The future of the BBC licence fee

Under the BBC’s Royal Charter (PDF) and Agreement (PDF), the BBC is funded primarily through a licence fee. The current Charter began on 1 January 2017 and runs to 31 December 2027.

The licence fee model was conceived at a time of linear viewing – watching television programmes at the time of broadcast. Changes in viewing habits, such as a move to video-on-demand, and the growth of new technologies, has resulted in the model being challenged.

In a written ministerial statement of 29 November 2024, Lisa Nandy, the Secretary of State for Culture, Media and Sport, said the government was committed to upholding the licence fee until the end of the Charter period. This was to ensure the BBC was on a “stable financial footing”. As required by the licence fee settlement agreed in 2022, the cost of a TV licence would increase in line with inflation each year until 2027. The cost of an annual colour TV licence from April 2025 would be £174.50, an increase of £5.

Lisa Nandy also announced that the simple payment plan – a scheme to help those with financial difficulties pay for their licence throughout the year – would be extended. This formed part of a wider discussion with the BBC and Ministry of Justice on how to reduce the impact of TV licensing enforcement action on women and vulnerable people.

The secretary of state said the previous government’s BBC funding model review would not be progressed. The government would instead consider the future of the funding model as part of the next Charter review process. 

The Charter review is due to begin in 2025.