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Licence fee payers should not bear the cost of BBC turning digital

LONDON - The BBC's controversial plan to increase its licence fee by 2.3 percentage points above inflation was dealt a blow by the House of Lords today, which recommended the government should bear the brunt of digital switchover.

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The report said that the BBC's current bid is "particularly high because the government expects the BBC to fund a significant proportion of the costs of analogue switch off".

The House of Lords select committee said it "saw no reason" why the licence fee payer should foot the bill because they already face covering the costs of replacing their analogue TV sets and recorders.

The committee also opposed the licence-fee hike saying "it will particularly hurt low-income households".

It recommended that the government, which would earn up to £2bn from selling the analogue system, should fund a significant proportion of switchover.

It also warned the BBC that it should continue to seek efficiencies in this area because many organisations are able to reduce growth in costs below the RPI.

BBC director-general Mark Thompson and chairman Michael Grade estimated in a report last month that the new licence fee charge would be £150.50 a year under its proposals.

Taking current inflation, this means the licence fee could in fact soar to £183 by 2012 and £210.50 by the end of the 10-year charter in 2016.

The committee has called on the National Audit Office to carry out an independent assessment of the BBC's licence fee request.

It also recommended the BBC should be funded by the licence fee until 2017.

Other recommendations include The BBC's Royal Charter being replaced by a statutory constitution that is subject to parliamentary scrutiny.

In terms of editorial responsibility, the committee advised the BBC should be "distinctly different" from those offered by commercial broadcasters but should continue mixing popular and distinctive programming, with the BBC board ensuring that its output as a whole reflects the public interest.

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