Culture Secretary ‘considered funding BBC through general taxation’

Lisa Nandy previously considered funding the BBC through taxation rather than the licence fee, it has emerged.

The current agreement between the broadcaster and the Government, known as the Royal Charter, runs until the end of 2027, and the process of reviewing it will begin this year.

It is understood that Ms Nandy, the Culture Secretary, wants to turn the BBC into a mutual organisation so that ownership and direct control of it belongs to the public.

As part of a review into the running of the broadcaster, she looked at alternative funding models, including paying for the BBC through general taxation, The Sunday Times reported.

It would mean the Government would no longer spend money enforcing the licence fee and prosecuting those who do not pay.

Last year, ministers considered decriminalising non-payment of the levy, with official figures showing that legal action was being taken against 1,000 people every week.

However, a government source said that funding the BBC through general taxation was “not a realistic possibility”.

PM ‘prepared to think radically’

The annual licence fee is increasing by £5 in April, after the Government approved a rise in line with inflation.

The BBC’s financial results published last year revealed it had suffered from an £80 million drop in licence fee revenues – the broadcaster’s main source of income.

The number of households paying the levy to watch live television, or the BBC’s iPlayer streaming service, fell by half a million to 23.9 million.

Concerns have been raised about the future of the funding model, with dwindling numbers of young people regularly watching live television, instead favouring streaming services or video-sharing platforms.

Ms Nandy has previously suggested that alternative future funding models could include a “mutual” arrangement, with licence-fee payers becoming direct stakeholders in the BBC and therefore holding its board to account.

She previously said about the Royal Charter review: “We will have an honest national conversation about the broadcaster’s long-term future, ensuring the BBC has a sustainable public funding model that supports its vital work but is also fair and responsive to those who pay for it.”

The Culture Secretary has discussed her ideas with Sir Keir Starmer, the Prime Minister. He is prepared to “think more radically” regarding the issue, according to The Sunday Times.

However, it is understood that Rachel Reeves, the Chancellor, has not been involved in any discussions regarding the tax proposals, and it is thought that she would be very unlikely to support the idea, the newspaper reported.

On Saturday night, a government source said: “Funding the BBC through general taxation is not a realistic possibility, and is not being seriously considered.”

A spokesman for the BBC said: “The public cares about the BBC and later this year, we will launch our biggest ever public engagement exercise so audiences can help drive and shape what they want from a universal and independent BBC in the future.

“We look forward to engaging with government on the next Charter.”

Meanwhile, Tim Davie, the BBC director-general, has put a renewed focus on the broadcaster’s commercial operations and extracting more money through selling shows abroad.