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Rishi Sunak has issued a stern warning to the BBC about their license fee, emphasizing the need for the corporation to be "realistic" about the financial expectations placed on the public. The fee is scheduled to increase to £159 in April, ending a two-year freeze prompted by soaring inflation contributing to increases in the cost of living.
During his recent visit to the Cop28 UN climate change conference in Dubai, the Prime Minister expressed apprehension about the proposed increase. Netizens applauded his decision and were quick to react:
However, the Prime Minister added:
“I think going forward, the BBC - final decisions haven't been made, obviously - should be realistic about what it can expect people to pay at a time like this. That, I think, is the right approach.”
BBC anticipates a license fee increase below the rate of inflation
Rishi Sunak has told the BBC to cut costs amid warnings ministers could intervene to limit next year's licence fee hike.
The Prime Minister advocates cost-cutting for all public organizations during challenging times for households. Growing demands for the abolition of the licence fee and its replacement with a subscription model akin to Netflix or other online streaming services are gaining momentum. The licence fee charter is set for renewal in 2027.
The TV licence fee, stagnant at £159 for the past two years, is slated to increase in alignment with inflation over the next four years starting from the upcoming spring. This adjustment would result in an almost £15 surge, bringing the fee to £173.30 next year—a considerable hike and the most substantial in four decades
When Mr Sunak was asked if the licence fee is sustainable and needs a major overhaul, he said:
“I think it is welcome that the BBC are looking at making savings and efficiencies in how they operate. It's really important that when things are difficult everyone is doing what they can to ease the cost of living for families."
According to Daily Mail, households could see nearly £15 increase in licence fee next year with nine percent hike, aligned with CPI Inflation Reports suggest that the government may consider intervening to restrict the extent of the proposed rise.
Culture Secretary Lucy Frazer today said a £15 rise would be "high" as speculation mounted that Mr Sunak could block the 9% rise. She told Times Radio:
"What that means is that we're in a position where people are struggling with the cost of living. And as a Government, we tried very hard to make sure that those costs are low. And the licence fee is due to rise, although we froze it for two years."
When she was asked about a rise to over £170, she said: "Well, obviously, that's high. This is something that we're looking at, at the moment. And we'll be making a decision on this in due course."
Netizens were really happy with the decisions and they reacted:
On the other hand, an industry insider said it would be 'bad form' for the government to change the terms of the licence fee deal after the BBC had already accepted a 'multi-year freeze'. A BBC source said:
"The licence fee has been frozen for a couple of years in recognition of cost of living challenges at a time when competitors have put their prices up by over 30 percent."
The BBC's annual report, released this summer, reportedly disclosed a decline in the number of adults purchasing a licence fee by 500,000, totaling 24.3 million—attributed to the strain on the cost of living. Consequently, licence fee income saw a decrease from £3.8 billion to £3.74 billion.
The Telegraph stated that the government compelled the broadcaster to cover the costs of free licences for individuals over the age of 75 and later criticized the organization when the benefit was withdrawn. Tim Davie, the BBC’s director-general, expressed disappointment, acknowledging that the deal would undoubtedly impact the broadcaster’s frontline output. Mr. Davie stated:
"We are disappointed. We would have liked to have seen an inflation rise throughout the period. We've got four out of six years, and on we go."
The Office for Budget Responsibility foresees a rise in BBC's licence fee revenues to £4.1 billion by the end of the decade, propelled by population growth. This marks a roughly 30% increase since 2016 when the licence fee generated around £3.1 billion.
A Department for Culture, Media and Sport spokesman said:
“We agreed a fair settlement with the BBC that will see the licence fee remain at £159 until 2024 to protect licence fee payers from current inflationary pressures, and then rise in line with inflation until the end of 2027."
As per The Mirror, while former Culture Secretary Ms. Dorries pledged to abolish the licence fee, current Culture Secretary Ms. Frazer has not committed to this approach. Instead, she suggests that 'the licence fee isn't the only way' and contemplates the BBC 'might need to look at a variety of sources for its funding.'
Last week, the BBC announced Newsnight will become a 30-minute show as part of its wider plans to make £500million worth of savings.
Newsnight cuts 34 jobs, scales back program to 30 minutes
Newsnight, the flagship program of the BBC, is set to transform into a 30-minute show as the corporation implements extensive cost-cutting measures, aiming to achieve £500 million in savings. The decision, announced by Deborah Turness, the Chief Executive of News and Current Affairs, is part of a broader strategy to streamline operations and eliminate redundancy, ultimately seeking savings of £80 million.
It comes a month after Kirsty Wark said she would step down as the Newsnight's lead presenter after the next general election, following three decades with the program. Employees are left heartbroken after the decision.
The BBC is compelled to achieve £500 million in savings due to the freeze on the license fee and the effects of inflation. Additionally, the broadcaster acknowledged a decline in linear TV audiences by 11% over the last five years, indicating the challenges it faces in adapting to changing viewing habits and economic pressures.
