Ministers are examining a proposal from a cross-party think tank to abolish the £180 licence fee and fund the BBC through a charge on home internet connections, paid whether or not anyone watches live television.
The television licence fee could be abolished and replaced with an £11 a month charge on household broadband bills, under a proposal put forward as ministers examine the future of BBC funding.
The proposal would apply to every home with an internet connection, whether or not anyone in the house watches live television. The £180 annual licence fee would go.
The plan, drawn up by the Social Market Foundation (SMF), would scrap the licence fee and collect the BBC’s public funding through internet service providers instead. It is a think tank proposal, not government policy. The Sun reported that the document setting out the levy has been discussed with advisers to the Culture Secretary, Lisa Nandy, and the SMF’s work is among the options circulating as the government prepares to renew the BBC’s Royal Charter.
For households that pay in full today, the switch would cut the annual cost to around £132, about £48 less than the licence fee and roughly £4 a month less than the £15 instalments most payers use. It would also extend BBC funding to internet-connected households that do not currently pay the licence fee, including many that do not watch live television. That includes households that legally do not need a licence, as well as a separate group that requires one but does not hold one.
That is part of the appeal for its supporters. Unlike the licence fee, the proposed levy would attach BBC funding to a service used by almost every connected household.
Claire Bullivant, chief executive of Great British PAC, said:
“Replacing the television licence with a compulsory charge on every household’s broadband bill would not abolish the licence fee, it would simply reinvent it and make millions of people who may never watch the BBC pay anyway.”
The report rests its case on numbers that have moved in one direction for a decade. In December 2025, the government said the number of households that need a licence but do not hold one had risen above 12 per cent, from around 6 per cent in 2015. About 3.7 million households say they no longer need one because they do not watch live television. Half a million stopped paying last year, with the number of licence fee payers falling by 539,000 to about 23.3 million.
Licence fee income came to about £3.8 billion in the year to March 2025, roughly 65 per cent of the BBC’s total income. The BBC has said it must cut spending by a further £500 million over the next two years. The share of households paying has fallen to about 80 per cent, from more than 90 per cent in 2016/17.
The SMF argues that the internet connection, not the television set, is now the point at which most people receive video. Home internet access is close to universal, at about 95 per cent of households, with an average bill of £31 a month. On that basis, £11 would add roughly 35 per cent to the average broadband bill. Internet providers would be paid for collecting the charge, and lower-income households could pay less under a social tariff.
Bullivant also argued that changing viewing habits strengthened the case for a choice-based model. She said:
“Times have changed. We live in an age of extraordinary choice, where broadcasters and streaming services have to compete for viewers by producing programmes people actually want to watch. The BBC should be confident enough to do the same. If it produces outstanding television, trusted journalism and genuinely world-class programming, people will choose to watch it and there should be a funding model capable of reflecting that choice. What is much harder to justify is forcing every household with an internet connection to finance one broadcaster, irrespective of whether they use its services.”
The report does not pretend the charge is painless. It acknowledges that a levy paid by every connected home risks falling hardest on poorer families, which is why it proposes the social tariff discount. It also leaves open practical questions about which connections would count, including mobile and satellite services, and about who would bear the cost of collecting the money.
The £11 levy is not the only option on the table. The same report sets out a smaller news and culture levy of £2.30 a month, added on top of the existing licence fee rather than replacing it, aimed at a funding gap projected to exceed £800 million a year within a decade if payment trends continue. A third option modelled by the SMF, a £12 a month household levy, is the one the BBC is said to favour; the SMF notes it could just look like expanding the licence fee to all households without concessions. Putting the cost on streaming subscriptions would add about £6.25 a month to each, a rise of some 75 per cent, with the risk that customers cancel and the BBC ends up with less. These are options modelled for the review, not commitments from ministers.
The SMF also proposes turning the BBC into a mutual, in the style of the John Lewis Partnership. Members would be selected by lottery to sit on a council that would hold the BBC board to account, serving terms of up to three years and paid for their time, with no control over editorial decisions, hiring or programming. Lisa Nandy has previously backed the principle of mutualising the corporation.
The government has not endorsed any of it. A DCMS spokesperson said: “The BBC must be funded by a model that is sustainable and fair to all those that are paying it. Through Charter Review, we are looking at a range of options, including how the BBC can operate more efficiently, generate more commercial revenue, and how the licence fee could be reformed.”
Ministers have committed to keeping the licence fee until the current charter ends on 31 December 2027. The government’s Charter Review Green Paper ruled out replacing the licence fee with general taxation or a household levy, leaving advertising, subscriptions or a reformed licence fee as the main routes. That leaves the SMF proposal sitting awkwardly against the government’s existing published position. The public consultation closed in March with about 120,000 responses, and a white paper is expected later this year. Ministers have not announced any change to the Green Paper position.
Nandy has described the present arrangements as unenforceable. The BBC’s director general, Matt Brittin, has called the funding model a busted flush and rejected both advertising and a subscription model. Reform UK has said it would end the licence fee outright if it won power.
The trust argument has been sharpened by two separate rulings. Ofcom found that the BBC documentary Gaza: How to Survive a Warzone was materially misleading because it did not disclose that its narrator was the son of a Hamas official, and ordered the corporation to broadcast a statement of its findings in prime time. The BBC accepted the ruling in full and said there had been a significant failing on accuracy. Separately, the BBC apologised to Donald Trump over a Panorama edit of his 6 January 2021 speech, saying it gave the mistaken impression that he had made a direct call for violent action.
Bullivant said the funding question could not be separated from that record.
“That argument becomes even more difficult after serious and documented editorial failures at the BBC. Ofcom found that its Gaza documentary materially misled viewers, while the corporation itself accepted that the editing of Donald Trump’s January 6 speech gave the impression of a direct call for violent action. These are not trivial matters for an organisation whose unique funding arrangements depend upon public trust. Many people on the political right have also argued for years that significant parts of the BBC’s output reflect a predominantly metropolitan, liberal worldview. The BBC disputes accusations of institutional bias, but the answer to that crisis of confidence cannot be to make it even harder for the public to opt out of paying for it.”
Jamie Gollings, deputy research director at the SMF and author of the report, said ending public funding would mean “thousands of jobs lost, and billions in GDP forsaken from the creative sector, a true British strength”. The report was commissioned by the campaign group 38 Degrees, whose campaigns director, Veronica Hawking, said the public wanted “an independent BBC, protected by sustainable public funding”.
Bullivant said:
“The principle should be simple: in the modern media age, the BBC must win audiences through quality, impartiality and trust, not guarantee its income by attaching a compulsory charge to something as essential to modern life as a broadband connection. If the BBC is as valuable to the public as its defenders believe, it should have nothing to fear from a funding system in which the public has a meaningful choice.”
The licence fee question would disappear. The argument over who has to pay for the BBC would not.
