A House of Lords select committee today criticised the Government for loading costs onto the BBC which will result in a higher than necessary licence fee. They predict that on present plans the licence fee will rise to �180 in eight years time and will be raising over �4� billion a year from the public.

The committee say that Parliament not the Government should set the level of the licence fee and call for the National Audit Office to scrutinise the BBC�s bids for increases.

Although they support the principle of the licence fee they say that if it continues to rise steeply then it will damage the BBC by undermining support for the Corporation. In every year since 1997 the licence fee has risen by more than RPI and the BBC�s latest proposal is for increases of RPI plus at least 2.3 per cent.

The committee say that the Government are now asking the BBC to shoulder costs that previously have been borne out of general taxation. The prime example is that the BBC will be required to bear the cost of helping the elderly and the disabled with digital switchover � although the Government already accepts that it is responsible for bearing the costs of the licence fee for the over 75s.

The report says there is no justification for the BBC to be charged for the use of broadcast spectrum as is currently under consideration. It would not be justifiable to raise the licence fee in order to pay the Treasury for a resource that has always been supplied to the BBC free of charge.

The BBC are also criticised for not accurately costing the licence fee bid that they have put to the Government. An examination of one part of the bid � the cost of the proposed move to Greater Manchester � showed that the costs which were first presented could be reduced by a third.

Commenting Lord Fowler, the chairman of the committee, said:

�The licence fee has now been classified as a tax by the Office of National Statistics. We do not support this change and believe it has implications for the independence of the BBC. But what is also clear is that the Government are now beginning to use the licence fee as a tax.

�The substantial cost of helping the elderly and disabled with digital switchover should not be a cost picked up by the licence fee payer. The Government rightly takes on the responsibility for providing free licences for the over 75s and funds it from general taxation. It should do the same with help for switchover.

�There is an overwhelming case for licence fee increases to be properly scrutinised by Parliament with the assistance of the National Audit Office. There is no justification for the present position which is in effect a deal between the Government and the BBC.�

The committee also propose that the BBC conduct a full scale review of its international services. BBC World is a consistent loss maker � since 1999 its losses total �80 million � while the greatly admired World Service struggles for funds. Under present plans the World Service intend to launch an Arabic language television service but for only 12 hours daily. The committee propose that the Government should immediately provide the required �6 million to establish a 24 hour Arabic service. The World Service is an undoubted success. To maintain this it must remain independent of Government and never become a tool of UK foreign policy.

Other recommendations of the report include:

�The Committee supported the competition authorities� attempts to break up exclusive sports rights into packages. This will allow free to air broadcasters to compete more effectively for the big sporting events. However they feel the European Commission�s decision on Premier League TV rights does not go far enough to create a competitive market. They also call on the BBC to make a genuinely competitive bid for rights to live test cricket when negotiations with the ECB begin in 2009.

�The BBC should continue to explore innovative ways of approaching religion and other belief systems. There should be more high quality and thought provoking programmes emerging from the BBC Religion and Ethics Department.