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Culture secretary Tessa Jowell has unveiled her green paper on the review of the BBC's charter.
The minister has agreed to keep the licence fee for another ten years but has decided to axe the broadcaster's board of governors in favour of two new management bodies.
The changes - to be formalised in a white paper later this year - will be brought in when the next royal charter begins on January 1, 2007.
The controversial licence fee, which any household with an in-use TV set is obliged to pay, brings in around £2.5 billion a year. "Although not perfect, we believe it remains the fairest way to fund the BBC," said Jowell, adding that alternative funding models would be explored in more depth during the next charter period.
The board of governors, who have a dual role as regulator and cheerleader of the BBC, have long been criticised for their conflict of interest. "There is widespread consensus that the current model of Governance is unsustainable," continued Jowell. "The Governors' role... does not sit easily in a public organisation of the size and complexity as the BBC. It lacks clarity and accountability."
Instead a new 'BBC Trust' will be established to "speak up" for the licence payer, with an 'Executive Board' carrying out the day-to-day management of the BBC. The board, headed up by Director-General Mark Thompson, would be held to account by the Trust.
"The functions of the two bodies will be clearly defined, enabling the Trust to judge the management's performance clearly and authoritatively," Jowell explained. "The Trust will have the high-level powers of approval over BBC budgets and strategy. It will have the tools to hold the BBC to account, issuing new service licences for each BBC service and applying a public value test to proposals for new services."
BBC chairman Michael Grade would be the first chairman of the Trust. "It is regrettable that our own reforms have not had time to prove themselves," he said today. "But it is important that the issue has now been settled ahead of the new Charter, providing the BBC with the necessary certainty and stability.
"For the first time in the BBC's history, there is now a clear distinction and appropriate separation between governance and management, and a greater emphasis on objective, evidence-based scrutiny of BBC activities."
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