Even as British regulator Ofcom published its annual report on the BBC, which assesses the Corporation’s performance in meeting the needs of viewers and listeners over the period April 2023 to March 2024, the UK government said the licence fee of BBC will increase annually till 2027.

The BBC licence fee will increase in line with inflation each year until 2027, rising in April 2025 to £174.50, the UK Government announced late last week. It will be an increase of £5, or an extra 42p a month, after the last £10.50 rise brought the charge to £169.50 in April.

Culture Secretary Lisa Nandy, as per an official UK government press release put out on Dec 29, said: “The BBC provides much-needed programming for households across the country, including children’s education, world-class entertainment and trusted news for all people in all parts of the UK. I want to see it thrive for decades to come.

“Through the Charter Review, we will have an honest national conversation about the broadcaster’s long-term future, ensuring the BBC has a sustainable public funding model that supports its vital work but is also fair and responsive to those who pay for it.”

The media statement stated new plans were being explored to ensure the BBC’s financial sustainability. The Culture Secretary provided an update on the funding of the BBC, setting out how the government will review alternate funding options to secure the broadcaster’s long-term sustainability, while providing it with funding certainty for the remainder  of the current Charter period.

In a written statement to Parliament, Nandy set out how the media landscape has changed significantly in recent years, and the need for the BBC to evolve with it. The broadcaster now faces increased global competition from streaming giants, changing viewing habits and a decline in licence fee income of more than 30 per cent.

To ensure the BBC is on a stable financial footing, the government is committed to upholding the licence fee until the end of this Charter period in 2027. This comes as the Foreign Secretary also announced an extra £32.6 million for the BBC World Service in 2025-26, a clear demonstration of the value the government places on the World Service’s role in providing impartial accurate news to a global audience of 320 million, the media statement added.

As required by the Licence Fee Settlement agreed in 2022, the cost of a TV licence is due to increase in line with inflation each year until 2027.

The government intends, as is usual practice, to use the annual CPI inflation rate to calculate these licence fee uplifts until 2027 to provide the BBC with funding certainty for the remainder of the Charter period.

This means the cost of an annual colour TV licence from April 2025 will now be £174.50, an increase of £5, or an extra 42p a month. This is significantly less than the £10.50 increase in 2024-25.

Recognising the value of BBC programming, especially children’s programming, for many households struggling with financial pressures, the government is also expanding the Simple Payment Plan (SPP).

This will allow an estimated additional 9,000 unlicensed households experiencing financial difficulty per month, to split up the annual payment into more manageable fortnightly and monthly instalments, reducing their risk of enforcement action. The BBC’s analysis suggests that the expansion could double the number of households using the SPP to around 500,000 by the end of 2027.

Meanwhile, Ofcom’s annual report on the BBC includes findings following a mystery shopping exercise into the BBC First complaints process.

Separately, Ofcom also published the findings of the second part of its ‘Review of Local Media in the UK’ focusing on the BBC’s impact on competition in the local news sector.

“Generally, we find that the BBC is delivering well against its remit for viewers and listeners. Despite facing increased competition from other media platforms and streamers, it continues to be the most-used UK media brand across TV, radio and online, with 61 percent of adults viewing it favourably,” Ofcom said in a statement

Pointing out that the past year has seen escalating international conflicts and many national elections taking place around the world, with people increasingly turning to social media for news, ofcom said these challenges highlight the importance of the BBC’s role and the need for it to find new ways to deliver to audiences, wherever they are, in order to retain their trust.

The BBC has made efforts to develop here, such as its new fact-checking tool BBC Verify. Ofcom wants to see the BBC build on its work and are keen to see how its commitment to supporting audiences’ media literacy further develops in practice.

The report also identifies areas for improvement. The BBC is still struggling to reach all audiences. For example, those from lower socio-economic backgrounds.