BBC funding: TV licence fee to rise by £10.50, government says

The UK government has announced a 6.6% increase in the TV licence fee, raising it from £159 to £169.50. The decision to use September’s rate of inflation instead of an average over the past year resulted in a smaller increase than anticipated. The current fee has been frozen at £159 for the past two years. The government’s decision to raise it by a smaller percentage is expected to leave a funding gap of around £90 million.

The increased fee will take effect in April 2023. Additionally, Culture Secretary Lucy Frazer has announced a review of the BBC’s funding model, acknowledging the challenges posed by the evolving media landscape. The review will explore alternative funding options for the BBC as the current licence fee model is deemed increasingly anachronistic in the digital era. The terms of reference for the review acknowledge the importance of the BBC as a national institution but emphasize the need to consider changes in light of evolving viewer habits and preferences. The government has published the terms of reference for the review, which will investigate options for the future of the BBC’s funding model, taking into account changes in the media landscape and viewer behavior. The review aims to ensure that the BBC remains financially sustainable while adapting to the evolving media landscape. The government has emphasized the importance of considering alternative funding models that align with changing viewer habits and preferences in the digital age. The terms of reference state that the review will assess the current funding model’s sustainability and consider alternative options, taking into account the rapid changes in the broadcasting sector.

The government has expressed its commitment to supporting the BBC in realizing commercial opportunities to enhance its financial sustainability. The review will explore provisional options collaboratively with the BBC. Shadow Culture Secretary Thangam Debbonaire criticized the government’s decision to raise the licence fee by a smaller amount, stating that it would make “no material difference” to those struggling with the cost-of-living crisis. She highlighted the minimal impact of a 33 pence per month difference compared to the government’s initial agreement. The funding for faced challenges, with a decline in the number of households paying the licence fee and changes to the financial responsibility for free licences for over-75s. The government transferred the financial responsibility for free licences for the over-75s in 2019, resulting in a significant cost to the corporation. The decline in households paying the licence fee has been attributed to factors such as refusals to pay and elderly people being unaware of the requirement to buy a licence.

The number of households paying the licence fee has dropped by 437,000 over the last 12 months. The terms of reference for the review underscore the importance of the BBC as a great national institution but acknowledge challenges around the sustainability of the current licence fee funding model. The government recognizes the rapidly evolving broadcasting sector and the public’s increasing choice in accessing content. The review will explore potential changes to the funding model, ensuring that the succeed while adapting to the changing media landscape. The terms of reference emphasize the need to consider alternative funding options that align with viewer preferences in terms of content consumption. The review aims to support the realizing commercial opportunities to enhance its financial sustainability. The government’s commitment to exploring provisional options collaboratively with the reflects a collaborative approach to addressing the challenges facing the broadcaster in the evolving media landscape.