A dedicated Scottish digital channel will be recommended as the best way to improve broadcasting north of the Border.

The Broadcasting Commission, set up by Alex Salmond, is expected to stop short of recommending the First Minister's desired option for a separate Scottish Six O'Clock News in its report, published today.

The dedicated channel would be based in Scotland and could be modelled on the new publicly funded Gaelic service which will cost £21million a year.

It is understood that the commission, which is chaired by Blair Jenkins, the former head of news and current affairs at BBC Scotland, will call for the channel to be funded on a

not-for-profit basis through the government's public service broadcasting polcy.

This could pave the way for a fierce battle among broadcasters over the future of the licence fee. A Westminster Government source said: “This will be a battle between the broadcasters.”

Industry insiders said that the new channel could be funded from the licence-fee “excess” - £800million ring-fenced to fund digital switchover during the the next five years.

Ofcom, the broadcasting regulator, is examining the possibility of using the licence-fee excess to help pay for channels, including Channel 4, to fulfil costly public service roles.

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