Kill the licence fee

The BBC is financed by a poll tax which turns the poor into criminals and stultifies the intellectua

Rioting in the streets may have seen off the community charge, but an even more regressive poll tax continues to flourish. Margaret Thatcher's ill-fated local taxation scheme required only a nominal contribution from the poor; yet all householders under 75 must pay £112 a year if they use a television set (apart from the registered blind, who enjoy a 50 per cent discount on their viewing). The TV licence fee increases annually by 1.5 per cent more than inflation, so each year it takes a slightly bigger chunk out of the living standards of the poorest: benefit levels rise only with prices.

"Inquiry officers" in detector vans prowl Britain's streets and estates in pursuit of evaders. Armed with a 26-million-strong database showing the paid-up or otherwise status of every home in the land, they catch a thousand defaulters a day. Thanks to the Wireless Telegraphy Act 1949, their victims are not debtors to be sued but criminals to be prosecuted. Last year, convictions were up 75 per cent. Inevitably, many of those hunted down are poor. Struggling single mums have been a typical target. In some years, licence fee crime has accounted for more than half of the criminal convictions of women.

The 23 million licences sold annually produce around £2.5bn of revenue, getting on for the equivalent of a whole day's gross domestic product. All of this sum is handed to one institution, the BBC, to use as it sees fit. It opts to spend only a small fraction on publicly ordained purposes that could not be funded by consumers or advertisers. Taken together, Radios 3 and 4, for example, accounted for less than 4 per cent of BBC spending last year. BBC4, the digital TV channel set up amidst much ballyhoo to handle the arts and suchlike, absorbed just 1 per cent. On the other hand, the £962m invested in BBC1's successful ratings war with ITV constituted 37 per cent of the total.

At least Margaret Thatcher's poll tax paid for vital public services. This surviving poll tax essentially funds entertainment. Since the BBC's output is consumed disproportionately by the middle classes, the system picks the pockets of the poor to fund the pleasures of the better off.

If all this seems odd, it is getting odder. In the past, everybody with a television watched BBC channels at least some of the time. Now, more than 40 per cent of homes have multi-channel TV. In these households, more and more people watch no BBC programmes at all. Instead, they often pay substantial sums to watch other material. Naturally, they are growing less and less keen to pay in addition for BBC services that they do not want.

Meanwhile, the expected "convergence" of reception equipment will throw the practicability of the licence fee into question. Already, people listen to the radio on their computers. The spread of "broadband" links will make it easier to watch video by computer as well. As this practice gathers pace, it may cease to be obvious just what constitutes a television set and should therefore be subject to licensing.

The proliferation of commercial TV channels and radio stations means we no longer need a publicly funded broadcaster to underpin "diversity". On the contrary, instead of extending the range of what is available, the BBC is using its guaranteed public bounty to duplicate commercial services, driving their providers out of business in the process. Its two new digital children's channels have been pitted against 14 existing commercial children's channels. Currently, the corporation boasts 44 per cent of TV and radio viewing and listening, whilst it is also directing state-subsidised competition at magazine publishers, website developers and the providers of coursework back-up.

The channelling of so much spending through an unaccountable, self-regulating state dinosaur appears increasingly out of place in a world in which even the NHS is to be decentralised. Inevitably, there is gross inefficiency and waste. Recently, bonuses, junkets, buildings and taxis have all sparked rumpuses. Now, staff are to be allowed to sign their own expenses claims. After all, it's only licence fee cash.

Hardly surprising, then, that a review of the TV licensing system should have been scheduled for 2004, in time for the expiry of the BBC's Charter in 2006. What did cause some surprise was a remark by Tessa Jowell, the Culture Secretary, in June, apparently pre-empting her own government's review. She told the Financial Times that as far as she was concerned, the licence fee is here to stay. Surprise was, however, unwarranted.

Every so often, the absurdity of the licence fee prompts some kind of re-examination. Brows are furrowed, professors report and change is demanded. Then, for reasons that owe much to the peculiar character of our mysterious nation, everything carries on as before, only a little more absurdly, as changing circumstances render the system a little more bizarre.

