BBC warns of further cuts as new licence fee leaves $113m shortfall

BBC New Broadcasting House (Source: BBC)

The BBC has confirmed it will have to make further budget cuts following the UK government’s decision to increase the licence fee that funds it by less than had been expected.

As reported yesterday, culture secretary Lucy Frazer announced that the licence fee would be increased from £159 to £169.50, a rise of £10.50 and less than the figure expected under an agreement struck between the BBC and the government in 2022, when the fee was frozen for two years with the proviso that it would rise with inflation after that.

Frazer undercut this commitment by calculating the inflationary increase on the basis of September’s inflation rate rather than an annualised inflation figure.

The move means a shortfall of about £90m ($113m) in the BBC’s revenue next year.

“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 said in a statement.

“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.”

The BBC, which implemented a cost-cutting drive due to the freeze, has already announced some additional cuts to its news coverage.

Frazer has meanwhile announced a review into how the BBC should be funded, focusing in part on the potential to up commercial revenue.

She said the review would also look at whether failure to pay the licence fee should be subject to criminal prosecution. Non-payers can currently be fined up to £1,000. They cannot be sentenced to prison terms, but courts may impose custodial sentences on offenders who refuse to pay court fines.