New Plans To Ensure The BBC's Financial Sustainability Set Out By The Culture Secretary

30th November 2024

The Culture Secretary has provided an update on the funding of the BBC, setting out how the government will review alternate funding options to secure the broadcaster's long-term sustainability, while providing it with funding certainty for the remainder of the current Charter period.

Ministers to review the BBC's Charter to examine the BBC’s future funding.

Licence fee to rise in line with annual CPI inflation in 2025 to provide the BBC with stable financial footing.

Thousands more households to be offered support to pay TV licence fee.

In a written statement to Parliament, Lisa Nandy set out how the media landscape has changed significantly in recent years, and the need for the BBC to evolve with it. The broadcaster now faces increased global competition from streaming giants, changing viewing habits and a decline in licence fee income of more than 30 per cent.

The government will use a review of the BBC’s Royal Charter to consider funding options to support the national broadcaster’s long-term future, safeguarding the world-class content that millions of people know and love. The Charter Review will include a public consultation enabling audiences and stakeholders to give their views.

To ensure the BBC is on a stable financial footing, the government is committed to upholding the licence fee until the end of this Charter period in 2027. This comes as the Foreign Secretary also announced an extra £32.6 million for the BBC World Service in 2025-26, a clear demonstration of the value the government places on the World Service’s role in providing impartial accurate news to a global audience of 320 million.

As required by the Licence Fee Settlement agreed in 2022, the cost of a TV licence is due to increase in line with inflation each year until 2027.

The government intends, as is usual practice, to use the annual CPI inflation rate to calculate these licence fee uplifts until 2027 to provide the BBC with funding certainty for the remainder of the Charter period. This means the cost of an annual colour TV licence from April 2025 will now be £174.50, an increase of £5, or an extra 42p a month. This is significantly less than the £10.50 increase in 2024-25.

Recognising the value of BBC programming, especially children’s programming, for many households struggling with financial pressures, the government is also expanding the Simple Payment Plan (SPP).

This will allow an estimated additional 9,000 unlicensed households experiencing financial difficulty per month, to split up the annual payment into more manageable fortnightly and monthly instalments, reducing their risk of enforcement action. The BBC’s analysis suggests that the expansion could double the number of households using the SPP to around 500,000 by the end of 2027.

This is the latest measure by the government to support people with the cost of living, including extending the Household Support Fund until March 2026 to help struggling families with the cost of essentials. Alongside this, we are increasing the National Living Wage, uprating benefits and helping over one million households by introducing a Fair Repayment Rate on Universal Credit deductions, while our Child Poverty Taskforce develops an ambitious strategy to give all children the best start in life.

Culture Secretary Lisa Nandy said, "The BBC provides much-needed programming for households across the country, including children’s education, world-class entertainment and trusted news for all people in all parts of the UK. I want to see it thrive for decades to come.

"Through the Charter Review, we will have an honest national conversation about the broadcaster’s long-term future, ensuring the BBC has a sustainable public funding model that supports its vital work but is also fair and responsive to those who pay for it.

In the short term, we are providing the BBC with funding certainty, while supporting thousands more households facing financial hardship to spread the cost of a TV licence.

Charter Review
The Charter Review is a well-established, transparent process that will incorporate independent expert advice, stakeholder views and public consultation to decide on how best to support the BBC’s long-term future.
The Culture Secretary informed Parliament that the government will not be progressing the BBC Funding Model Review set up by the previous government, and is disbanding the expert panel set up to support that review, whom she thanked for their previous input. Instead the government will take forward this issue as part of the Charter Review process, since what the BBC does and its future role is fundamentally influenced by how it is funded.

Simple Payment Plan
The Simple Payment Plan was set up to help households struggling to pay their annual TV licence fee by offering a more flexible payment plan spreading the cost of the licence fee evenly throughout the year, rather than paying a greater amount of money up front.

Currently, unlicensed households are only eligible for the SPP if they meet certain criteria set out in legislation, such as having been visited by TV Licensing, or sought advice from a debt advice charity.

The Culture Secretary will introduce secondary legislation to expand the eligibility criteria, so that TV Licensing can offer the SPP to unlicensed households if their agents assess a household is facing financial hardship. This will enable TV Licensing to offer the scheme to more vulnerable households, so that they can spread the cost of the licence fee across the year.

Moving forward, BBC TV Licensing agents will contact unlicensed households to assess whether an individual is struggling to pay their licence fee in the standard way and would benefit from enrolling in the SPP.

The current BBC Charter began on 1 January 2017 and ends on 31 December 2027.

The government is using the well-established methodology to calculate inflation until the end of the Charter period. The rolling CPI inflation from October to September 2024 is 2.96 per cent. The licence fee uplift will be made via secondary legislation which will be introduced when Parliamentary time allows.

By convention, the licence fee is rounded to the nearest 50p.
The annual cost of a black and white TV licence will be £58.50.
S4C, which also receives licence fee funding, will see its public revenue rise to approximately £97.6 million.
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