BBC funding: Lords say tax a better model than adverting or subscriptions

Tax, rather than adverts or subscriptions, should fund BBC says House of Lords

BBC licence fee

The House of Lords committee on the future of BBC funding has rejected the idea the corporation can be adequately funded through advertisements or subscriptions.

In its report published on Monday the committee laid out three tax-based alternatives to the current licence fee model.

But Baroness Tina Stowell, who chaired the committee, told Press Gazette the most important recommendation in the report is that the BBC must outline a “bold new vision” before it can choose its next funding model.

The report, “Licence to change: BBC future funding”, caps off an inquiry that began in February 2022 and draws together written and oral evidence from sources including Netflix, Andrew Neil, GB News presenter Mercy Muroki and the chairman of Marks and Spencer.

[Read more: Andrew Neil defends BBC against bias claims but calls for licence fee overhaul]

In the face of competition from subscription streaming platforms – and claims the BBC does not cater to the whole country – some have argued the corporation should switch to an opt-in subscription-funded model to fund its £4bn budget.

But the committee said the model would deliver “inadequate revenues and face major technical hurdles”.

It likewise said that proposals to fund the broadcaster through advertising “would provide insufficient income whilst decimating the revenues of other public service broadcasters” – echoing the findings of the Thatcher-era Peacock  committee that the BBC is so big it would pull much of the television advertising spend away from its competitors.

How could BBC funding change in the future?

The report laid out three alternatives to the current licence fee, all of which move away from the current model of a flat tax.

“A universal household levy linked to council tax bills is one option which could take greater account of people’s ability to pay,” it said. “A ring-fenced income tax is another. Reforming the existing licence fee to provide discounts for low-income households is a third.”

The report recommended moving away from a funding model linked to the existence of televisions in a home, and warned the BBC faces a challenge from viewers who do not feel represented by the corporation.

Its role, it said, “as a national glue will only become more important, and more complex, in the context of increasing social, cultural and demographic change.”

But ultimately, the report said, funding decisions will depend “on what the BBC should be for and what it exists to provide.

“We are therefore calling on the BBC to publish a bold new vision. This must propose a strategic purpose that will guide it through the next quarter of the 21st century and set out what it will do differently, what it will stop doing and where it needs to innovate.”

BBC director-general Tim Davie himself said something similar at a session before the committee in May.

“I don’t think you can split the finance model from the editorial output and intent for the organisation,” he said. “Simple as that. This is why the stakes are so high. What we choose to go to will directly lead to what comes out.”

Baroness Stowell: BBC needs ‘bold new vision’

Baroness Stowell told Press Gazette that for her, articulating the “bold new vision” for the BBC was the most important recommendation in the report.

“But what I think is important to emphasise as to what’s different about this,” she said, “is: we know that that Reithian mission – to inform, educate and entertain – remains important and is enduring. Nobody’s questioning that. 

“But they have to be much clearer about, well – why? Why should people be drawn to the BBC for information, education and entertainment?

“What has never really been properly defined in the past is what the BBC is for. Successive director-generals are asked that question – it’s a question they usually dodge. And what we’re saying as a committee is that: you can’t dodge that.”

Stowell said this was because the public now has numerous other options for its information, education and entertainment. 

Asked whether she was optimistic the report’s recommendations would be acted upon, Stowell said: “I guess I am optimistic, really. Because I think that I can’t see an argument for not responding to this.

“This is a moment, an opportunity for the BBC to seize. I mean, I do recognise, as the committee does, that… there are risks to the BBC coming forward and saying, in a more bold way than they’ve ever done before, that they need to define their role more clearly and the implications of doing so…

“Because if they come out in front, then they are putting themselves out there for other people to then start debating.

“But the risk of them not doing that, is that a government – whichever government – will make decisions that then get imposed upon them, which they might not like either. Or, indeed might not be the best solutions.

“Because at the end of the day, the people who are running the BBC are the people who understand better than anybody both how their organisation is functioning but also the challenges that they’re facing.”

Stowell also urged the BBC to articulate its goals as soon as possible.

“We need to crack on.

“In the past, what’s tended to happen is decisions about the BBC’s remit and funding have been made quite last minute, before the [Royal] charter expires and the new one needs to kick in.

“And what we’re saying is that’s just not going to work anymore. What is required is is radical, and therefore, you know, it is a process that needs to start – but fundamentally, it’s got to start with BBC.”

The BBC announced its annual results last week, declaring it had made over £1bn in savings over the past five years of cost-cutting and that BBC Studios had turned a record profit.

But those savings were generated in part by large staff cuts – cuts which continue, with 70 job losses announced only days after the annual report’s publication.

[Read more: A look at alternative ways to fund the BBC]

A BBC spokesperson said: “We welcome the Lords report. We agree we need to keep reforming which is what we have been doing at pace. Clearly the BBC needs to keep relevant and we welcome the report’s finding that a market failure BBC wouldn’t be a good outcome.

“Beyond that, we are open minded about the future and it is right there is a debate on whether the licence fee needs to evolve and if so, what comes next.”

Picture: Reuters

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