The licence fee began life not as a poll tax but as a subscription. In 1922, a group of wireless set manufacturers calling themselves the British Broadcasting Company began making programmes so people would buy their products. They charged anyone using a "BBC" receiver ten shillings a year for their shows. Unfortunately, some bright sparks made their own wireless sets and listened to the programmes but refused to cough up their ten bob (just as computer owners may soon start watching video material while refusing to pay the licence fee). To regularise the position, a government committee decided in 1923 that everyone with a wireless should pay the charge.

When nationalisation took place in 1926, the licence fee was preserved, though only after advertising had been considered and rejected. It was believed that licensing would enable the corporation to convey, in the words of its first director general, Lord Reith, "everything that is best in every department of human knowledge, endeavour or achievement", and to do so independently of government. It is easy to see how this thinking must have seemed compelling enough at the time. Regrettably, events have proved it wrong.

In theory, a guaranteed revenue stream should have enabled the BBC to concentrate single-mindedly on its admittedly ill-defined public duties. However, the corporation's bosses, entranced by their uniquely privileged status, were gradually seduced away from high purpose into institutional aggrandisement. This led them to want an ever-bigger licence fee. To win public support for this aim, they decided to maximise ratings. Hence dumbing down, which was already a live issue in the 1950s. The independence that the licence fee promised also proved illusory. To get the rate increased, the BBC needed politicians' goodwill. That meant restraint, "responsibility", support for the conventional wisdom and respect for the establishment - not rocking the boat.

The struggle for a great big licence fee proved a long haul. It stayed at a mere ten shillings for the first 20 years. As recently as the early 1970s it was just £7 (the equivalent of £60 today). Even then, however, the Minister of Posts and Telecommunications was having to warn that the BBC "should not attempt to compete across the board with commercial interests". Finally, in a deal brokered by John Birt in 2000, the corporation hit the jackpot, by agreeing to throw its weight behind the government's dubious plan to switch Britain to digital broadcasting.

Not that it is satisfied. It wanted 5 per cent a year more than inflation, not 1.5 per cent. Already, in the wake of Jowell's kind words, it is manoeuvring for a further boost in 2006. By securing the exclusion of a pay-TV facility from the digital terrestrial platform it is now to control, it has buttressed licensing by making it harder for individual services to be charged for directly.

Yet the flaws in the idea behind the licence fee have long been clear. As long ago as 1986, the Peacock Committee ended a report on BBC funding thus: "If we had to summarise our conclusion by one slogan, it would be direct consumer choice rather than continuation of the licence fee." Yet licensing survived, as it survived the latest such inquiry as recently as 1999.

Why? The system is hardly popular. A recent report from Sony Broadcast suggested that 73 per cent of the population want to be able to pay only for channels that they actually watch. MPs are regularly badgered by constituents grumbling about the licence fee. But so what? It continues to be sustained by a broad coalition of the powerful, none of whose members is stuck for £112.

The BBC loves TV licensing. Wouldn't you? The rest of the broadcasting industry likes it because it pumps £2.5bn a year into the sector on top of whatever advertising and subscription would naturally yield. To politicians (especially nanny-staters such as Jowell) it is a positive delight, keeping the nation's main provider of supposedly impartial news on a short leash, while appearing not to. Even Margaret Thatcher, who instinctively loathed the system, came to appreciate that it was to be preferred to one that would make the BBC genuinely independent.

Critically, however, the licence fee is also a totem for the Guardian-reading, public-sector-and-professions-based "liberal" establishment which dominates the formulation of polite opinion. For these people, the corporation enshrines sacred but otherwise endangered values, attitudes and tones of voice, while keeping at bay unsettling demons such as Rupert Murdoch. Celebrity Sleepover may be regretted; but no risks must be taken with the institution that provides The Archers and The Antiques Roadshow. If a tax sustains it, well, these people prefer tax-and-spend to the vulgarity of the market place. If the tax is regressive, that is in theory disgraceful but in practice entirely acceptable.

