Countdown to biggest shake-up in history of TV licence fee …what do we know about Labour’s plans?
With fireworks ringing in the new year across the globe, the countdown until the long-awaited renewal of the BBC’s Royal Charter is now into the final two years. Over the next 730 days, the Labour Government will face mounting pressure to reform, replace or remove the TV licence fee.
The countdown to the 2027 deadline to the BBC Royal Charter renewal takes place against a backdrop of growing public resistance to the current funding model.
Half a million households cancelled their TV licence fee in 2023 alone, with British viewers turning away from terrestrial channels in favour of subscriptions like Netflix, Disney+, Prime Video, and Apple TV+, to name just a few.
Watching on-demand content on these streamers does not require a TV licence, but there are circumstances where you’ll need to pay the annual £169.50 price tag to watch on Prime Video, Apple TV+, and Netflix.
Sky Stream has never been this affordable. The broadcaster has just launched an affordable new bundle of channels and on-demand services, dubbed TV Essentials. It includes its plug-and-play Sky Stream box, over 100 live channels including Sky Atlantic — the exclusive home of shows like Game of Thrones, And Just Like That, and The White Lotus. You’ll also find a subscription to Netflix and Discovery+ included too and can upgrade to Sky Cinema and Sky Sports at an extra cost.
With diminishing sports rights and dwindling viewing figures, plus the challenge of enforcing TV licence rules in the streaming era, the future of the BBC and its unique funding model hangs in the balance.
Over the next two years, the Government must assess a range of alternative funding models, which range from subscription services to household levies, as the BBC prepares for its biggest transformation in decades.
Rishi Sunak’s Government resolved to keep the licence fee in place — with an increase of £10.50, which raised the total to £169.50 following a two-year freeze — until the end of the current charter period in late 2027.
The last Conservative administration pledged to scrap the funding model altogether when the next renewal came around. Following the General Election last summer, the new Labour Government declined to take the same stance. However, it’s also remained tight-lipped about exactly what it wants to do with the TV licence fee ahead of the next election, which isn’t due until 2029.
And so, all eyes turn to Lisa Nandy, who serves as Secretary of State for Culture, Media and Sport in Keir Starmer’s cabinet. During her speech at the Labour Conference in mid-September, the Wigan MP said: “We are about to kickstart the charter review to ensure the BBC survives and thrives well into the latter half of this century. And we’re working with the TV industry to ensure it becomes far more representative of the country, with decision makers who hail from every nation and region.”
Looking ahead to what exactly could be in the works from the new Culture Secretary, the most detailed outline can be found in previous comments from the Labour MP. Writing for the website LabourList back in 2020, Lisa Nandy proposed to make the BBC more accountable to those funding it — the members of the public who pay their licence fee.
The Member of Parliament suggested a new model where the BBC is “owned and directed by licence fee holders,” changing the relationship between the public broadcaster and its audience. The annual £169.50 fee wouldn’t just pay for the upkeep of linear channels, live radio, and iPlayer, but would also make viewers stakeholders in the BBC.
Under the proposal, licence fee payers would have a say in major BBC decisions — addressing a common criticism that the annual fee is a one-way transaction, with limited accountability to those who fund it.
According to the article by Ms Nandy, a new model where the BBC is “owned and directed by licence fee holders” would be an improvement and ensure the broadcaster is accountable to its funders — the public who pay the licence fee — and not just to the Government of the day.
“To maintain the BBC as an institution, it must be accountable to those who fund it – the British people. Instead of tokenistic consultation with the people who pay for it, and backroom negotiations with the government, the BBC should move to a model of being owned and directed by licence fee holders – who can help decide the trade-offs that the BBC must make to secure its future,” wrote Lisa Nandy in the four-year-old LabourList article. “This will mean a new structure for the BBC board that focuses on genuine public representation and participation – and greater commitments to transparency.
“This will support greater independence from the government, and protection from the Trump-like assault on free and open media that this government wants to pursue.
“It is time for all of us to be more forceful in supporting a free and open media. Because if we don’t fight for it, we will lose it and we will all be damaged as a result.”
Now the Wigan MP is in a position to implement such radical changes, it’ll be interesting to see whether her views have changed in the intervening years. It’s worth noting that such dramatic reform would face challenges.
Juggling the opinions of millions of licence fee payers across the UK, maintaining editorial independence, planning for the long-term health of the business, and meeting the requirements of a public broadcaster would be no small feat for the BBC. Dozens of new processes would need to be put in place.
The renewal of the Royal Charter in the next two years will determine not just how the BBC is funded, but its fundamental role in British broadcasting for the coming decade.
Subscription services have been floated as one alternative, enabling viewers to access BBC shows like Netflix. However, this could compromise the universal access requirement for a public service broadcaster — it would also present technical challenges for BBC radio services.
Another popular suggestion is a household levy, which is something that Germany has introduced. It would require all homes to contribute, potentially lowering individual costs, but raising affordability concerns for Britain’s lower average disposable incomes.
With so many viewers streaming live and on-demand content from the BBC, a new levy imposed on broadband has also been suggested as an alternative. It would simplify collection — it would be charged by Internet Service Providers (ISPs) like BT, Sky, and Vodafone as part of your monthly broadband connection fee — but could further increase rising broadband costs, potentially rendering internet access unaffordable for some households.
Advertising represents another option, freeing the BBC from public accountability. But commercial broadcasters warn this could severely distort the TV and radio advertising market. While there’s no doubt that major shows like Strictly Come Dancing would attract advertisers, smaller shows like Springwatch and Songs of Praise might struggle to generate sufficient revenue and could be axed.
