James Cridland

BBC funding: beyond the licence fee

After Nadine Dorries decided she’d spring “no more licence fee from 2027” on the BBC (and then change her mind), there have been plenty of hot takes on how the BBC might take its funding forward.

What the world needs is another hot take, I thought. So, here’s an idea,

It doesn’t involve advertising

It sounds beguiling, doesn’t it, to stop the public paying for something and instead get McDonald’s to pay for it by filling ad breaks full of ads for Filet O’Fish. (Only joking: they never advertise that product).

However, there’s plenty of evidence that were you to make the BBC advertising-funded, bad things would happen.

Phil Riley has done the maths for BBC Radio, and it’s not a pretty sight: it would require a 60% cut in programme content budget, and simultaneously put the rest of commercial radio out of business, since there’s really not enough radio ad budget to go round.

And, the listeners wouldn’t like it. Or the viewers. CBeebies, the under-school-age channel can’t have ads in it anyway (at least, morally); and it’s likely that audiences would reduce if the output was full of advertising.

And in any case, advertising needs audiences. A lot of the things that the BBC does are not done for huge audience figures, but as a public service. Yes, yes, Top Gear and Doctor Who but also until 2018, a thirty-minute programme called The Organist Entertains, featuring a man (and it was always a man) playing recordings of organs.

So, let’s discount revenue from advertising. Any advertising.

It doesn’t involve televisions

The benefit of the “television licence”, and the radio licence before it, was that people of low income didn’t have to pay. Originally. A radio was once an expensive thing to have, and you could say the same about a television.

However, that’s clearly not a thing any more.

And, of course, the BBC does more than just TV and radio: it runs one of the most popular news websites in the UK, and the iPlayer, and all manner of other things online.

So, a “licence” for a device doesn’t really make much sense.

It isn’t a household charge

Household charges are inherently unfair.

A house of 8 people consumes rather more of the BBC than a house of 1.

A house consisting of one old-aged pensioner might consume a lot of the BBC, but they can be on a very limited income, and it’s much more of a financial burden.

It doesn’t cost more if you can’t pay in one chunk

You can pay the TV licence in two parts, if you can’t afford to pay it all in one. And the TV licence people (the BBC’s contractors) charge you extra for not being able to afford to pay it. That can get in the sea. Instead, let’s see how people can pay this weekly or monthly for no extra cost.

Update: It turns out that you can now get a monthly direct debit for your TV licence, or even pay fortnightly, without any fee. So, that’s good.

It doesn’t involve cutting anything

I’d like to see if it’s possible for funding to be done to maintain the BBC as it currently is funded.

Now: that might not be sensible. There might be things that really ought to be cut from the BBC, and I’m not just talking about the new Top Gear. But, for the purposes of this exercise, let’s see if we can fund the whole thing.

It’s the law at this point to say that the BBC isn’t perfect, etc, and after two years working for the Corporation, I’ll happily give you plenty of examples of where it isn’t perfect. But let’s assume we want to maintain the money it’s currently getting.

So here’s the idea

  • A tax. It’s collected with our income tax. We do this so that we can cut collection costs to a minimum. Collection of the TV Licence is quite expensive: it appears in the BBC’s annual report as costing £8.50 or so per TV licence, but that figure also includes a pension deficit too, not that the BBC’s hiding anything. Let’s assume it’s about half that.
  • Based on income. We do this so that people who are not earning income (old age pensioners) don’t pay. We do this so that people who are on low incomes don’t pay, or pay considerably less. And since we’re doing this as part of our income tax, we’ve got all the figures we need.
  • Not set for renewal every xx years with inflation. It doesn’t need to be. It’s based on salaries, which go up with inflation and with total population. This is no longer a political football: it increases automatically based on the prosperity of the nation.
  • Paid per person. This isn’t a household charge. Everyone gets some value from the BBC. So everyone pays: if they earn enough.
  • 1% of taxable income. A single parent on the minimum wage would pay £50 a year (based on the £5,000 they’re taxed), and would pay £4.15 a month. They currently pay the full fee. Someone who isn’t working or is retired would pay nothing. They currently pay the full fee. A student would pay nothing.
  • Capped. It would be tempting to suggest that millionaires should pay a massive amount, but that’s not that helpful. So, we cap it to, let’s say, £110.

So: 1% of taxable income, capped.

Haven’t we heard this somewhere before?

Yes. I cheated. Sorry.

This is exactly what happens in Sweden. A 1% tax, reduced for those on low income, capped at €128 per person.

How much revenue does it earn? €78 per person.

The BBC licence fee? It earns €83 per person. But, as mentioned above, about €5 of that is the cost of collection, which would disappear. Which makes it… gosh, the same.

So, we’ve fixed all the issues with the licence fee; something that’s fairer, something that spreads the cost properly, no advertising, and brings in exactly the same money.

The only trouble with all this?

The Conservative government.

That’s not a political point; it’s more an acknowledgement of one: the current Conservative government don’t like the idea of additional taxes, which this is, even if it replaces something that is a tax by another name.

And there, I’m afraid, I can’t help you.