Over the years, governments have engaged in negotiations with the BBC regarding the corporation’s licence fee. In essence, the licence fee is a charge which is levied on households who watch live television or seek to stream and download BBC content online (namely by accessing BBC iPlayer services). Pursuant to the terms of the BBC Charter, the licence fee will remain in existence until at least the end of 2027, meaning that decisions concerning the corporation’s long-term funding structure are unlikely to be taken in the immediate future (and may very possibly not be addressed until after the next general election). However, in the interim period, the government and the BBC have sought to reach a licence fee settlement, which determines the level of funding that households will be expected to supply on an annual basis. At present, the fee is set at a rate of £159 per annum; Culture Secretary, Nadine Dorries, has confirmed that this figure will remain fixed until April 2024. Thereafter, the fee may increase, in order to account for inflationary pressure. Whilst it may initially seem that the announcement is unlikely to constitute headline news, in view of the plethora of challenges currently facing the country, it has attracted controversy.

The decision to freeze the licence fee has been justified by reference to the cost of living. Given that inflation rates have reached approximately 5.1%, the real incomes that households generate over the course of the year may fall if they do not receive an equivalent uplift in work related earnings. As such, households may be less well placed to meet overheads, such as utility bills. If the licence fee was to rise in line with inflation, the difficulties that households face in fulfilling these obligations would most likely be compounded; by freezing it, the government therefore anticipates that the announcement will alleviate the pressure that many households may be subjected to. However, it is unclear whether the decision will make a tangible contribution towards the achievement of this objective, given that the licence fee typically accounts for a small proportion of households’ mandatory overheads. Moreover, critics argue that the decision – which refuses to raise the licence fee to £167 per annum for the next two years - may inflict considerable financial pressure on the BBC. In essence, it may lead to a reduction in the corporation’s real terms funding, at which point the range of services and programmes that it can provide to the general public may reduce. If so, this is likely to disadvantage individuals who access BBC content, something which serves an important educational function for many.

Interestingly, the Culture Secretary has suggested that it is time to “discuss and debate new ways of funding, supporting and selling great British content”. The implications of this statement are not yet entirely clear. However, it is not unfathomable to contemplate that the government may, at some stage, consider abolishing the licence fee all together. Indeed, some parliamentarians appear to be enthusiastic advocates of such an idea, including Peter Bone whose BBC Licence Fee (Abolition) Bill is due to receive a second reading. There is after all an argument to suggest that the corporation should be voluntarily funded by subscription fees, a model which has been embraced by some of the corporation’s competitors. The announcement to freeze the licence fee may well serve as a catalyst for igniting this much wider debate regarding the BBC’s long-term funding.

by Dara Foody

The Saga Surrounding the BBC License Fee