BBC funding reforms could replace licence fee with internet levy

The UK government is considering radical reforms to the BBC's funding model, including the potential abolition of the television licence fee. According to proposals from the Social Market Foundation, a think tank influential with ministers, the current system could be replaced by a ‘Home Internet Levy’.

Under this proposed scheme, an £11 monthly charge would be automatically added to household broadband bills. This would shift the funding mechanism from live television viewership to internet connectivity, capturing households that currently use streaming services or evade the licence fee. For many current licence fee payers, the switch could reduce annual costs from £180 to approximately £132.

The Social Market Foundation suggests the BBC could also transition into a mutual society model, similar to the John Lewis partnership, where ‘members’ could participate in a council to hold leadership accountable. These discussions have reportedly been shared with advisers to Culture Secretary Lisa Nandy as part of the ongoing Charter review. The move comes as the BBC faces sustainability challenges, with non-payment rates rising and millions of households claiming they no longer require a licence due to a lack of live TV consumption.