The BBC's new director general Matt Brittin has called for the urgent abolition of the licence fee, describing it as a "straightjacket mechanism" that ties the corporation to the past. The call comes as the BBC's annual report revealed that the number of active licence fees fell by over half a million in the past year, dropping by 539,000 to 23.3 million households.
Declining Licence Fee Revenue
Last year, the number of licences sold had fallen by 303,000, but this year's decline of 539,000 marks a significant acceleration. While 94% of UK adults use the BBC each month, less than 80% of households now pay for a TV licence, leaving the BBC facing a deficit. The cost of a licence rose to £180 this year, generating an overall income of £3.9 billion, an increase of £36 million year-on-year, but the falling number of payers is unsustainable.
Brittin, who joined the BBC in May after 18 years at Google, told MPs last week: "The BBC is being held back by the straitjacket of the licence fee mechanism. It's a model that ties us to the past when audiences are already living in the future. So we urgently need a solution that will provide sustainable, sufficient, and universal funding, so there can continue to be a BBC for each of us, funded by all of us."
Cost-Cutting and Reinvention
Last month, the BBC announced 550 job cuts and programming reductions as part of a plan to slash a further £500 million in costs. Brittin said, "This is a moment of real jeopardy, not just for the BBC but for public service broadcasting and the UK as a whole." He added, "I believe the case for BBC has never been stronger: public service, economic impact, UK sovereignty and values. Our mission has never been more needed. So reinventing the BBC to fulfil that mission in a fast-changing world is our duty and our challenge."
Brittin described the current licence fee model, based on consumption of live TV or iPlayer, as "sort of yesterday's behaviour." He noted, "Almost everybody is consuming BBC content across the country, but we have a gap between those and the number of households paying. So it's right that the government's looking at how you restructure that mechanic."
Potential New Funding Models
The director general suggested a "supercharged Britbox-style platform" involving the UK's main broadcasters as a possible funding option. "I don't think we're looking at mergers and acquisitions," he explained. "We're looking at is it possible for us to integrate more into a sort of sovereign media platform. And I think in the medium term, that's got some appeal if you want shows that are about who we are and where we're from, and also that bring those British values to the world."
BBC finance boss Berangere Michel said evasion of payment by those who still use the BBC was around 12%, down to changing viewing habits, with people not paying if they watch on catch-up via iPlayer rather than in real time. "Most of the UK's adults use the BBC but only 80% of households, so one to two adults per household, actually pay for it. The key issue is that we're providing a universal service, and we're very proud of it, but the funding model doesn't match that, and that creates deficit."
BBC Chair's Warning
BBC Chair Samir Shah stressed: "This report sets out in detail the considerable pressures now faced by the BBC – not least the question of future funding. When 94% of adults use the BBC per month yet fewer than 80% of households contribute, it tells you the current funding model cannot maintain the BBC's public service mission. The new Charter must ensure that the BBC can continue to be a universal public service media organisation of scale." He added, "We have to remember that the BBC is, and always has been, so much more than simply a broadcaster. It is a fundamental public good. It delivers unique benefits to audiences and to the whole of the UK – for our society, our economy, and our democracy."
