BBC Funding Model: Licence Fee and Simple Payment Plan

The Government are today providing an update on the short and long-term funding of the BBC.

The BBC is a vital British asset and makes a huge contribution to lives up and down the country. It supports our democracy, brings our communities together, and helps to shape and define our nation through telling stories about the lives of people in all parts of the UK. Continuing to make that contribution, and deliver the obligations placed upon it, requires that the BBC receives ongoing and sustainable public funding.

As the media landscape undergoes the next generational shift, the BBC too must adapt and be supported to do so. The forthcoming charter review is a key opportunity to set the BBC up for success long into the future. It will look at a range of issues and, as a priority for this Government, will start a national conversation to make sure the BBC truly represents and delivers for every person in this country. Charter review will also look to uphold the BBC’s independence and ensure that it maintains the trust of the public.

As we address these vital issues about the future form of the BBC, we must also ensure that there is a sustainable funding model that is fair for those who pay for it. The Government are keeping an open mind about the future of the licence fee, but we are clear that the BBC’s funding and its operation are inseparable. As such, we will not be progressing the BBC funding model review set up by the previous Government, and we are disbanding the expert panel set up to support that review, to whom we are grateful for their previous input.

In its place, the Government will be taking forward this issue as part of the charter review process, since what the BBC does and its future role are fundamentally influenced by how it is funded. We firmly believe that the unique obligations placed on the BBC demand continued, sustainable public funding to support its vital work. We will work closely with the BBC, and engage with other broadcasters, stakeholders across the creative industries as well as the British public to inform our thinking. This will include the opportunity for stakeholders and audiences across the country to respond to the charter review public consultation before the new charter comes into effect in 2028.

The charter review will be about ensuring the BBC thrives well into the future and can command the support of the people who pay for it. To achieve this aim, we must ensure the BBC is properly and fairly supported. The Government are determined to get the charter review right and future-proof the BBC, but we can only deliver this if the BBC is on a stable financial footing for the remainder of this charter period. We will always take decisions on funding to provide certainty and stability to the BBC, reflecting our understanding of the pressures it faces, and ensuring those decisions deliver the best outcomes for licence fee payers.

To provide stability to the BBC and S4C over the remainder of this charter period, the licence fee will increase in line with CPI inflation, as required by the licence fee settlement agreed by the last Government in 2022. This means a £5 increase per household to £174.50 from April 2025—less than the £10.50 increase in the previous year. Based on our assumptions on future TV licence uptake, this increase will provide around £75 million more in licence fee income to support the BBC and S4C in delivering their essential public service remits, allowing them to continue to deliver world-class, educational and engaging programming.

This increase represents a return to the approach taken at the start of this charter period, using the average of CPI from the previous October to September. To provide certainty to the BBC, S4C and the public, the Government confirm that we intend to use this same approach for calculating uplifts in the remaining years of this charter period. We will introduce legislation to implement the April 2025 uplift when parliamentary time allows.

We have already set out concerns about the impact of TV licensing enforcement action on vulnerable households. While the Government strongly believe in public funding for the BBC, given the public good it serves, we are aware of the financial difficulties faced by some households, and committed to supporting them to spread the cost of the TV licence. For this reason the Government are also announcing today a significant extension to the simple payment plan.

For the BBC to be a truly national broadcaster, the BBC must be available even to those struggling. The simple payment plan is an existing scheme that helps households struggling to pay for their licence fee throughout the year. However, it is currently available to a limited number of households. We will introduce legislation, when parliamentary time allows, that BBC analysis suggests could double the number of households in financial hardship benefiting from the scheme to around 500,000 by the end of the charter period to support them to be able to access all the BBC offers. This forms part of a wider discussion I am having with the BBC and Ministry of Justice on how we can collectively reduce the impact of TV licensing enforcement action on women and vulnerable people.

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