Major reform of the BBC would lead to abolition of the Licence Fee. But Culture Secretary Lisa Nandy’s preferred alternative funding model for the BBC could face road blocks.
- Funding through general taxation being mooted.
- Would lead to BBC being funded in the same way as Finland’s YLE public broadcaster.
- BBC still confident that the licence fee will be retained.
Culture Secretary Lisa Nandy has signalled she would like to abolish the TV licence fee in two year’s time and replace it with funding through general taxation.
This would lead to the BBC being funded similar to the Finnish model for public broadcasting.
According to The Sunday Times, the Culture Secretary’s radical proposal “will shock many who expected the Government to retain the licence fee for another decade as the least worst option.”
As part of the proposal, Nandy want to make the BBC a mutual organisation, similar to John Lewis or the National Trust, owned by its members.
Plans to fund the BBC through general taxation are expected to hit opposition from the Chancellor Rachel Reeves, who is unlikely to support a move that would increase the tax burden.
In Finland, public broadcaster YLE is funded by a 2.5% tax on annual income above €15,150, capped at a maximum €160 per person per year. Although this arrangement increases the amount of tax individuals must pay, this is offset by not having a TV Licence to pay for as well.
TV producer David Elstein, who previously sat on a panel set up by the previous Government to review alternative to the TV Licence told The Sunday Times funding the BBC through general taxation would be “weird”. He added the proposal would be “better than the licence fee, but only a bit.”
Objections to the proposal may well result in the plans going nowhere. BBC bosses are still understood to be confident that eventually the Government will come back to keeping the Licence Fee, similar to what happened in the Republic of Ireland after lengthy discussions.
Discussions are part of the BBC Royal Charter renewal process, which must be concluded by 2027.
🟢 Analysis: What happens if the licence fee is retained?
By: Marc Thornham
The licence fee is increasingly unpopular. Licence fee evasion has risen to 10%, according to latest figures. The number of TV licences sold has fallen from nearly 26 million in 2018-19 to 23.9 million in 2023-24. The budget shortfall caused by this fall is the equivalent of the BBC losing the combined budgets of BBC Radio 1 and BBC Radio 2, according to The Sunday Times analysis.
Resulting cuts to BBC services, including to BBC News and BBC Local Radio may well result in more households deciding the broadcaster is not worth the licence fee. The flat rate nature of the licence, which doesn’t reflect household income, means poorer households face the biggest impacts from annual increases in the fee.
Despite this, BBC bosses view the licence fee as the “least worst option” out of all alternatives.
The Culture Secretary has previously spoken out in support of decriminalisation of the licence fee, meaning if the licence fee is retained, it could effectively become a voluntary payment.
To protect revenues, this could lead to the BBC effectively paywalling its services, something that becomes much easier with the migration to streaming-based TV platforms, whereby registration for a BBC Account, already required for the iPlayer and Sounds, is directly linked to a TV Licence. It appears this is the direction of travel for the BBC, reflecting their confidence that the licence fee will be retained.
However, this could restrict the BBC in following the likes of ITV, Channel 4 and Sky in making content or live streams available on YouTube and other platforms to reach younger audiences.
The end result would be a de facto subscription-based BBC, which despite being a public broadcasters, would struggle to reach all audiences.