Funding change

BBC facing new finance model to replace licence fee

BBC Scotland
BBC will be forced to review its budget (pic: Terry Murden)

BBC management will be forced to make cuts after the government announced that the licence fee will be abolished in 2027 and the broadcaster’s funding will be frozen for the next two years.

Culture secretary, Nadine Dorries has indicated that the “the days of state-run TV are over” and that BBC will have to negotiate with the government over an entirely new funding model when the final licence fee funding deal expires.

Potential options include a subscription service, part-privatisation, or direct government funding. In the meantime, the licence fee will remain at £159 until 2024 before rising slightly for the following three years.

If the BBC had been allowed to increase the licence fee in line with inflation – currently at 5.1% – the annual cost would have risen to £167 in April.

Ms Dorries said: “This licence fee announcement will be the last. The days of the elderly being threatened with prison sentences and bailiffs knocking on doors are over. Time now to discuss and debate new ways of funding, supporting and selling great British content.”

She said the BBC “can learn to cut waste like any other business. This will be the last BBC licence fee negotiation ever. Work will start next week on a mid-term review to replace the charter with a new funding formula. It’s over for the BBC as they know it.”

The BBC has already made substantial cost savings behind the scenes, but there is likely to be a cut in drama and sports coverage, and possibly even the closure of some channels or services altogether. The BBC Scotland digital channel is likely to be among those that will be reviewed.

The BBC has previously come under fire over the abolition of free TV licences for all over-75s, with a grace period on payment because of the Covid-19 pandemic having ended on July 31.

Only those who receive pension credit do not have to pay the annual sum.

A BBC source told one media outlet: “There are very good reasons for investing in what the BBC can do for the British public and the creative industries, and the (profile of the) UK around the world.

“Anything less than inflation would put unacceptable pressure on the BBC finances after years of cuts.”

Shadow Secretary of State for Scotland, Ian Murray said the Prime Minister was planning to to save his failing premiership by targeting the BBC. 

“He should spend less time focusing on our cherished national broadcaster, and more time reflecting on his own position,” said Mr Murray.

“The BBC is the envy of world broadcasting and provides an enormous amount of value to people across the United Kingdom, with world class coverage of sporting events like the Olympics, fantastic dramas like Line of Duty and educational programming for children – all for just 44p a day.

“In Scotland, the BBC provides around 1300 specialist jobs in media and production, and develops Scottish talent with comedies like Scot Squad. 

“The sad reality is Scotland is stuck between two governments who want to denigrate the BBC for their own political ends. 

“Labour supports impartial public broadcasting, even when it is critical of us, because it’s the right thing to do for the country.”

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