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Government 'split' on licence fee Government 'split' on licence fee
(about 1 hour later)
The cost of a television licence fee is likely to go up in line with inflation, government sources have revealed.The cost of a television licence fee is likely to go up in line with inflation, government sources have revealed.
The BBC has asked the government for a rise of 2.3% above inflation for the next seven years, meaning the licence could rise to £180 by 2013.The BBC has asked the government for a rise of 2.3% above inflation for the next seven years, meaning the licence could rise to £180 by 2013.
But the cabinet is split, according to BBC Business editor Robert Peston.But the cabinet is split, according to BBC Business editor Robert Peston.
The prime minister and chancellor are backing a rise below inflation, while the culture secretary is pushing for a higher rate, Mr Peston said.The prime minister and chancellor are backing a rise below inflation, while the culture secretary is pushing for a higher rate, Mr Peston said.
It means a compromise is now most likely, he added.It means a compromise is now most likely, he added.
The BBC argues the increase in the licence fee - currently £131.50 - is needed for on-demand services and more quality programming.The BBC argues the increase in the licence fee - currently £131.50 - is needed for on-demand services and more quality programming.
Uncertain outlookUncertain outlook
It has yet to be decided whether the costs of funding digital switchover - turning off the analogue signal that has provided terrestrial television since inception - should be funded separately from the licence fee.
A financial settlement to cover the whole 10-year period of the BBC's new charter is highly unlikely.A financial settlement to cover the whole 10-year period of the BBC's new charter is highly unlikely.
Ministers believe the outlook for the industry is too uncertain to guarantee a whole decade of funding, so the new licence settlement is expected to cover between three and five years.Ministers believe the outlook for the industry is too uncertain to guarantee a whole decade of funding, so the new licence settlement is expected to cover between three and five years.
A decision is expected this autumn, probably next month and will take effect from April of next year.A decision is expected this autumn, probably next month and will take effect from April of next year.
The government has already said licence fee money will be used to help elderly and disabled people pay for digital TV equipment.
Earlier this year ITV said that the BBC was asking for too much, with then-boss Charles Allen saying the calculations had been done on the "back of a fag packet".Earlier this year ITV said that the BBC was asking for too much, with then-boss Charles Allen saying the calculations had been done on the "back of a fag packet".