Outlook: Leave Auntie just as she is

Nobody doubts the size of the management task facing John Birt, director general of the BBC. In some respects the BBC's licence fee is every chief executive's dream - a guaranteed source of income into the indefinite future. Unfortunately this unique, hypothecated tax is not all upside. The fixed licence fee means there is limited scope for growing revenue, which in turn necessitates spreading a fixed pool of money more and more thinly in the fight for audience. Furthermore, from this year onwards the Beeb will be spending a tenth of its revenue annually on the conversion to digital. That means less money for programming, less money for trouncing increasingly fierce competition.

All the same, it is not clear that making the BBC into an institution mutually owned by licence fee payers - as suggested in a new booklet by the Institute for Public Policy Research, a left leaning think tank - would solve the problem. There would be some potential advantages, obviously. Removing the BBC from public ownership would allow the BBC to raise debt without affecting the level of public sector borrowing or going the whole hog of privatisation, though for what purpose the IPPR doesn't say. And mutual ownership might make licence-fee payers feel more attached to the BBC as well as making the BBC more answerable to its viewers.

But in the end the proposal suffers from a fundamental flaw - you cannot privatise a tax without allowing people the right to opt out of it. The virtue of the present licence fee system - which is unique to Britain - is its attributes as a flat rate tax, affordable to all, capable of funding a basic level of quality, public service broadcasting. The moment the BBC is removed from the public sector, a sizeable minority, possibly swelling over time to a majority, is going to start wondering why they should be paying a licence fee at all when they spend their lives watching Sky, down the gym or loitering on street corners.

Furthermore, it is questionable that we actually want the BBC independently tapping the capital markets for extra sources of income. The BBC is already a monopoly broadcaster in the UK with nearly a half of the total TV and radio market. That's enough for any organisation, even one producing such lasting monuments of our age as Teletubbies and Eastenders. Nothing would be gained by attempting to make it more dominant still. The BBC is perfectly all right as it is, thanks very much.

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