Jowell confirms licence fee

Media secretary Tessa Jowell has confirmed the BBC's licence fee settlement and said she expects the corporation to make 3% cash-releasing savings annually from next year.

Media secretary Tessa Jowell has confirmed the BBC's licence fee settlement and said she expects the corporation to make 3% cash-releasing savings annually from next year.

In an oral statement to the House of Commons, Jowell said the settlement will be for six years, with annual increases in the licence fee of 3% for the first two years and 2% in years three, four and five.

There will be an increase in 2012 of up to 2%, depending on a further review nearer the time.

The price of a colour TV licence will rise from its current level of £131.50 to £135.50 from 1 April this year, reaching £151.50 in 2012.

Jowell said that based on independent evidence from consultants PKF and others, the Government believes that the BBC can realise up to 3% cash-releasing savings annually from 2008.

As expected a fund of £600m has been ringfenced to help the elderly and disabled make the switch to digital. The BBC will also pay for a £200m public communications campaign being run by Digital UK to ensure people are prepared for switchover. This sum is also ringfenced meaning that this responsibility should not impact on the BBC's core budgets and services.

A 12.5% increase in its borrowing capacity to help deliver this commitment has also been written into the settlement.

Jowell said: 'The licence fee will enable the BBC to deliver its new public purposes set out in the new Charter. And as digital technology transforms the media world, it will enable the BBC to take a leading role in making the most of it.

'Investment in high quality content, the driver of creative industry and what audiences value most of all, can remain high.

'This settlement will enable the BBC to do all that. And it will allow the BBC to move key departments - including Children's, Sport, New Media and Formal Learning - to the North West of England.'

'I welcome the Trust's confirmation, due later today, that this will happen.'