Members of the Communications and Digital Committee of the UK House of Lords (Upper House) while frowning down on BBC’s “stagnation and decline”, have, however, favoured continuance of public funding of the broadcaster, apart from additional alternatives.

The new report, titled ‘Licence to Change: BBC Future Funding’ and released Monday, said that rapid changes in media, technology and consumer habits, combined with increasing competition, mean the BBC must define its role and publish a new vision for how it will deliver for audiences and benefit the nation.

The Committee warned that the BBC faces “stagnation and decline” if it doesn’t urgently set out a bold new plan for its future, adding this needs to include costed options for future funding models that go beyond the existing licence fee system, which has been described as “regressive”.

The Lords Communications and Digital Committee is chaired by Baroness Stowell of Beeston.

However, it went on to add that the report finds that some form of public funding will remain necessary beyond the existing licence fee settlement, but for any form of public funding to remain legitimate, the BBC “must do a better job of representing the full range of perspectives and communities that make up our diverse society”.

The Committee also said the BBC would need to expand its commercial operations and be “open minded about exploring more ambitious commercial options, such as domestic or international hybrid subscription services”.

According to the Chair of the Committee, Baroness Stowell of Beeston: “The greatest threat to the BBC’s future isn’t a battle amongst politicians about the licence fee – though decisions about how it is funded are important to get right and becoming increasingly urgent.  The real danger is if the BBC doesn’t seize this opportunity to reform and demonstrate why it’s of value 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.  There will be choices for the Government and Parliament to make when it comes to funding mechanisms.  But these decisions must be informed by a bold vision of what the BBC exists for and what it will deliver.  So first, we are calling on the BBC to define its role more clearly and respond confidently with a plan that is positively ambitious about what and how it will change to serve the public interest in this fast-changing world.”

In addition, the UK the Committee highlighted the following issues:

# There remains a “vital” role for a BBC which delivers value and benefit to audiences, society, and the UK’s global position – but that role needs to be defined more clearly and inform a bold new plan for the future, which sets out how the BBC will change.

# The existing licence fee has several benefits but also drawbacks. The link to a television set looks increasingly outdated. Its regressive nature means that regularly raising the fee to the levels the BBC requires will hit the poorest hardest.

# There are alternatives. A universal household levy linked to council tax bills is one option that could take greater account of people’s ability to pay. Others include a ring-fenced income tax and reforming the existing licence fee to provide discounts for low-income households.

# The BBC will need to expand its commercial operations to generate additional streams of funding. This could include exploring options for domestic and/or international hybrid-subscription services.

# A model based fully on subscription or advertising would not work. Nor would a BBC funded wholly by government grants.

# The BBC will need to operate within a nimble regulatory framework in future. It currently takes too long for sensible changes to be introduced under the current arrangements with Ofcom.

# The Committee expresses concern at the lack of plans by the UK government for public engagement, and calls upon the Department for Digital, Culture, Media and Sport to consult the public extensively before any major decisions about future funding are made. The Committee urges that any discussion on BBC future funding should move beyond the binary ‘for or against’ licence fee debate.