Speaking at the Westminster Media Forum, Grade said: "Using the licence fee to solve a theoretical future deficit in public-service provision is a thoroughly bad idea. Not good news for viewers and listeners." Channel 4 is keen to use top-sliced licence-fee funding to pay for its public service broadcasting requirements.
While welcoming the proposals in the Government's Green Paper to grant the BBC a new Royal Charter for ten years with continued licence-fee funding, he urged the Government to wait until digital switchover was completed before embarking on its next BBC funding review.
Grade said that he accepted the paper's proposal for a rigorous public-service test of its output. This could see some services either curtailed or removed entirely.
He also criticised the paper for underestimating the impact of emerging digital technologies on the future of BBC audiences.
He said: "It is vital the BBC remains agile, able to respond flexibly, on behalf of licence-fee-payers, to new opportunities and the new ways they wish to enjoy BBC content."