BBC warned that the licence fee may soon come to an end

The licence fee that funds most of the BBC's programming has long been a contentious issue in the UK. For some, it's a safeguard for the broadcaster's most valuable work, while for others it's an increasingly outdated and unfair tax, penalising those who only want to watch other channels. Today the UK's Culture, Media and Sport Committee weighed into the debate, declaring that it doesn't see "a long-term future" for the licence fee in its current form. It admitted there were few viable alternatives for the fee in the near-term, but emphasised the current model was becoming "harder and harder to sustain."

In a new report, it criticised the BBC's corporate mistakes from the last few years, including the Digital Media Initiative that was worth £100 million and eventually scrapped in 2013. The Committee stopped short of calling for a reduction in BBC funding, but argued the broadcaster should be braver with its strategy and reduce its spending in areas that are already better served by other players, or where its public service merits are marginal. The report even took a side-swipe at the planned BBC One+1 channel, suggesting that it's a poor use of the licence fee and doesn't support its public service obligations.

So without the licence fee, what's the alternative for funding the BBC? The Committee says it would prefer a "broadcasting levy" similar to the one found in Germany. It would be a flat fee imposed on every household, regardless of how many people live there and the number of devices they own. Such a levy would tackle homes currently not covered or evading the licence fee, and could also be used to fund public service programming by other British broadcasters. It would also ensure people pay if they're only listening to BBC radio or watching shows via catch-up on iPlayer. Notably, in Germany the broadcasting levy is actually cheaper than the old licence fee because everyone now contributes.

Of course, this would be unlikely to sit well with people who have abandoned the BBC's programming in favour of other TV channels and standalone streaming services. The Committee noted this and said other options should be explored, such as a voluntary subscription or general taxation that would be set by the UK government and proportionate to a household's income. It also stressed that the current licence fee should be amended to include catch-up TV services as soon as possible, and the broadcaster should "prepare for the possibility" of larger changes in the 2020s. The BBC, meanwhile, has issued a statement that fails to address most of the Committee's specific proposals. "This report confirms the importance of the BBC in national life and recommends maintaining and modernising the licence fee, something we have said is necessary," it says.

The BBC's current Royal Charter, which sets out its public service obligations, will expire at the end of 2016. When the next official review rolls around, it's unlikely that we'll see any fundamental changes to the licence fee or the way the BBC is funded. Today's report will, however, give firepower to licence fee critics and apply new pressure to the long-standing debate around public service broadcasting and the way it's funded in the UK.