The BBC license fee will return to rising with inflation again until 2027, as new Culture Secretary Lisa Nandy continues with her reset of relations and looks to the future.
The corporation’s funding was supposed to be returning to an inflationary rise last year but was handed a below-inflation rise by the Conservatives, which left it with £100M ($126M) less to spend. Prior to this, it was frozen for two years, putting vast amounts of pressure on BBC budgets.
Nandy has just announced that the fee will return to rising in line with the CPI measure of inflation until the end of the charter period in 2027. She will also review BBC funding in the long term “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.”
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, which was below inflation.
Nandy’s future funding review will come amid intense competition from streaming giants, YouTube and social media. The BBC’s 100-year-old license fee funding model has long been considered anachronistic by some and many have pushed for a change after 2027. An initial review was kickstarted by the previous government but never completed.
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.
She added that “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.”
A BBC spokesperson said: “We welcome confirmation that the licence fee will increase in line with inflation next year. We want everyone to get value from the licence fee and we are committed to delivering trusted news, the best homegrown storytelling and those special moments that bring us together. We also look forward to the debate about the future and working with the Government to ensure sustainable, long-term public funding. As part of these discussions we will run our biggest ever public engagement exercise in 2025 so that audiences are at the heart of shaping our future.”