Stratford-on-Avon MP Nadhim Zahawi does not rule out scrapping BBC licence fee if he becomes PM

Tory leadership contender Nadhim Zahawi said he does not rule out scrapping the television licence fee if he becomes the next prime minister.

Earlier this year, Culture Secretary Nadine Dorries announced the BBC licence fee will be frozen for the next two years, confirming she wants to find a new funding model before the current deal expires in 2027.

The chancellor and Stratford-on-Avon MP told LBC radio: "We have to review how the BBC is funded. We have to look at how it is sustainable in the future.

"We have to review everything. Nothing is off the table."

The licence fee will be frozen from 2022/2023 and then rise in line with CPI inflation for the following four years.

Writing in the corporation’s annual report for 2021/22, released on July 12, chief operating office Leigh Tavaziva said the BBC estimated annual savings of £285 million will be required by 2027/28 to "mitigate the loss of inflationary increases to the licence fee over the next two years".

The report also showed licence fee income had reached £3.8 billion, an increase of 1% on the previous year.

BBC director-general Tim Davie said during a press conference for the annual report, speaking about the principles of a new funding model, that it is important to have a funding solution that “allows for the growth of the UK industries”.

He said: "In terms of a truly independent media, you want a funding system that allows for the independence of the BBC. You want something that is offering value to the licence fee payer and a fair system.

"You want something that ensures that the benefits for the creative industries, all the things we do and that we do rather well in the UK, are preserved, protected, but also stimulated.

"So I think we need to find a funding solution that allows for the growth of the UK industries."

Mr Davie said the BBC would "lay out those very clearly in the next few weeks".

Chairman Richard Sharp said the board “welcomes an informed debate” about the future funding of the broadcaster.

"We believe all options should be looked at and nothing should be off the table,” he said.

"We will also make our own contribution, of course, by setting out the key principles against which we believe options for future funding models should be assessed in order to support the BBC as a national and as a global asset."

Mr Sharp said "funding must follow strategy" and there is a risk of choosing the funding model and only later discovering "what kind of BBC that creates".

In January, Ms Dorries announced the licence fee will be frozen at £159 for the next two years until April 2024, insisting it is a "fair settlement for the BBC".

She also announced a review of the BBC’s funding model, which she later confirmed was due to begin before the Commons summer recess on July 22.

However, that now faces a potential delay after Boris Johnson announced his intention to step down as leader of the Tory party and Prime Minister.