Veteran broadcaster Andrew Neil has suggested that the BBC should adopt a two-tier funding system as a replacement for the licence fee.

The government has confirmed that it is looking at the future of the licence fee beyond the expiration of the current Royal charter at the end of 2027 - and current culture secretary Nadine Dorries has suggested that she is minded to scrap it.

Talking to The Times, Neil argued that the licence fee - currently £159 a year - should be switched for a model of guaranteed funding plus a subscription service.

He proposed that the public funding element - likely a much smaller licence fee - would produce content that the "market doesn't do", including arts, current affairs and news, while the subscription element would be for shows such as Strictly Come Dancing, Line of Duty and EastEnders.

"The licence fee is... an asset because it's guaranteed money but it comes with a price," he said. "Market economics are finally hitting the BBC. The situation is systematic."

A BBC spokesperson said: "We look forward to the national debate on the next charter and, of course, all options should be considered. The BBC is owned by the public and their voice must be heard when determining the BBC's future."

The BBC raised around £3.75 billion from the licence fee in 2020-21.