A House of Lords committee has urged the Government to take a “bold, confident and unapologetic” approach to securing the BBC's financial future as ministers prepare the next Royal Charter.
The Communications and Digital Committee said on 18 September that the forthcoming Charter cannot be treated as a routine renewal, warning that the BBC is already under significant financial pressure while television audiences increasingly move away from traditional broadcasting.
The intervention comes amid a wider debate over the future of the television licence fee, with millions fewer licences now held than at the scheme's recent peak and senior BBC figures arguing that the present funding mechanism needs to change.
Lords warn against giving BBC an economic growth mission
The committee has written to Culture Secretary Lisa Nandy ahead of the Government's BBC Charter Review White Paper.
It said any new or expanded responsibilities imposed on the BBC — including responsibilities involving regional growth, technological innovation or media literacy — should be accompanied by sufficient funding, or by an acknowledgement that the broadcaster would have to do less elsewhere.
However, the committee rejected the case for a broad new BBC public purpose specifically requiring it to drive economic growth across the UK.
It said the BBC already contributes £6.7 billion to the UK economy and warned that an explicit economic-growth purpose could cause “mission drift” and influence commissioning towards more generic and exportable programming.
Traditional television audiences have fallen sharply
In 2015, broadcast television reached an average of 92% of people in the UK each week. The equivalent figure last year was 54%.
The committee said the BBC will increasingly need to distribute programmes through third-party services such as YouTube if it is to maintain universal reach, while warning that doing so reduces the BBC's control over presentation, audience data and its direct relationship with viewers.
It also welcomed discussions between the BBC and Channel 4 about an expanded iPlayer, provided any arrangement protects the organisations' different brands and funding models and maintains competition and plurality.
2.4 million fewer households hold a TV licence than at the peak
The Government's Charter Review Green Paper says the number of households with a television licence has declined from 26.2 million in 2017/18 to around 23.8 million, a reduction of approximately 2.4 million.
It says licence sales fell by around 8.3% between 2014/15 and 2024/25, equivalent to roughly 2.1 million fewer sales. The Government says the decline is partly driven by households declaring that they no longer require a licence because they do not watch live television or use BBC iPlayer.
A licence is currently required to watch or record live television on any channel or service, or to use BBC iPlayer. It is not required solely for watching on-demand services such as Netflix, Disney+, Amazon Prime Video or YouTube.
The annual colour television licence increased to £180 on 1 April 2026.
BBC chairman has backed discussion of a household levy
One proposal discussed during Parliament's Charter Review inquiry has been a universal household levy.
Giving evidence to the Commons Culture, Media and Sport Committee in July, BBC chairman Dr Samir Shah said the BBC's future funding needed to be universal and large enough to sustain the organisation.
Asked about a levy applying to households more broadly than the existing television licence, Shah said a household levy had “many advantages”, including being enforceable and potentially reducing collection costs. He said the BBC was open to discussing the proposal.
BBC Director-General Matt Brittin told MPs that only around 80% of households currently pay the licence fee. He said moving towards universal household collection could potentially allow the amount charged to each household to be reduced, depending on decisions made by the Government.
Brittin also said licence-fee collection currently costs the BBC about £190 million a year.
Shah later told a Lords committee that a household levy would provide the BBC with greater stability of income.
Government has ruled out a new household tax
Despite the BBC leadership's willingness to discuss a household levy, it is not currently Government policy.
The Government's Charter Review Green Paper explicitly rules out replacing the licence fee with a new tax on households, funding the BBC through general taxation or imposing a levy on streaming-company revenues.
Culture Secretary Lisa Nandy reiterated that position when she appeared before MPs in July, saying those three options had been ruled out.
The Government is instead considering reforming the existing licence fee, including potentially changing which services require a licence, introducing different rates for particular groups of users and increasing the BBC's commercial revenue.
The Green Paper says ministers are keeping an open mind about whether BBC online services or BBC Sounds could eventually fall within the scope of the licence requirement.
Licence fee model under increasing pressure
The Government says the licence fee provided £3.8 billion to the BBC in 2024/25.
The Public Accounts Committee reported that 3.6 million households had declared that they did not need a licence in 2024/25 and estimated licence-fee evasion at 12.5%.
The committee warned in November 2025 that the BBC's existing collection and enforcement system was becoming less effective.
The Government has committed to retaining the licence fee for the remainder of the existing Charter period, which ends on 31 December 2027.
White Paper will set out Government's next steps
The Communications and Digital Committee's intervention does not itself change the licence fee or the BBC's funding arrangements.
Its recommendations will feed into the wider Charter Review, with the Government expected to set out its proposals in a White Paper.
Baroness Keeley, chair of the committee, said the review was fundamental to the future of public-service media and argued that ministers must be realistic about what the BBC can be required to deliver while it faces significant financial pressures.