The BBC licence fee will rise by £5.50 to £180, in line with the annual rate of inflation, as ministers consider replacing the charge with an alternative funding model.
Culture Secretary Lisa Nandy confirmed the increase, which is larger than last year’s £5 rise.
The licence fee is rising in line with the annual rate of inflation, calculated at 3.14 per cent, for the second time time in four years, with the new £180 figure introduced from April 1.
The Government said it was committed to a futher inflation-linked rise next year, the last under the current BBC Charter, under a 2022 funding plan inherited from the last Conservative administration.
There had been reports that ministers wanted to freeze the licence fee this year to demonstrate it is helping families with the cost of living crisis – a move that would have forced the BBC to cut services.
The uplift was announced on Friday as ministers examine new models to fund the licence fee, including advertising and Netflix-style subscription payments.
A consultation on the Government’s “green paper” on the next BBC Charter, due to being in 2028, will conclude next month.
The DCMS said: “The Government recognises the financial pressures on households and is committed to ensuring the BBC’s funding model is sustainable, fair and affordable. The government has committed to the licence fee for the remainder of this Charter Period.”
The department said support for households in severe financial difficulty would be available along with free licences for over-75s on Pension Credit.
BBC sources have said they want a new mechanism that guarantees funding for the BBC that doesn’t require an annual rise in line with inflation.
Suggestions include making wealthier households pay more and giving discounted licences to certain groups such as students.
The DCMS said the “ongoing Charter Review will ensure the BBC is sustainably funded to provide value for licence fee payers, commands the public’s trust with impartial editorial standards and drives growth, opportunity and good jobs across the country.”
The BBC said its income had been reduced by 30 per cent over the past fifteen years as a result of the licence fee being effectively frozen under previous governments.
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