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UK freezes BBC license fee: How will this affect the broadcaster?

UK's Conservative government has packaged the decision as a cost-cutting measure for its citizens reeling under the fallout of the coronavirus pandemic.

Written by Navmi Krishna , Edited by Explained Desk | Kochi |
Updated: January 19, 2022 2:34:06 pm
The British government on Monday announced a two-year freeze on the British Broadcast Corporation (BBC) license fee, prompting concerns about the future financial and editorial stability of the broadcaster. (Reuters)

The British government on Monday announced a two-year freeze on the British Broadcast Corporation (BBC) license fee, prompting concerns about the future financial and editorial stability of the broadcaster. The annual license fee, which makes up about three-quarters of BBC’s income, will remain fixed until April 2024 and could be completely abolished by 2027, according to a statement by the culture secretary.

UK’s Conservative government has packaged the decision as a cost-cutting measure for its citizens reeling under the fallout of the coronavirus pandemic, soaring inflation rates, and the rising cost of living. However, critics say that the announcement is a part of the government’s efforts to bolster support for Prime Minister Boris Johnson, who is under fire for his role in ‘lockdown parties’ that breached the pandemic restrictions.

Justifying the decision on Twitter, Culture secretary Nadine Dorries wrote: “The BBC wanted the fee to rise to over £180 by the end of the settlement. Instead, it will remain fixed at £159 until 1 April 2024. That’s more money in the pockets of pensioners; in the pockets of families who are struggling to make ends meet.”

What is a license fee?

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United Kingdom’s national broadcaster is funded by a system known as the television licensing fee which essentially works like a tax, the non-payment of which is a criminal offence that can result in jail time.

Every household with a television playing live programmes is required to pay a fixed amount to the government. Currently, this fee is fixed at £159 for a colour TV license and £53 for a black-and-white TV licence, with discounted rates for the elderly and differently-abled persons. This amount is sent to a consolidated state fund from which it is disbursed to the beneficiaries, including the BBC, via the parliament.

As a norm, the cost of the annual license fee is revised every April to account for inflation. An exception to this was in 2010 when the fee was frozen at £145.50 for six years.

BBC in a bind

For decades, the license fee has accounted for the bulk of BBC’s income. According to its 2020-21 Annual Report, the license fee amounts to £3.75 billion of its overall £5.06 billion income, with the rest coming from grants and commercial deals. BBC says that this allows the national broadcaster to provide quality content without advertorial or political interference.

The freeze on the annual hike of the license fee will reduce the funds available to the broadcaster to produce valuable content, which could, in turn, affect its ability to compete with the existing and emerging entertainment options.

Current challenges

The television license fee in the UK has been a contentious issue for years for various reasons, including the prosecution of tax evaders. Non-payment of the fee can be punished by a fine of up to £1,000 or even imprisonment. The TV license tax evasion rate in the UK is between 6.5 and 7.5%, according to a statement published by the government on Jan 21, 2021.

It also comes amidst the global shift in TV viewing trends, particularly among the younger generation. Following the rise of subscription services like Netflix, traditional networks have seen a drop in viewership, leading to questions on why people are being forced to pay for a service that they might not be using. The uniform fee rates have also been seen as a disproportionate burden on poorer families.

This has been compounded by the changes in the political and social climate of the UK in the past decade. The BBC had come under criticism over its pro-London bias, a complaint Secretary Dorries referenced in her speech on Monday, saying: “We need a BBC that is forward-looking and that commands support from across the breadth of the UK – not just the London bubble”. It has also fielded complaints that its programs do not sufficiently represent the cultural minorities in the UK. In 2019, for instance, a 68-year-old Welsh woman made headlines after she faced jail time for her refusal to pay the license fee. According to a Guardian report, she was one of the 80 people protesting the absence of Welsh content in the broadcasts in such a manner.

What next?

Though the government has not charted out its plans for the BBC post-2027, analysts and experts have pointed out various alternatives for the license fee system.

This includes packaging the BBC programs as a subscription service, decriminalising license fee evasion, taxing internet service providers instead of televisions, or opening up the BBC to advertisements.

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