Parliament: Advertising on BBC is ruled out

BROADCASTING

BBC FUNDING from the licence fee is "sustainable" until 2006 when the corporation's charter is open to review, Janet Anderson, the Broadcasting minister, told MPs yesterday.

Her remarks were seen as a signal that the Government has no plans for a radical shift towards raising revenue through advertising on the BBC.

Meanwhile, Peter Mandelson called on the Government to set a pounds 35 charge for BBC digital television, as ministers were was about to be handed the report by Gavyn Davies on future funding for the BBC.

Officials confirmed last night that the report is expected to be received by Chris Smith, Secretary of State for Culture, Media and Sport, by the end of the week. Senior sources dismissed reports that it will recommend a big increase in the licence fee after 2002 when the present arrangements run out.

The pounds 101 licence fee is to be raised by less than inflation over the next two years, and it is likely that it will be index-linked until 2006.

The Davies committee has considered additional resources being raised by a separate licence fee for digital television and it won backing last night from Mr Mandelson, the former secretary of state for trade and industry, who still holds sway at No 10.

"An extra pounds 35 a year on a digital licence is a drop in the ocean compared to the average pounds 30-a-month that digital television subscribers pay. High- quality BBC channels, which I admit have been absent so far because of lack of funds, are the one thing that will attract to digital many of the two-thirds of British viewers who have not yet been tempted by multi- channel television," Mr Mandelson said in a speech at the European Media Forum

He urged the Government to "be bold" in setting a date for switching off traditional analogue television signals.

Ms Anderson, answering questions in the Commons yesterday, scotched reports that the special concessions on the licence fee are to be scrapped.

Mr Davies, a Government adviser and leading economist, will advise Mr Smith in his report on ways that the BBC can raise money to supplement its pounds 2.2bn budget.

After criticism that the BBC was in danger of losing its direction as a public broadcasting service under Sir John Birt, the Government is keen to restore the balance under the corporation's director-general designate, Greg Dyke.

Peter Ainsworth, the Tory spokesman on broadcasting, called on the BBC to start justifying its budget and explain what the licence fee was for before dipping further into the pockets of television viewers.

The Tories have called for the BBC to sell off parts of its empire to fund its public services. A Tory report, published last week, called for advertising to fund programmes on BBC Choice and News 24, with private finance for BBC Worldwide.

The Davies report is due to be published in August to allow consultation.