TV licence: pay changes to BBC fee explained, could it be linked to council tax - will cost be scrapped?

The BBC licence fee could be scrapped and replaced with a new funding model, according to Culture Secretary Nadine Dorries, who called the corporation’s current financial model "totally outmoded.”

Dorries said the Government will investigate how media regulator Ofcom can "hold the BBC to account," as well as exploring new funding options for the corporation.

Any changes will be made “well ahead” of the BBC Charter renewal in 2027, she said.

The Government believes the charge is becoming increasingly unsustainable as more viewers shift online, and Dorries believes the company is too London-centric and dominated by "elitist" metropolitan attitudes.

But will the BBC eventually be free to view without a licence, and will it have to begin airing adverts? What does it mean for viewers?

Here is everything you need to know.

What has Nadine Dorries said?

Dorries reaffirmed that the five-year licence fee settlement she imposed on the BBC in January, which froze the charge for the first two years, would be the last, as she unveiled a Broadcasting White Paper that promised to "usher in a new golden age for British TV and radio."

White papers are policy documents that outline the Government's legislative proposals for the future.

They serve as a foundation for consultation and discussion with interested parties, as well as the ability to make final adjustments to Bills before they are formally introduced to Parliament.

The Broadcasting White Paper warns that if nothing is done, viewers will have to pay "significantly" more in the future to make up for the deficit left by the one million households that have opted to stop paying the licence fee in the last two years.

With more people watching shows on devices other than TVs, as well as more competition for viewers and advertising money, Dorries believes that drastic reform is required to enable public service broadcasters to compete in the internet age.

Speaking to The Spectator, Dorries said: “We are going to very soon announce that we are going to be looking very seriously about how we fund the BBC.

“We are ready to implement a new way of funding the BBC.

“We’re going to be looking at how Ofcom hold the BBC to account and then very shortly after that we will be announcing other measures that we are going to put into place to start looking at how the BBC will be funded in the future so that we are well in time to have that in place for the Charter renewal.”

What would a change mean for the BBC?

Dorries’ comments come as the BBC debates how to support its services in the face of an unclear future for the licence fee.

When it comes to BBC funding cuts, director-general Tim Davie has stated that he would rather “make slightly less” content, but was not willing to “compromise quality”.

Speaking at the VLV Spring Conference about the cost-saving measures being considered, Davie said: “I think the idea of trying to protect universality by doing everything with every service is the wrong way forward, you spread yourself too thin.”

Davie said he would not reveal what content or services could be cut yet, but that the objective is to "maximise the value" of the licence fee as part of the public service mission.

“We’re not trying to be Netflix, we are the BBC and very highly distinctive, of the highest quality,” he added.

He said the goal is to discover ways to be more efficient with funding while also looking for ways to increase commercial income and third-party investment.

The BBC produces roughly 31 original dramas a year, and Davie predicted that the corporation would have to "make less" of them if it didn't want to lose out on funding.

Another possible cost-cutting approach could be for services like BBC Four to become "primarily archive services."

Davies admitted that repeat programming would be necessary in this case, but claimed it would still be beneficial to customers who enjoy the channel's content.

How could the BBC be funded in future?

Despite talk of the licence fee being “scrapped”, only the current model is looking to be changed, and it’s unlikely that access to the broadcaster’s content will become entirely free.

Linking the fee to council tax is one option for changing the current system, a move which would see wealthier households pay a higher fee.

A household fee could also be imposed and paid along with other utility bills like gas and electricity.

Former Culture Secretary John Whittingdale has suggested funding the BBC's basic services comes from a Treasury grant, with viewers then paying a Netflix-style subscription "top-up" for entertainment and sport.

But Chancellor Rishi Sunak is likely to be cautious of any direct support of the BBC from the Treasury, which could raise questions about the broadcaster's independence from the Government.

What else is in the White Paper?

It’s not just the BBC in line for changes with the release of the White Paper.

Streamers operating in the UK could face fines of up to 5% of their earnings if found guilty of presenting “harmful” content, and a new Video-on-Demand Code will give UK users the power to report content on Netflix, Amazon, Disney, or Apple shows to Ofcom.

On-demand services from public broadcasters - like BBC iPlayer and ITV Hub - must also be given "appropriate prominence” on platforms like smart TVs, so that viewers can easier find UK programming.

Under other proposals, a convoluted set of 14 "purposes" and "objectives" imposed by rules passed in 2003 will no longer apply to UK public service broadcasters.

Instead, their remits will be simplified, with a new definition of what it means to be a public service broadcaster and an emphasis on creating distinctive productions that reflect British culture, support domestic film and TV production, and provide unbiased and reliable news coverage.

Sport fans will also benefit, with a modification to broadcasting regulations guaranteeing the BBC and other free-to-air networks live rights to show the World Cup and Olympics.