BBC likely to receive below-inflation rise in licence fee

The BBC will receive a below-inflation increase to the licence fee, the culture secretary, Lucy Frazer, has in effect confirmed after Rishi Sunak said he welcomed cuts made by the corporation to its spending and services.

The £159 annual fee has been frozen for two years, and if it were to increase in line with inflation it would go up by about £15. During an interview round on Monday, Frazer said this was unlikely to happen.

“We as a government have been really concerned about the cost of living for people across the country, and have taken a number of steps across the board to make sure that those costs are down,” she told Sky News.

“It [the licence fee] is due to rise but we want to make sure that it rises by an appropriate amount that people can afford.”

Asked about the idea of a with-inflation rise, taking the annual total to £173, Frazer said: “I’m concerned that’s a very high level and it’s a decision that I’m looking at at the moment. We will be making an announcement on this very shortly.”

Asked if she was, in effect, confirming a lower increase, Frazer said only: “I’m concerned about that level of rise.”

A below-inflation increase would require further cuts to staffing and programmes, such as last week’s decision to halve the staffing levels on Newsnight, the BBC’s flagship weekday current affairs programme, which involves getting rid of all its in-house reporting and moving the show to a discussion-only format.

Asked by reporters about such cuts on his way to the Cop28 climate summit in Dubai, Sunak said: “First thing to say is, I think it is welcome that the BBC are looking at making savings and efficiencies in how they operate.

“It’s really important that when things are difficult, everyone is doing what they can to ease the cost of living on families. That’s certainly what I have done over the last year and made a bunch of decisions that haven’t been easy. But that’s helped to bring inflation down to ease the burden and the cost of living.”

Frazer, when asked in a subsequent interview on BBC One’s Breakfast programme if she was considering whether a £15 rise would be too great, responded: “Absolutely.”

She said the corporation must look to a post-licence fee future, one expected to be set out in the ongoing review of its charter.

“I want to make sure that the BBC remains sustainable and continues to provide the amazing service,” she said.

“In broader terms overall my department is looking at how we fund the BBC going forward. It is unsustainable because 400,000 people did not renew their licence fee over the course of the last year. The media landscape is changing.

“We’re not consuming the BBC like we used to consume it, so I’m also looking at a broader review of how do we make the licence overall fairer to licence fee payers, and how do we maintain the amazing service that the BBC provides.”

A BBC spokesperson said: “The government and BBC agreed a six-year licence fee settlement in January 2022, which froze the licence fee for two years with increases in line with inflation from 2024.

“As is usual practice the government sets and confirms the cost of a licence each year and this remains unconfirmed for 2024/25. The BBC will continue to focus on what it does best: working to deliver world-class content and providing great value for all audiences.”