“BBC licence fee should be scrapped”

The BBC licence fee should be removed, and instead replaced with a voluntary subscription service, according to a new report by the Adam Smith Institute.

The report said that the licence fee “criminalises poor people”, and enforces payment for services that are free elsewhere through revenue raised from advertising.

“The hostility of its competitors is justified,” the report also argued. “Continued commitment to subsidy via the licence fee will mean contraction and decline.”

The BBC licence fee currently costs £3.35 billion annually – the report, ‘Global Player or Subsidy Junkie? Decision time for the BBC’, suggests that the voluntary subscription service should initially charge £145 a year, the same cost as the current licence free.

The report also proposes a “transitional guarantee” of income, from 2012 – which is when viewers would be told they did not have to pay a licence fee, and instead could move to voluntary subscription.

However, an interim fee of £145 would be charged up until 2015, and only after then would BBC services change to become subscription only.

“Over a transitional period, subscriptions would replace licences as they fall due,” the report said. “During this period, BBC would retain all its current privileges with a fixed sum allocated by government to cover possible licence fee losses. This should ensure little change in current output over the interim phase.”

David Graham, the report’s author, said that the BBC “invests heavily in opinion management and capturing UK regulators rather than looking outwards towards the international media market”.

“Continuing with the current funding model means justified hostility from the rest of the industry, contraction and decline for the BBC,” he added. “The new government seems ready to rethink fundamentals. I hope this paper will help to encourage a serious debate, at a critical time, about a very important British institution”.

The report also argues that the government needs to “take back responsibility” in defining what is public service content. It says that this should include news, but not entertainment or documentaries. The report suggests monitoring of “public service” should come from a specialist unit in government.

This follows recent news that the government is considering cutting the current licence fee cost.