BBC licence fee to be abolished in 2027 and cost frozen for next two years

The price freeze is expected to cause the broadcaster a loss of around £2billion in funds

The BBC licence fee will be abolished in 2027 and its cost frozen for the next two years, leaked reports from the government have revealed.

The licence fee currently costs £159 per household, which would rise to £167 in April in line with inflation.

Culture Secretary Nadine Dorries said the current licence fee funding model will be scrapped and that this announcement related to it “will be the last”. “The days of the elderly being threatened with prison sentences and bailiffs knocking on doors are over,” she said. “Time now to discuss and debate new ways of funding, supporting and selling great British content.”

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The licence fee price is set by the government and, in 2027, the BBC will have to negotiate for a new funding model with whoever is in power. Replacement options for the licence fee could include a subscription service, semi-privatisation of the network or funding from the government itself.

Nadine Dorries
Culture Secretary Nadine Dorries CREDIT: Rob Pinney/Getty Images

The BBC will continue to receive £3.2billion a year from the licence fee, but the price freeze is expected to cause the broadcaster to lose around £2billion in potential funding. It will also force the corporation to make more redundancies and shut down some of its services.

The latest negotiations over the licence fee began back in November 2020 when Oliver Dowden held the office of Culture Secretary.

Shadow Culture Secretary Lucy Powell responded to Dorries’ plan, saying: “The cat is out of the bag. The Prime Minister thinks those reporting on his rule-breaking should pay consequences, whilst he gets off free.

“We haven’t seen the full details of the licence fee deal, as it’s been leaked to the media before Parliament. The anticipated five-year deal needs to be fair to the license fee payer while there’s a cost of living crisis, but also ensure the BBC is able to continue to do what it does best: making great programmes, providing local news, educating our children, and underpinning our creative industries in every part of the country.”

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Powell added: “The Prime Minister and the Culture Secretary seem hell-bent on attacking this great British institution because they don’t like its journalism. British broadcasting and our creative industries are renowned around the world and should be at the heart of Global Britain.”

Meanwhile, BBC Three is set to return to television screens in the UK after being taken off the airwaves in 2016. Starting on February 1, it will be broadcast from 7pm GMT on Freeview, Sky, Virgin and Freesat, as well as BBC iPlayer.

Last year, media regulator Ofcom investigated the potential impact its return could have after rivals raised concerns that it could pull viewers away from youth-focused broadcasters such as Channel 4.

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