Sustainable independent and impartial news

Section 2: Funding options – a contestable element of the Television licence fee

Potential sources of top-up funding

17. The Television Licence Fee is an existing, transparent, large scale funding mechanism designed to support the provision of public service content. It is a levy on a particular set of devices - ones capable of receiving or recording television content. It has a wide pedigree in its various forms across European and wider markets. The source of the Television Licence Fee is the audiences who buy those devices. It is already closely aligned, in its use by the BBC, to core public purposes in respect of value for money, sustaining citizenship and civil society; and representing the UK, its Nations, regions and communities ^[3]. The Government believes that if top-up public funding is required to secure news in the Nations, locally and in the regions, then the Television Licence Fee revenue can be shared for these purposes.
[3] Royal Charter for the continuance of the British Broadcasting Corporation Section, 2006, Cm 6925 Section 4 (d) [PDF]

18. The Television Licence Fee is not the “BBC” licence fee. In principle the BBC has no exclusive right to the Television Licence Fee. This is a matter of historical practice. This device levy is paid into the Consolidated Fund like any other tax, for the government of the day to determine how it should be used. Successive governments have chosen since the 1960s to allocate 100% of Television Licence Fee revenue to the BBC, but have always reserved the right to allocate less than 100%. This fact is reflected in the Agreement between the Government and the BBC published alongside each BBC Charter. The Television Licence Fee has already been used to support broadcasting policy objectives beyond the BBC’s core services. An example is the ring-fencing of broadly 3.5% of the Television Licence Fee revenue in the current Television Licence Fee settlement to meet the cost of the Digital Switchover Help Scheme and Digital UK’s marketing and communications costs.

19. That is the reason why in the Digital Britain White Paper [commentable version], the Government has presented the idea of a "contained contestable element” within the Television Licence Fee from the beginning of the next Television Licence Fee settlement period in 2013. We envisage that this would be broadly equivalent to the 3.5% currently ring-fenced for Digital TV Switchover, but would be independent of the overall level at which the Television Licence Fee is set.
[WTR: see the section Public funding for competitive provision of essential public content in the Digital Britain Report.]

20. This element would be used primarily to top-up fund independent, alternative providers of news (the IFNCs). However it could also potentially be used to sustain other essential public service content priorities (e.g. the provision of plural original content for children) if the independent provision of Nations, local and regional news should require less than the contestable sum set aside.

21. The Government recognises that this is a departure from current practice whereby the BBC has been the sole recipient of the Television Licence Fee, but it must be a key option in the absence of other solutions.

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22. The Government recognises that there is an argument that the Television Licence Fee has become associated in many people’s minds with the BBC alone and that this association is a core reason for the wider public acceptability of the Television Licence Fee. The Government is therefore keen to understand people’s perceptions and views on the use of the Television Licence Fee for securing plural news in the Nations, locally and in the regions and potentially for other essential public service content. In addition to this consultation we will carry out specific research into the views of audiences for that purpose, and will engage specifically with those who represent them. We will also seek specifically the views of the organisations entrusted with special responsibilities in relation to plural public service content provision: the BBC Trust and Ofcom.

23. Subject to the outcome of this consultation the Government proposes that the public funding required for the pilot phase should come from the expected underspend from funds set aside in the current Television Licence Fee settlement to meet the costs of the Digital Switchover Help Scheme. We will discuss with the BBC Trust how that can be achieved.

24. As stated in the White Paper, the Government is open to alternative proposals that would to the same extent deliver its objectives of maintaining a strong, independent BBC funded by the Television Licence Fee; and providing a sufficiency of sustainable contestable funding to support public service content from other sources than the BBC, primarily in news for the Nations, locally and in the regions.

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Consultation questions:

Do you agree that the Television Licence Fee should be used to support impartial news in the Nations, locally and in the regions in addition to BBC services?

Do you agree that any funding within a contained contestable element of the television licence fee not required for impartial news should potentially be available to fund other forms of essential public service content, or should such funding be limited to news?

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Are there alternative funding mechanisms that you believe would deliver the above objectives more effectively?

Protecting the BBC’s funding

25. In order to protect the BBC’s security and independence, the Digital Britain White Paper [commentable version] proposed that the BBC Agreement should be amended to set out an agreed maximum percentage of the Television Licence Fee income that could be set aside as a contestable element. The Government is open to discussing with the BBC Trust other options for containment.
[WTR: see the section Public funding for competitive provision of essential public content in the Digital Britain Report.]

26. It will be important to ensure that appropriate governance arrangements are in place to guarantee proper scrutiny of any contestable fund. All Television Licence Fee expenditure, whether by the BBC or a third party, must meet high standards of transparency, public accountability and be in the public interest. The BBC’s Royal Charter already contains a set of Public Purposes which govern the BBC’s use of the Television Licence Fee. These are:
- sustaining citizenship and civil society;
- promoting education and learning;
- stimulating creativity and cultural excellence;
- representing the UK, its nations, regions and communities;
- bringing the UK to the world and the world to the UK;
- in promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television.
The Government proposes that the use of any contained contestable element should be required to fall within these purposes too. The Government would work the BBC Trust and Ofcom to ensure that the governance model for IFNCs and any wider contestable expenditure delivers these guarantees so as to continue to protect the interests of the Television Licence Fee payer.

Consultation questions:

Do you agree with the proposal to set a maximum percentage of Television Licence Fee revenue which could be set aside as a contained contestable element?

Do you agree that amending the BBC Agreement could provide the necessary protection to the BBC’s future funding and independence?

Do you agree that the use of any contained contestable element within the Television Licence Fee should be restricted to the public purposes set out in the BBC Charter?