The BBC’s director-general, Tony Hall, is a man in a hurry. As one of the oldest DGs to be appointed, and already in receipt of his BBC pension, the 64-year-old is acutely aware that the corporation’s charter has less than two years to run, and that the licence fee – the BBC’s bedrock for the 93 years of its existence – has no long-term future (according to a report from a cross-party committee of MPs published last week).
In a speech on Monday, Hall claimed that the committee had given the licence fee at least another 10 years. Actually, that was wishful thinking – the report said no such thing: only that in the 2020s, a new system would have to be in place – and the pace of events strongly suggests the beginning of the next decade is the back-stop date.
Hall set out the case for switching from the licence fee to a broadcasting levy on all households, irrespective of whether they have a television, watch or listen to BBC programmes, or want to pay for the BBC. This was one of the options canvassed by MPs, the other being the new Finnish system of a percentage surcharge on income tax, with both a floor and a ceiling.
Of course, for those who do not need to have a TV licence – the million or so homes without a television and the growing number who just watch online – the proposed switch would be unwelcome, despite Lord Hall’s attractive rhetoric about retaining the BBC as a “creative beacon” in a threatening world.
A household levy also has the disadvantage of possibly requiring primary legislation, and most likely needing the consent of the Scottish parliament, if it were to be attached to council tax collection. Given that in Germany – where the broadcast levy was recently introduced – the main beneficiaries are the regional governments and their respective broadcasters, it is hard to see an SNP administration failing to demand substantial devolutionary control of broadcasting. That would not appeal much to a thoroughly centralised BBC.
Unmentioned by Hall in his presentation was the sting in the tail of the proposed levy. This was that the proceeds should not accrue exclusively to the BBC, but be in part reserved for other broadcasters whose ideas for public-service content required a degree of public funding.
Indeed, the Commons committee, in calling for the trust to be replaced by a Public Service Broadcasting Commission (PSBC), which would allocate the levy, envisaged a situation where funding might be withdrawn from the BBC if its output failed to live up to expectations. Again, the BBC has always bitterly opposed sharing the licence fee: Hall’s silence on this point was eloquent.
Both the committee and Hall called for online consumption of content to come within the ambit of the licence fee. Oddly enough, it would seem to do so already: any device capable of receiving live broadcast television is technically subject to the rules. It is just that the BBC has not had the nerve – or resources – to seek that level of enforcement.
In any case, there is a simple solution, which is to encrypt TV content on the BBC iPlayer, as that wily bird, Lord Burns, recommended to the committee. Licence holders would be able to gain access to iPlayer by typing in their licence number. Non-holders would have to pay a fee – rather like that for Netflix or Amazon. It would take weeks, not years, to implement such a system, and require no special legislation. After all, the BBC already sells DVDs of its programmes, and is a 50 per cent shareholder in UKTV, which charges a monthly subscription for access to its content, the largest single element of which comes from the BBC.
Why is Tony Hall so adamantly opposed to something so obvious, fair and easy? It is because he sees it as the thin end of the wedge, where the licence fee as a whole might be replaced by subscription. Ostensibly, the BBC opposes voluntary subscription as a replacement for the licence on two grounds: loss of universality and loss of revenue. In reality, the argument is about two different philosophies of funding broadcasting: compulsion versus choice.
The concept of universal provision of BBC services, free at the point of use, is quite recent. Not all BBC channels have been available to all households at all times; and there would be no reduction in availability in a subscription system.
As for being “free at the point of use”, that can only apply once you have paid your licence fee: which is no different from paying a Sky, Virgin Media or Netflix subscription, where you can consume as much content as you like at the relevant level of payment.
Pros and cons of the licence fee, according to MPs
More importantly, the BBC fears a significant loss of revenue if households were given the freedom to subscribe – or not. Hall argues that a reduction in the numbers of those paying would entail either a cut in the quality of service, or an increase in the fee, or both. He may be right, though my view is that with the average viewer’s consumption of BBC TV running at 8-10 hours a week, the chances of people en masse giving up EastEnders, Casualty, Countryfile, Bake Off, Antiques Road Show, Top Gear and even Pointless, not to mention Newsnight, Panorama, and an array of documentaries, in order to save £12 a month, is minimal.
The BBC regularly reminds us that, at 40p a day, its huge array of output is a tremendous bargain. The trouble is that nothing is a bargain if you have no choice but to buy it. If the BBC really believed its own propaganda about the 40p, it would embrace subscription without a second thought. That it is so viscerally opposed to subscription – and to choice, a word rarely on the lips of BBC mandarins – is a reminder that its business model relies upon criminal sanctions to achieve success.
The hundreds of thousands of impoverished householders who are prosecuted for failure to pay the licence fee are the other side of the reputed bargain. Allowing those people the freedom to do without the BBC, is surely a small price to pay for a clear conscience.
The BBC will also argue that a major investment would be required to equip millions of Freeview TV sets with conditional access modules, in order for encryption to work. That this absence is the deliberate result of BBC policy when Freeview was launched – to frustrate any future move to subscription – does not alter the economics.
The capital cost might run as high as £500 million, but this would be spread across some 15 million households, where the cost of a module per TV set might be between £15 and £25: no different from the average cost involved in the recent upgrade from analogue to digital broadcasting. If the BBC were nervous about the rate of take-up, it could easily borrow against future revenues in order to reduce the initial cost of conversion.
Source: DCMS select committee
In any case, time is not on Tony Hall’s side. Parliament has voted to decriminalise the licence fee, either in 2016 or 2017, leaving the BBC to chase non-payment as a civil debt, with the inevitable result that hundreds of thousands of households will avoid payment. The BBC acknowledges that at least £200 million a year could be lost this way. Needless to say, at least an encryption and subscription system would prevent evaders freeloading at the expense of those who pay.
Subscription would also give the BBC effective independence from politicians, as opposed to the nominal independence the licence fee represents. In October 2010, the Coalition transferred more than £500 million a year of spending obligations from its departments to the BBC, as the price of freezing the licence fee within an overall public spending review. The Commons committee was scathing about the BBC Trust’s failure to resist this blatant abuse.
At least giving up the licence fee, and adopting subscription, would free the BBC from the constant threat of political interference in its funding. Instead, the BBC would deal directly with those who consume its services: surely not the worst of outcomes.
Many people – probably most – admire the BBC and its cheery DG. They wish both well. But a dose of courage on their part would not go amiss.
This piece was first published in The Telegraph (2 March 2015)