BBC suffers funding blow as licence fee looks set to be frozen

UK pubcaster the BBC faces having its funding frozen for the next two years in a move that will severely impact its ability to compete with its media competitors.

The corporation, which broadcasts dramas such as Vigil and entertainment formats including Strictly Come Dancing, is currently chiefly funded through the £159 ($215) per year licence fee – along with commercial revenue from BBC Studios. It could see the cost of the licence fixed in place as the BBC and the UK government continue to negotiate its sum.

The fee typically rises with inflation, but UK newspaper The Daily Telegraph reports that ministers are seeking to ease Britain’s cost of living crisis by halting this rise for up to two years. The BBC has warned that it will struggle to keep up with the rising cost of programming if the licence fee does not similarly continue to increase.

The corporation’s preference is for the fee to continue to rise in line with inflation, but with UK inflation predicted to go up to 4.4% next year due to the impact of the pandemic on the economy, the government is looking to avoid this sharp rise in taxpayer bills.

The BBC’s licence fee has been frozen before, between 2010 and 2015, and some campaign groups have claimed this led to gradual declines in BBC revenue to the tune of £1bn.

Another freeze would likely hit hard with production costs rising across all genres. Earlier this year, BBC Chair Richard Sharp revealed that the cost of some of the corporation’s biggest shows had doubled, while drama costs alone have risen by around 35%.