem to matter greatly to enthusiastic listeners in such places as Belize, the Cook Islands and Papua New Guinea.

The reason for the division's closure was not that listeners had lost interest: they hadn't. The trouble was that many of the radio stations that subscribed to the tapes operated on a shoestring and couldn't afford to pay for much more than the cost of the freight. Consequently it ran at a loss that was hard to justify in terms of Britain's overseas broadcasting priorities.

The closure would not in itself be of huge significance if it were not a symbol of something more fundamental. Like most publicly funded institutions, the World Service is having to endure retrenchment as the Government applies a continuing squeeze on its resources. This pressure comes at a time of increased competition for the airwaves, when there is less certainty than there was about the role of publicly financed overseas broadcasting. Many of the World Service's most fervent supporters now fear we are reaching a point when, weakened by constant paring, it is no longer worth saving. If they are right, we may be witnessing a case study in the subversion by stealth of a much-loved national institution - one now regarded as a luxury that 21st-century Britain is unable to afford.

Since it's launch as the Empire Service in 1932, the World Service has acquired a reputation for embodying some of the best qualities of British public life - moderation, reasoned discourse and moral courage on the one hand, solid middlebrow entertainment and education on the other. With the possible exception of ballroom dancing, there is little in the late- 20th-century world that the British, by general agreement, do better than anybody else. Perhaps because of our decline as a first-rank power, our outlook on the world is increasingly valued; rather as our cricket umpires gain international respect in adverse proportion to our diminishing knack for the game itself. At pounds 160m a year - about 7 per cent of the BBC's total budget - the World Service is not a profligate investment.

It broadcasts in 42 languages to more than 140 million listeners, who tune in for a variety of reasons. In countries where the media are strictly controlled, it may be the only way of finding out what is really going on in your own backyard. For English-speaking travellers it is a functional news resource: a survey of senior British executives commissioned by the BBC last autumn revealed strong support for its adequate funding. And there is a devoted corps of listeners in Britain (where you can find it on 648MW and on Radio 4 frequencies after 1am) who appreciate its rigorous refusal to follow the tabloid news agenda that, in their view, now infects all British radio, even Radio 4.

For the first six years of its life, the Empire Service broadcast only in English. In 1938, the BBC began to reach beyond the Empire and to broadcast first in Arabic and then in French, German and Italian. During the Second World War it was operating a round-the-clock service in 22 languages. Although moderation and impartiality were qualities not much in demand in wartime, the BBC insisted that its factual information was accurate, if not always comprehensive. The service was of particular value to resistance fighters in occupied countries.

Came the Cold War, and international broadcasting developed into an important weapon of diplomacy. Britain, though, decided not to follow the lead of the Americans, the Russians, the French, the South Africans and a host of smaller overseas broadcasters, all of whom made political propaganda their priority. Bush House was allowed to maintain and embellish the BBC tradition of accuracy and impartial analysis - to the extent that in the 1956 Suez crisis it earned the Government's displeasure for allowing the world to know that the Anglo-French invasion had provoked serious opposition in Britain.

For most of the World Service's history, the peculiar structure of its control has been a source of strength. Unlike the rest of the BBC, it is not funded through the licence fee but by an annual grant from the Foreign Office. But because it still comes under the umbrella of the BBC, jealous of its independence, it has managed to keep its distance from its Whitehall paymasters. John Tusa, the former Newsnight presenter who was managing director of the World Service from 1986 to 1992, describes it as "a semi-independent part of the BBC federation".

The Foreign Office, at least in its public comments, seems cheerful enough about underwriting a broadcaster that does not always endorse its policy aims in detail. "The fact that the World Service provides objective reporting in international affairs is often in harmony with the Foreign Office's own objectives of free trade, freedom of speech, democracy and human rights," says a spokesman. "It gives us a good name."

The value of that good name in terms of hard cash has never been easy to quantify, however, and the World Service budget has always appeared vulnerable when Treasury officials have pressed the Foreign Office to make cutbacks. Abolishing the news in Uzbek may be thought a less painful option than closing the consulate in Marseilles. The World Service's present funding squeeze is in part a result of that thought-process, but it has been made worse by simultaneous pressures from inside the BBC itself. This is the new factor that makes this crisis worse than the others that Bush House has endured over the years.

In 1986, the year Tusa took over as MD of the World Service, the domestic BBC was absorbing the first blows in the sustained assault on its organisation and values by the Thatcher administration. It was the year of the appointment of a new chairman, Marmaduke Hussey, who quickly fired the director general, Alasdair Milne, and brought John Birt in from LWT to be deputy director general at first, then director general in 1993.

Under Milne's successor, the accountant Michael Checkland, the process began of exposing the BBC's procedures to the strong gale of market forces - a process now known, perhaps unfairly, as Birtism. Gone were the expansive days when the creative men and women on the programme side decided on the type and scale of programmes they wanted to make, leaving the money managers to worry about the bills afterwards. Now detailed budgets have to be prepared and justified in advance and every last inter-departmental transaction must be accounted for, with tenders sought from outside suppliers for facilities previously provided by the corporation's own staff.

Under Tusa's protective rule, Bush House was able to quarantine itself for a while from the epidemic of over-zealous bureaucracy and exhaustive managerial accountability raging through Broadcasting House and TV Centre. It was only when he left in 1992, to be replaced temporarily as managing director by the BBC's deputy director general Bob Phillis, that the virus spread east to the Aldwych.

