Legislation clears upper house after Tories and cross-benchers drop opposition to lifting compensation cap

Lisa Nandy, the culture secretary, has published a green paper on BBC charter renewal. It includes a consultation on options for the future.

On funding, the document says the government has an “open mind” on how the licence fee system may be reformed to stop fewer households paying every year. It suggests there might be a new type of licence fee for people who say they don’t watch BBC TV, but who do use the BBC’s website, or BBC Sounds.

In addition to BBC saving and efficiency programmes, we also want to explore wider reforms that could help address the funding challenges the BBC faces. We have not ruled out keeping the current licence fee in place with its current structure. However, given the sustainability challenges it is facing, we are also reviewing the scope of services for which the licence fee is required and considering differential rates for specific types of users, to make it more sustainable for the long-term, along with increasing commercial revenue to ease the burden on the public. This would aim to reverse the trend of fewer households paying every year and declining overall income, which risks the BBC declining if it is not addressed. Any reform of the licence fee must be proportionate and reflect the cost-of-living burden on the public.

As the licence fee is a tried and tested public funding model, we are not considering replacing it with alternative forms of public funding, such as a new tax on households, funding through general taxation, or introducing a levy on the revenues of streaming services to fund the BBC …

My aims for the charter review are clear. The BBC must remain fiercely independent, accountable and be able to command public trust. It must reflect the whole of the UK, remain an engine for economic growth and be funded in a way that is sustainable and fair for audiences.

As green paper on corporation’s charter renewal is launced, what funding options might be under consideration?

Advertising. Subscriptions. A household levy. The government claims to be considering all options for funding the BBC. In reality, however, many industry insiders believe radical reforms will be dodged in favour of sticking to the licence fee model – perhaps for the last time.

Advocates for the licence fee have long argued it is the only model that allows the corporation to stick to its guiding “universality” principle – producing programming for everyone.