Netflix Isn’t Killing The BBC - The License Fee Is
The BBC is in a financial mess, and ministers are scrambling to find ways of plugging the broadcaster's nearly £500 million annual deficit. The government's latest idea – making users of streaming platforms like Netflix and Disney+ pay the TV licence fee, regardless of whether they watch live television – is less a solution than a tacit admission that the licence fee, a funding model forged in the black-and-white era, cannot survive the streaming age. Ahead of the 2027 Royal Charter renewal, it's time to bring the Beeb's funding into the 21st century, separating public service from entertainment and introducing a subscription model that aligns with how people consume information in modern Britain.
The licence fee is a relic. Introduced in 1946 when the only channel was BBC One, it made sense then as a quasi-tax for funding Britain's only broadcaster. In 2025, when young audiences spend more time on TikTok than watching live TV, that rationale can no longer be justified. Revenue has stagnated, rising just 4% in real terms since 2010. The evasion rate is now 10%, costing the BBC around £400 million a year. Worse, the licence fee is not just a quasi-tax but a regressive one. The flat levy of £169 a year swallows more from the incomes of the poorest than the richest. Enforcement is no less archaic; 75% of prosecutions target women, often single mothers dragged through court for non-payment.
Over the last decade, efforts to adapt this outdated system by expanding 'television' to include catch-up content and streaming of live events have been made. But viewing habits are changing faster than the licence fee can adapt, and extending this system to streaming services would only compound its flaws. Forcing households already paying for streamers like Netflix to subsidise a service they may not use is unfair and difficult to enforce. It would also be a recipe for resentment of the BBC, doing untold brand damage.
A better solution would be to distinguish between the BBC's public service role and its entertainment arm, funding the former through a direct grant and moving the latter to a subscription model. Core services like news, educational content, and the World Service bring benefits across society, whether informing the population or boosting Britain's soft power abroad. There's a strong case to continue funding this through taxation, and a direct grant would be more progressive. But there is no reason the public should be forced to subsidise the BBC's other output, which is more personal preference than universal public benefit. Around 60% of households subscribe to a streaming service, so it's a model people are used to and would force the BBC to be more responsive to British viewers.
It is not sustainable to force users of one service to fund a competitor they don't watch. It would also fail to incentivise the BBC to focus on its strengths. A common counter-argument is that the BBC cannot outspend rivals like Netflix. But the BBC doesn't need to match Netflix's scale. It has plenty of shows people want to watch, from cherished brands like Doctor Who to breakthroughs like The Traitors. The BBC shouldn't be focusing on what consumers want when they watch Netflix—it should focus on the entertainment people come to the BBC for.
A subscription model would force the broadcaster to play to its best. Some point to the failure of BritBox as a reason why a subscription model can't work. But this is unfair. BritBox focused on legacy content, much of which was already available on iPlayer, and didn't grant access to new episodes and shows.
Such a shake-up would certainly be a risk. But the bigger risk is sticking with the licence fee. Expanding it would only create resentment, entrench regressive funding, and trap the BBC in a death spiral. The 2027 Charter renewal offers a chance to reset. The broadcaster's greatest asset has always been its ability to evolve, from radio juggernaut to television pioneer. Now it must change again and earn its place in British living rooms rather than demanding it by legal threat. Splitting the BBC into a taxpayer-funded public service and a subscriber-driven entertainment arm is the best way to protect its finances without sacrificing its soul.
Jack Rowlett is a political commentator with Young Voices UK. You can find him on X @Jack_Nostalgic.
