Jolyon Kimble looks at the issues facing the BBC as it goes through the charter renewal process

Charter renewal is always a protracted and controversial affair, and the 2006 review looks set to be as rancorous as ever. After a bitter feud between Number 10 and the upper echelons of the BBC led to the departures of former director general Greg Dyke and ex-chairman of governors Gavyn Davies, commentators were predicting that the government would want their pound of flesh and make the corporation accept real curbs on its independence at renewal time.

The hangover from the Hutton inquiry has certainly added an extra level of complexity to the wrangling, but there are now fewer fears at the BBC and around Westminster that the government will let spite influence their decision. Culture secretary Tessa Jowell has said there is "absolutely no question" of the decision to renew the charter hinging on the Iraq dossier row.

However, she has indicated that the fallout will inform some of the government’s thinking. "I said last summer when the Hutton inquiry was established that charter review and the Hutton inquiry were two separate processes and they are, except that of course it's relevant and appropriate that Lord Hutton's conclusions - his specific conclusions in relation to the BBC - are incorporated in that process," she commented.

Since the takeover at the top of the BBC by chairman Michael Grade and director general Mark Thompson, relations seem to have thawed and the government doesn’t seem to be bearing a grudge. The idea of hiving off part of the licence fee and spreading it around other channels, raised during the phase one renewal discussions, appears to have been dropped. Ministers have also stopped muttering darkly about replacing the board of governors, and the threat to halve the duration of the charter seems to be receding.

In return the corporation, in its "building public value" manifesto, has pledged reform and innovation and indicated it will cut back on the commercial operations that have so incensed its market rivals. “Our task over the next year is to convince the British public that the BBC's role in the new digital age of plenty is both justified and necessary,” said Grade as he launched the manifesto.

The corporation is also being smart in other areas. It has pledged to move production centres to Manchester and Milton Keynes. This anticipates and avoids government charges that the BBC is too London-centric. Another clever strategy is offering to farm out the licence fee negotiations to an independent body.

It’s a win-win scenario that echoes the transfer of interest rates to the Bank of England, a move that abdicates responsibility (depoliticising the licence fee settlements) and neutralises accusations of over-centralisation. And the BBC has also let it be known that it would consider constitutional options other than its current royal charter such as mutualisation or trust status. It’s a savvy approach - putting the ball firmly back in the government’s court.

The BBC is ticking all the right boxes, but is there any substance to its plans? The thrust of the manifesto was "public value", but it remains uncertain how this would be measured. As Grade has admitted, despite a plethora of assessments and guidelines, measuring value is, in the final analysis, “a judgement call”. The manifesto talks of a future where “the traditional one-way traffic from broadcaster to consumer evolves into a true creative dialogue”.

Is this plausible? The new manifesto has a lot of breadth but questionable depth. This is probably how the new management likes it, and it is probably the wisest option. It’s short on specifics but big on aspiration. The BBC has put together a package that is very on-message, with lots of small sops to the government, that also relies on the great public affection the broadcaster enjoys to keep it safe.

There may be heavily polarised views on the accuracy and integrity of BBC reporting in the wake of the Hutton report, but the public seems to consider themselves to be stakeholders in the corporation, and the BBC knows this. It also knows the government knows the same thing. The "public value" plans will allay government fears while keeping the overall integrity of the organisation intact, and it should make charter renewal a formality. However, it may not be a blueprint for success when the dust settles.

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