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BBC: Licence fee best way of funding

July 16, 2014

By Colin Mann

In two related blog posts, James Heath Director of Policy, BBC, has set out the Corporation’s thinking with the aim of discussing ideas, and to stimulate debate on some of the key public policy questions facing the BBC.

“Some argue that the licence fee is outdated and should be scrapped; others that it should stay but be distributed beyond the BBC. It’s right that these issues are debated and that we engage with the counter-views,” he wrote at the outset of the first post – Why the licence fee is the best way to fund the BBC – in which he mounted a and detailed robust defence of the licence fee.

“What the BBC is for and how it should be funded are inextricably linked. I think there are four basic tests for the BBC’s funding mechanism: universality and social value, great programmes at an affordable price, creative sector investment, and independence. This post examines whether the licence fee still meets these tests,” he explained.

“No funding system is perfect. But I believe there is a strong case that the licence fee still meets the tests of a good funding system for the BBC,” he concluded.

Heath’s second post – Why subscription isn’t the best way to fund the BBC – asks whether there be a better funding model, or at least one that is more suited to the digital world? “What about subscription? Or could a hybrid model of a core licence fee funded service with additional services funded on a subscription basis, deliver the best of both worlds? This post deals with both potential options in turn,” he wrote.

Heath notes that subscription is not a new idea for funding the BBC. “Nearly 30 years ago, the Peacock report favoured it as the best way to give effect to consumers’ preferences. Digital switchover has now made it technically possible (but only at significant cost) to charge households directly for the BBC’s TV services (but not radio) and exclude non-subscribers,” he explained.

“But whether these models are desirable depends on what you think the BBC is for and what impact it should have,” he suggested.

Offering an equally detailed analysis of the options, Heath suggests that there are too many obstacles and too few benefits in trying to operate a subscription model, and as for a hybrid model, he argues that rather than delivering the best of both worlds, the BBC’s initial analysis suggests that under a hybrid model, some people would pay significantly more for the same number of services and others would pay a bit less for a lot fewer services. “Perhaps more fundamentally, the BBC would be erecting a pay-wall around the digital future,” he warns.

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