BBC to argue for licence fee link to inflation

Internal report into corporation's funding recommends move to inflationary rise in place of price freeze

The BBC will go into negotiations with the government over its future arguing for the licence fee to be linked to inflation, in place of the current income freeze.

The recommendation is made in an internal BBC report into the corporation's future funding, which also recommends raising the amount of money it makes through commercial ventures, the corporation said on Sunday.

The broadcaster made the disclosure following a newspaper report alleging that a review into the organisation's funding suggested replacing the licence fee with a subscription service from 2020.

The Sunday Times said that the majority of a 12-strong centenary review set up by James Purnell, the former Labour minister turned BBC director of strategy and digital, supported the change. It also reported that the review recommended freezing the licence fee until 2020.

A BBC spokesman said: "The report recommends that the BBC pursue an inflationary licence fee increase with greater commercial revenue. No subscription model is recommended. "

The BBC's royal charter, which sets out its scope and remit, and funding arrangement – both 10-year agreements – is up for renewal at the end of 2016.

Tony Hall, the BBC director general, and other senior executives have already begun making the case for licence fee renewal and negotations with the government may begin as early as this year.

The licence fee was frozen at £145.50 in the last deal thrashed out with the newly elected coalition government in October 2010, and will remain at that level until 2016, a 16% cut in real terms. The BBC also agreed to take on extra funding commitments including the World Service and Welsh language broadcaster S4C.

Last week Hall argued that the 2010 funding deal was forcing the BBC to make tough choices, including closing BBC3. Danny Cohen, the BBC director of television, said that further funding cuts could put BBC4's future in jeopardy.

On Friday the justice secretary, Chris Grayling, mooted the idea of making the non-payment of the licence fee a civil rather than criminal matter, to ease the pressure on courts.

Cases of people accused of evading the annual fee accounted for more than one in 10 of all criminal prosecutions last year – with 155,000 convicted and fined.

The culture secretary, Maria Miller, said the proposal, backed by more than 100 MPs, was an interesting idea which could form part of negotiations over the renewal of the BBC charter.

The corporation is also aiming to make more money through a revamp of the iPlayer which will allow viewers to access paid-for programmes from a new BBC download service.

The idea of replacing the subscription service has been raised before. Last month former Crimewatch presenter Nick Ross said that the current charter should be the last and it should be replaced with a subscription system.

Addressing a seminar discussion for the thinktank Civitas, he said: "The licence fee has just reached the end of its natural lifespan. It's already 88 years old and she will be well into her 90s by the time of charter renewal."

At the time the BBC said a subscription model would lead to "more expensive fees paid for by fewer people".


Jason Deans

The GuardianTramp

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