BBC licence fee in DECLINE with another drop in households paying - as broadcaster says it's £1 BILLION worse off a year

In the BBC Group’s Annual Report and Account, which was published today, the broadcaster admitted to a “decline” in viewers purchasing a TV Licence - which the company uses to fund production of its content.

It said: “While licences in force declined by 2 per cent year-on-year, the vast majority of our audiences remained committed to paying the licence fee and 95 per cent of public service spend was directed to content and its delivery.”

The broadcaster also revealed a large real-terms drop in funding due to the loss of funding acquired by the licence fee.

“In real terms, the licence fee generated 30 per cent more income in 2010/11 than it does today – a difference of more than £1billion a year,” the report explained.

“We have been clear that the significant funding pressure we are under means we need to make further savings, on top of the major savings and reinvestment we have already made, to deliver the most value for audiences.”

The existing fee agreement expires at the end of 2027 and the end of the current BBC charter. In 2023, the licence fee income dropped to £3.47billion.

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Discussing the BBC’s biggest challenges, Director-General Tim Davie admitted that the decline in licence fee payments has “chipped away” at its income.

He said: “Our big challenge now is to accelerate rapidly the transformation of the BBC. We need to create a leaner, more agile organisation, and make the most of the digital-first opportunity to redesign our processes, cut costs and serve audiences better.

“Below inflationary licence fee settlements have chipped away at our income over many years and have put serious pressure on our finances. We now have an inflation-linked agreement until the end of the Charter, but this comes on the back of a 30 per cent cut in real terms between 2010 and 2020, and a tough couple of years of flat funding.”

Chairman Samir Shah said that the licence fee’s increase in April by £10.50 “certainly brought more financial certainty, but the rise was less than anticipated”.

It was its first increase since 2021 and was brought in to create a funding shortfall of £90million.

Upon its announcement in December 2023, former Culture Secretary Lucy Frazer told the House of Commons: “We know family budgets are stretched, which is why we have stepped in again – following two years of licence fee freezes – to reduce this year’s increase to less than a £1 a month.”

Davie has publicly rejected calls for a subscription model similar to Netflix , as he said it would incentivise the BBC to only produce content for its most die-hard subscribers. Earlier this year, he said: “We should not create another commercial walled garden or a narrow BBC that provides a niche service for the most hardcore users.

“The very wonder of the BBC is that quality news sits next to genres, such as drama and sport, thus ensuring widespread usage.”

Quizzed on whether a subscription model could work on a recent flight to Washington DC, Sir Keir Starmer responded: “We’ve committed in our manifesto to obviously the BBC and to the licensing scheme. It comes up, I think from memory, in 2027 so obviously there’s going to be some more thought between now and then, but we are committed to the BBC and we are committed to the licensing arrangements.”

Richard Sharp, the former BBC chairman, said last year that he was in favour of a mandatory licence fee, although he was worried it was regressive because those on lower incomes pay the same as wealthier households.

Discussing the issue last summer, he said: “I would be in favour of a form of a mandatory payment – currently the licence fee.

“There is one issue, which is that it’s regressive, which may need to be addressed.”