TV Licence Faces Huge Shake-Up As BBC Review Begins

The way you pay for the BBC is about to face its biggest shake-up in decades – with everything from adverts on iPlayer to subscription fees for dramas now on the table.

Culture Secretary Lisa Nandy has launched a sweeping review that could fundamentally reshape the broadcaster, from what you watch to how much you pay.

The proposals range from modest tweaks to the £174.50 TV Licence fee to radical options like placing BBC entertainment behind a paywall while adverts play during the news.

What Is This Charter Review?

The BBC operates under a Royal Charter – essentially its constitutional rulebook – which gets renewed roughly every decade. The current one expires on December 31, 2027.

This Charter Review is the process by which the government decides what goes in the next charter, which will run from 2028 onwards.

Today’s Green Paper is a consultation document laying out options the government is considering. The public gets to respond until March 10, 2026, then the government will publish its actual proposals in a White Paper later in 2026.

Think of it as a once-in-a-decade chance to reshape how the BBC operates, what it does, and – how you pay for it.

The review comes at a difficult time for the BBC. The broadcaster is dealing with the fallout from Director-General Tim Davie’s resignation over the Trump documentary editing scandal, faces a $5 billion lawsuit from the US president, and is losing both viewers and licence fee payers at an alarming rate.

But while the government insists it wants to “futureproof” the BBC, the consultation document reveals the scale of changes being considered – from placing advertising across BBC services to moving entertainment content behind a subscription paywall, alongside fundamental questions about whether the £174.50 annual licence fee can survive at all.

The Licence Fee Crisis In Numbers

The document lays bare the financial crisis now facing the BBC. Licence fee uptake has fallen by 2.4 million households since its peak in 2017/18, with just 23.8 million licences now in force.

As we’ve reported extensively this year, evasion stands at a record 12.52% – costing around £550 million annually.

Meanwhile, 3.6 million households have legally declared they don’t need a licence because they don’t watch live TV or use BBC iPlayer, representing another potential £617 million in lost revenue.

Combined, that’s over £1.1 billion annually the BBC isn’t collecting – more than a quarter of its total £3.8 billion licence fee income.

The government acknowledges what’s been obvious for months: “if that pattern continues and the current model remains in place without reform, the BBC’s licence fee income will erode over time.”

The result? A BBC that’s “less well funded to fulfil its role” – or as the government puts it more bluntly, a smaller BBC. And that, Nandy insists, “is not in the UK’s interest.”

The BBC’s Enforcement Struggle

The Green Paper also reveals the growing costs of trying to collect the licence fee. Collection and enforcement expenses jumped to £166 million in 2024/25, up from £143 million the previous year, driven largely by a 14.4% increase in postal costs.

As we reported when MPs grilled BBC executives in September, the BBC has been tightening the screws on “No Licence Needed” declarations – changing the rules so people must reconfirm after one year instead of two, which generated an extra £13 million in revenue.

The BBC also deploys specially trained agents to ensure people don’t inadvertently declare they don’t need a licence, including explaining that watching live overseas channels on YouTube requires one.

Advertising: From Limited To “Full” Options

Perhaps the most dramatic proposal is allowing the BBC to carry advertising for the first time in its public service broadcasting history.

The Green Paper outlines three potential approaches, ranging from modest to radical:

Limited advertising on certain online platforms – for example, on entertainment and sport pages of bbc.co.uk, or on older BBC iPlayer and BBC Sounds content after it’s been available for a year. This would avoid advertising on linear TV and radio, aiming to minimise impact on competitors.

Full advertising across all BBC services – which would “generate the most revenue” but the government acknowledges “would likely be accompanied by a reduction in the cost of the licence fee.”

The consultation is remarkably frank about the trade-offs. Full advertising would create “significant negative impacts on the BBC’s competitors which could impact the strength of the UK’s wider media ecosystem,” with particular risks for commercial public service broadcasters like ITV and Channel 4.

The total TV advertising market has already shrunk from £5.1 billion in 2018 to £4.9 billion in 2023.

Throwing the BBC into that mix could, the document warns, result in “cannibalisation of key TV advertising revenue streams for other public service media providers, potentially jeopardising their financial viability.”

The Subscription Question

Alongside advertising, the government is exploring whether to move some BBC content behind a subscription paywall.

Again, there are escalating options:

A modest top-up service where older content – perhaps archive material or programmes more than a year old – sits behind a paywall on iPlayer. This could include advertising as well as subscription fees.

A fundamental restructuring where only certain genres like news, current affairs, and children’s TV remain universally available, with “more commercially viable TV content” moved to a subscription model funded by payments and advertising.

That second option would be transformative – and the government admits it “would significantly change the BBC’s role in serving all UK audiences with a broad range of universally available content.”

The consultation poses thorny questions: should British dramas like Waterloo Road or major sporting events involving the home nations be public service content or paywalled? Where exactly do you draw the line?

