Monday, 14 June 2010

How the BBC licence fee amounts to subsidising middle class hobbies


I return to this matter of the free rider. But this time, I am stretching the thinking a little to look at the extent to which certain groups receive far more value from the BBC licence fee than others. It has seemed to me for some while that, despite its efficiency as a tax (it is after all a near universal poll tax), the license fee presents some issues of equity.

At the heart of this is use – whether or not we get value from the license fee depends on the extent to which we make use of the BBC’s services. As I noted before with cinema popcorn and service stations, there is an implicit cross subsidy within the BBC's business model. And, as with those situations the cross subsidy is intended to ensure that some ‘free’ goods are provided. In the BBC’s case, these free goods are what is termed ‘public service’ and provision for ‘minorities’ (or rather a selected group of minorities – we have an Asian radio station but no station for gypsies, for example). And the biggest minority benefit goes to elite arts and culture.

This all seems perfectly fine until you appreciate that my friends who slump before assorted soaps, televised sport and reality TV are forced to subsidise grand opera, symphony orchestras and ‘up themselves’ late night arts discussions (and frankly such folk are more likely to be annoyed by this than they are irritated by Jonathan Ross’s package). Because of the ‘public service’ requirement (and limiting broadcast restrictions), my friends are contributing to religious programming, to earnest current affairs analyses and the development of a vast internet empire. I suspect that, given a choice, these friends would choose not to cough up for any of this stuff.

Which brings us to the free rider problem. Bluntly, middle class arty-farty types like me are getting a brilliant deal from the BBC – vast subsidies for our narrow, minority interests are achieved by transferring cash from people forced to pay for the license fee who would never pay for subsidising a ballet company. And these people will make some observations about these subsidies – like the fact that their chosen preferences either are too plebby for subsidy (not a lot of public subsidy for the Northern club circuit, I notice) or else are more than capable for paying their own way without support – the BBC aren’t subsidising rugby league, country and western or snooker.

So those of us who enjoy minority music, who want to watch a bunch of smug people pontificate about books we’ll never read or who want to watch god being bothered get this on the cheap because people who don’t want that stuff are paying the same price. And the BBC gets a further economic benefit from all this as those benefiting from this cross-subsidy (which is, generally speaking, from poor to rich) provide an articulate, media-savvy, well-connected lobby aimed at persuading the government to maintain the current poll tax. Plus, of course, reminding the poor saps being ripped off just how important the poll tax is to maintaining these vital cultural institutions.

As a result we have an ‘elite’ arts and cultural sector that is de facto nationalised (this is especially the case with music) – so dependent on continued subsidy that its leaders simply cannot envisage a sustainable model based on the idea that people pay an economic price to watch or listen. The very business model that makes London theatre profitable and allows for the continued extension of aging rock stars’ careers wouldn't work for Philip Glass or Newsnight Review.

I do not think the licence fee should be scrapped rather that a gradual reduction of its significance to the BBC is needed. The BBC’s business model should seek to monetise all those aspects of provision that are not clearly and definably a public service. Over time the license fee should whither to a small amount directed to clearly described and limited purposes – everything else should be paid for by the user, through advertising, using sponsorship or through other charges. I can think of no rational or moral case for carrying on with taking poor people’s money to subsidise rich folk’s hobbies – however much I may like those hobbies.


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