Dyke: Tories should scrap BBC licence fee

Former BBC director general Greg Dyke has recommended that the Conservative party should ditch the licence fee to save over £100m a year.

Following his review of Tory media policy, Dyke suggested scrapping the BBC's expenditure on administration and enforcement of the £142.50 licence fee, reports The Guardian.

The freed-up funds would instead be used to boost the output of commercial public service broadcasters, most notably for the provision of a viable local news alternative in the UK.

Under the plan, the BBC would still receive its annual £3.6bn income from the public purse, but this would derive from general taxation or a grant from the government.

A source close to the review said: "This is definitely an area that Greg is interested in and thinks needs to be raised and explored. It will be in the report."

However, Dyke's approach will be strongly opposed by the BBC on the grounds that it would erode the corporation's independence from government control.

Conservative party leader David Cameron asked Dyke to head a panel of 12 industry experts - including Carphone Warehouse co-founder Charles Dunstone and Universal Music boss Lucian Grange - to advise on creative sector policy ahead of the general election next year.

Published next month, the review panel's report will cover various issues, including the future of Channel 4, efforts to curb illegal file-sharing and the rollout of digital radio.

Dyke has long opposed the licence fee, which he described in a speech last year as "a desperately unfair tax". The industry veteran further believes that the fee will become harder to collect as online TV viewing continues to gather pace.

According to official figures, the BBC spent £123m collecting the licence fee in the 12 months up to the end of March 2008.

The Labour government has instead proposed using the £130m underspend from the Digital Switchover Help Scheme to enable independent consortia to deliver ITV regional news in England, Scotland, Wales and Northern Ireland.

However, BBC Trust chairman Sir Michael Lyons firmly opposes the proposal - known as top-slicing - and further warned that the licence fee "must not become a slush fund".