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Dorries confirms licence fee freeze

January 18, 2022

By Colin Mann

Following suggestions that such an announcement was imminent, Culture Secretary Nadine Dorries has confirmed the TV licence fee will remain at £159 (€190) until 2024 and then rise in line with inflation for the following four years.

The plans for the new licence fee settlement cover a period of six years and will take effect from April 1st 2022 until March 31st 2028.

The government says the settlement will give the BBC the financial certainty it needs and a clear funding stream to deliver effectively on the Mission and Public Purposes set out in its Royal Charter while protecting households at a time when many are facing financial pressures.

It means the BBC is expected to receive around £3.7 billion in licence fee funding in 2022 and £23 billion over the duration of the settlement period. The BBC also receives more than £90 million per year from the government to support the BBC World Service.

According to the government, Welsh language broadcaster S4C plays a unique role promoting the Welsh language, and supporting the wider public service broadcasting landscape. It will receive a similar settlement and is also allocated an extra £7.5 million a year to develop its digital offering. This will help it reach more Welsh language speakers including younger audiences.

“The BBC is a great national institution with a unique place in our cultural heritage,” declared Dorries. “It broadcasts British values and identities all over the world and reaches hundreds of millions of people every day.”

“But at a time when families are facing a sharp increase in their living costs we simply could not justify asking hard-working households to pay even more for their TV licence.

“This is a fair settlement for the BBC and for licence fee payers,” she asserted. “The BBC must support people at a time when their finances are strained, make savings and efficiencies, and use the billions in public funding it receives to deliver for viewers, listeners and users.”

The BBC’s Royal Charter sets out that the current licence fee model should remain in place until the Charter concludes on December 31st 2027 and the Culture Secretary is required to set out funding for the corporation for the remainder of the period.

The Charter requires the Culture Secretary to assess the BBC’s commercial income and activities and the level of funding required for effective fulfilment of its Mission and Public Purposes.

Following a period of negotiation she has concluded the settlement must shield licence fee payers from the current inflationary pressures for the next two years while providing billions of pounds and secure funding for the BBC for the next six years.

She believes the settlement strikes the right balance between protecting households and allowing broadcasters to deliver their vital public responsibilities while also encouraging them to make further savings and efficiencies.

Using current economic estimates it is expected that under this settlement the cost of the licence fee will increase by only around £3.50 in 2024 to £162.50. While inflation can change, by the final year of the settlement it is anticipated the licence fee will cost less than £175.

The government has committed to support the BBC in what is a fast-changing broadcasting landscape by more than double the borrowing limit of the BBC’s commercial arm to £750 million.

This will enable the BBC to fund a commercial growth strategy which can benefit the creative economy across the UK. The UK’s creative industries are a vital part of the economy and in 2019 contributed £115.9 billion to the country.

The licence fee settlement is only one step in the government’s roadmap for reform of the BBC.

Later in 2022, as part of the Mid-Term Review of the BBC’s Charter, the government will start to consider the overall governance and regulation of the BBC, whether the current arrangements are working effectively and whether reforms are necessary.

Following the BBC’s 10-point action plan on impartiality and editorial standards in response to the Serota Review, the Mid-Term Review will also look at whether the plan has contributed to improving the internal governance of the organisation.

Looking further into the future and, in light of the huge changes in the broadcasting landscape over the past decade with the arrival of streaming and video on demand, the government will also separately consider whether the licence fee will remain a viable funding model for the BBC. No decision on the future of the licence fee has been made.

In a joint statement, Richard Sharp – BBC Chairman, and Tim Davie – Director-General, said: “Given the breadth of services we provide, the Licence Fee represents excellent value for money. There are very good reasons for investing in what the BBC can do for the British public and the UK around the world.”

“A freeze in the first two years of this settlement means the BBC will now have to absorb inflation. That is disappointing – not just for Licence Fee payers, but also for the cultural industries that rely on the BBC for the important work they do across the UK. The BBC’s income for UK services is already 30 percent lower in real terms than it was 10 years ago. We will set out the implications of the settlement later, before the end of the financial year, but it will necessitate tougher choices which will impact Licence Fee payers.”

“While there will be challenges, we do have the financial stability of the Licence Fee, which is crucial. We have the certainty of a six-year deal for the funding of the BBC: two years cash flat and four years keeping pace with inflation.”

“We have great faith in the BBC and its future. We will do everything to ensure the BBC continues to punch above its weight for Britain and for audiences around the world. We will continue to drive an ambitious programme of reform, moving more of our output across the UK, transitioning the organisation to a digital future and delivering distinctive and impartial content. We have a uniquely talented team of people at the BBC who are focussed on delivering this for the public.”

“We actively look forward to the national debate on the next Charter and, of course, all options should be considered. The BBC is owned by the public and their voice must always be the loudest when it comes to determining the BBC’s future,” they concluded.

Julian Knight MP, Chair of the House of Commons Digital, Culture, Media and Sport Committee, welcomed Dorries’ and the Government’s review of the licence fee model.

“However, the BBC plays a fundamental role in our culture and demonstrates the richness of this country’s broadcasting landscape,” he noted. “In order to preserve this institution for audiences, it is critical that the Government provides clarity on how future funding will be provided, given the current levels of broadband coverage which cast doubt on the success of a subscription model.

“An alternative source of funding must deliver the stability necessary to enable the Corporation to compete effectively on a global stage,” he contended.

ʺWe are very pleased to see an increase in funding for S4C,” remarked Dyfrig Davies, Chair of TAC, the voice of the independent TV production sector in Wales. “TAC strongly supported the case, and we look forward to S4C will be implementing its plans to commission high-quality programming from the independent production sector in a multi-platform media landscape. This will ensure continuity of service for Welsh-language speakers and learners in Wales and to a wide audience in the UK and worldwide.”

“Overall however a two-year freeze in the TV Licence Fee will create significant difficulties for the BBC which, as a world leading media organisation, does very important work in supporting the UK’s creative industries. This generates huge economic and cultural value including for Wales and we have great concerns about this decision and the effect it will have on the creative industries at a time when they are still recovering from the effects of the Covid-19 pandemic.”

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