The BBC has warned that the licence fee is in ‘irreversible’ decline and urged the Government to back a new, ‘fairer’ funding mechanism including income-linked models used in Finland and Germany
Steven Smith Content Editor
09:51, 06 Mar 2026
The licence fee is under scrutiny in a streaming world(Image: Carl Court, Getty Images)
The BBC could abolish the TV licence as business leaders branded it “not fit for purpose” and “basically a poll tax for telly in a streaming world”. The corporation has acknowledged the licence fee is in “irreversible” decline and has called on the Government to support a new, “fairer” funding model, which might result in lower costs for some viewers.
Evasion and non-payment cost the BBC more than £1billion last year, with the licence set to increase to £180 in April, according to the broadcaster. In its 100-page submission to the Government’s Charter Review consultation, the BBC revealed it was exploring its first ever licence fee reduction, provided the number of paying households grows.
The BBC generated £3.8bn in licence fee revenue during 2025 – but the broadcaster confirmed it is examining alternative funding sources. It suggested scrapping the licence fee in favour of a system similar to Germany’s, where citizens pay a “digital public service media” tax of €18.36 (£16) monthly – regardless of whether they consume the nation’s public broadcasting content.
Alternatively, the Finland model could be adopted, where payment is taken as a tax “linked directly to an individual’s personal income” – rates vary from €0 to €160 (£139) for individuals aged over 18, and up to €3,000 for businesses. Naina Clayton, founder of Sandwoman Business Support, said the TV licence needed to be scrapped.
She added: “The TV licence is archaic and should have been banned a long time ago. It is ridiculous that pensioners still have to pay for this unless they are over 75. These days, with the cost of living and a choice between food or heat, and a lot of pensioners only having television as a companion, it should not be necessary to pay to watch that too.
“I disagree with making it compulsory that every household has to pay something regardless, if they watch BBC or not. These days, people use streaming devices because they find the public channels can be limiting in diversity and choice.
“I don’t think the BBC should be forcing fees onto every household to create revenue for itself. They should look at the streaming services and how they manage revenue and consider those practices.”
Kate Underwood, founder of Southampton-based Kate Underwood HR and Training, voiced her belief that a new model was required.
The future of the licence fee is under discussion(Image: PA)
She added: “The licence fee is basically a poll tax for telly in a streaming world and people are voting with their feet. Is it fit for purpose? Nope. It was built for aerials and live TV, not iPlayer, clips and ‘I don’t watch BBC, honest’.
“When payment relies on confusion, guilt and enforcement, evasion is baked in. And let’s be blunt: trust has taken a battering. When the BBC messes up, it can look like the cheque book comes out before accountability does.
“Yes, settlements aren’t proof of wrongdoing and they’re often a legal cost-control move. But the optics are rotten. People feel like they’re paying for someone else’s mess, not great broadcasting.
“What’s fairer? Finland-style income-linked funding is the most grown-up option. Germany’s flat charge is simpler but hits lower earners harder. Cut the fee? Not until you fix the leaky bucket. Any new model needs automatic collection and ruthless transparency on pay-offs and decision-making, or the resentment and evasion won’t shift.”
BBC ‘needs protection’
Rohit Parmar-Mistry, founder at Burton-on-Trent-based Pattrn Data, said the BBC needed protecting.
He added: “The BBC planning for the end of the licence fee sounds sensible, but the key question is what they are planning for. A transition that protects public value, or one that mainly protects internal structures. Any replacement model will reshape incentives.
“Subscription pushes towards premium entertainment and away from universal services. Advertising rewards volume and attention. General taxation can work, but only with hard independence safeguards and multi-year settlements so funding is not a political lever.
“If the BBC wants legitimacy in this debate, it should be explicit about what it will deliver in return: measurable public outcomes, clearer accountability for spend, and a service proposition that reaches beyond the already converted. Planning should start with what the public needs, not what the institution wants.”
Kate Allen, owner at Kingsbridge-based Finest Stays, said the BBC was extremely valuable.
She continued: “The BBC is far more than a television service, so comparing it with subscription platforms like Netflix misses the point. It underpins a huge public ecosystem, from national and local radio to trusted journalism and global news through the BBC World Service, one of the UK’s most powerful soft-power assets abroad.
“It also plays an important cultural role, supporting British music, drama and national fundraising events such as BBC Children in Need and Comic Relief, which have raised billions for charity. If the licence fee is no longer fit for purpose, the question is how to modernise funding without weakening that public mission.
“The German or Finnish models, where a universal media levy or income-linked charge replaces the licence fee, arguably reflect modern media habits. But any new system must ring-fence the funding and keep it clearly independent from government.”