The BBC TV licence could eventually be scrapped under a major funding shake-up, with one alternative potentially adding £6.25 a month to streaming bills. Ministers are considering a range of options for overhauling how the broadcaster is funded as the number of households paying the £180-a-year licence fee continues to fall.
Government Review of Licence Fee
The Government has confirmed it is looking at reforming the licence fee, including potentially changing the range of services for which households are required to have one. In a parliamentary response last month, Culture Minister Ian Murray said ministers were examining "how the licence fee could be reformed, including the scope of services for which a TV licence is required".
He said the Government was considering responses to its consultation on the BBC's next Royal Charter, with policy decisions expected to be announced in a White Paper by the end of the year.
Streaming Levy and Other Options
One option examined separately by the Social Market Foundation (SMF) is a levy linked to streaming subscriptions, which its analysis found could add £6.25 a month to bills. Currently, households do not generally need a TV licence simply to watch on-demand services such as Netflix or Disney+. However, a licence is required to watch live television on any service, including streaming platforms, as well as to watch or download BBC programmes on iPlayer.
Another alternative examined by the SMF is an £11-a-month levy on home internet connections. The think tank found a "home internet levy" would be the fairest way to fund the BBC and the option most likely to command public support. An £11 monthly charge would amount to an average 35% increase on existing internet bills, although the analysis found it would work out around £4 a month cheaper than the current licence fee. With 95% of households having home internet access, such a system could also make use of infrastructure that is already widely available.
Household Levy and Subscription Models
A German-style household levy has also been discussed as another possible model for funding the broadcaster. BBC director-general Matt Brittin has suggested a system similar to Germany's Der Rundfunkbeitrag, under which households contribute towards public television and radio. He predicted such a model could allow the current fee to be cut by 20%, reducing the annual cost by £36.
However, the Treasury is reportedly opposed to a household levy amid concerns it could be portrayed as a new "TV tax". Culture Secretary Lisa Nandy has previously said: "We ruled out a new tax on households because of the cost of living crisis."
Other potential funding models include turning the BBC into a subscription service similar to Netflix or allowing the corporation to generate more of its own commercial income. The BBC has opposed moving entirely to subscriptions, arguing that such a system would undermine its commitment to providing services universally.
Impact and Outlook
BBC Studios, the corporation's commercial division, generated £2 billion in revenue last year, compared with £3.8 billion raised through the licence fee. A BBC spokesperson said: "We have consistently argued that the current funding model is outdated and needs reform. We will continue to engage with government to secure a new Charter that provides sustainable, sufficient and universal funding so the BBC can deliver for audiences for generations to come."
The Government has previously stressed that no final decision has been made over the future of the licence fee. Responding last month to reports that the charge could be extended to streaming services such as Netflix, Amazon and Disney+, a Department for Culture, Media and Sport (DCMS) spokesperson said: "The BBC must be funded by a model that is sustainable and fair to all those that are paying it. Through charter review, we are looking at a range of options, including how the licence fee could be reformed, but no final decisions have been made."
