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The BBC license fee will return to rising in line with the annual rate of inflation again for the first time in three years next year, as the government also said it would review alternative funding models as part of an “honest” conversation about the corporation’s long-term future.
Culture Secretary Lisa Nandy said that from April next year, the cost of annual The BBC the license fee will rise by £5 to £174.50, in line with the average consumer price index (CPI) measure of inflation of 2.96% between October 2023. and September 2024.
The license fee increase follows a two-year freeze and a a below-inflation increase set by the government for that year which capped the rise at £10.50 as the rate of annual inflation jumped.
The then Culture Secretary Lucy Fraser walked away from an agreement with the BBC to raise the license fee by the usual average annual rate of inflation between October 2022. and September 2023, which was 9%, for this year’s increase.
Instead, the government chose to use the lower rate in September 2023. – 6.7% – citing the cost of living crisis for not raising it by the £15 expected by the corporation.
The BBC, which has taken up significant rounds of layoffs in recent years as its finances have been stretchedsaid at the time that lower growth meant it would need to find another £100m of cost savings.
Nandy said the government would also look at the BBC’s funding model as part of a review of the charter, which is due for renewal in 2027, and scrapped a separate Conservative funding review and the panel set up to inform it.
“Through the charter review, we will have an honest national conversation about the long-term future of the broadcaster,” Nandy said in a written statement to parliament on Friday. “To ensure the BBC has a sustainable public funding model that supports its vital work but is also fair and accountable to those who pay for it.”
The BBC said that in real terms the corporation’s license fee funding had fallen by 30% over the past decade.
The government also said it was extending the Simple Payment Plan (SPP), which was set up to help disadvantaged households pay their license fee in installments over a year, which it said would make 9,000 currently unlicensed homes eligible.
Currently, unlicensed households are only eligible for the plan if they meet certain criteria set out in the legislation, such as having been visited by TV Licensing or sought advice from a debt advice charity.
The government said the BBC’s own analysis of expanding SPP criteria suggested it could double the number of households using the scheme to 500,000 by the end of 2027.
“In the short term we are providing the BBC with funding security,” Nandy said. “[And] supporting thousands more households facing financial difficulties to spread the cost of a TV licence.’
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