The future of the BBC licence fee

The licence fee model

Under the BBC’s Royal Charter (PDF) and Agreement (PDF), the BBC is funded through a licence fee. This is intended to safeguard the BBC’s independence from government and the market. 

The current charter began on 1 January 2017 and runs to 31 December 2027.

The licence fee model was conceived at a time of linear viewing – watching programmes at the time of broadcast. Changes in viewing habits, such as a move to video-on-demand, and the growth of new technologies, has resulted in the model being challenged. 

In its annual report for 2025/26 (PDF), the BBC noted that changing audience behaviours had resulted in “a significant adverse impact on licence fee income”. Licences in force had fallen from 23.8 million in March 2025 to 23.3 million in March 2026.

In November 2024, Lisa Nandy, the Secretary of State for Culture, Media and Sport, said the government was committed to upholding the licence fee until the end of the current charter period. This was to ensure the BBC was on a “stable financial footing”. She also said that the government would examine the future of the BBC’s funding as part of the next charter review.

Charter review launched

The government launched the charter review on 16 December 2025. The intention is to use the review to “futureproof” the BBC so that it can thrive in a “rapidly changing media landscape”.

One of the review’s objectives, as set out in the terms of reference, is for a BBC “that is sustainably funded for decades to come to support its vital public service role”.

The government’s green paper (PDF), also published on 16 December 2025, sets out a range of options for the future funding of the BBC. These include:

• reforming the process for determining the cost of the licence fee
• reforming the licence fee
• exploring whether licence fee concessions should be updated
• exploring options for fairer collection and enforcement, supported by technology
• supporting the BBC to generate more commercial revenue

A public consultation on the green paper closed on 10 March 2026. The government is considering the responses and has said that it plans to set out policy decisions for the next royal charter in a white paper, expected to be published by the end of this year.

Digital, Culture, Media and Sport Committee recommendations

In an October 2026 report on the BBC Charter review, the Digital, Culture, Media and Sport Committee said the current licence fee is “outdated and no longer fit for purpose: it does not reflect the way people watch television now, and the amount of income it generates is declining year on year”. 

The committee said the government’s “best next step” would be to reform the licence fee so that it reflected modern media consumption. It recommended that the government’s forthcoming white paper should set out steps to broaden the scope of the licence in time for the start of the new charter in January 2028.

The committee also said there were strong arguments for replacing the licence fee with a levy on every household, irrespective of their media consumption. A levy could increase revenue and reduce evasion, and there would be less expense on enforcement and chasing non-payment. It could also be made more progressive, enabling households on lower incomes to be eligible to pay a lower fee. However, one of the challenges with implementing a levy is finding a suitable collection mechanism – this could be as an addition to Council Tax, or as an additional amount on broadband or utility bills.