Yesterday the director general of the BBC Mark Thompson announced cuts of £400m to its budget. The cuts are part of an ongoing restructuring and redundancy programme. The bold move involves the freezing of executives pay, reducing fees for top stars and a future 1,200 job losses. These are drastic steps and one that will have the likes of Jonathan Ross facing the prospect of a pay cut. Ross who is thought to be on a whopping £6m a year will be a prime target in difficult financial times for the public service broadcaster. It’s been a big week for the BBC on another front as Conservative Party leader David Cameron announced that the Conservatives would freeze the licence fee for a year if they won the next general election. He left open the possibility of licence fee cuts under a Tory Government.
This might seems drastic to those broadcasters who assumed the licence fee would rise forever, but it is only fair that in the current climate the BBC take appropriate action. This comes after private sector broadcasters such as ITV recently took drastic action following the difficulties they are having in the recession. Such changes have involved cancelling programs all together as well as job losses. Not even grannies’ favourite Heartbeat survived the chop.
It is thought that the cuts at the BBC are being made partly to stop the breaking of its statutory borrowing limit. If this is the case it symbolises wider problems for publicly funded organisations as previous years of overspending and borrowing can come back to hurt in hard times. This surely will be mirrored in government at some stage over the next year as public sector cuts become inevitable. But years of excessive borrowing mean whoever wins the election will have to take similar tough decisions to that of the BBC. The stark economic reality is that with unprecedented borrowing, a record budget deficit and collapsing tax revenues result in tough decisions lying ahead.