The government has confirmed that the BBC licence fee will not rise as much as originally promised and has launched a review into the future of the licence fee and alternative funding options.

In 2022, the government froze the licence fee for two years. It was agreed that the current annual fee of £159 would remain unchanged until April 2024, before rising by inflation for the following four years.

The government has now confirmed that the licence fee rise will be lower than agreed with the BBC, it says “in recognition of the ongoing cost of living pressures faced by families.”

This means the annual cost of a TV licence will be £169.50 from April 2024.

The previous methodology for calculating inflation was the averaged annualised October to September CPI figure of 9 per cent. The new methodology for 2024 uses the annual rate of CPI in September 2023 of 6.7 per cent.

The BBC Board said in response to the announcement: “We note that the Government has restored a link to inflation on the licence fee after two years of no increases during a time of high inflation.

“The BBC is focussed on providing great value, as well as programmes and services that audiences love. However, this outcome will still require further changes on top of the major savings that we are already delivering. Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the UK. We will confirm the consequences of this as we work through our budgets in the coming months.”

A review into how the BBC should be funded in the future has also been launched by Culture Secretary Lucy Frazer.

The review will be “supported by a panel of independent experts soon to be announced from across the broadcasting sector and wider business world” and will assess a “range of options” for funding the BBC. “It will look at how alternative models could help secure the broadcaster’s long-term sustainability amid an evolving media landscape, increased competition and changing audience behaviour, while reducing the burden on licence fee payers.”

Culture Secretary Lucy Frazer said: “This is a fair deal that provides value for money for the licence fee payer while also ensuring that the BBC can continue to produce world leading content.

“We know family budgets are stretched, which is why we have stepped in again – following two years of licence fee freezes – to reduce this year’s increase to less than a £1 a month.

“But this settlement has highlighted other challenges faced by the BBC with the changing media landscape making the battle for audiences more competitive and the number of people paying the licence fee decreasing. This raises fundamental questions as to sustainability of the current licence fee system.

“So we are also launching a funding review of the BBC that will take a forensic look at the licence fee, and whether a reformed funding model could better support our national broadcaster to remain sustainable and affordable for audiences while driving growth in our creative industries. I want a thriving BBC, supported to inform, educate and entertain and this funding review will help us make sure we can deliver this for decades to come.”

Jon Creamer

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