An income tax model, like the system used in Finland, would tie BBC funding to earnings but faces political challenges as critics could frame it as an additional tax burden.
Government grants could remove direct public payments but risk increased political interference and budget fluctuations based on government priorities.
Commercial funding through taxes on broadcasters and telecoms companies, similar to Spain’s model, would face legal challenges from industry players and potentially harm existing public service broadcasters.
A hybrid approach combining multiple funding sources could create a two-tier BBC, with core services publicly funded and premium content behind a paywall. The current licence fee remains an option, as demonstrated by Ireland’s recent decision to retain their system, though continuing cancellations threaten to create a downward spiral of reduced funding and services.
Campaigners have warned the UK Government that failure to protect traditional aerial television, like Freeview, could leave millions unable to watch the content their licence fee has paid to produce.
In its manifesto, the Labour Party promised that it would work “constructively with the BBC and our other public service broadcasters”, making culture and the arts more accessible and investing in the creative industry as part of its industrial strategy.
When Prime Minister Starmer announced the appointment of the Secretary of State for Culture, Media and Sport, Ms Nandy said she was “thrilled”. Lisa Nandy’s mother, Luise Nandy, was a TV producer best known for the former, long-running news review show What The Papers Say and the studio debate programme Gloves Off back in 2000.
“Its industries give meaning to millions of lives and bring communities in our towns, villages and cities together,” she said in a statement. “As Culture Secretary, I will do everything I can to harness the limitless potential of the extraordinary people in these amazing sectors to drive economic growth, unlock opportunities for everyone and change lives for the better. The hard work begins today.”
Under UK law, every household is required to have a valid TV licence to watch or record live television. This £169.50 fee doesn’t just cover programmes on the BBC but applies to live broadcasts on ITV, Channel 4, Sky TV, Virgin Media, and all other channels in the TV Guide.
You’ve always needed to be covered by a TV licence to catch up on previously aired shows and films on BBC iPlayer. However, watching on-demand content from streaming services like Netflix, Disney+, Apple TV+, and Prime Video was exempt. But that’s all about to change.
That’s because these streamers are increasingly branching out into live broadcasts.
Netflix broadcast a stand-up show from Chris Rock called Selective Outrage back in March 2023 to subscribers across the globe — its first foray into live events. This was followed by another live comedy special, John Mulaney Presents: Everybody’s in LA.
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But the US streamer upped the ante on November 16, when it will exclusively broadcast a boxing match between YouTube superstar Jake Paul and heavyweight champion Mike Tyson from the AT&T Stadium in Arlington, Texas. Originally scheduled for July, the hotly-anticipated fight was pushed back after Tyson experienced an ulcer flare-up and was forced to pause training on doctor’s orders.
Some 80,000 fans watched the feverishly-anticipated brawl in the venue, with 108 million Netflix subscribers streaming from their Smart TVs, iPhone, iPad, Android phones, laptops and more. Since this is a live broadcast, the TV licence exception no longer applies. As such, Netflix viewers — as well as those who tune in to other streamers who dabble in live events — will need to spend £169.50 on the licence fee.
A spokesperson for the BBC told GB News: “A TV Licence is needed to watch live content on streaming services, watch or record a TV programme on any channel and when using BBC iPlayer. Further information is available on the TV Licensing website or via the customer services team, who can help with any queries.”
The loophole was first spotted by the team at telly-centric blog CordBusters. Crucially, those who only watch on-demand shows and films on streaming services will not need to be covered by a TV licence.
Netflix isn’t alone, with a number of streamers now experimenting with live broadcasts. Prime Video has aired Premier League fixtures to its fans, who can watch with a standalone £5.99 subscription or as part of an annual Prime membership, as well as coverage of the ATP Tour, WTA Tour, and European Open.
Meanwhile, Disney+ streamed Elon John’s farewell concert, Elton John Live: Farewell from Dodger Stadium, on November 20, 2023 — the 47th anniversary of his 1975 performance at the Los Angeles ballpark. Apple TV+ has secured the rights to all football matches in the Major League Soccer 2024 season too, marking its continued push into live sports coverage.
Given that so many of these streaming services previously only offered on-demand content — and were therefore exempt from the TV licence — their changing schedules and the ramifications for licence fee payers will likely catch some viewers off-guard.
Many (outdated) online guides claim that viewers who stream exclusively from ITVX, Channel 4, Netflix, Prime Video, and Disney+ do not need to pay the £169.50 fee.
Crucially, whether you need a TV licence fee is never determined by the device you’re using to watch a programme. It applies to traditional TVs, as well as desktop computers, laptops, smartphones and tablets, games consoles, set-top boxes like Sky Stream, and or DVD/VHS recorders.
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According to BBC data, the total income from the licence fee in 2023 was £3.74 billion, which accounted for about 65% of the BBC’s total income of £5.73 billion. The TV licence fee was frozen for two years between 2022 and 2023. At the time, the UK Government hailed the announcement as giving “broadcaster certainty while protecting the public from price hikes”.
If you’re caught watching live TV without a TV licence, then you may be fined £1,000 or be taken to court. The maximum fine is £2,000 in Guernsey.
In 2022, there were 40,220 convictions for licence fee evasion, resulting in an average fine of £202.
According to TV Licensing annual 2022/23 review, a total of 90% of UK households who were required to hold a valid TV licence had one. In that same period, 73,000 people were caught watching live TV without a licence and £137 million was spent collecting the necessary fees.
It’s a common misconception that you can be sent to prison for licence fee evasion. However, you can be imprisoned for failing to pay the fine for not having a valid TV licence.