The BBC could have been forced to run advertising on its stations under plans considered by the government in order to rein in the corporation’s “extravagant” spending.
In September 1979, just months after she came to power, Prime Minister Margaret Thatcher suggested that advertising could be introduced to some of the BBC’s radio programmes to help raise revenue for the organisation, which was operating at a substantial deficit.
She also proposed that a tax could be charged on every new radio sold, with the money boosting the BBC’s coffers, and an amendment so that people would not have to pay the licence fee if they only watched ITV.
Files released by the National Archives in Kew, west London, reveal there was considerable concern in the government about the BBC’s spending, which by November 1979 was running at a deficit of £50 million, increasing by £4 million a month.
In a memo to the prime minister about increasing the cost of a TV licence, Home Secretary Willie Whitelaw wrote: “I know that there have been suggestions that the BBC should be funded at least in part from advertising.
“This would be extremely controversial and would be bitterly criticised by the BBC Governors and others in the broadcasting world as well as by some people in our party.”
Mr Whitelaw suggested the financial effects on the BBC would “not be great”, and to allow advertising on Radio 1 would affect independent local radio.
He added: “To allow competitive advertising on BBC1 – to which I would be strongly opposed both on financial grounds and grounds of principle – would make nonsense of our plans for the Fourth Channel.”
But in a subsequent conversation between the two, Mrs Thatcher said she was “concerned about the extravagance of some of the BBC’s spending”, and that union opposition was blocking the introduction of “proper manning scales” and new electronic news-gathering technology.
A memo of their discussion revealed the prime minister proposed that “the possibility of introducing advertising on light music radio programmes should be considered. Secondly, since there was no longer a licence on radios, consideration might be given to charging a levy on all radio purchases, which would be payable to the BBC.”
Mrs Thatcher also proposed people could only watch ITV and not have to pay a licence fee, which would “put pressure on the BBC to be more competitive, and it would be consistent with the government’s aim of giving people as much free choice as possible.
“But it would of course be necessary for the TV manufacturers to produce a set which could only be tuned in to ITV stations.”
In further talks on increasing the TV licence fee, Mr Whitelaw told the prime minister he would warn the BBC’s chairman that if its costs spiralled, he would expect the BBC to reduce its spending or increase its revenue, and that the government “would not exclude the possibility of the BBC’s accepting advertising on Radio 1 or BBC local radio”.
The proposals did not garner universal backing. Bernard Ingham, Mrs Thatcher’s press secretary, wrote: “I doubt whether I am the stuffiest member of society, but I would consider it a retrograde step to introduce advertising to BBC radio or television.
“The BBC’s reputation worldwide rests in part on its integrity as an independent source of information financed without commercial sponsorship. To introduce commerciality could only, in my view, damage its reputation, particularly in the areas of news and current affairs.”
A memo to the Home Office in November 1979 suggested that Mrs Thatcher had turned against the idea, saying: “the Prime Minister ... has decided that – on reflection – it would be a mistake for the Home Secretary even to raise the possibility of the BBC’s accepting radio advertising at this stage”, but that “she would not like to rule this out for all time”.