Starting April 2024, the TV Licence fee in the UK will increase to £169.50, marking an end to the two-year freeze.
This rise comes amid ongoing discussions about the cost of living crisis, the financial sustainability of the BBC, and the debate on whether the TV Licence fee should be replaced with a different funding model.
However, since the TV Licence fee was frozen for two years and the recent increase is set below the rate of inflation, the BBC will face heightened financial constraints, necessitating further cost-cutting measures.
This situation will likely compel the broadcaster to make additional budgetary adjustments to align with the reduced funding, following two years of ongoing cuts, in particular to its news productions.
The New TV Licence Fee
The TV Licence fee, a cornerstone of the BBC’s funding, has been the subject of much debate, especially in the context of the increasing cost of living.
Anyone who watches the BBC live, or streams it via BBC iPlayer, has to pay the fee.
Furthermore, if you watch any live TV from any broadcaster (even an international one) – you also need to pay the fee (See our full guide on whether you need to pay the TV Licence fee or not).
Failure to pay the TV licence fee is a criminal offence and can lead to a fine of £1,000 – and even, in rare cases, jail time – if you fail to pay the fee and the fine in court.
The current licence fee stands at £159 per year, frozen for the last two years.
The new rate of £169.50, effective from April 2024, represents an additional 88p per month for households.
The TV Licence fee for Black and White TVs will increase from £53.50 to £57.
Earlier this week, we reported that the government was looking to reduce the upcoming fee increase.
And, indeed, the change was calculated using the September 2023 Consumer Price Index (CPI) rate of inflation at 6.7%, a departure from the previous methodology which would have led to a higher fee.
Following the government’s recent announcement and considering the two-year freeze, the annual licence fee from April next year will be over £20 less than it would have been without government intervention.
By the close of 2024, these measures will have culminated in a saving of £37 for licence fee payers since 2022.
Culture Secretary Lucy Frazer highlighted the government’s sensitivity to the cost of living pressures, stating, “We know family budgets are stretched, which is why we have stepped in again – following two years of licence fee freezes – to reduce this year’s increase to less than a £1 a month.”
The BBC’s Financial Challenges
The BBC faces numerous financial hurdles, notably the increasing rates of licence fee evasion.
With approximately 7% of eligible households not paying the fee, the broadcaster’s budget is directly impacted.
This evasion trend mirrors broader changes in media consumption habits, with many, especially younger viewers, opting for streaming services like Netflix and Amazon’s Prime Video over traditional TV channels like the BBC.
Furthermore, BBC iPlayer has its own image problem, with many (especially younger viewers) seeing it mostly as a catch-up app, and not as a fully-fledged streaming service.
Alongside the fee increase, a review of the future funding of the BBC has been initiated by the culture secretary.
This review aims to explore sustainable and affordable models for the broadcaster amidst evolving media landscapes and increased competition.
The review will assess various alternatives, supported by independent experts, to ensure the BBC’s long-term viability while lessening the burden on licence fee payers.
Following the government’s statement, the BBC board issued this response:
“We note that the Government has restored a link to inflation on the licence fee after two years of no increases during a time of high inflation.
“The BBC is focused on providing great value, as well as programmes and services that audiences love. However, this outcome will still require further changes on top of the major savings that we are already delivering.
“Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the UK.
We will confirm the consequences of this as we work through our budgets in the coming months.”