by Darwin Friend, policy analyst at the TaxPayers' Alliance
It seems a political age has passed since February, when Downing street figures told The Times that the BBC licence fee was set to be scrapped. But even though other seismic events have understandably dominated media and political attention in recent months, the battle over the future of the television tax - and with that inevitably, the future of public service broadcasting - is not one that can or should be set aside.
Thankfully, there seems to be some parliamentary appreciation of the seriousness of the issue, as the DCMS select committee, led by Julian Knight has launched a new inquiry into public service broadcasting, to which the TaxPayers’ Alliance has submitted. In the submission, we explain that the nature of the modern digital landscape is a major competitive threat to the future of public service broadcasters (PSBs). We also make clear that all PSBs, the BBC included, must embrace commercial or subscription-based financing models. Compelling people to pay a blanket tax for television services is no longer viable or justifiable.
Historically, there was at least some justification for taxing everyone with a television set. The BBC was the only show in town. Those with televisions were effectively paying an early version of a subscription fee exclusively in return for BBC content, fair enough. But as private competitors have first emerged and then exponentially grown, the case for the TV tax has disappeared. The BBC itself acknowledges this, with its 2018-19 annual report showing the time people spend across its TV and radio platforms is diminishing year-on-year. Yet, the public are still being compelled to pay a tax designed for a monopoly market, when there are quite literally thousands of other options to choose from.
There has never been anything close to the current array of content providers on the scene, thanks to the rise of both cheap satellite television and more recently the streaming services like Netflix, Amazon Prime and Disney+. Furthermore, modern digital technology means that each of these have their back-catalogues available in a manner that was never true historically. The depth of consumer choice is incomparable to what was available 23 years ago, when the last public service broadcaster - Channel 5 - was created, let alone when the licence fee started.
One of the effects of this increase in choice has been to make the licence fee an unjust charge. It acts as a gatekeeper to television - in order to access this vast range of choice people are still compelled to pay the BBC, even if they have no interest in watching it. Thanks to the choice that now exists in television, the BBC accounts for a lower proportion of viewing than at any time in British history. But taxpayers still have to pay for it as though it were the only thing on TV.
The BBC is far from the only public service broadcaster in the UK. Channel 4 is also owned by the public, a state of existence which clearly ought to end (though it does at least largely fund itself). The Beeb is therefore unique in competing in the commercial market while being primarily financed by taxpayers' cash. Given they’re using money received on pain of imprisonment, it’s unsurprising that the BBC dominates the radio market - owning 54 per cent of the market; and though the number is fast-declining, it still holds roughly a third of television viewership. It is natural to wonder if this relative dominance would continue unabated without the compulsory licence fee. Unsurprisingly, the BBC are not keen to give up their massive in-built advantage by following their rivals and sourcing their own revenues from subscriptions or adverts.
The argument that obligations placed on PSBs to produce content in the public interest warrant them receiving vast amounts of public money in return is flawed. Yes, the BBC alone has 22 regulations and obligations as a public service broadcaster. But unlike the BBC, PSBs such as ITV, Channel 4 and Channel 5 are primarily financed by commercial or private means and are still able to produce content in the public interest - and invest in British media. Channel 5 chose to increase investment in UK-originated content shortly after being privatised. In recent years, the enormous success of documentary programming produced by the likes of Netflix, HBO and Sky has also shown that PSBs are not the only broadcasters able to provide quality factual content in the public interest. Making a Murderer, McMillions, Epstein: Filthy Rich and Our Planet are not products of an out-of-date licence fee. It’s clear that the licence fee funding model is no longer a necessity to produce content in the public interest, but a convenient choice made by executives at the BBC to continue forcing taxpayers to cough up.
As well as showing that the independent television sector can produce much of what PSBs are supposedly designed for, the growth of “high-brow” programming on subscription services also shows that a subscription rather than licence-fee funded BBC would not need to abandon all such content. In fact, it would be incentivised to continue providing the most popular parts of its existing content - such as its various news services, which are the most used news source for adults in the UK.
Yet, some sceptics argue that the nature of British television, with the BBC on channels one and two of nearly every television set, makes a move to a subscription-based BBC impossible. A 2019 article in The Guardian suggested that the entire world would need to be online before such a change could occur. This is nonsense. The technology already exists for people to receive different TV signals and the BBC employs it for its iPlayer services. So rather than attempting to maintain a nearly century old system of compulsory charging, including with mad ideas like a broadband tax, the BBC should be told to use the technology already available to create a variety of subscription models. This would make it simple to set different charges for domestic and overseas viewing, rather than the complex and piecemeal approach currently taken to selling programming overseas.
Fundamentally, Britain’s TV tax-funded PSB has a choice. If it wants to succeed or even compete long into this century, then it needs to do more than just change top executives – it must change its financing model to one based on consumer choice rather than compulsion. This means the time has come to axe the tax and embrace the variety of technological options available. Coming into the 21st century would be a true public service from BBC broadcasters.