TV licence fees have officially been frozen by the Government for the next two years, after which it is intended to be scrapped completely. This announcement seemed to be a saving grace for many amidst the rising cost of living but potential replacements for the licence fees could become an even bigger burden than the licences ever were.
The TV licence fee currently sits at £159 and lasts for 12 months, however the BBC has been urging for this to be increased in line with inflation.
Had this been approved, households would find themselves paying more than £180 by the year 2027.
The freeze will see households saving roughly £16 and the announcement of its potential cancellation has been a joy for many.
The price will remain at £159 until April 1, 2024 and from there will increase in line with inflation until the end of the Royal Charter.
The Royal Charter, which currently funds the BBC, is due to end on December 31, 2027, from which point TV licence fees are reported to be completely abolished.
The decision has been seen as a saving grace by many who are struggling with the rising cost of living, as well as those over the age of 75 but not claiming Pension Credit.
Previously, the BBC covered the cost of TV licences for all Britons over the age of 75, but recent changes saw only those claiming the Pension Credit benefit being able to receive them.
The broadcaster is expected to make deep budget cuts and reorganise their finances whilst they are still able to receive income from the licence fees.
This would then see broadband providers collecting the money quite easily from their customers and adding a potential £13 monthly charge to broadband bills for households.
It has been suggested by some that the BBC could be funding directly by the Government as is the case in Australia for their ABC broadcaster.
However, this leaves some murky waters surrounding what the editorial independence of the BBC would look like and leaves potential pathways for censorship.
BBC connections and programs overseas currently have advertising on its services, leaving many to suggest they simply do the same in the UK although it is doubtful if this would raise enough funds.
Special income tax
This funding model is mainly seen in Scandinavian countries, generally abolishing their TV licences in favour of a one percent income tax with a maximum tax cap per person.
These taxes would be kept separate from things like National Insurance contributions on one’s payslip and would go directly to a dedicated funding pot for the broadcaster.
Many across the UK have ditched the traditional live TV approach to entertainment in favour of subscription services such as Netflix or Disney+, which then saw households not requiring a TV licence at all.
The popularity of this funding model is undeniable although the technicalities behind operating it on BBCs multiple consumer platforms could be a concern.
BBC Chairman Richard Sharp and Director General Tim Davie said: “Given the breadth of services we provide, the Licence Fee represents excellent value for money. There are very good reasons for investing in what the BBC can do for the British public and the UK around the world.
“A freeze in the first two years of this settlement means the BBC will now have to absorb inflation. That is disappointing – not just for Licence Fee payers, but also for the cultural industries that rely on the BBC for the important work they do across the UK. The BBC’s income for UK services is already 30 percent lower in real terms than it was 10 years ago. We will set out the implications of the settlement later, before the end of the financial year, but it will necessitate tougher choices which will impact Licence Fee payers.
“While there will be challenges, we do have the financial stability of the Licence Fee, which is crucial. We have the certainty of a six-year deal for the funding of the BBC: two years cash flat and four years keeping pace with inflation.
“We have great faith in the BBC and its future. We will do everything to ensure the BBC continues to punch above its weight for Britain and for audiences around the world. We will continue to drive an ambitious programme of reform, moving more of our output across the UK, transitioning the organisation to a digital future and delivering distinctive and impartial content. We have a uniquely talented team of people at the BBC who are focussed on delivering this for the public.
“We actively look forward to the national debate on the next Charter and, of course, all options should be considered. The BBC is owned by the public and their voice must always be the loudest when it comes to determining the BBC’s future.”