BBC seeks licence fee increase

The BBC is seeking an increased licence fee settlement to "ensure that it continues to deliver value to licence payers" as the Corporation moves towards a fully digital service.

The BBC proposes a licence fee increase from April 2007 that is calculated on inflation plus 2.3% a year. Based on today's prices, this means £150.50 a year per household by 2013, compared to the current £126.50. That amounts to an average annual £3.14 increase per household, excluding inflation, from the start of the next Charter, while the licence fee is still declining steadily as a proportion of disposable income.

It does not include the costs of targeted help for special groups when the analogue signal is switched off.

The first time the BBC has made its case for a new licence fee settlement so openly, the claim follows public consultation and scrutiny by the BBC Governors and their independent advisors, as well as public response to the Government's Green Paper proposals.

Launching the proposal, the BBC's Director-General Mark Thompson said: "The BBC needs to transform itself to ensure we are providing the very best content, accessible to and valued by everyone across Britain, and the licence fee will help us achieve our vision to be the best creative digital broadcaster and content provider for audiences in the world."

The final licence fee decision will be taken by the Government next year as part of the process around the BBC's new Royal Charter starting in 2007.

The additional spend required to meet the vision outlined in the Green Paper will total £5.5bn over the seven-year period to 2013/14. However, the Corporation will meet more than 70% of this itself by means of job losses, rationalisation and commercial disposals, in all contributing around £3.9bn.

But with a shortfall of £1.6 billion, which could be closed by an RPI+1.8% settlement, there are also additional costs related to digital switchover which means that the total increase sought is a further RPI+0.5%, taking the total to RPI +2.3%.

BBC Chairman Michael Grade said the bid had been "thoroughly and independently scrutinised" and was an "efficient business plan designed to meet licence payers' expectations at the lowest cost."

(GB/SP)