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| Version 2 | Version 3 |
|---|---|
| Ministers agree TV licence deal | Ministers agree TV licence deal |
| (20 minutes later) | |
| The Culture Secretary and Chancellor have agreed a below-inflation rise for the TV licence fee, the BBC has learnt. | |
| The agreement reached by Tessa Jowell and Gordon Brown has not yet been approved by Tony Blair. | |
| Under the plan the fee would rise by 3% next year and the year after, and 2% for the following three years. The Retail Price Index is currently 3.9%. | |
| The decision means that the licence fee will rise to £135.45 next year from its current level of £131.50. | The decision means that the licence fee will rise to £135.45 next year from its current level of £131.50. |
| By 2012 the cost of a TV licence could be as low as £148.05 or as high as £151. | By 2012 the cost of a TV licence could be as low as £148.05 or as high as £151. |
| The level of increase is unsure for year six because of the uncertainty over the financial cost of the changeover from analogue to digital TV. | The level of increase is unsure for year six because of the uncertainty over the financial cost of the changeover from analogue to digital TV. |
| New stance | |
| The new agreement - which will be announced in the new year - means the Treasury has succeeded in its long-term goal of treating the BBC like any other public sector institution as the licence fee will not be linked to inflation at all in future. | |
| The BBC had asked for an increase 1.8% above inflation for seven years, partly to help pay for the switch to digital television. | |
| BBC LICENCE FEE RISES Now: £131.50Year 1: £135.45, up 3%Year 2: £139.51, up 3%Year 3: £142.20, up 2%Year 4: £145.15, up 2%Year 5: £148.05, up 2%Year 6 - £148.05-£151, 0-2% rise | |
| Sources at the Department of Culture, Media and Sport said that the Treasury had originally hoped to secure a settlement of 1.5% below inflation. | |
| They added that adding that as a result of their negotiations they had secured around £1bn over the next six years for the broadcaster. | |
| However, the new fee agreement is expected to lead to the BBC cutting back on many of its plans, though it is not clear which ones. | |
| 'Big questions' | |
| Conservative shadow culture spokesman Hugo Swire added that the deal was a "huge defeat" for Ms Jowell, adding she had led the BBC to believe it would get a generous settlement. | |
| He added: "The big questions now are what comes off the menu agreed between the Government and BBC during the charter renewal process, if the BBC can deliver on all they have been told to by the Government, and was the original figure submitted by the BBC grossly inflated?" | |
| But BBC Business Editor Robert Peston said the deal meant the licence fee would rise broadly in line with the headline rate of inflation - the Consumer Price Index, which excludes mortgage payments. | |
| "In theory this is less than inflation, in the sense that Retail Price Index is 3.9% at the moment. And I am sure the Treasury will claim this as a tough settlement," he said. | "In theory this is less than inflation, in the sense that Retail Price Index is 3.9% at the moment. And I am sure the Treasury will claim this as a tough settlement," he said. |
| "But on a running CPI basis, I think it can be seen as broadly in line with inflation - the Bank of England's CPI target rate is 2%." | "But on a running CPI basis, I think it can be seen as broadly in line with inflation - the Bank of England's CPI target rate is 2%." |
| News of the deal comes just weeks after Michael Grade quit as BBC chairman during key talks over the licence fee. | News of the deal comes just weeks after Michael Grade quit as BBC chairman during key talks over the licence fee. |