Last week the Culture Secretary, Nadine Dorries, announced that the BBC TV licence fee will remain at £159 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 1 April 2022 until 31 March 2028.

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.

The Welsh language broadcaster S4C will receive a similar settlement and is also allocated an extra £7.5 million a year to develop its digital offering.

The BBC’s Royal Charter sets out that the current licence fee model should remain in place until the Charter concludes on 31 December 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 that the settlement “must shield licence fee payers from the current inflationary pressures for the next two 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”.

The Government says that 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 says that the licence fee settlement “is only one step in the [G]overnment’s roadmap for reform of the BBC”.

Later this year, 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”.

The Government says that 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, it 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”. To read the Government’s press release in full, click here.