BBC could be funded by council tax levy, says House of Lords report

The BBC licence fee could be replaced by an additional charge on local government council tax bills, breaking the link between the charge and ownership of a TV and enabling lower income households to pay less, according to a report from the House of Lords on the future funding of the pubcaster.

The council tax proposal is one of several funding ideas floated by the report, Licence to Change, BBC Future Funding, which was published yesterday by the House of Lords communications and digital committee.

Other ideas include a ring-fenced element of income tax and a reformed licence fee with discounts for low-income households.

The report also called for an expansion of the BBC’s commercial operations, including a call for it to be “open minded” about “more ambition commercial options” including domestic and international hybrid subscription services. However, it noted that domestic subscription offerings could compromise the principal of universal access to the BBC’s services.

The committee was clear about the ill-advisedness of one option that has been floated by some politicians and commentators – a pure subscription model – and also rejected other models such as direct government grant and advertising.

“It is important to be clear about what will not work. Substituting the licence fee entirely for advertising would provide insufficient income whilst decimating the revenues of other public service broadcasters. A full subscription-based model would likewise deliver inadequate revenues and face major technical hurdles. Funding the BBC through Government grant would risk undermining editorial independence,” the report said.

The committee also recognised that the household levy proposal had some disadvantages, replicating the imperfect link between council tax liability and level of income that has also been subject to criticism, particularly in relation to elderly people on low incomes who live in large houses. A household levy would also break the link between paying for the BBC and consuming its services entirely.

Nevertheless, the report said, this was “a viable alternative to the licence fee”.

The BBC currently receives about £3.75 billion, or 75% of its income, from the licence fee, the level of which has been frozen until 2024.