Grade and Thompson could go in bust-up over BBC licence fee

The positions of Michael Grade, the chairman of the BBC, and Mark Thompson, the director-general, are under threat over government proposals to give some of the corporation's licence fee to other broadcasters.

The positions of Michael Grade, the chairman of the BBC, and Mark Thompson, the director-general, are under threat over government proposals to give some of the corporation's licence fee to other broadcasters.

The bosses, who have both been in their posts for less than a year, are resisting moves to reduce the BBC's power in what is threatening to be the biggest shake-up of the corporation in its 80-year history.

If they lose, it is thought that Mr Grade and Mr Thompson could decide their positions within the BBC are untenable and resign.

The Government had planned to publish a Green Paper tomorrow on the future of the BBC, whose five-year charter is up renewal at the end of 2006. But its publication has been delayed after the eleventh-hour intervention last week by the former BBC director-general Lord Birt, Tony Blair's "blue-skies thinker". Lord Birt has thrown his weight behind proposals by his fellow peer, Lord Burns, to share some of the BBC's licence fee with other broadcasters, including ITV and Channel 4, to subsidise their own public service obligations.

His intervention puts further pressure on Tessa Jowell, Secretary of State for Culture, Media and Sport, to include licence fee sharing as an option in the Green Paper.

Unions have now threatened to hold a ballot for industrial action if the Government backs this proposal.

In December, Mr Thompson announced cost-cutting plans that will lead to up to 6,000 job losses, out of a current workforce of 28,000. Unions say the BBC could not survive another round of cuts, which would have to follow any reduction in its licence-fee funding.

Gerry Morrissey, assistant general secretary of the broadcasting union Bectu, said: "If the Government proposed top slicing, we would tell Mark Thompson he would have to put the announced cuts off.

"If he refused, then we would seriously consider running a ballot for industrial action. We have no doubt it would be successful. There is a lot of anger."

The position of Mr Thompson within the BBC, already weakened by the savage cuts he has put forward, rests on securing a favourable charter settlement. If the proposals for its next charter outlined in the Green Paper suggest top slicing is likely, he could face a vote of no confidence.

Earlier this month, Jeremy Dear, president of the National Union of Journalists, which also represents BBC staff, met Ms Jowell to voice the NUJ's opposition to top slicing.

Mr Grade is also resisting proposals to set up a regulator to oversee the BBC, which would take away much of the power of his board of governors. This new public service regulator could also hold the purse strings to any new licence fund set up for other broadcasters.

Will Wyatt, the former chief executive of BBC Broadcast, writing in today's Independent on Sunday media section, warns that if Ms Jowell were to sanction such a move, it is likely that Mr Grade would resign.

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