The consultation specifically asks whether you’d be willing to pay for a BBC top-up subscription service “assuming it was a similar price to other popular video-on-demand subscription services” – so think £10-15 per month, on top of the licence fee.

Reforming The Licence Fee Itself

Rather than abolishing the licence fee entirely, the government is considering reforms to make it more sustainable.

One intriguing option involves “requiring more households to pay but with each paying less.”

The document doesn’t spell out exactly what this means, but it likely refers to widening the definition of what requires a licence – perhaps to include all BBC online services, not just iPlayer – while reducing the annual cost.

The idea would be to reverse the trend of falling licence numbers by bringing more activities into scope, but making it more affordable for each household.

The government explicitly rules out replacing the licence fee with “a new tax on households, funding through general taxation, or introducing a levy on the revenues of streaming services.”

Nandy had already ruled out general taxation, saying it would compromise the BBC’s independence.

But there are other potential changes on the table:

New concessions for households facing financial hardship. Currently, the Simple Payment Plan – which spreads the cost throughout the year – supports around 287,000 households.

But the government notes that 53% of those households don’t keep up with their payments, suggesting many people genuinely struggle to afford the fee even with flexible payment options.

The Green Paper looks at whether new concessions should be introduced for low-income households, pointing to Germany where concessions are available to individuals receiving social benefits and some students.

However, any substantial new concessions would be “limited by the funding pressures the BBC already faces.”

Technology-driven enforcement – requiring households to verify their TV licence to access BBC iPlayer, similar to how Netflix checks your subscription. This would be “balanced against the risk of creating barriers for use for people with lower levels of digital skills.”

The Decriminalisation Debate Returns

The government is also revisiting the long-running debate about whether TV licence evasion should remain a criminal offence.

Around 75% of prosecutions are against women – something the government calls “an ongoing concern” – and there are worries about the impact on vulnerable people.

But the Green Paper references previous reviews that found problems with alternative enforcement systems.

The 2020 DCMS consultation, which received 154,000 responses, found that moving to civil enforcement “could have wide-ranging impacts for licence fee payers, including the potential for significantly higher fines for evaders and for vulnerable people to be impacted by the use of bailiffs.”

Meanwhile, doorstep enforcement is becoming less effective. As we reported in November, TV Licensing conducted nearly 2 million visits to unlicensed households in 2024/25 – a 50% increase – but prosecutions fell 17% year-on-year. People simply aren’t answering the door anymore.

More Commercial BBC

Beyond advertising and subscriptions, the consultation explores how to grow the BBC’s commercial arm, BBC Studios, which already generates £2.2 billion in revenue annually.

This could include:

• More ambitious partnerships with other broadcasters and streaming services
• Licensing BBC content to AI companies for training data
• Placing more BBC content on third-party platforms like YouTube to generate revenue (and reach younger audiences who’ve abandoned traditional BBC platforms)

The government wants to review BBC Studios’ borrowing limit to give it “greater access to capital to invest in driving its growth,” and examine whether the trading and separation requirements between the BBC’s public service and commercial arms need relaxing.

What Happens Next?

The consultation runs until March 2026 – giving the public nearly three months to respond.

Those responses will feed into a White Paper expected later in 2026, which will set out the government’s actual proposals. A draft Charter will then be published and debated in Parliament before the current one expires on December 31, 2027.

The new Charter – the tenth in the BBC’s history – will take effect on January 1, 2028.

Nandy struck a supportive tone in her foreword, calling the BBC “one of the two most important institutions in our country” alongside the NHS. “While one is fundamental to the health of our people, the other is fundamental to the health of our democracy,” she wrote.

What’s clear is that the £174.50 annual fee you currently pay for watching any live TV or BBC iPlayer – mandatory since 1946 in various forms – faces its biggest shake-up in decades.

Beyond The Money

The consultation isn’t just about funding. The Green Paper also proposes:

• Strengthening editorial standards by giving accuracy equal weight alongside impartiality in the BBC’s mission
• New workplace conduct duties for the BBC Board following the independent review into workplace culture
• Counter-disinformation responsibilities to help combat fake news and support media literacy
• Reformed board appointments to reduce political interference 
• New obligations to drive economic growth across the UK’s nations and regions

The government also wants to examine whether the Charter should have a longer lifespan than the current ten-year cycle, to provide more certainty and reduce the opportunity for political interference.

Have Your Say

The BBC belongs to all of us, the government insists – and this is your chance to shape its future.

The online survey asks questions across all these topics, from whether you’d pay for a BBC subscription service to whether advertising should be allowed, and whether technology should enforce licence compliance through iPlayer.

Given the 872,701 responses the BBC received to its own “Our BBC, Our Future” survey earlier this year, the government is clearly expecting significant public engagement.

With the consultation closing in March and a White Paper due later in 2026, the long-term future of how you pay for the BBC has never been more uncertain.

For more news about TV and streaming, Subscribe to our free newsletter.