The BBC is backing a new system of funding that would see all households pay a levy, replacing the current licence fee which only targets homes that watch live TV.

The corporation says that it will make significantly more revenue from the move with TV Licensing, the body tasked with collecting the licence fee and chasing down evaders, costing more than £100m last year.

It said the change would help it to mitigate the cuts of about £700m that it has to find after striking the funding settlement with the government that includes covering the cost of free TV licences for the over-75s.

“There is a way in which the government could still reverse the decline in UK original content investment, invest in the creative industries and meet the needs of [home] nations audiences better,” said the BBC in its report outlining the future of the corporation on Monday.



“The government has set out a medium-term funding option in the green paper to modernise the licence fee by levying it on all households. We believe this would generate additional revenues.”

The BBC said that implementation is a “decision for government” but that it will now open discussions on “whether that is a justified investment in the creative industries”.

The household levy system, a version of which was introduced in Germany in 2013, would help to solve issues that have arisen with the current licence fee system.

One problem is that the licence fee only covers live TV viewing, on any device, but not those who use the iPlayer to watch on-demand television.



This has become a growing problem as more young people turn to digital viewing.



In addition, non-payment of the TV licence fee is a criminal offence, and the costs and time involved in prosecuting evaders has come in for heavy-criticism.

In 2013, more than 170,000 people were prosecuted for failing to pay for the £145.50 a year TV licence fee, taking up about 10% of magistrates’ court cases. About 30 people a year are jailed for the offence.

TV Licensing spent £102.2m on collecting licences in the year to the end of March 2014, a figure that includes paying for call centres, a field force, detection of evaders, letters seeking payment and “information campaigns”.



The BBC would not provide an estimate of how much more income it might receive shifting to the universal levy system.

However, it provided figures claiming that research using “prudent assumptions” shows that every £1 increase in licence fee revenue the BBC generates about 60p of extra economic value.

“Investment in the creative industries pays for itself,” said the corporation. “This is because the licence fee channels resources into one of the most productive sectors of the UK economy, the creative industries,” the BBC said. “The BBC is a reforming organisation with every incentive to reduce waste and maximise money for content.”

In July, the government published a green paper looking at the scale and scope of the BBC, which raises three alternative options of funding the corporation including the household levy model.



In February, the culture, media sport select committee, led by John Whittingdale before his elevation to culture secretary, published a report on the future of the BBC that backed the household levy.

“A move to a broadcasting levy on all households is our preferred alternative to the licence fee,” it said. “Such a levy on all households would obviate the need to identify evaders and would be a fairer way of ensuring those people who use only BBC radio and online services contribute to their costs”.



The report said that such a system would allow a “small proportion” of the revenue raised to be used to fund public service content and services provided by other organisations.

The report pointed out that the while it is a universal levy, the German system allows members of the public to apply for exemptions including those on certain welfare benefits, such as unemployment benefit, and students living away from home.