A liberal-left case for a subscription funded BBC

9:44 am - July 16th 2008

by David Elstein    

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Sunder Katwala recent article on the BBC raises two issues: editorial bias and funding. Many of us have encountered what we regard as examples of BBC lack of impartiality.

Anthony Barnett on Our Kingdom lambasted the BBC’s coverage of the David Davis campaign. I have spent nearly six years trying to persuade the BBC to acknowledge, let alone make amends for, the worst breach of impartiality in its history (a documentary on the Mau Mau rebellion purporting to be objective but actually presenting a lone scholar’s highly tendentious – and subsequently widely discredited – opinions).

In truth, these concerns regularly arise, and for the most part the BBC is aware of its obligations, especially under the new governance structure, which was responsible for a recent report by John Bridcut on the whole question of alleged liberal bias in the BBC. For me, funding is a much more important long term issue.

There are those who would die in a ditch to defend on principle the present licence fee – what former BBC DG Greg Dyke regularly calls an unfair poll tax. I would have much less of a problem with the licence fee if it were equitably levied: on those who can afford to pay tax, in proportion to their taxable income. A BBC charge of 0.75% of taxable income, collected with each individual’s tax payments, would leave the BBC with roughly its present income, but excuse those too poor to pay tax.

In the past, there have been concerns about editorial independence were the BBC to be funded directly out of tax receipts. However, the BBC’s World Service is already funded that way, as is 15% of its domestic service cost (the proportion paid by the Treasury on behalf of the over-75s), without any issues of supposed interference in editorial content. S4C and Gaelic Broadcasting are also directly funded, and similarly untouched by fears about independence.

Sunder sidesteps the more radical potential way of funding the BBC – voluntary subscription – by suggesting it would be too expensive to introduce. This is almost certainly untrue. The cost of collection and evasion of the licence fee is over £300m a year, excluding the hidden expense of the vast number of court cases the BBC initiates each year.

The last published estimate showed that 400,000 people were threatened with prosecution each year, and 150,000 actually prosecuted.

There is a social cost to this process, as well as a financial cost. A large proportion of those prosecuted are single parents on low incomes, for whom the licence fee is a considerable burden. To add to this burden the court-imposed fines is effectively to criminalise poverty. Almost no-one now goes to jail for failing to pay the evasion fine, but the victims of the system are often dragged back to court soon after a conviction, having fallen behind again and now finding themselves on the enforcers’ radar.

The reason that voluntary subscription has not been pursued in the past is not cost, but technology. However, the switchover to digital television means that by 2012 every functioning TV in the country will have the means of decoding scrambled TV signals – the technology that underpins pay-TV in all delivery systems. It seems quixotic to maintain the fleets of detector vans, armies of snoopers and mountains of paperwork associated with a physical licence when anyone failing to pay the licence fee in the digital age could simply be cut off from receiving the BBC’s signals.

And there’s the rub. Advertiser-funded free-to-air channels would still be available to non-payers, and the BBC could suffer a loss of viewers. However, surely even the BBC would prefer to have viewers who have chosen to pay for its services rather than those who have been coerced.

As it happens, there is an abundance of evidence that very few people would choose to do without the BBC, at a given price. Moreover, a series of studies has shown that a large proportion of the population would willingly pay more for the BBC than the current level of the licence fee, strongly suggesting that if the BBC introduced a series of channel packages, from, say, just BBC One through to the full array of current channels plus HD options and perhaps a sports channel, take-up of one or other of these choices would be nearly universal, and BBC income would rise, rather than fall, especially as each TV set would need its own smart card, allowing the cost of the cheapest package for a single TV to be as low as £5 per month.

The paradox of the present situation is that people too poor or too unwilling to pay for the BBC are forced to subsidise those who value it well above the level of the licence fee, mostly because that level is a much lower proportion of their net income than it is for the poorest. A tax-based licence fee removes that inequity, but a layered consumer proposition which is entirely voluntary gives the BBC a much stronger connection with its viewers and listeners, real accountability for the first time, and the opportunity to continue developing new services that will appeal to subscribers.

The BBC has in the past run a layered fee system: at one time, there were separate charges for radio and television, and when BBC2 was launched it effectively entailed a supplementary licence fee, as it was the only channel available in colour, and a colour licence cost more.

