BBC licence fee to rise by more than £10 next year

BBC Broadcasting House Credit: PA

The BBC licence fee will rise by just over £10 next year, Culture Secretary Lucy Frazer has told MPs.

For the past two years the licence fee has been frozen at £159 but it was previously agreed it would rise in line with inflation after April 2024, which would see it increase by 9% – or £15 – to £173.30.

However, Ms Frazer has confirmed that it will instead rise from £159 to £169.50 next year.

It had been reported that ministers had pressed the corporation to settle in line with September’s consumer prices index (CPI) rate of inflation of 6.7%.

Ms Frazer also revealed she was launching a review of the BBC’s funding model.

Ms Frazer said: “The review will look at how we can ensure the funding model is fair to the public, sustainable for the long-term and supports the BBC’s vital role in growing our creative industries.”

Secretary of State for Culture, Media and Sport Lucy Frazer Credit: Danny Lawson/PA

She told the Commons: “Under the terms of the settlement, the licence fee must now increase annually in line with CPI (consumer prices index rate of inflation), with the first increase due in April 2024.

“The Government is committed to supporting families as much as possible during these difficult times.”

She stressed that the licence fee rise was being “kept as low as possible”.

Ms Frazer added: “In April the licence fee will rise by 6.7% to £169.50 annually.

“This will minimise the rise for households, keeping it to £10.50 over the year, or 88p a month, rather than the rise of £14.50 which would have happened under the previous CPI measure.”

On the review, she suggested the BBC licence fee could be replaced by an alternative funding model, although such an outcome would depend on the review and a public consultation, and would be part of the charter review process.

Ms Frazer said the review will be led by the Department for Culture, Media and Sport and supported by an expert panel, adding: “It will assess a range of options for funding the BBC. We are clear that we want the BBC to succeed.

“The review will include looking at how the BBC can increase its commercial revenues to reduce the burden on licence fee-payers. Given pressure on household incomes, I can explicitly rule out that this review will look at creating any new taxes."

She added that viewing choices were changing. “We’re already seeing an increasing number of households choosing not to hold a TV licence. The number of households holding TV licences fell by 400,000 last year and has declined by about 1.7 million since 2017-18. This is placing increasing pressure on the BBC’s licence fee income."

BBC director-general Tim Davie Credit: PA

Prime Minister Rishi Sunak told reporters over the weekend that the BBC should be “realistic about what it can expect people to pay at a time like this” and the BBC should be looking to “cut its cloth appropriately” as the country continues to deal with the heightened cost of living.

The lower fee increase will come as a blow to the BBC, which is seeking to make £500 million of savings in the face of high inflation and the two-year freeze on the fee, which provides most of its funding.

The corporation previously announced its nightly current affairs show Newsnight will be reduced to a 30-minute programme, axing more than half of the show’s 60 jobs, as part of the cost-cutting measures in its news output.

An extended hour-long edition of BBC News At One will move to Salford while BBC Breakfast, also broadcast from Salford, will be extended by an extra 15 minutes daily.

The corporation expects the raft of changes to save the news division £7.5 million.

Earlier this year the BBC also announced it would broadcast 1,000 fewer hours of new TV programmes this year as part of a drive to save money.

Other cost-cutting measures include moving a number of World Service TV and radio broadcast services online, and merging the domestic and global news channels.

The licence fee announcement will come just a day after veteran TV executive Dr Samir Shah was named as the Government’s preferred candidate to become BBC chairman.

The role was vacated earlier this year by former Goldman Sachs banker Richard Sharp, who resigned after failing to declare his connection to an £800,000 loan made to Boris Johnson.

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