Culture Secretary Nadine Dorries announced the 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.
The settlement will give the corporation the financial certainty it needs and a clear funding stream to deliver effectively on the Mission and Public Purposes set out in its Royal Charter while protecting households at a time when many are facing financial pressures.
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 plays a unique role promoting the Welsh language, and supporting our wider public service broadcasting landscape. It will receive a similar settlement and is also allocated an extra £7.5 million a year to develop its digital offering. This will help it reach more Welsh language speakers including younger audiences.
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 the settlement must shield licence fee payers from the current inflationary pressures for the next two years while providing billions of pounds and secure funding for the BBC for the next six 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.
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. ■