When the BBC first introduced its digital services, the BBC supported the recommendation of the report from a committee chaired by Gavyn Davies that a supplemental licence fee be charged for those services, as it was only fair that those who used them should pay for them. It was Tony Blair, under pressure from BSkyB and ITV Digital, who over-ruled this proposal.

Objections to subscription
One objection that has been raised to subscription is that it might induce the BBC to thin out its public service content as opposed to entertainment, so as to maintain the highest level of subscribers. There are three answers to this point.

First, there is a well-established public demand for high quality products: without it, publications like The Economist and the Financial Times could not exist, along with a huge array of other magazines.

Secondly, the research that has been done shows that the present balance of BBC output would deliver enough subscribers to maintain the present quality of service: and as the BBC is non-profit-making and publicly owned, there should be no pressure to dilute in order to maximize revenue.

The third answer is perhaps the most fundamental: if the BBC feels that it would be wrong to impose on voluntary subscribers content that had only limited appeal, then it is entirely open to Parliament to re-invent public service broadcast funding, along the lines of one of the options floated by Ofcom in its recent Public Service Broadcasting report (published on April 10th): a funding agency, dedicated to such content, and charged with ensuring plurality and quality of supply across the old and new media.

This would be a much more logical and elegant way of embedding public service content in our media in the future than, say, top-slicing the licence fee.

Conservative approach
Sunder asked what the Conservatives think about all this – presumably assuming that I might know something, because a think tank I chair produced a report on the future of the BBC (Beyond The Charter (pdf file)) that was commissioned by John Whittingdale when he was the shadow minister responsible for broadcasting.

In fact, the Conservatives largely ignored that 2004 report, and the latest publication from their Research Department (Plurality in the New Media Age‘ – pdf file) shows no interest in any change in funding arrangements.

As Anthony Jay’s paper shows, there is little to be learned from right-of-centre thinking on these issues currently.

After all, why keep even a reduced licence fee to pay for the most populist of the BBC’s TV channels, when 90% of what it transmits could be readily funded by the market-place? And what Radio 4 most needs is an effective competitor, not an enshrining of its unique status.

So we have a radical option for funding the BBC in the future, which would allow it much greater freedom and flexibility whilst introducing real accountability and transparency for the first time: and this would fit well with Ofcom’s current thinking in trying to envisage a public service content system in the future that would be plural and wide-ranging. We could also move to a fair, though still “single-package”, version of the licence fee, which would also eliminate all the current costs of collection and court cases.

Or we could stick with the social misery, inflexibility, lack of accountability and absence of transparency of the current regressive and unfair system. Time for the “liberal-left” to take off its blinkers and understand that dancing round the licence fee totem pole is no substitute for thinking clearly about what is best for the BBC and its audiences.

Extracts from this article were first posted as comments in reply to Sunder Katwala’s article

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About the author
This is a guest article. David Elstein is a former contender for the director-general position at the BBC. He previously launched Channel 5, worked for Sky as head of programming and held a position as a senior editor at the BBC. He is now chairman of DCD Media plc, and at Screen Digest Ltd and Luther Pendragon Holdings Ltd.
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Story Filed Under: Blog ,Equality ,Media ,Realpolitik ,Westminster

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Reader comments

1. John Meredith

It is interesting to ask ourselves what the licence fee would look like if it was being introduced now. If the government decided that every owner of an internet-enabled computer should have to have a licence, for example (because of all the excellent state produced content available etc) would we think that a smidgen illiberal? I think we would. The fact that the BBC licence fee doesn’t strike everybody as scandalous is, I think, just a down to a combination of familiarity, the ingrained habits of deference to authority in this countr and self-interest from those who highly value the BBC but wouldn’t want to pay for it all themselves (much cheaper than Sky if everybody is forced to subsidise our entertainment).

Anything that moves from a coercive to a voluntary method of funding strikes me as an improvement in terms of respecting people’s rights and choices, and so this article gets my agreement.

This doesn’t address the wider morality question, since I don’t believe it exists (a tax you can avoid by not having a TV isn’t much of a tax on the poor, since if you’re poor you can always not have a TV; most of the people I know who have very low incomes don’t have TVs and still appear to be alive) – however, I’m highly sceptical of the studies that you reckon prove people will pay as much as they currently do on a voluntary basis.

For a start, people always lie in such surveys. “Yes, of course I’d pay £500 for the BBC, it’s so educational and such a wonderful institution” might be a good focus group response, but when it comes down to TV channels vs holiday the outcome is rather different.

