A DCMS Committee has urged the Government to consider a household levy as a potential model to replace the TV licence fee
The DCMS Committee has warned that the TV licence fee model is outdated and no longer fit for purpose
On 1 October 2026, the Digital, Culture, Media and Sport Committee (a cross-party committee which scrutinises the Department for Culture, Media and Sport (DCMS) and its associated public bodies) published a report on the Government’s BBC Royal Charter review ahead of its expiry in December 2027. The Charter is the legal basis for the BBC’s existence – granting it the right to operate and independence from the Government – and expires every 10 years. The report reiterated Samir Shah’s (Chair, BBC) statement that the BBC is at a “fork in the road”, and that one path would lead to a declining BBC while the other would lead to a public broadcaster of scale and reliability. One of the main issues for the BBC is that fewer people are paying the TV licence fee, with Matt Brittin (Director-General, BBC) informing the committee that it had lost around £1.2-1.3bn in licence fee revenue over the last 10 years and that 40% of that was due to a reduction in the number of households paying the fee. As a result, the committee warned that the current TV licence fee is outdated and no longer fit for purpose, and assessed alternative funding models that could be used instead.
The committee suggested a household levy could replace the TV licence in the long term, but would probably not be a viable short-term solution
The committee encouraged the Government to consider a household levy as a potential model to replace the TV licence in the future, which it had appeared to reject in its green paper in December 2025. Our research suggests a household levy is the most common alternative adopted in European countries that have moved away from a licence fee – see Figure. The committee suggested that the cost to households compared to the current licence fee could be reduced if the criteria for fee-payers is expanded. While in practice a household levy could be very similar to the TV licence, it would remove the link between using a particular device and having to pay the fee, which would make it more future proof. The committee suggested that it could also be made more progressive, and enable certain households to be eligible to pay a lower fee. The DCMS committee was informed that a household levy may not be a viable short-term solution, mainly due to the challenges of finding a suitable collection mechanism – such as an addition to Council Tax or on broadband or utility bills, as is done in Italy and Bosnia and Herzegovina. The committee noted that there was “more optimism” about an additional amount on broadband or utility bills than on council tax, which it had been informed was the “least popular tax” to have been introduced. However, despite acknowledging the potential downsides of an addition to Council Tax, it failed to consider the challenges of collecting a household levy through broadband bills, which could significantly increase broadband prices, and would arguably run counter to the objective of digital inclusion – hindering plans to switch-off DTT. Overall, the DCMS committee suggested that, in the short term, reforming the TV licence so that it is no longer linked to a particular device or activity would be the best next step towards introducing a household levy. This could be implemented in the long term, although the committee did not define a time period for either of these options.
Other funding methods, such as general taxation, advertising or a subscription model were not considered viable
The committee noted that all of the other funding options have considerable drawbacks. General taxation would risk the BBC’s independence, especially as the BBC is a national broadcaster, not a state broadcaster. Similarly, advertising would fundamentally change the BBC, making it less likely to commission programmes with a strong public service ethos such as Newsround, Bitesize or local journalism. Other broadcasters (including ITV, Channel 4 and Sky TV) did not support the BBC carrying advertising, as the BBC would eat up a proportion of the advertising base and “cannibalise the market”. The committee also noted that a subscription service wouldn’t be suitable as this would turn a public service into a consumer product, as well as introducing new costs for the BBC to acquire customers and avoid high churn rates. Finally, it suggested that the Royal Charter should be made indefinite rather than expiring every 10 years, as this creates an avoidable opportunity for political interference and a disproportionate distraction for the BBC. This would have to be accompanied by robust mechanisms to enable periodic reviews of the BBC’s funding and public purposes.
