The BBC could be forced to share the licence fee with rival broadcasters after the Government signalled that the corporation’s exclusive right to public funding would come to an end.

James Purnell, the Culture Secretary, suggested that the £3.4 billion licence fee could be carved up in future between the BBC and commercial broadcasters committed to making quality, public-service programmes.

Sir Michael Lyons, chairman of the BBC Trust, said that a “contested” licence fee that reduced the BBC’s budget could threaten its ability to deliver public-service programmes and prompt a viewers’ revolt.

Mr Purnell made his announcement at a conference on media regulation at the University of Oxford. He said that the Government was prepared to be bold in establishing a framework for the digital broadcasting era.

He said: “Let’s put the question starkly: do we think it’s sustainable for every penny of the licence fee to go to a single organisation in an industry which now has very many providers rather than just a handful? Would some form of contestability for licence-fee funding help to sustain quality, innovation and efficiency?”

The status quo did not appear to be an option. Referring to a comment once made by Tony Blair, Mr Purnell said: “It was once said that we are at our best when we are at our boldest. The flipside for broadcasting is: people are at their worst when they are at their most conservative. The greatest unwitting enemies of public-service broadcasting are those who say we should leave it be. I’m afraid the world doesn’t allow for that.”

Channel 4 could prove one of the beneficiaries of a licence fee that is “top-sliced”. The channel has argued that it needs public funding to maintain its public service output in a multi-channel, competitive environment. Andy Duncan, the channel’s chief executive, said: “Some form of new funding underpinning needs to be provided for Channel 4 so that we can renew our public purposes. We can’t spend several years debating the issues.”

Sources close to Mr Purnell say that he added the “top-slicing” section to his speech after Sir Michael had appeared to rule out any radical change when he spoke to the conference.

Criticising the concept of a shared licence fee, Sir Michael said: “Currently, the licence fee payer knows exactly where the money is going and who to hold to account. Should we not think very carefully indeed before diluting or blurring the clarity of the current arrangement?”

He added that viewers might not be happy to pay an additional 10 per cent on their licence fee to fund programmes on other channels that they may not wish to watch. He said: “The number of people who wish to pay more tax is a very small community.”

A shared licence fee could not come into effect until 2013, when the current settlement comes to an end. Mr Purnell said the Government would conduct a review into how public-service broadcasting could be funded outside the BBC after an Ofcom investigation. He rejected one proposal to create a “arts council of the air”, which could distribute licence fee money to producers who had worthy projects.

Mr Purnell said: “I think the risk that posh programmes disappear into a space all of their own, rarely to be visited by those without a prior grounding in the subject matter, is very real.”

Ofcom has suggested that a £300 million fund, known as the Public Service Publisher, could distribute funds for programming, such as arts and current affairs, threatened by commercial pressures.

Mark Thompson, the Director-General of the BBC, this week called for more government funding to support public-service programming, but set his face against the licence fee being carved up by a central body.

Sources at the Department for Culture, Media and Sport said that the details of a contested licence fee had not been spelt out in discussions, but the minister had deliberately placed the issue on the table. “The status quo is not an option,” said a departmental source.

£7.54 of every licence fee is spent on the BBC’s television output each month

£1.17 of every licence fee is spent on the BBC’s radio output each month

92.5% of people in Britain use the BBC every month

£2 the price for the first licence fee, issued in 1946

£135.50 The annual cost of a colour licence

£45.50 The annual cost of a black and white licence

Source: BBC

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