And even if people are being honest about the amount they’ll pay, you can’t multiply everyone’s willingness-to-pay by x million households and assume that’s the revenue generated – you’re selling a mass-market product and you don’t even know which of your consumers are willing to pay what.

The best you can do is to create packages that are pitched at groups with approximately similar willingness-to-pay, but this is going to come a long way short of perfect price discrimination.

Didn’t that Rowntree report the other week say that a colour TV and a DVD player was part of the bare minimum standard of living?

@Bishop Hill: Yes, it did, which made the whole thing a bit of a laughing stock.

However, the switchover to digital television means that by 2012 every functioning TV in the country will have the means of decoding scrambled TV signals

This is untrue. Integrated digital TVs do, and set to boxes that support TopUpTV do, but the vast majority of cheap set top boxes do not have card slots. (I am unsure about Freesat, but it is my understanding that it was developed from the point of view of not supporting encrypted channels.)

The BBC is better off funded as it currently is.

Leave aside the nightmare incremental administrative cost of levying a proportional tax on workers to fund the broadcaster, the BBC is fine as it is.

The threadbare “criticisms” of the BBC’s coverage of Davis’s wasteful resignation are the usual grasping at straws from those who are of fixed mind anyway (he would not have resigned had he been sitting in a marginal constituency. Which blows any attempt at making Davis out to be some sort of defender of freedom – and a narrow, exclusive, rightwing definition of freedom at that).

Your obsession with the coverage of the Mau Mau rebellion says more about your bizarre fixations than it does about the BBC’s overall coverage and editorial decision making. Obsessives never see the bigger picture, do they? Out of thousands and thousands of hours of broadcasting you “spent nearly six years trying to persuade the BBC to acknowledge, let alone make amends for, the worst breach of impartiality in its history (a documentary on the Mau Mau rebellion purporting to be objective but actually presenting a lone scholar’s highly tendentious – and subsequently widely discredited – opinions).”

There are nutty blog sites set up to try and “expose” BBC bias, all of which have completely failed to unearth any substantive evidence to support their weird, Murdoch-led hatred of the Beeb.

And isn’t it ironic that rightwingers, the self-styled defenders of “our heritage and values” spend most of their time trying to pull down our best instituions?!!

The BBC works, and should be left alone. We should not bolster rightwing whinging about paying for the BBC (which is all their “criticisms” boil down to) by pretending other funding solutions would be just as good. Whoever brought in the Licence Fee when the BBC was set up settled for the most practical way of funding what is now the world’s most pre-eminent broadcasting service. Theirs was real wisdom.

Uhh Ben, I think it is you that is not really living in the real world. Just take a look:


Don’t even look at the articles (I acknowledge many of them are somewhat specious), just read the quotes on the side-bar. Employees, current and previous, of the BBC now freely admit there is bias in reporting. They just don’t care for the moment.

“Many of us have encountered what we regard as examples of BBC lack of impartiality.”

Ever watched Dispatches on C4, they give a camera to someone to prove his hypothesis with no margin of impartiality. All broadcasters screw up, no-one pretends otherwise. However, the BBC have a program dedicated to criticising themselves (Newswatch), the get the editors into the studio and lay into them. I don’t see ITV doing that.

“I would have much less of a problem with the licence fee if it were equitably levied: on those who can afford to pay tax, in proportion to their taxable income. A BBC charge of 0.75% of taxable income, collected with each individual’s tax payments, would leave the BBC with roughly its present income, but excuse those too poor to pay tax.”

I’d broadly support that, with pre-conditions. Firstly, just because someone has a higher income, and therefore pays more licence fee, they should not have greater influence or say over the way the BBC is run. Secondly, it should still be an optional licence fee, not a tax, as this would protect the BBC’s status as the only broadcaster that people do not have to pay for (I’ll explain this bellow). Thirdly, the percentage of taxable income should be set to ensure that the BBC would receive income equal or greater to what it currently receives.

“the BBC’s World Service is already funded that way, as is 15% of its domestic service cost (the proportion paid by the Treasury on behalf of the over-75s)”

Surely in the subscription model that you push, the over-75’s would no longer receive free access to the BBC. I think it would be very unkind (and, dare I say, illiberal) to make pensioners pay to subscribe to the BBC or lose access. Also, what about the World Service and International Broadcasting, would it lose its grant from the FCO in a subscription model. Bearing mind the huge service the BBC World Service (et al) does to our foreign policy (the Foreign Secretary brought it up himself a while ago), this would be very bad for our image worldwide.

