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The head of Britain’s media regulator, Ofcom, has said the government should look again at how the BBC is funded, and called for the national broadcaster to strengthen its governance and complaints mechanisms.

Michael Grade, who had served as the chair of the BBC, described the licence fee that funds the BBC as a “regressive tax” that meant he would pay no more than a “single mom with three kids in a rented room”.

The former ITV and Channel 4 boss added that one of the “big” questions for the next BBC charter review was whether the BBC should be allowed to compete for advertising revenue against commercial broadcasters, which are already seeing a sharp decline in this income.

The BBC needed to be more “independent and transparent” in its approach to how complaints are handled, he added, something that Ofcom has “pushed quite hard”. The government is expected to overhaul the BBC’s complaints system as part of a forthcoming review.

In an interview with the Financial Times after his first year at Ofcom, Grade said that the next chair of the BBC should be “more high profile” in representing the position of its board. The government is interviewing a shortlist of about 10 candidates for the role, including acting chair Dame Elan Closs Stephens and former BBC non-executive director Samir Shah.

“The board does need to be much more publicly open about what they think about some of the stuff that becomes controversial. We hardly ever hear from the board and that leaves a vacuum.”

Grade was picked as chair of Ofcom after Boris Johnson, who was at the time prime minister, was overruled in his attempt to appoint Daily Mail boss Paul Dacre. Grade was a Tory peer but has since dropped his affiliation given his role at the independent regulator.

Political allegiances had no bearing at Ofcom, he said. “I spent my whole life in broadcasting defending freedom of expression, and defending the independence of broadcasters. I don’t think I need to defend my record in any way about trying to influence broadcasting.”

Ofcom has employed an additional 350 people to handle the extra workload from the Online Safety Act, which imposes rules for tech groups on harmful and illegal content.

Grade is not concerned over its size or extensive remit over media, telecoms and tech. “There’s so much convergence it makes sense to have a convergent regulator.”

Ofcom will have powers to require that tech groups use “accredited technology” to search encrypted services for illegal content, which has raised objections from the industry.

But Grade said they needed to accept regulations — which he described as part of a global effort to rein in the sector. He said Ofcom would set out how it would deal with encryption issues next year.

“Everywhere in the world, the tech companies are having to face regulation. They can’t just up sticks and go because they’ll end up being a niche business in America.”

Ofcom has 14 investigations into GB News over issues such as impartiality from the use of Tory politicians as presenters. The channel employs MPs such as Jacob Rees-Mogg and has recently signed up Johnson.

Grade described the channel’s approach in its use of politicians as “quite innovative”, adding that this was fine as “long as they comply with the rules”. So far, Ofcom has ruled that the broadcaster has breached rules four times. 

Serving politicians are not allowed to be used as news presenters or reporters, but Grade does not regard GB News as a pure news channel.

“It’s not like Sky News. Watching some of their programmes, you would never say that they were news programmes, they are current affairs. We don’t want Ofcom dictating who can and can’t present shows — its freedom of expression.”

Ofcom has also been criticised as toothless given that repeated offences at GB News have only led to warnings rather than financial penalties. Grade said that “whatever sanctions we impose on any broadcaster is proportionate to offence”.

Grade said he would have no problem appearing on GB News but that it would be “improper” when there were live investigations.

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