Dyke: Scrap the licence fee

Greg Dyke

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Greg Dyke, the former director general of the BBC, has called for the licence fee to be scrapped.

In a speech on public service broadcasting, he labelled the blanket levy as "a desperately unfair tax" and predicted it will become harder to collect with the growth of internet television.

Instead he has called for the government to fund the BBC through an "exchequer grant", which would save the corporation up to £200m which it spends each year on licence fee collection.

Speaking at a Public Service Broadcasting and Local Television conference hosted by Kent County Council on Tuesday, Dyke praised Ofcom's document on PSB funding in which it sets out four different funding models for PSB after digital switchover.

But he added: "Personally I think there is a sixth opportunity, which contributes something around £150m to £200m to a public service fund and that is to scrap the licence fee.

"Fund the BBC by an exchequer grant and use the money currently spent on collecting the licence fee, which is somewhere around £150m to £200m, for the public service fund."

According to the BBC's 2007/08 annual report, published on the same day as Dyke's speech, the corporation spent £123m collecting the licence fee in the 12-month period, compared to £134m the year before.

Dyke anticipated strong objections from his former colleagues but said scrapping the licence fee was a matter of logic.

"Now, there'll be horror and outrage expressed by some in the BBC that a former director general could be suggesting scrapping the licence fee but let's look at the logic," he said.

"The licence fee has always been a desperately unfair tax. The rich pay the same as the poor and going forward it will be increasingly difficult to collect the amount they collect now. In the age of internet television, how can you insist people continue to pay a licence fee? A licence fee for what – owning a computer?

"Already, you don't need to pay a licence fee to watch most of the BBC's original programmes if you watch them on the computer via the iPlayer…he and all his mates can now watch all they want on the BBC without paying a licence fee at all and nothing that they're doing is illegal."

PSB fund

Dyke also suggested that if Ofcom sets up a PSB fund, some of that should be used to fund local television.

"To get decent, truly local services up and running, there will need to be public money involved just as there was many years ago when BBC local radio started," he said.

"The current service in Kent is being funded by the county council but I believe if there is to be an Ofcom public service fund, there is no conceivable reason why local television services should not be able to make a claim on it."

He suggested that local newspapers get in on the act and start producing local television, and said he is firmly opposed to the idea of awarding the whole of a PSB fund to Channel 4.

Time runnning out for Five

Dyke, who was also chairman of Five when the channel launched, predicted it is "only a matter of time" before the broadcaster disappears as a separate entity.

"While the channel doesn't have massive public service obligations, and its problems I think go way beyond some regulatory demands, personally I'm sure it's only a matter of time before Five becomes part of a larger group or disappears altogether," he said.

"Personally I don't believe that the status quo is a long-term option for Five."