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4 March 2015

The Licence Fee remains the best way to fund the BBC – here’s how we modernise it

We can learn a lot from how other countries have tackled this tricky issue in recent years

By Ben Bradshaw

Despite its recent problems, self-inflicted wounds and the relentless hostility of much of the press, the BBC remains one of our best loved institutions. It ranks along with the NHS among the organisations Britons rate most highly and, like the NHS, it enshrines certain values that we see as part of our national identity.

If you were creating a new national public service broadcaster now, it would not have the BBC’s system of funding, nor its governance structure. But these have evolved over time and have largely served us well. It is no accident that most other European countries built BBC- style public broadcasters from the ruins of the Second World War and still have them in various forms.

But the broadcasting market and the way we consume content is changing. This has led to some, especially the BBC’s enemies, to question the future of the Licence fee.

Our committee looked carefully at the Licence fee, alongside other potential funding options. In spite of the instinctive hostility of most of the Conservative members, we concluded, with the exception of one Tory, that the licence fee, or something like it, remains the best way of funding the BBC for the next ten year Charter period.

Subscription would be likely to lead to viewers paying more for less. The licence fee costs £145.50, equivalent to little more than the price of a pint of beer a week and less than the cheapest Sky subscription.

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Moving to advertising would mean the BBC competing with and, potentially, damaging its commercial rivals. Britain’s mixed economy in broadcasting is one of our strengths and a mainstay of our creative economy. The public also say one of the things they like most about the BBC is the absence of advertising.

Funding from general taxation might be less regressive than a flat rate fee, but has been calamitous in the Netherlands, where it has created a toxic mix of political interference and repeated government raids on funding.

So the licence fee remains the best model for now, but it could be reformed in ways which would also address the main criticisms of it.

Germany has recently moved from a “device based” licence fee paid for owning a TV or radio to a household broadcasting levy. This has obviated the need for detector vans or for dragging people through the courts and is device neutral. At the moment in Britain you have to pay the licence fee for having a TV or watching TV live on another device, but not for radio, catch up or reading content on line. Adopting the German model would mean that the tiny fraction of the population that doesn’t own a television or radio or anything else on which they could watch, listen or read BBC content would have to pay. (Just as people who own a TV now, but claim never to access BBC content have to pay) But, as our Committee’s Conservative Chair, John Whittingdale said, if you believe public service broadcasting is a public good, providing something the market wouldn’t, this can be justified. We pay for schools, even if we don’t use them.

More urgent and drastic change is needed to the address the flaws in BBC governance.  The importance of effective, independent regulation has become accepted across public life in the last 20 years, from the NHS to MPs. Having the same body, the Trust, in charge of the BBC and responsible for regulating it has failed. It’s left the BBC at times insufficiently able to defend itself and at others insufficiently self-critical – the worst of both worlds. That’s why we recommend abolishing the Trust and splitting its regulatory functions between a new independent Public Service Broadcasting Commission and Ofcom, while freeing up the BBC to be managed by a unitary board. This should lead to a better managed and better regulated BBC, better able to fight off its enemies and better able to avoid damaging mistakes. Valuable objectives if you care about the BBC and the future of public service broadcasting.