Labour exploring ‘alternative funding options’ to BBC licence fee

Nandy is said to believe the BBC’s current funding model is not “financially sustainable” and wants to find an alternative.

According to The Sunday Times, Nandy is exploring alternative funding options including paying for the BBC through general taxation. At the same time, The Sunday Times said that Nandy wants to turn the BBC into a mutual organisation to give direct control and ownership to the public. The paper said that Nandy believes turning the BBC into a mutual will help make it “future-proof.”

The government has said that the process of reviewing the licence fee will begin this year ahead of charter renewal in 2027.

“Lisa does not believe that the licence fee is financially sustainable,” a Whitehall source told the paper. “But she believes that our national broadcaster should be owned by the nation: the money would go in from taxes but citizens would own it and be involved in decisions about its strategic direction.”

The licence fee raises about £3.74bn a year. Last year’s BBC annual report showed a 500,000 drop in the number of licence fee payers. The rise of streaming services such as Netflix, Disney+ and Prime Video has thrown major questions marks over the future sustainability of the licence fee.

The Sunday Times said that Nandy had not discussed the idea of funding the BBC through general taxation with the chancellor, Rachel Reeves, who would be highly unlikely to support a move that would increase the tax burden.

A government source told the paper: “Funding the BBC through general taxation is not a realistic possibility, and is not being seriously considered.”