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BBC’s funding model to be reviewed

Written by on 17th January 2022

The government will “undertake a review” of the BBC’s funding model and the licence fee will be frozen for the next two years, the culture secretary has said.

Making the announcement in the Commons, Nadine Dorries said it is time to ask the question whether “a mandatory licence fee is appropriate” and confirmed a government review into the matter will start “shortly”.

Ms Dorries told MPs it is “time to look further into the future” as we are now “living in a world of streaming giants”.
On Sunday morning, the culture secretary tweeted: “This licence fee announcement will be the last.”
Ms Dorries also confirmed the BBC licence fee will be frozen for the next two years and will rise in line with inflation for the four years after that.
It means the current £159 annual charge will remain in place until 2024 and equates to a severe real-terms cut in the corporation’s funding.
In a statement, the BBC said the decision is “disappointing” and “will necessitate tougher choices which will impact licence fee payers”.
If the cost of the licence fee was not frozen and rose in line with inflation – currently at 5.1% – the total annual fee would be £167 from April.
Ms Dorries said the decision was being taken in light of Britons facing increasing living costs and that the new agreement gives the broadcaster certainty while protecting the public from the price hike.

“It’s a fair settlement for licence fee payers across the UK,” the culture secretary said.
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 BBC wanted the fee to rise to over £180 by the end of this settlement, instead it will remain fixed at £159 until April 2024,” she told the Commons.
“That’s more money in the pockets of pensioners, the pockets of families who are struggling to make ends meet.
“We are supporting households at a time when they need that support the most and this settlement sends an important message about keeping costs down while also giving the BBC what it needs to deliver on its remit.”

BBC chairman Richard Sharp and director-general Tim Davie said in a statement that “given the breadth of services we provide, the licence fee represents excellent value for money”.
“A freeze in the first two years of this settlement means the BBC will now have to absorb inflation. That is disappointing – not just for licence fee payers, but also for the cultural industries who rely on the BBC for the important work they do across the UK,” their statement continued.
“The BBC’s income for UK services is already 30% lower in real terms than it was 10 years ago. We will set out the implications of the settlement later, before the end of the financial year, but it will necessitate tougher choices which will impact licence fee payers.”

It concluded: “The BBC is owned by the public and their voice must always be the loudest when it comes to determining the BBC’s future.”
Ms Dorries told MPs that to help the BBC deal with the “fast-changing broadcasting landscape” the government “will more than double the borrowing limit of the BBC’s commercial arm to £750 million”.

“This will enable the BBC to access private finance as it pursues an ambitious commercial growth strategy, boosting investment in the creative economy across the UK,” she said.

S4C’s settlement will consolidate S4C’s current £74.5m annual Licence Fee funding with its current £6.8m annual DCMS grant income. It will also award S4C a further £7.5 million per annum from the Licence Fee to support its digital development. This follows a five-year funding freeze.

In total, this will provide S4C with approximately £88.8 million in Licence Fee funding per annum, which will rise in line with increases to the Licence Fee linked to inflation after the second year of the settlement period.

From IRN/SKY News for GTFM