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Mr Muggeridge said the blue asbestos problem was the unknown quantity.
4. Mr Ridley said that he now planned to put the agreed capital and current expenditure figures, extended to cover 1984/85, to his Ministerial colleages and the Treasury with the hope that the evidence of savings to be made would induce them to agree to the necessary increase to proceed with the BBC's capital programme.
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5. Mr MacInnes asked if the BBC could give a view on the proposed FCO savings. Mr Muggeridge said that the BBC would rather find savings out of underspent capital than by cutting services. The necessary amount could be found in 1982/83 as well as 1981/82 thanks to the Henstridge Transmitter Programme. It was in the national interest to maintain existing services.
6. Mr Ridley said that the real difficulty would come in 1983/84 and 1984/85 and any approach to the Treasury to meet this would have to show that genuine savings had been made wherever possible. It was for the FCO to decide which services could be dispensed with. Mr Muggeridge asked what the chances are of more Government money being available in 1983/84 if the expected up-turn in the economy took place. Mr Ridley said that the Government would first seek to reduce taxation would be unwise to make predictions in this field. Mr Muggeridge said the present level of services was appropriate for a major international broadcasting country. If these were reduced it would put the UK into the second league. Some of the countries to which it was proposed to close vernacular broad- casting were politically vulnerable. Mr Ridley said FCO were talking about broadcasting to France, Spain and Italy in their own languages. France was certainly not unstable, nor at present were the others. Mr Gregson said that France was currently increasing expenditure on her own external services. The BBC's French vernacular services provided the infrastruc- ture for a proper understanding of French affairs in the international scene. The same applied to Spanish services. Mr Ridley said that he accepted the need to broadcast in these languages to Francophone, Africa and Latin America but he could not agree that it was necessary to broadcast to the metropolitan countries.
7. Mr Muggeridge said that the French Government increasingly controlled their broadcasting and Press and therefore informed French opinion valued the BBC broadcasts. He accepted that the FCO's opinion on the political stability of Spain and Italy was paramount, since this must be a political judgement. Mr Ridlev said in the Government's view there was no need for proselytis- ation in the European Community and given the obvious need for economies this was the least damaging area for cuts. Neverthe- less, he would put all these arguments before his Ministerial colleagues. He warned that the possibility of further cuts could not be ruled out and it would be better to cut vernacular services and concentrate on obtaining agreement on capital expenditure improve audibility. Lord N Gordon Lennox warned that even if a capital saving could be shown in 1982/83 the Treasury would not be content with a one-year windfall. would also be looking for savings in the following years. Mr Perris said that the Treasury would certainly insist on savings in current expenditure.
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RESTRICTED.