Tuesday, 19 October 2010


The cuts to the BBC caught me a bit off guard I must say, although everyone must pay the price of recession.

The BBC will have to have its license fee frozen at £145.50 for the next six years. This means that the BBC can't increase its 'prices' inline with inflation and other external factors. So in real terms the BBC is getting a pay cut.

The opportunity cost from the view of the Government is that the BBC now won't have to pay for licenses of over 75s (which was the next best alternative for gone). This would have cost the BBC 25% in cuts (in real terms) opposed to this policy, which costs 16% in real terms but over six years.

Reason why the Government are doing this are difficult to pin point it could be for political gain: to be seen as the restorer of justice to a company with outrageous cost, after the scandal of Jonathan Ross and management pay perhaps to mask their own cuts and expesnive scandel.
Of course an even more cynical view be to say that is to return the favor to the right wing newspapers that supported the Tories in taking power. Maybe there is economic basis behind the discision; at least with all the cuts consumers will have some extra cash to spend (hopefully raising AD). Again this could be twisted; they Con-Dem Government is doing this to say they gave people money as well as cut: 'the balanced budget"

Either way the cuts are likely to reduce the quality of services and hit moral. Its good news for ITV their main rival that has been through rough times recently. 
Perhaps the BBC should add an extra B and become Budget Britain’s Broadcasting Corporation. 

Is the Government addressing an out of hand monopoly or damaging a public service?

Source: http://www.bbc.co.uk/news/entertainment-arts-11572171

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