Culture Secretary Nicky Morgan is to launch a public consultation on whether failure to pay the TV licence fee should no longer be a criminal offence.
Currently, anyone who installs, uses a TV or watches BBC iPlayer without a TV licence is guilty of a criminal offence and could go to prison.
Baroness Morgan said it was time to think about keeping the fee “relevant” in a “changing media landscape”.
The BBC said a 2015 review found the current system to be the fairest.
The consultation will also look at the viability of an alternative enforcement scheme.
Ahead of a speech on Wednesday, Baroness Morgan said many people thought it wrong that “you can be imprisoned for not paying the TV licence and its enforcement punishes the vulnerable”.
“We are launching a public consultation to make sure we have a fair and proportionate approach to licence fee penalties and payments, that protects those most in need in society,” she added.
Licence fee increase
The culture secretary is also to announce a new flexible payment scheme, called the Simple Payment Plan, to help those struggling to pay, including the over-75s.
It will allow people to spread the fee out into a number of manageable instalments.
“This will help prepare the BBC and public service broadcasting for the future and make sure it continues to work for our society, our economy, and the public which funds it,” said Baroness Morgan.
Last year, Treasury minister Rishi Sunak said the Prime Minister Boris Johnson had ordered a review of the sanction for non-payment of the £154.50 charge, which funds the BBC.
Confirmation of the consultation comes two days after it was announced the fee is to increase by £3, from £154.50 to £157.50, from 1 April 2020.
It also follows the controversy last year over the decision to scrap free licences for some over-75s, a decision which saw a number of celebrities joining the call for the decision to be overturned.
From June, only over-75s who are claiming pension credit will be eligible to a free licence.
In a statement, the BBC said “a detailed government-commissioned review (in 2015) found the current system to be the fairest and most effective”.
“It did not recommend change – in part because the current system is effective in ensuring payment with very few people ever going to prison.
“If there are changes, they must be fair to law abiding licence fee payers and delivered in a way that doesn’t fundamentally undermine the BBC’s ability to deliver the services they love.”
Impact on BBC
In 2018, more than 121,000 people were convicted and sentenced for evasion and issued with an average fine of £176.
There were around 26 million TV licences being used in the UK last year, generating £3.69bn in income for the BBC.
If decriminalisation of the TV licence fee were to go through, it would have a considerable impact on BBC funding.
The DCMS (Department for digital, culture, media and sport) said the government would take into account the impact on the corporation in the context of the overall licence fee settlement, for which negotiations begin later this year.
A previous government review in 2015 looked into whether a fine for non-payment could be issued under civil law instead, similar to the fees for breaking parking, bus lane and congestion charge rules.
The review also examined whether unpaid TV licence fees should be considered a civil debt in the same way as unpaid utility bills or council tax.
However, it recommended against changing the criminal sanctions regime, saying decriminalisation could bring with it an increased risk of evasion.