The BBC licence fee is safe with inflation-linked rise, Corporation sources confirm

The BBC has been assured by the "highest level of Government" that the annual £145.50 levy will rise with Consumer Price Index inflation from 2017 under the new deal

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The BBC will be given a new licence fee from 2017 that rises in line with inflation, senior Corporation sources have assured RadioTimes.com.

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Director-general Lord Hall has been personally told by “the highest level of Government” that it will not use its review of the BBC’s Royal Charter to scrap the £145.50 fee or go back on unofficial assurances that it will rise in line with CPI [Consumer Prize Index] inflation.

The assertion by well-placed BBC sources follows events in the summer when the BBC believed it had extracted the promise of a licence fee increase linked to CPI inflation in return for a commitment to pay for licence fees for the over 75s.

However, as RadioTimes.com reported in July, there were anxieties that the Government’s promise may be reneged on following proposals to set up a new panel examining the BBC’s size and purpose. 

Former shadow culture secretary Chris Bryant said at the time: “There’s quite a big row [between the Government and the BBC] going on now because the original version that [Chancellor George] Osborne and [Culture Secretary John] Whittingdale wanted was scale and scope. The BBC said no, not scale: purpose and scope is fine – what the BBC should and shouldn’t be doing – but not its size, because that is reopening the question of the licence fee settlement which we think we have just done a deal on. Which is, we’ll take on the over-75s in exchange for CPI inflation.

“I think the Government thinks ‘we might not give you CPI inflation’. There is a row. It sounds like a tiny little tweak but I think it’s quite a significant one.”

However, these fears now appear to be groundless and it appears that the Government will not undermine the financial deal that the BBC has long insisted has been agreed since the summer.

“The BBC has received assurances from the highest level of Government that the deal is the deal,” a senior BBC source told RadioTimes.com, following a report in today’s Daily Telegraph

It is understood that the details of the deal have been thrashed out with the Chancellor of the Exchequer George Osborne.

The linking of the licence fee to inflation is crucial to the BBC’s prospects with Corporation insiders suggesting that the lack of a link when the new licence fee kicks in in 2017 would be the equivalent of a ten per cent reduction to its budget.

The news that the “highest level of Government” have now stepped in is a blow to culture secretary John Whittingdale who has long been hawkish on the question of BBC finding.

Last week, when he was asked whether the BBC was too large, he said that the issue was an “open question” and “dependent on charter review”.

Now it seems that the substance of the licence fee’s future has been finally decided.

BBC sources also revealed today that it was still negotiating with the Government about its online news provision following complaints from Whittingdale that the BBC websites were competing too directly with newspapers.

In a speech last night, Lord Hall unveiled a poll that showed that 95 per cent of the public were in favour of written news on the BBC website.

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“Even when presented with both sides of the arguments – the assertion that it can make it harder for newspapers and their websites to attract readers and therefore the revenues they need – the overwhelming majority, 77 per cent, support the BBC continuing to provide this,” said Lord Hall. “Just six per cent oppose it. There is room for both the BBC and newspapers.”