The Government recognises the licence fee funding model is facing challenges. In an increasingly competitive media landscape, the number of households holding TV licences is declining and fell by 400,000 last year. Though the Government is committed to the licence fee model for the remainder of this Charter period (until 2028), these changes raise fundamental questions about the sustainability of the licence fee over the long term.

The BBC is a great national institution which generates significant public and cultural value. In delivering its remit it provides accurate and impartial news and current affairs, and plays a vital role in our democracy as a trusted source of information: a role becoming only more important in an increasingly fragmented media landscape where misinformation is on the rise. The BBC is also responsible for producing culturally relevant content that competes with global giants, and in doing so reflects the UK to the world. The BBC is at the heart of the UK’s thriving creative industries, where it makes a significant economic contribution and supports the continued growth of the sector by investing and developing skills and talent across all parts of the UK.

The licence fee model confers on the BBC a unique responsibility to its audiences, which alongside its obligations, creates a singular connection between the BBC and the public. The Government is committed to supporting this connection for years to come. It is therefore important that we are proactive in addressing the serious challenges that threaten the legitimacy of the licence fee model, which is why the Government has launched a review of the BBC’s funding model. The review will look at how we can ensure the funding model is fair to licence fee-payers, sustainable for the long term, and supports the BBC’s vital role in growing our creative industries.

The review will be led by DCMS, and supported by an expert panel. It will assess a range of options for funding the BBC. This will include looking at how the BBC can increase its commercial revenues to reduce the burden on licence fee-payers. Given pressure on household incomes, the Secretary of State has explicitly ruled out this review looking at creating any new taxes.

The findings of the review will support the Government’s views on the future funding of the BBC. Any final decision on reforming the BBC’s funding model would be taken at Charter Review.

Department for Culture, Media and Sport