Licence fee to rise by 3%

Culture secretary Tessa Jowell is set to announce that the BBC licence fee will rise by 3% over each of the next two years.

Culture secretary Tessa Jowell is set to announce that the BBC licence fee will rise by 3% over each of the next two years.

In the House of Commons later today Jowell will set out the government's plans that will see the cost of the TV licence fee rise from its current level of £131.50 to £151 by 2012.

Borrowing limits will also be restricted to between £220m and £230m, below the £400m the corporation had hoped for.

The government has already announced that a £600m portion of the settlement will be 'ring-fenced' to help finance the digital switchover. The deal will also ensure the £400m move of some departments to Salford goes ahead. Ms Jowell is expected to follow her announcement by giving a keynote speech to the Oxford Media Convention.

The government had been warned it will starve the BBC of the resources required to maintain quality broadcasting if the Cabinet endorses a below-inflation increase in the licence fee.

Union leaders representing BBC staff sounded the warning last night and MPs in all parties united in an eleventh hour plea to the government to think again.