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17 January 2022

For the Conservatives, scrapping the BBC licence fee is more complicated than it sounds

Alternative models to the current BBC funding system could be politically problematic for the Tories.

By Stephen Bush

Will the BBC licence fee come to a final end in 2027? That’s the future as envisaged by Nadine Dorries, the Culture Secretary, who has said that the current licence fee agreement between the UK government and the corporation will be “the last”. 

The long-term future of the BBC’s current funding model looks far from stable. The fee is unpopular (more than 60 per cent of people think that it is “unfair” or “very unfair”, while just 23 per cent favour the continuation of the licence fee model) and many of the assumptions underpinning it are fragile. The number of people watching so-called linear TV (that is, people watching TV on a certain channel at a certain time) has been steadily declining for years. 

But there is, as it stands, no obvious alternative that ticks all of the Conservative government’s boxes. Any alternative funding model needs to do the following things: it needs to maintain services for which there is consumer demand, and the disappearance of which would cause political difficulties to the Conservatives. It needs to service the political interests of the Conservative Party. And it needs to provide services that the British state, regardless of which party is in power, would otherwise have to pay for directly.

The British right’s new big idea for doing without the licence fee is streaming: but none of the big streaming services currently make money. They are all reliant either on cross-subsidy from their parent company (as in the case of Disney, Apple and Amazon’s streaming services), or they are heavily indebted, like Netflix. Netflix, the market leader in providing streaming services worldwide, is aiming to break even this year, but its path to profitability is uncertain and market sentiment towards the big streaming services is increasingly sceptical. 

However, if we imagine for a moment that the BBC was allowed and expected to make and generate money like any other media corporation here in the UK, it would enjoy a huge number of advantages. It would both have a popular and trusted brand and an extensive back catalogue of previous programmes, documentaries and films. While the streaming market is, to my eyes, currently over-saturated, I see no reason, barring chronic mismanagement, why the BBC’s entertainment businesses ought not to emerge as one of the major winners from the streaming wars. 

As for news, the BBC website starts with a huge number of keen users, people who have downloaded its app, who use it as their homepage, and so forth. Whether the broadcaster wanted to pursue an advertising-driven, non-paywall strategy, or a subscription model, it would be well-placed to survive and thrive. 

And its ability to compete and make money would extend well beyond what we think of as the BBC’s “traditional” or most high-profile services. A BBC freed to monetise its services as it saw fit would be well-placed to become one of the UK’s most successful events businesses, to put on and run many of its most successful music festivals and events. While the BBC enjoys a large influence in British public life as a publicly funded organisation, it would have an even greater market share as a private one, assuming that it was well-run and well-led.  

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But I’m not convinced such a state of affairs would be good for the Conservative Party. Firstly, the dream of many BBC critics on the right isn’t that the BBC would survive and thrive, but that it would create more space for right-wing media. But a world in which the BBC was competing here in the UK for either advertising or subscriptions would be painful – yes, for the BBC during its period of adjustment, but it would also be pretty difficult for much of the rest of the media. 

If you actually think about what the post-licence fee BBC looks like, you realise that any government very rapidly ends up either having to explain to its allies in the rest of the media why it is allowing the BBC to use the advantages and structural dominance it has acquired during a century of public service broadcasting to crush the competition, or having to directly intervene in the market to scrap and prevent the BBC from providing services the public wants to consume. Neither feels like a comfortable place to be, politically. 

Nor am I convinced that the news ecosystem in a post-licence fee world would be more hospitable to the government of the day that it is now. Because of the nature of the BBC’s charter renewal process, the broadcaster always has an incentive not to be too adversarial towards the government of the day, and that advantage has generally been compounded when we have a Conservative government because most of the British print press is right wing, and the BBC tends to take its lead from the print press. 

Instead, imagine that, whether as a series of joint enterprises with subscription and revenue targets, or as separate businesses licensing the same brand, you have BBC Radio 6 Music seeking to attract subscribers. Its news judgments are, inevitably, going to be shaped around the preferences and prejudices of its (largely younger, and therefore more pro-Labour) audience. Even if you maintain British regulations around news and impartiality, it is difficult to see how a 6 Music competing out on its own would not be more anti-Conservative in some of its underlying assumptions. Other BBC channels would move in the opposite direction, but it is far from clear that the net effect is better for the Conservatives. 

Then, of course, there is what we might call the “second bucket” of BBC services: those that do not command a particularly high audience but which the British state has a strong interest in maintaining. These include: revision and other teaching materials used by schools (that are currently free on the BBC website), news that assumes a common state and a shared set of interests and, fundamentally, a platform that allows the government of the day to take to the airwaves when it has to order people to remain in their homes and refrain from physical contact in the face of a novel disease. These are all things that, ultimately, the British government is going to end up on the hook for.

Indeed, the British government’s attempts over the past decade to free itself of its financial obligations to the BBC World Service, which the Foreign Office already funds, is probably the instructive parallel here. Many of the proposed cuts in Foreign Office spending on the BBC World Service did not materialise or have been reversed. A more likely future for the BBC under Conservative governments is the one that has been in use over the past decade: real-terms cuts, but with a genuine re-imagining of how the broadcaster operates always a safe distance away.

[See also: Who should be the BBC’s next political editor?]

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