In Whitehall there is a convention that when a ministerial meeting runs over a civil servant comes in and draws it to a close with the words “minister, your next meeting is here” whether it is or not. My regular monthly meetings with Tim Davie, the director-general of the BBC, always ended in this way, because there was always so much to discuss.
This wasn’t just because Tim is charming, on top of the detail of his brief and loquacious. It wasn’t because every month another drama engulfed the BBC from the Huw Edward’s scandal to Gary Lineker’s tweets. It was because now is an existential moment for the BBC, where it has to consider how will it survive as we are changing the way we consume media.
The reality that the BBC is facing is that its most significant source of funding, the licence fee, is anachronistic. Germany, Finland, Norway, Sweden and Denmark have all already abolished this as a method of funding.
The licence fee system, which is that anyone with a TV has to pay the fee, was designed at a time when everyone had a TV and if someone said they didn’t watch the BBC they were probably lying. But now we get our news and entertainment through phones, tablets and games consoles. And the rise of streamers such as Netflix and Disney means that for some Succession and Baby Reindeer beat Happy Valley and Gavin & Stacey.
When I raised this issue as culture secretary, the left screamed “culture war”. And I was advised by others to stay clear. Seeking tips from George Osborne shortly after I had been appointed his parting words from our meeting were “don’t fall out with the BBC”. But shutting our eyes to the issues faced by the BBC will lead slowly to its decimation and irrelevance. In the course of last year the BBC lost 500,000 licence fee payers. The director-general has told us that its income fell 30 per cent between 2010 and 2020.
If the BBC doesn’t address its funding arrangement it will cease to exist in its current form. And that would be a huge loss for the BBC, our creative industries and the UK.
So what’s the answer? The culture secretary has said that she will look at BBC funding as part of the charter review, which will begin this year and “nothing is off the table”. When she stood to be leader of the Labour Party she talked about her support for mutualisation. But she hasn’t been clear as to what that means, or indeed if this could be a successful model in what is an increasingly globally competitive market.
In a debate in the House of Commons last month the minister for the media gave a possible hint to the government’s current thinking “we firmly believe that the unique obligations placed on the BBC demand continued and sustainable public funding in support of its vital work”.
By this does she mean raising taxes to pay for all of the BBC’s output?
If she does, this is not only uncreative, but politically difficult. How could the government justify yet another tax rise, and then explain it was to fund Strictly Come Dancing not our schools or social care?
Having looked at this carefully as secretary of state, I believe that there isn’t one simple answer to the BBC funding issue, there are several. The BBC needs a multi-layered approach to funding. So here is a potential solution to spark a thoughtful debate: a more limited licence fee or similar model for core services such as news and current affairs; government funding for the World Service; commercial funding (through a voluntary top-up subscription for other services, for example mainstream entertainment); and increased commercial revenues from a significantly increased international offering.
The rationale for this is that we must preserve the very essence of the BBC but now the BBC does so much for different audiences and we cannot ignore the changing media landscape.
A more limited licence fee or other similar funding arrangement for core services should be retained because the UK should protect and preserve the important role the BBC plays in providing some services, which must include unbiased and trusted news. This should however be on the condition that the BBC ups its game on impartiality and doesn’t eat up its thriving competition, including local news.
The BBC World Service should be paid for by the government directly. It is a service that seeks to enhance our standing in the world. But where the BBC makes shows that any TV producer would wish to make — its popular and generic entertainment, which has no intrinsic public benefit — this should be paid for directly as a commercial offering.
Most entertainment nowadays is offered on a subscription basis. As of September last year, about 20.1 million UK households — 68.8 per cent — have access to a streaming subscription service. Netflix has about 17 million UK subscribers. If the BBC charged £10.99 a month broadly in line with Netflix’s standard no-ads offering, and matched their UK subscribers they would generate over £2 billion.
And then there is the BBC’s massive international commercial potential. The BBC has done much work to expand this offering, with platforms like BritBox International which has 3.8 million global subscribers. But it needs to move with pace and ambition. And should do more. It has a significantly valuable back catalogue in this world of generative AI.
These are not radical suggestions. This is a path the BBC is already on. But the speed of change is slow and the incentive for a gear change is non-existent. The BBC isn’t going to suddenly voluntarily turn down £3.75b of licence fee revenue. So this is a matter for government. And the answer needs to be more thoughtful than yet another increase in our tax burden and more practical and detailed than a leadership promise. But the government is right to start this conversation.
The hard truth for the BBC is this — the media landscape is changing and for the BBC to survive, it needs to adapt. That includes its funding model. If it doesn’t it will not survive in the long term. I am
a huge fan of the BBC but this is a real debate we need to have, even if it’s uncomfortable territory for our national treasure.
Lucy Frazer was the Conservative culture, media and sport secretary from 2023-24
