Market Insight

BBC licence fee should not be abolished, say MPs

February 26, 2015  | Subscribers Only

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit

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The licence fee does not have a long term future in its current form but the current system of funding public broadcasting in the UK should remain in place for at least another five years, according to British MPs. Presenting its report The Future of the BBC today, the House of Commons Culture, Media and Sport Committee recommended that the licence fee should be amended to cover catch-up viewing and that non-payment should be decriminalised.

The report, which sets out to examine the role and position of the BBC and the way it is managed and governed, follows a year-long inquiry from the MPs, who received more than 100 written submissions and visited the Netherlands, Germany and Denmark. Its publication is the starting point for the government's review of the BBC Charter, which runs out at the end of 2016.

While ruling out abolition of the licence fee (a payment for which anyone viewing live TV is liable and which is currently set at £146.50 a year), the MPs ruled that the system 'is becoming harder and harder to sustain given changes in communications and media technology and services, and changing audience needs and behaviours'. They acknowledged that there may not be enough time to introduce a new system before the end next year and that the current BBC Charter could be extended for an interim period.

The Committee said that the German model of a broadcasting levy on all households would be its preferred alternative, adding that Finland's tax model, introduced in 2013, is also worth considering. It was also critical of the way current Charter agreement was negotiated by the government and the BBC, calling for an independent panel to review the Charter and for its recommendations to be voted on by Parliament.

The MPs were highly critical of the BBC's regulator, the BBC Trust, recommending that it should be abolished and the BBC overseen by a newly-created Public Service Broadcasting Commission. 

Our analysis

A short statement published by the BBC welcomed the Committee's findings, agreeing that the licence fee 'needs to be modernised' and noting that its members voted against the idea of financing the BBC via subscription. In spite of harsh criticism of recent problems like the revelations of child abuse by the presenter and DJ Jimmy Saville, the Digital Media Initiative and the loss-making acquisition of The Lonely Planet by BBC Worldwide, the Report holds few unwelcome surprises for the BBC and recommends that any changes to its funding and management are implemented with care.

Potentially less welcome would be the move to decriminalise non-payment of the fee. The BBC's own evidence to the Committee opposed such a move, on the basis that evasion could increase from its current level of around 2.5%, hitting the BBC's revenues. The government has, however, voiced support for decriminalisation, on the grounds that prosecution takes up a disproportionate amount of court time. In 2012, there were more than 190,000 prosecutions which accounted for one in ten of hearings in magistrates' courts.

Anyone viewing BBC services on catch-up does not currently have to buy a licence. The BBC believes that as many as 500,000 households consume its services on this basis - a change could therefore generate an additional £75 million in revenue (assuming the same non-payment rate). 

BBC BBC Worldwide
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