"What happened after I left was that the centre said the World Service would no longer be allowed to run semi-independently," says Tusa, who is now in charge of the Barbican Arts Centre. "All practices that applied to the rest of the BBC would, whether sensible or not, apply as a matter of dogma to the World Service."

Tusa makes the point that under his leadership the service had already introduced efficiency measures of its own, which had been commended by the National Audit office. "If anybody tells you that the World Service had somehow let efficiency pass it by until the Birtian revolution, that's nonsense. It was as a matter of managerial choice that the shackles of management rigidity were cast over the World Service. Successful managerial change has to be useful to the people concerned and it has to be driven by them. This was all imposed."

One of the most damaging results of the drive for efficiency - or at least for the appearance of efficiency - was the ending of casual associations with important part-time contributors who had done much to create the character of the World Service. Geoffrey Stern is one of them. A lecturer in international relations at the London School of Economics, he had since 1963 combined this role with regular contributions to World Service current- affairs programmes as a popular presenter and commentator.

"In 1994 they told me that under the new arrangements I had to do it on a more regular basis," he says. "As an academic I couldn't do this, so they dropped me. A lot of people left at that time for the same reason. There was also a mass sacking of established newsreaders." Horror stories abound at the brutality of the cull: one regular freelance presenter was informed minutes before going on air that this would be his final programme; another claims he was told baldly that he was too boring for the job.

"Given the changing mood of the times, I suppose the service could hardly stay as a haven of privileges and values that had been destroyed elsewhere," says Stern. "You used to have time to think. Now they want people who can churn things out, and the joins show in the editing."

The veteran foreign correspondent Tim Llewellyn had his first BBC job with the World Service in 1971 and has contributed to it, as well as to the domestic services, ever since. He used to relish the collegiate atmosphere and journalistic intelligence of Bush House. Now he says: "It's been Birtised, there's no doubt about that. I talk to people there every day who are absolutely crushed by the idiocies of Birtism. The old esprit de corps is flagging."

It was one of those "idiocies" that signalled the end for Topical Tapes. When Bob Phillis took over as managing director he insisted on a change in the method of charging the World Service for the use of facilities provided by the domestic BBC. Previously the World Service had paid only the actual extra cost of providing the facilities it used. Under the new rule the overheads had to be shared as well and a market-rate fee imposed. The result was that pounds 3m of the Foreign Office grant was channelled to the domestic BBC to supplement licence fee income. This created the budget hole into which Topical Tapes was hurled to its death.

Its staff had plenty of notice of the closure. Sam Younger, who took over from Phillis as MD at the end of 1994, announced it last July along with the curtailing of some foreign- language broadcasts to France, Germany and Portugal. But the announcement came as a surprise because only four months earlier Topical Tapes had been revamped and given a smart new name, Radio International. (A surviving part of Radio International, which sells domestic radio programmes overseas, was shifted from the World Service to the BBC's commercial arm, BBC Worldwide, where, along with the fledgling World Service Television, it will be expected to make a profit.)

Younger thought that by shedding Radio International he could protect the foreign- language broadcasts that are the raison d'etre of Bush House. He was wrong, though. Before long he discovered to his dismay that he was going to have to squeeze expenditure even tighter than he had expected. After last November's Budget the Foreign Office announced that it was going to cut his grant for 1996-97, even though there was still a year to run of a three-year funding agreement that Younger had innocently supposed to be set in stone.

"We were surprised," he now admits. "The three-year funding period has always been sacrosanct, but on this occasion pounds 5.4m was knocked out of our capital budget for 1996-97. We didn't challenge it, although clearly we expressed disappointment."

At the same time, the Foreign Office delivered a second, even heavier blow to Bush House. Its projected grant for 1997-98 is to be cut by a further pounds 8.7m, taking it down to pounds 163m - or pounds 14m less than the figure originally agreed for 1996-97. This is being challenged by the BBC and talks are under way with the Foreign Office to see if some of the cuts can be restored. Meanwhile Younger has announced an "efficiency review" - a euphemism for job losses - aimed at reducing spending by a further pounds 13m.

Bravely, he tries to make the best of it: "Our view is that there is a strong case for maintaining the range of services we have now. We're also clear that we can't stand still: if we're going to thrive in the next century we need to invest in the things that need investment. We hope to get from the Foreign Office a revision of the planning figures that acknowledges that we are doing everything we can in terms of efficiencies."

One device being examined to help make up the pounds 5.4m cut in this year's capital budget is a private funding initiative. This is a favourite Whitehall wheeze by which Government facilities, such as prisons, are built using private money. Discussions are going on to see whether such an arrangement can be made for the proposed pounds 30m relay station in Oman - part of the long-range programme to improve the audibility of the service that began in the Eighties.

Younger is clearly sceptical. He recognises that there is no such thing as a free relay station and that the World Service would have to rent it from the financiers, putting extra strain on its diminishing budget. "The issue is whether the economics add up," he says diplomatically. "What's the trade-off between putting pounds 30m up front over five years and the return on capital that the private operator would require over the 20-year life of the installation?"

Tusa, fearful that a continued funding squeeze could prove terminal, is more blunt. "The Foreign Office learns absolutely nothing," he asserts. "What other country has this kind of broadcasting organisation? If we stopped it we'd surrender all influence in international communications to the big multi-nationals, most of them American or Australian. What sort of a national strategy is that?

"I hope the Government will realise its mistake and that it doesn't throw away the World Service in a moment of inattention. It's a huge achievement, a wonderful possession. Sooner rather than later I think people will come to understand it again, and I hope that not too much damage is done in the meantime."