Sir Michael Lyons: BBC World Service needs more money, not less

The BBC chairman, Sir Michael Lyons, has said that the government should spend more rather than less on the World Service after it emerged that it is facing huge budget cuts.

He told MPs today the corporation is engaged in "robust" discussions with the government about a reduction in the service's £272m Foreign Office grant.

"We're talking about an audience of 180m in the last year [and] very modest expenditure for Britain to have its voice heard by that large an audience,"

Lyons said, adding that the World Service was an example of "soft power" and a "cost-effective" way of seeking to influence global opinion.

"Far from spending less, it's an area where you could really get that [influence] by spending more."

He refused to be drawn on the size of the cuts the Foreign Office is seeking but warned that they would lead to services being closed.

"These are some of the most cost-effective and leanly-run parts of the BBC... It would have an effect on services." He indicated the cuts would be substantial, however.

"The parameters of the conversation are the same as the rest of the FCO and the rest of government."

Most government departments have been asked to identify savings of at least 25% although spending on the NHS has been ring-fenced.

The cuts will be announced by the chancellor, George Osborne, in his public spending review next month.

Insiders at the World Service fear it could withdraw from some countries, including Burma, completely.

Staff have been told that frontline journalism in areas of the world where conflicts are continuing will be protected, however.

Its Russian services are also thought to be under possible threat.

The BBC withdrew from eight eastern European countries in the former Soviet bloc three years ago.

Lyons was making his annual appearance before MPs on the culture media and sport select committee along with director-general Mark Thompson.

He also gave the clearest indication yet that the corporation may choose not to take a 2% licence fee increase next year.

Lyons told MPs that a proposal to forego the planned increase in April next year was "in the melting pot".

He said the corporation was committed to "asking for no more than the BBC needs to do a good job".

Its current 10-year licence-fee settlement has five years left to run.

"The trust has a responsibility... to consider – even within the five year settlement – what the BBC needs from year to year," Lyons said.

Lyons added that no decision had been reached and said no discussions had taken place with the government on the matter.

Thompson denied that a meeting last week at Number 10 with Steve Hilton, a key member of David Cameron's inner circle, led to a commitment to change the tenor of the BBC's coverage of the forthcoming public spending cuts.

He said he "would be straight in front of a microphone" if any government threatened the BBC's editorial independence and reiterated that it was a routine meeting.

Lyons also revealed that discussions with the government about allowing the National Audit Office to scrutinise the BBC by giving it greater access to its finances were continuing.

He said the Trust would next week be examining work carried out over the summer by Thompson and his team on further efficiency saving

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