BBC says TV licence fee could be reduced if more people pay it

The BBC has suggested the TV licence fee could be reduced if more households are required to pay it, as the broadcaster warns its current funding model cannot sustain the organisation long term.

The proposal was outlined in the corporation’s response to the UK government’s review of the BBC’s royal charter, which determines how the public broadcaster operates and is funded.

Turn to streaming leaves live TV behind

The BBC says big changes in how people watch content have created a growing gap between those using its services and those paying for them. According to the broadcaster, around 94% of adults in the UK use BBC services every month, but fewer than 80% of households currently pay the licence fee.

“The BBC has gone from being a service almost every household paid for and used to one that almost every household uses but millions do not pay for,” the corporation said.

BBC leaders say the current system, which requires a licence mainly for watching live television, no longer reflects modern viewing habits. With audiences increasingly watching content on demand or through digital platforms like YouTube, the broadcaster says the rules around who must pay are confusing and outdated. 

It also warned that if the number of paying households continues to fall, those still paying could become resentful. The BBC said the current system risks leaving “a diminishing number of people paying for a service designed for and made available to everyone”.

One idea raised by the corporation is lowering the licence fee while expanding the number of people required to contribute. It also suggested streaming platforms could do more to notify viewers when the content they are watching requires a TV licence.

BBC to cut spending by £500m

The broadcaster says falling income and rising costs are already forcing tough decisions. It confirmed plans to cut spending by another £500m over the next two years, on top of £1.5bn in savings made during the current charter period. BBC income from the licence fee is now about £1.2bn lower in real terms than it was at the start of the current charter.

BBC director-general Tim Davie warned that the organisation faces a difficult choice if reforms are not made. “The choice here is clear: back the BBC or watch it decline. The status quo is not an option.” He added that the corporation needs a funding system that is both sustainable and fair so it can continue serving audiences.

The BBC is also asking the government to once again fully fund the World Service, which currently costs the broadcaster around £400m per year. That cost used to be covered entirely by the government before responsibility shifted to the BBC in 2014. 

BBC chair Samir Shah said the broadcaster still plays a major role in the UK’s culture and global influence. “The BBC is a vital national asset. A shared investment in the UK’s culture, communities, and democracy. It supports world-leading creative industries and drives economic growth, as well as promoting the UK’s interests and influence abroad.”

“But it is also at risk like never before and this Charter must deliver reform.”

BBC consider opening iPlayer to ITV and Channel 4

Another proposal would see the BBC open its streaming platforms to other British broadcasters. Under the idea, services like ITV and Channel 4 could place their content on iPlayer, potentially with advertising or subscription models, while BBC content would remain ad-free. The broadcaster believes a joint platform could help British media compete with global streaming services such as Netflix and YouTube.

“It is increasingly clear that in the new world of global streaming, only a few destinations will be successful in retaining audience scale,” the BBC said.

Without cooperation, it warned that the main platforms dominating viewing in the UK could all end up being foreign-owned.

BBC raises concern over political influence

The BBC’s submission also raised concerns about political influence over its governance. Currently five of the broadcaster’s 14 board members, including the chair, are appointed by the government. The BBC suggested introducing “a new, clearly defined, transparent and broadly consistent process” for selecting board members to reduce concerns about independence. It also proposed removing the current system where its royal charter expires every 10 years, arguing this creates uncertainty about the organisation’s future.

A BBC source said independence remains a major concern for audiences. “When it comes to independence, perceptions matter as much as reality, and the audience has spoken.”

The government is currently examining the future of the BBC, including its funding model, governance and charter system. Ministers are considering options such as changes to the board structure, new complaints processes and greater public involvement in decision-making through “citizen assemblies”. Talks between the BBC and the government will continue before formal proposals are published later this year.

The broadcaster says reform is urgent if it is to adapt to the rapidly changing media landscape. “The Charter must provide a funding model that is fit for the future. The current model can no longer sustain the BBC’s public service mission.”