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BBC licence fee rises £10.50; review launched

December 7, 2023

A review into how the BBC should be funded in the future has been launched by Culture Secretary Lucy Frazer, as new action is taken to reduce the impact of price rises on licence fee payers.

The review, supported by a panel of independent experts soon to be announced from across the broadcasting sector and wider business world, 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.

As set out in the terms of reference, the review will explore the sustainability of the BBC’s current licence fee model, and build an evidence based understanding of alternative models for funding the BBC. The review will be supported by analysis which will include externally commissioned research.

The licence fee will also rise by less than previously expected next year following changes brought in by the government to minimise the cost to households. In 2022, the government froze the licence fee for two years to protect families from the sharp rise in the cost of living. 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.

However, in recognition of the ongoing cost of living pressures faced by families, the government has now decided to change how the inflation-linked uplifts to the licence fee are calculated for 2024. This means the annual cost of a TV licence will be £169.50 from April 2024 – the equivalent of an additional 88p per month.

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, and is the approach used to calculate uplifts to benefits.

As a result of the announcement and the two-year freeze, the government says that from April next year the annual licence fee will be more than £20 cheaper than it would have been had it not acted. By the end of 2024, licence fee payers will have saved £37 since 2022 due to the measures.

The decision will ensure the additional cost to licence fee payers is kept as low as possible while giving the BBC over £3.8 billion in annual licence fee funding. It will also ensure S4C can maintain its role promoting the Welsh language and supporting the wider public service broadcasting landscape.

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.”

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