Wednesday, October 20, 2010

Spending review: day of cuts begins with raid on BBC.

Today, we finally learn what Osborne is actually going to do. For months they have been hinting at it, telling us to brace ourselves, and now, finally, Osborne is going to reveal just what it is that he is proposing.

There are hints of what is to come:

Average budget reductions of 25% to most Whitehall departments are expected alongside welfare cuts, following months of negotiations with ministers.

Reports suggest nearly 500,000 public sector jobs will go by 2014-15.

On Tuesday 8% cuts to the defence budget were outlined separately in the strategic defence review.

Overall 42,000 jobs - in the Ministry of Defence and in the armed forces - are to go by 2015.

Half a million public sector jobs will go. How does it help avoid a double dip recession if one adds that many people to the dole? That's half a million less people with the power to buy things, half a million more people claiming unemployment benefit.

Osborne will claim today that what he is doing is "unavoidable", but that is simply tosh. He is doing what he is doing for ideological reasons; because the Tories have never favoured the notion of a large state and the financial crisis is giving him the perfect excuse to do what the Tories have always wanted to do: Slash state spending.

He has also made life extremely difficult for one of Rupert Murdoch's greatest enemies: the BBC.

Haggling over the deepest public spending cuts since the second world war has culminated in the BBC being forced to accept a 16% budget cut that will see its licence fee frozen for six years and the corporation taking over funding of the World Service from the Foreign Office.

The negotiations left the BBC stunned, with insiders claiming that a licence fee settlement that would normally take years to thrash out had been imposed in three days. The extra financial burdens are equivalent to the cost of running the BBC's five national radio stations.

What does freezing the BBC's licence fee for six years have to do with the current financial crisis? Why, nothing, of course. But this is too good an opportunity for Osborne to pass up. After all, the licence fee is paid by the public, it costs the government nothing, but freezing it for six years will greatly please the Murdoch's and make life much more difficult for Murdoch's greatest British rival.

I spoke this time last year about Cameron's plan to help Murdoch:
What it will mean is that the BBC's income will be capped, without the regional television companies seeing any government help, which will strengthen the market position of Britain's only satellite television company, Sky. "This was done for News International," a Tory insider said yesterday. "Murdoch wants Sky to go head to head with the BBC. He doesn't want the independent companies strengthened."
And now he starts to do Murdoch's dirty work for him, all the while pretending that what we are witnessing has something to do with the financial crisis; when, in fact, nothing could be further from the truth.

Cameron promised to hobble the BBC over a year ago and he has today made good on that promise, but it has bugger all to do with the financial crisis because the BBC's fee is paid directly by the public. Again, we see ideology masquerading as financial prudence.

David Cameron had pledged in the general election to protect the pensioners' free TV licence fee. The BBC fiercely resisted taking responsibility for the cost, saying it was an open-ended drain on BBC resources, but this morning succumbed to demands that it take on the cost of the BBC World Service and the Welsh language channel SC4 from 2015.

It also confirmed the BBC will take responsibility for the rollouts of broadband and digital radio, and accept a six-year freeze in the £145 licence fee until 2016-17. The total cost is a minimum of £340m by 2014-15.

What could possibly suit Murdoch more than "an open ended drain on BBC resources"? Cameron has frozen the BBC's income for six years and imposed a further cost of £340 million on their expense sheet. It's a very good day for Rupert Murdoch's empire. It's a very bad day for the BBC. Cameron today repays Murdoch for the support his party received from The Sun.

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