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The coming year will be a defining period for the future of Britain’s welfare state, a post-war national treasure. People working in key public services - health care, social security, education, public housing and transport - are in for a bumpy ride following the election of a Conservative government with a mandate to cut spending. 

Few people will be watching the unfolding drama more closely than executives and journalists at the BBC, the world’s leading broadcaster, which is also in the crosshairs of austerity-minded Tories. 

The enemies of the BBC, both political and corporate, are circling following the release of the Culture, Media and Sport committee report on the future of the BBC earlier this year. Their aim will be to cut or even eliminate the £145.50 annual licence fee which delivers around £3.7 billion each year.

In the past the corporation has seen off its political critics on the back of steadfast public support for its ethos of independent broadcasting, but the ground is shifting and reputation may count for little at a time of cuts and when people are turning to new Internet-based models for their news and entertainment. 

Certainly, journalism has come a long way in the 15 years since Daily Mail Editor Paul Dacre, an arch-critic of the BBC, famously told his staff at the newspaper´s annual summer party: "A lot of people say that the internet is the future for newspapers. Well, I say to that: bullshit dot com." 

What happened next is painful history for thousands of journalists who lost their jobs or found themselves cast out into the precarious world of self-employment and freelance work. They have learned the hard way that in the age of the Internet and the restructuring of media markets the traditional funding models for journalism – both public and private – have been broken, possibly beyond repair.

And the BBC faces a massive task to convince its critics that its subsidy should be maintained or even, as some argue, extended and increased in the light of a depressed media market and the collapse in public interest journalism, particularly at local and regional levels. 

Much investigative reporting in the UK is already being paid for by philanthropists and foundations. Abroad, groups like the Bill and Melinda Gates Foundation, pour millions into media programmes for reporting on health, poverty and development issues in parts of the world where journalists can no longer afford to set foot.  

For years there has been a largely fruitless search for an elusive “new market model,” but there few signs that private enterprise is breathing new life into journalism, whether in the form of open journalism or behind paywalls. 

Even The Guardian, the world’s third most frequently visited news site and an acclaimed leader in quality journalism, has had to bear white-knuckle losses of more than £100 million since 2010 – despite its role in breaking news of immense public importance including the News of the World phone hacking scandal, and the Edward Snowden and WikiLeaks stories. 

Changing attitudes 

The arguments in support of media that expose corruption and question the rich and powerful in the spirit of the BBC’s Panorama or Channel 4’s Dispatches are compelling, but questions remain over whether there is a public appetite to continue paying for public interest journalism.

There’s an even bigger challenge from the BBC’s competitors in the private sector. In 2009 James Murdoch made a lacerating attack on the BBC in a much-publicised MacTaggart lecture arguing that the BBC and its news website prevents commercial media from investing in news. At the time the ideological collusion between the Tories and the Murdoch media empire was at its height and News Corporation still hoped to win control of BSKYB (now Sky) and Andy Coulson, the former News of the World editor, who was later jailed over phone hacking, was still David Cameron's director of communications. 

Since then the Murdoch star has fallen in the wake of Leveson and the newsroom scandals and there is less enthusiasm, even in Tory ranks, for any moves that might see the introduction of a British version of Murdoch’s American flagship, the politically-biased Fox News.

With cross-party support the BBC is well-placed to see off its political and industry critics, but convincing people already suffering the impact of the worst public spending cuts in a generation to continue to pay is another matter. 

The corporation is unnerved by anything that might encourage backsliding on paying the licence fee and has warned that plans to decriminalise non-payment of the current fee – another proposal from the Parliament culture committee – will knock £200 million off its annual income.

Certainly, in its current form the BBC licence fee is unsustainable, not least because people are turning away from television as their main focus for getting, news and entertainment. 

The existing tax on television and radio sets is rapidly becoming obsolete. The all-party Parliamentary culture committee proposes that the licence fee could be scrapped in favour of a German-style broadcasting levy on each household. This would be a universal flat-rate fee, regardless of the number of people in the house or how many (or indeed any) televisions, computers, tablets or radios they own. 

A similar system was narrowly agreed last month in a referendum in Switzerland where people were also offered a 10 per cent reduction in the existing fee, but even then just 50.8% voted in favour, the narrowest margin ever in a Swiss national vote. 

In his 2011 book Free Ride Robert Levine complained that every media business has to contend with the notion that information on the net – whether video, audio or text – should be free or accessible at a minimal cost. As it is currently configured both technically and legally, he argued, the Internet allows technology companies to reduce the price of content to zero by allowing them build businesses using content copyrighted by others.

By delivering content they don’t pay for themselves, or by selling content for far less than what it cost to create, Levine says, information and entertainment distributors such as YouTube and The Huffington Post become “parasites” on the media companies that invest substantially in journalists, musicians and actors such as the BBC.

The problem is exacerbated by a new generation of consumers that is happy to sacrifice a degree of privacy and open the door to the undercover surveillance and commercial exploitation of their personal data by big Internet companies like Facebook, Amazon and Google as part of the bargain.

People appear to care more about getting email and other communications services for free than worrying about loss of civil liberty or opening the door to corporate and government snooping.

This free-for-all mentality on the web may encourage those who want to clip the wings of the BBC for political reasons and could strengthen the hands of those inside media who would like to diminish the corporation’s traditional role in British public life.

If they succeed it would be a serious blow to democracy, not just in the UK but in many parts of the world where the BBC and its reputation for editorial independence is an inspiration for independent and critical journalism.    

Sticks and stones 

Almost a year ago the BBC launched, rather grandly, a debate on the Future of News to consider how journalism will change over the next 10 years.

Its first report was typically slick, but it did not tell us much that we didn’t already know - that news is more accessible everywhere thanks to "faster, cheaper and more widespread" internet connectivity; that there will be more automation in journalism and more collaboration with the audience.

Talking about the future of BBC news the author James Harding, the BBC News and Current Affairs Director, says, “In the UK, devolution and the decline of the regional press are creating a real need for local news coverage. The BBC is going to have to do more to provide local news… we have to be uncompromising about our journalistic values - accuracy, impartiality, diversity of opinion, fair treatment of people in the news and public service.” 

These are brave words, particularly from a top leadership which so far has been remarkably timid about launching a full-scale public debate about why it’s important for people to continue paying their licence fee.

Behind this reticence may be the fact that the BBC has made life difficult for itself in recent years. The shocking behaviour of former presenter Jimmy Savile is one side of the story, but just as embarrassing are stories about the bonanza payments to top management and presenters in an age of public service cuts and austerity.

Even distinguished insiders have complained. In an interview last year Middle East editor Jeremy Bowen warned that that this behaviour had “caused massive damage to the BBC.” He said it had exaggerated the ‘them and us’ feeling internally between corporate bosses on enormous salaries and bonuses and newsroom staff being forced to endure cuts.

“But what I really resent about it,” he told Charlotte Higgins in The Guardian, “is the way it’s damaged us externally: it’s handed people who don’t like the BBC sticks and stones to chuck at us, and that’s a bad thing.”

He’s not wrong. If it is to survive the BBC must keep in step with its public. It needs to confront the free-for-all mentality of the digital age, and it needs to be more vigorous and outspoken in pressing home the argument that its output and its journalism are more than just business activities. The services it provides have public and democratic purpose that go beyond the bottom line and they are worth paying for.

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