“One objection that has been raised to subscription is that it might induce the BBC to thin out its public service content… there is a well-established public demand for high quality products: without it, publications like The Economist and the Financial Times could not exist”

This comes a week after ITV cancelled its one remaining current affairs program (save Tonight with Trev, which i think is still going). ITV cuts its news budget every year in addition to cutting the amount of children’s programs and other public service content. Yes the demand is there, but it is not profitable. In a subscription model, the BBC would still be the only way to access public service television. Children whose parents were not subscribers (much likely to be from low income families in a subscription model) would be at a huge disadvantage.

Finally, and I pointed this out on the other article, commercial television is not free, we still pay for it. When I buy a diet Coke, or insurance, or a car, or a new banking product, or shop at a supermarket; I am funding ITV and all other commercial broadcasters, including channels that I can only watch if I subscribe to Sky or Virgin. The difference with the BBC is, a) its a direct payment so we have more say over the way the BBC operates and it is accountable to us and not shareholders, and, b) if you don’t have a television you don’t pay for the BBC, yet you still pay for commercial broadcasters regardless when you buy a product that is advertised on TV.


The cost of getting a card-enabled set top box is less than the licence fee.

The article said that there would be an existing installed base. This is false. You would be asking people to throw away something they could have paid anything between £20 and £100 (or more if for a PVR that doesn’t have a card slot), when freeview boxes were specifically advertised as being able to receive BBC services.

I’m not disagreeing with you Jono. Just pointing out that the cost is insignificant compared to the cost of the licence fee.

“The threadbare “criticisms” of the BBC’s coverage of Davis’s wasteful resignation are the usual grasping at straws from those who are of fixed mind anyway”

Haha, the irony alarm is obviously broken.

Sorry, mucked up the HTML there – no closing slash A.

This is an interesting debate in which Mr Elstein again fails to avoid confusion between the main issues.

These being:-
i) Quality of service (aka public service standard)
ii) Universal provision of service
iii) Funding of service

I fully agree that the current method of funding falls into the category of ‘regressive’ and needs to change, but this article assumes that any changes cannot be consistent with the maintenance of universal provision – this isn’t the ‘Middle-class Broadcasting Corporation’ we’re talking about.

The question of bias is less easy to counter than it is to balance with different examples as separate contributions to the overall sphere of debate on any particular subject. Take Question Time as a source for analogy – I could use my Tivo to filter out all but one panelist in order to argue QT was biased unfairly. The reality is that there are a range of available political viewpoints possibly representative of sections of opinion, which must be balanced according to time allowed, topic of discussion and ability to adequately articulate. The problem isn’t bias per se, but of how balance is struck to create an interpretation of open and fair debate.

The final issue I’d take up here it the level of freedom which this national institution should be allowed. I think removal of all constraints from within its charter would leave it open to the damaging pressures of vested interests and thereby defenceless against attacks on the position of public interest which is enshined therein.

I find his argument that the minimisation of competitive difference between different media organisations will improve competition and levels of service odd in the extreme – especially in the already highly commercialised area of broadcasting. When one considers the amount of competitive collusion which exists within the industry such an argument can only be understood to satisfy the established commercial cartel of their political hegemony and ability to manage their industry without govenrment interference or direct public accountability. It would overturn the current interpretation of what democracy means.

Essentially Mr Elsteins proposals would mean media consultants grow inordinately in influence as the new focal point of the power relationship within the media industry and place him in the ideal position to take advantage (some would say there is already a gradual shift in that direction), but this is an overt attempt to lay the foundations for future empire building – in the interests if the common viewer, of course!

Of course if it a question of the existence of a public interest, or what how to adequately represent it on our screens then Mr Elstein is entering different territory which should be engaged in another discussion thread.

18. Cheesy Monkey

I’m sure the BBC is seriously looking at alternative funding possibilities – I hear staff are pessimistic that the BBC Charter will be renewed in its present form in 2015. But it will be a difficult decision as to what alternative to choose for these two reasons:

1) If the BBC move to a full subscription model, will a) the Corporation remain in public ownership; or b) become a fully private entity? I cannot see the BBC’s competitors (and much of the Right) favouring the former, as it would allow the Beeb to potentially operate at a loss or attract investment at more favourable terms than were available to the private media companies. However, the latter raises the question of public service broadcasting requirements – would a privatised BBC maintain this, or cast it aside to remain competitive with its rivals? Plus, if the Government of the day required such a BBC to maintain its public service commitments, how would they enforce this? Legislation would potentially hobble the BBC’s competitiveness, while a state-funded subsidy would effectively bring about (a) above in all but name, unless this subsidy were available for all broadcasters, which no doubt would be contentious in its own right.

