The Government has announced a review of the BBC’s future funding which will “explore the sustainability” of the current TV licence fee and examine alternative models for financing the broadcaster’s operations.
The review was launched by culture secretary Lucy Frazer alongside the news that the licence fee, which funds much of the BBC’s UK output, will rise from £159 to £169.50 next year.
The £10.50 annual increase is less than that expected under the broadcaster’s long-term funding deal with the government which anticipated an increase based on the annual inflation rate of 9%. Ministers have instead based the increase on the September rate of 6.7%.
Setting out the rationale for the lower hike, Frazer said: “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.”
In addition to funding the BBC’s core services, around £88m of the licence fee goes to supporting Welsh broadcaster S4C each year.
Separate to its licence fee funded channels, the BBC operates a portfolio of advert and subscription funded channels in the UK, including the popular Dave, Really, Yesterday and Gold channels. It also owns the advertising funded catch-up app, UKTV Play.
The government says its review into the broadcaster’s future funding model “will be supported by analysis which will include externally commissioned research.”
Membership of the review panel will be announced at a later date but will include “a broad range of views from experts in the broadcasting sector.”
Frazer said: “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.”
Responding to the increase announcement, the BBC Board said: “The BBC is focussed on providing great value, as well as programmes and services that audiences love. However, this outcome will still require further changes on top of the major savings that we are already delivering.”
“Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the UK. We will confirm the consequences of this as we work through our budgets in the coming months.”
The corporation also issued a separate statement on the upcoming review: “The BBC is an important and beneficial intervention in the UK media market.
“It is absolutely right that we debate how it is best funded to ensure that the BBC can thrive, not just today, but in the future – performing a role where it projects the UK’s values across the globe, while also producing impartial news, and telling stories through our content that reflect the real lives of people across the UK. That role should not be separated from the debate about funding.
“We believe that public service should be at the heart of the BBC and we need to ensure that if there are changes, that the public fully understands the implications of them, so that we all have a BBC that everyone can support and benefit from. The Government has confirmed that the licence fee will be in place until at least 2027/28.”