A universal household levy could offer a viable alternative to BBC license fees, according to a new report.
The Lords Communications and Digital Committee said the model, in which each household would be required to pay a flat fee regardless of its consumption, could provide the broadcaster with “predictable and sustainable levels of income”.
In a report on the BBC’s future funding, the committee said it should be means-tested to make it fairer than the current model, linking fees to council tax to achieve this.
This method has been adopted in Switzerland and Germany.
The committee also urged all parties to consider a hybrid model in which public service content would be publicly funded, while other programming, such as high-end drama, would be behind a paywall.
The report said the model would give audiences choice while ensuring that basic BBC programming remained universally accessible, but warned there would be “significant commercial risk with no guarantee of success”.
In the 73-page document, the committee said many of the benefits of existing license fees are “under threat” and the model has become “regressive”.
He ruled out two widely touted funding models during the ongoing debate over the company’s funding.
He advised against models funded entirely by subscription or advertising, as well as those in which the BBC is funded entirely by government grants.
A purely advertising-funded BBC is ‘highly unlikely to be viable’ and would mean ‘a multi-billion pound cut in revenue for the BBC while harming the rest of the public service broadcasting sector’, which relies on The advertisement.
BBC programming may also need to be cut back to refocus on core public service programming with a significantly reduced budget, the report adds.
The committee also rejected a subscription service model similar to Amazon Prime Video or Apple TV+ because it “would generate insufficient revenue while introducing disproportionate barriers to access”.
He said the model would also compromise the BBC’s ability to deliver its services across the UK and present various technical challenges.
In addition, the report says the BBC will face “major challenges” in the coming years, which will be characterized by “increasing competition and costs, and limited funding”.
It will also have to compete with “significantly better-funded international streaming giants” while answering questions about its value in a media landscape in which consumers have more and more choice.
It comes after Culture Secretary Nadine Dorries announced in January that licensing fees would be frozen at £159 for the next two years until April 2024.
The minister said she wanted to find a new funding model before the current deal expires in 2027 because it is “completely outdated”.
She also announced a review of the BBC’s funding model, which she said was due to start before the Commons summer recess on July 22, although this was cast in doubt following Boris Johnson’s resignation as conservative leader.
In the report, the committee said it was “concerned” about the lack of a specific plan for the upcoming review and warned that the government risked “undermining the legitimacy of any changes it might propose”.
Committee chairman Baroness Stowell de Beeston said: ‘The biggest threat to the future of the BBC is not a battle between politicians over license fees – although decisions on how it is being funded are important and are becoming increasingly urgent.
“The real danger is that the BBC fails to seize this opportunity to reform itself and demonstrate why it is valuable to audiences in this new world of endless choice.
“That’s why the committee concluded that, when it comes to what the BBC does, the status quo is not an option.
“The government and Parliament will have choices to make in terms of funding mechanisms.
“But those decisions must be informed by a bold vision of what the BBC exists for and what it will deliver.
“So first we call on the BBC to define its role more clearly and to respond confidently with a plan that is positively ambitious about what it will change and how it will change to serve the public interest in this world. rapidly evolving.”
A BBC spokesperson said: “We welcome the Lord’s report. We agree that we must continue to reform, which we have done at pace.
“It is clear that the BBC must remain relevant and we welcome the report’s conclusion that a BBC market failure would not be a good outcome.
“Beyond that, we are open-minded about the future and it is true that there is debate about whether the fee should evolve and if so what comes next.”