2) By 2015 will all of us be receiving our TV and radio via Freeview or Satellite? It’s a very good possibility that many households will be watching or listening to programmes and channels via the internet. Moreover, the way we watch “TV” and listen to “radio” may be much different by then, with the ability to pick and choose programmes at an individual level – channels as we know them now may not exist in a few years time. In choosing a funding model, the BBC will have to take this unknown into account – perhaps by partly becoming an ISP, such as Sky does now.

Just questions folks – I ask as I don’t have the answers! Well, at least yet.

Um, Nick, Biased BBC blog is perhaps the nuttiest anti-BBC blog there is.

It has been pulled up time and again for its loopy partisan rightwing bias, whilst having never found any smoking gun to support its increasingly unecessary existence.

And the quotes on its sidebar? Typically wrenched from any sort of context.

Oh Ben, always reaching for the ad hominem.

At least they link to the context too.

@BenM: What would a ‘smoking gun’ consist of in this context?

Personally, I avoid watching the BBC News nowadays, but for me this (discussed on my blog) was a pretty clear example of bias.

QT, confusing balance and bias again, aren’t you?

23. David Elstein

I’m grateful for all the feedback: so just a few responses.

A switch from a compulsory licence fee to a tax-based method of funding the BBC would not change universal availability at all. Greg Dyke in today’s Media Guardian endorses the idea, though he has too low an estimate of the annual cost of collection (it is over £150m, not £100m).

It is true that the BBC deliberately avoided having smart card slots in Freeview boxes, even though the cost of manufacturing the “smarter” version is identical. However, if the BBC were switched to subscription funding, it would quickly arrange for all “dumb” boxes to be upgraded at no cost to the consumer.

In any subscription scenario, the BBC would be entitled (like any other broadcaster) to apply to the kind of PSB (public service broadcasting) funding agency suggested by Ofcom in its recent PSB review (and previously recommended by the Burns Committee, set up by Tessa Jowell). The difference would be that entertainment content would not require tax funding or a compulsory fee, and all PSB content, across all points of delivery, could be managed more coherently by a single body charged with a single purpose. Given its traditions, the BBC would probably receive the most commissions.

Over-75s who pay tax would pay their share of the cost of the BBC under what I propose. I don’t see anything wrong with that. Those who do not pay tax would be no worse off.

It is not so much that I am obsessive about the coverage of the Mau Mau rebellion as that, having produced or directed many hundreds of documentaries and current affairs programmes, I feel the entire profession is damaged by a wrong’un. Without revealing that she was the sole and only source of virtually all the material in its ostensibly impartial documentary, the BBC allowed a rogue scholar to assert – quite falsely – that the British government of the day had deliberately caused the deaths of 100,000-300,000 Kikuyu during the Emergency. No other reputable scholar shares that view, and the evidence on which the BBC’s contributor relied has since been thoroughly debunked. The most reliable demographic analysis, published last year, shows that the official figure of 12,000 Mau Mau killed in battle is probably right, and that the small increase in infant mortality during the Emergency, and tiny increase in adult female mortality, were attributable to the malnutrition and increase in disease that affected the Kikuyu population during the time they lived in the protected villages which cut the Mau Mau off from their potential supply lines. Although the BBC was forced by Ofcom to apologize for unfair treatment of one of the programme’s interviewees, Ofcom has no jurisdiction over BBC impartiality, and the BBC resolutely refuses to investigate.

Anyway, my point was that for the most part the BBC is conscientious about observing impartiality (which is why such a blatant breach is so irksome).

I have no particular view as to whether the BBC should stay in public ownership or not if it were subscription-funded: it’s a separate issue.

Families on benefits can be supplied with a TV – but they must still pay the licence fee.

There is no administrative “nightmare” about a BBC surcharge on your tax return – it just represents a reduction in allowances.

I’m just a little surprised that so few respondents seem to care about the social equity argument, and how many seem to think that either tax-based funding or subscription funding are designed to damage the BBC. What hurts the BBC most is collective placing of heads in sand.

David Elstein

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