Osborne: BBC must be reined in

The BBC must not be allowed to crowd out independent media companies as it expands its services, George Osborne warned today.

The shadow chancellor cited the corporation’s plan to launch more local programmes as a one example, saying it could have a “ruinous” effect on local newspapers and radio.

Mr Osborne also pointed to the BBC’s online presence, saying its licence fee allowed it to hand out quality content free on the internet, making it “very difficult for other providers to move into the new video download market”.

“As new forms of media develop, I believe that the BBC must be very careful about not abusing its privileged position and huge resources to crowd out smaller players,” he said.

“I am concerned that in too many of its non-core activities, particularly on the internet, it is stifling the growth of innovative new companies that simply can’t compete with BBC budgets.”

He insisted: “This isn’t in the interests of the British public – who are denied new products and services, and ultimately, it isn’t in the interests of the BBC who need the competition.”

His comments come after the publication of a new BBC white paper earlier this year, which outlines a new ‘public value test’ to decide whether a proposed new service was really of benefit to the public, and to assess its impact on the wider market.

The new test, enforced by a BBC trust that would replace the existing governors structure, was designed to tackle criticism that it was expanding too much on the internet in particular.

However, speaking to a media conference this morning, Mr Osborne insisted a clearer framework was necessary to ensure the creative media industry could work effectively.

“As part of the framework government can provide for the creative industries to flourish, we should consider establishing a clear set of rules about what areas the BBC should focus on, and which it should be made to set aside for creative people,” he said.

“It is not clear to me that the new [BBC] charter does that. And the government needs to think very carefully about offering an inflation-busting increase in the license fee as it negotiates the next seven year settlement.

“The BBC must not become the bull in the china shop of new media.”