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The BBC‘s licence fee will not rise by as much as previously promised, the UK government has confirmed, condemning the corporation to a difficult year that could see more cuts and less shows commissioned. The government has, meanwhile, launched a review into the BBC’s funding model.
Culture Secretary Lucy Frazer announced in parliament in the past few minutes that the annual fee will rise by around £10.50 ($12.50) to £169.50, below the previous £14.50 increase that was tied to a higher rate of inflation. The licence fee has been frozen for the past two years, leading to difficult decisions for the BBC, and the government had initially said it would return to rising with CPI inflation from 2024. The licence fee will rise in April 2024 by 6.7%, the figure of inflation from September 2023 that is the same measure linked with state pensions and benefits.
The news was expected after Prime Minister Rishi Sunak said over the weekend that the BBC had to be “realistic” over what people can pay during the cost-of-living crisis. The BBC, however, is facing up to rampant increases in production costs and rival streamers have hiked subscriptions by far more than the rate of inflation.
Speaking in the commons in the past few minutes, Frazer said licence fee payers will have saved £37 over two years by the end of 2024 due to the government’s intervention while leaving the BBC with around £3.8B worth of program spend.
She pointed out that licence fee payers are declining and said the government wants to make sure “an exponential rise is not born by a smaller number of licence fee payers.” “Our decision means next year the increase will be kept as low as possible,” she added.
Describing the licence fee as “increasingly anachronistic” in the modern landscape, Frazer unveiled a government review into future funding model.
Led by the Culture, Media & Sport department, the review will explore the sustainability of the licence fee while looking at alternatives, although Frazer explicitly ruled out a new tax.
“We will look at 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,” said Frazer. “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.”
“Consequences” to come
The BBC responded gravely to the licence fee inflation decision.
“Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the UK,” said a statement from the board. “We will confirm the consequences of this as we work through our budgets in the coming months.”
Cuts have been a constant over the past couple of years, most recently to the BBC’s news teams that will see long-running topical format Newsnight restructured. The BBC is also slicing its progaming budget by around 1,000 hours. “The BBC’s financial structure is such that inevitably program expenditure will be cut first,” said one source with knowledge of the current situation.
The news comes a day after TV vet Samir Shah was unveiled as the new BBC Chair, replacing Richard Sharp. Shah used to be a senior BBC News exec and was a non-exec director during the ‘Crowngate’ affair involving Queen Elizabeth II. One source close to the government said Shah had been working closely with the Culture, Media and Sport department of late and was “aligned” with licence fee plans.
The licence fee is in place for the next three years but the BBC’s funding model after 2027 will soon be negotiated. Many believe that the model is no longer fit for purpose and that the corporation should explore a new mode of funding such as subscription or advertising.
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