This seems like an astronomical sum, particularly when so many other things - from air travel to clothes to television sets and computers - have actually gone down in price when considered as a percentage of our disposable income. So why does the BBC have to beg its political masters for more cash? Why should something - programming - hundreds of channels of which are available for nothing via Freeview and Freesat cost us more?
The main reason is because when Chris Smith was the culture secretary he and John Birt formed the view that the future for British viewers and listeners lay with digital technology, and the date for switching off analogue broadcasting has now been set at 2012. The Government wants the BBC to fund the switchover, market it, promote it, and go around making sure that everyone can get it. That process, with all the new transmitters and technology is going to cost a packet - and the BBC can't be sure of just how much of the licence fee it will consume.
At the same time, the BBC has decided to invest in the development of high-definition television, and has been ordered by the Government in last March's Green Paper to develop specific programming for all the different communities in Britain, and to move more of its production output outside London.
I personally don't think that Grade and Thompson helped their case this week by quoting a Mori poll which demonstrates that 81 per cent of the audience thinks the licence fee is good value for money, and 42 per cent would pay twice as much for the licence fee. That poll was of exactly 1,640 people, hardly an in-depth sample, and quite honestly I could walk up and down Oxford Street and probably find a sample of 1,300 people who think I should be running Britain.
The BBC needs to beef up its case more robustly. Some media analysts think Tessa Jowell might support the BBC's pleas, but that the penny-pinchers in the Treasury are completely against raising the licence fee over the rate of inflation. And so the BBC, not for the first time, finds itself in the embarrassing position of trying to please too many masters.
Mark Thompson has already announced sweeping job cuts and economies, which have enraged his staff, particularly at a time when many executives were taking bonuses of up to 30 per cent of their salaries. To his credit, Mr Thompson did not take a bonus this year, but his deputy, the over-rewarded Mark Byford, trousered a whopping £92,000 on top of his "basic" pay of £351,000 and £14,000 benefits. In future, bonuses are to be cut to 10 per cent, but many still feel that a public service broadcaster should not be trying to compete with what commercial rivals pay, especially when 3,800 other people in the organisation are getting their P45s.
Mr Thompson has also announced several departments, from sport to children's programming, are to be moved to Manchester. I laughed at this, because when I was a BBC executive 10 years ago, my department was relocated to Manchester in a similar PR move. Sadly, the talent wouldn't make the trip, and soon all the major entertainment shows were again made in London. The studios in Manchester have never been economic, and staff are going to be offered huge incentives to sell their houses and relocate northwards. It's not going to be easy, particularly with the Olympics happening in London in 2012. Moving programming to the regions is a cosmetic exercise, offering nothing in terms of local employment and little in the way of financial benefits.
The Government seems to want the BBC to fund the switch to digital and increase its output, all out of the same pot of money, funded by the public, who already pay tax. The BBC is in a difficult position, but frankly there are some things it should stop doing. It could abandon high-definition television - surely an anachronism when most of the public will soon be able to watch television on their mobile phones and can already download both television and radio programming onto their laptops. High-definition television is something manufacturers are thrilled about, but not necessarily the public.
The second thing the BBC needs to do is to decide what programme areas it is going to give up on. It can't be expected to fill every digital opportunity going. When I am told that soon I will be able to download a channel of baroque music, I am bemused, but not so thrilled that I would pay £180 for the opportunity. The BBC already provides more than enough local programming - how many versions of the news at 6pm can one crowded island need? The BBC makes excellent programmes, and its website is outstanding. The trouble is that no one at the BBC can ever utter those magic words: "We're not doing it". And so, the BBC is going to provide a digital channel specifically for schools out of the licence fee.
There are some audiences, like the 18-25 year-olds, which are over-catered for elsewhere, and yet the BBC still persists with a creaky Tops of the Pops and Radio 1.
To meet quotas, the Corporation has gone so far down the road of regional accents that it's almost impossible to hear anyone with a London accent on the national channels. All very laudable. Sooner or later, the BBC is going to have to shed not only staff but programming genres. Already, freelance camera and sound staff are upset that an internal memo has set a date by which in-house factual programme producers and directors will have to shoot their own material using cameras with built-in microphones. It might be OK for some output, but quality will suffer.
At the same time, the BBC has been ordered to increase the number of independent productions it commissions, as it has never been able to achieve the 25 per cent quota set by the Government. So, all sorts of conflicts are being played out within the Corporation.
The first thing that the new head of BBC announced he would be cutting was the red-clad irritating martial arts men who flap about between programmes. No one within TV Centre had realised before that the most alienating thing about BBC output is the relentless promotion of all the channels you can't get, don't want to get and know all about already.
It's our licence fee, our hard-earned cash, that's being squandered on over-lavish self-promotion. I wish the BBC well, but like most of Britain, it's still looking rather obese.Reuse content