Members of any part of this coalition will tell you that the licence fee is one of those strange British phenomena that does not appear to make sense but is none the less a national triumph. If this is so, why don't we also tax the owners of bookcases, so we can set up a British Publishing Corporation, to churn out free, state-approved books alongside those produced by commercial providers? Perhaps because TV licensing reflects what is wrong, not what is right, with Britain.

Unfair, patronising and dishonest, the licence fee keeps the foremost guardians of our culture tame and compromised. It channels the energies and talents of their brightest and best away from creative achievement and into sordid political manoeuvring. It entrenches mediocrity, crowd-pleasing and playing safe. It discourages original thought, subversive ideas, danger and excellence. It sustains Sara Cox, Holby City and Thought for the Day. In doing these things, it stultifies the national soul.

Stop and think. Do we really want to keep a piece of domestic electrical equipment whose future is uncertain as part of the tax base? We have, after all, said goodbye to the window tax. If broadcasting is to make a claim on public funds, why should its needs not be met from the Exchequer, like those of health and education? That way, the value of quiz shows and docu-soaps would be measured against that of quicker cancer treatment.

The BBC's apologists say such a system would imperil its freedom and undermine its ability to plan, even though the World Service is already funded in this way. The first argument is disingenuous, since the government's power to set the licence fee has proved quite sufficient to instil compliance. The second argument is insolent. Does a broadcaster need a steady income more than schools or hospitals?

We also need to ask whether broadcasting should be given public money at all. Books, magazines and newspapers get none. Theatre, opera, dance and museums might all fancy an equivalent of the licence fee. Yet a case can be made that broadcasting should get state funding. Although hundreds of commercial television channels and radio stations now exist, they provide only services that individuals want. Society may feel there are other functions it needs to have discharged that are best left to the broadcast media.

A list of such "market failure" functions might include educational programming, creative innovation, fostering national identity or what you will. Yet perhaps the most obvious of such roles is the need to ensure that citizens are properly equipped to perform their democratic duty. We need only contemplate this requirement to appreciate the inadequacy of the licence fee as a mechanism for achieving it. In spite of its avalanche of billions, the BBC does little to explain the arguments for and against the euro, Brazilian politics or the economics of development.

Yet we could get such public functions discharged for a fraction of the sums now generated by the licence fee. It might, however, make sense to ensure that public money earmarked for such purposes did not all end up in one monolithic institution. Sharing it between different bodies would reduce the danger of waste. Pluralism would encourage independent thinking. Creative competition would raise standards. Until Margaret Thatcher's 1990 Broadcasting Act, franchises for commercial broadcasters were awarded to the applicants deemed likeliest to advance the public weal. In those days, commercial broadcasters surpassed the licence fee-funded BBC in news, current affairs, drama, religion, children's programmes and other kinds of programme-making that did little for their ratings.

In future, public funds for such broadcasting as is deemed socially desirable but commercially unsustainable could be made available to all comers. Parliament could define goals; then broadcasters themselves could bring forward proposals for achieving them, naming the price which would make it worth their while. An independent board could choose the proposals that would enable us to achieve public purposes in the most cost-effective way.

The BBC, privatised or turned over to a not-for-profit regime such as Channel 4, could compete for this business against commercial rivals. It would probably become braver once it paid its own way: it is no accident that it is the advertising-funded Channel 4 that currently dares confront us with Brass Eye and Rory Bremner's take on Blair and Campbell. Probably, the corporation would perform better if it were broken up into more tightly focused units, free to compete against each other.

Its successful entertainment activities could be separately funded by subscription, advertising or sponsorship or a mix of all three. Freed to attract investment wherever it chose, it might grow into the global media player that Britain, unlike France and Germany, has never so far produced.

Biting the hand that fed him, Tony Hancock once called the licence fee an annual "clout around the ear'ole". Certainly, it seems to belong to the black-and-white era, when superior beings ministered to the people, even the poorest of whom expected to pay for the privilege. Now it's time to move on.