The Lead Untangles: Our BBC - what does the future hold?

The broadcaster and British institution has been at the centre of a worldwide story this week but behind the headlines there is a battle for the soul of the Beeb

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The BBC – the UK’s most trusted news source – is in turmoil. Last week Director General Tim Davie and the head of news, Deborah Turness both stepped down after a leaked memo regarding editorial errors sparked a 10-figure legal threat by President Donald Trump.

As a public broadcaster, the BBC is an important institution for democracy in the UK, but the question of how it is a subject of frequent debate, with the number of people paying the yearly licensing fee dropping year-on-year.

Now, the long-running culture war regarding the broadcaster is finally bubbling over, just in time for the government to review how the BBC is run and funded ahead of its next charter renewal in 2027.

How is the BBC currently funded?

Every ten years, the BBC sets out its overall purpose, mission and goals (such as providing impartial news and information), in a royal charter, which is essentially a legal document from the government. It also includes details on funding, governance and a framework for accountability. The current charter began on 1 January 2017 and ends on 31 December 2027.

Currently, the largest source of income for the BBC is the annual TV licensing fee, which costs £174.50 per household and is free for blind or severely sight-impaired people and people over 75 and receiving pension credit. This brought in £3.8 billion in 2024/25.

The broadcaster also makes money from commercial services such as selling content to other platforms and providing studio and post-production services, which brought in £2.2 billion in last year. BBC World Service, which provides news, documentaries, and other programs to an international audience however, is funded by the foreign office.

The number of people paying the licence fee has fallen since the last charter, from around 26 million in 2018 to 23.8 million last year. This is down to the advent of streaming services and a change in viewing habits (people watch television on demand rather than at the time of broadcast).

So what’s happened?

The licence fee has increasingly become a political talking point, and the Trump saga is just the latest in a long, raging culture war about the future of the BBC.

People all along the political spectrum accuse the BBC of left – or right – bias (although trust dwindles more towards the right). This week’s memo, which detailed a bad edit of a Trump speech, conflating two separate parts of Trump’s speech on the day rioters stormed Capitol Hill, has provided perfect fodder to the broadcaster’s biggest right-wing critics like Nigel Farage. The licensing fee is either seen as an essential way to uphold a democratic institution, or an unfair tax propping up a biased one.

Meanwhile, some claim that the licensing fee, which is a flat rate, is regressive and unfair, arguing that wealthier people should pay more, and competitors complain that the licensing fee gives the BBC an unfair advantage.

Campaigners, and even previous Secretaries of State, have warned that prosecutions for non-payment have been disproportionate. Figures from 2022 showed that women made up 76 per cent of the 52,376 people convicted in 2020 over TV licence evasion, leading to it being called “sexist”, and a long debate has reigned over whether failure to pay the license fee should be considered a criminal offence at all.

There have also been concerns about whether the funding model is suitable for the modern age. As streaming platforms like Netflix and YouTube dominate viewing habits, some have argued that the BBC is “forcing” people to pay for something they no longer watch — even though public funding allows it to produce uncommercial but socially valuable content.

How will the BBC fund itself in the future?

The BBC’s funding model has become a tricky problem for governments and the broadcaster in recent years.

Following the controversy, Nigel Farage, who is fanning the flames, said Reform UK would replace the “wholly unsustainable” license fee with a Netflix-style “subscription model” if in government. The BBC already charges US-based users a £6.50 monthly fee for unlimited access to its news content and rolling televised coverage. However, the BBC has vowed to fight this in the UK as it would create a “two-tier” system, locking out those who can’t afford it and could leave the BBC at the whims of the market.

It has also been suggested, by BBC chairman Samir Shah, that the licence fee could be reformed so wealthier households pay more, to stop it from being regressive.

The current Labour government has not committed to keeping the license fee in its current form. However, Nandy has ruled out general taxation (in order to keep the BBC independent from government) and has rejected calls from some MPs to defund the broadcaster. She has, however, indicated that the government is considering a mixed funding model, which would include combining the fee with subscription fees and commercial revenue.

Why does this matter?

According to a report by the Reuters Institute, the BBC is by far the most widely used source of news in the UK, on the left and the right, and, even when trust wanes, it is one of the most highly trusted sources of news. It is also the only online news provider in the UK more widely used as a source of online news than search engines and social media. Public service journalism increases political knowledge and participation.

As our Westminster editor Zoë Grünewald wrote this week, the BBC’s “independence is the thin line between accountable government and unrestrained power. If the government values public service, pluralism, and truth, it must defend the BBC.”

Leaning too far towards a subscription model, or advertising, could jeopardise the BBC’s output, whether by leaving it vulnerable to requirements from advertisers or pushing it to create content that stops people from cancelling, rather than what is the most useful. It could also stop it from being universal — a core tenet of the BBC’s mission.

What are people saying?

Lisa Nandy, Secretary of State for Culture, Media and Sport, said: “There is a fundamental difference between raising serious concerns over editorial failings and members of this House launching a sustained attack on the institution itself, because the BBC is not just a broadcaster, it is a national institution that belongs to us all.”

Reform UK leader Nigel Farage said: “If the BBC doesn’t now get a grip, get someone in from the outside, somebody who has got a history and a culture of changing organisations, of turning them around, then I think what you would see in the next couple of years are many many millions just refusing...

“We need a very much slimmed down BBC. When it comes to entertainment, when it comes to sport and many other areas like that - well, they should compete against everyone else for a subscription model. That is the modern world that we live in”

Prime Minister Keir Starmer said: “Where mistakes are made, they do need to get their house in order, and the BBC must uphold the highest standards, be accountable and correct errors quickly. But I will always stand up for a strong, independent BBC.”

Conservative Leader Kemi Badenoch said: “From its coverage of sex and gender, to lopsided coverage of Gaza, to high profile mistakes, the BBC has continually let down licence fee payers. We ought to treasure the BBC, but for that to happen it must learn from its mistakes, instead of sneering at those who point them out.”

What comes next?

Nandy has said that the charter review will begin imminently. This will see the government, parliament, experts and public consultations discuss what needs to change and why.

But first, the BBC needs a new director general, who will be appointed by the BBC Board in the coming months. ■

About The Lead Untangles: In an era where misinformation is actively and deliberately used by elected politicians and where advocates and opposers of beliefs state their point of view as fact, sometimes the most useful tool reporters have is to help readers make sense of the world.

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