EXCLUSIVE: BBC insiders have voiced alarm over a funding deal that has blown a £90M ($113M) hole in the UK broadcaster’s finances and sources say potentially threatens its independence.
The British government announced on Thursday that it would increase the BBC’s income in line with inflation, but ministers have ripped up the agreed way of measuring this price hike and the timetable for future funding settlements. A senior BBC insider said it was an “unhealthy way to do business.”
Culture secretary Lucy Frazer said the license fee, a levy that all UK households must pay to access BBC services, will increase by 6.7% from April 2024. This was the spot rate of inflation in September this year. Traditionally the government has pegged licence fee increases to an annual average of inflation, which would have been 9% in 2024 had this calculation been kept in place.
It means the £159 fee, which has been frozen for two years, will rise to £169.50 next year, and not £173.30 as the BBC had anticipated. The corporation estimates that this will leave it with a £90M funding gap on top of other savings plans, meaning it will lead to inevitable content cuts.
There is a view within the BBC that the government has broken promises made as part of its operating agreement, known as its charter. Deadline understands that the BBC has communication from the government that commits to calculating inflation increases as an annual average throughout the charter, which runs to 2027.
There is also concern that the settlement announced by culture secretary Frazer kicks the door open to annual funding deals, potentially leaving the BBC more vulnerable to political agendas.
The BBC’s funding is usually decided over five-year periods, but the government states that today’s agreement is for 2024. Asked if there will be another settlement next year, the Department for Digital, Culture, Media & Sport (DCMS) declined to comment.
Frazer said the lower license fee rise would help UK households with the cost of living crisis. “We know family budgets are stretched, which is why we have stepped in again,” she said.
A BBC insider said: “There is consternation about how the BBC has been treated and people are frustrated by this. We think constant conversations over the BBC’s funding are an unhealthy way to do business and a threat to our independence. We wouldn’t describe the conduct of the government in recent months as trust building.”
Others echoed the sentiments of the senior executive, with one well-known presenter saying the deal set a “worrying” precedent for the BBC. Concerns have been heightened amid allegations that the government has recently been questioning BBC editorial output. Two sources said ministers have been frequently “hassling” executives over news reporting, particularly involving the Israel-Gaza conflict.
Stewart Purvis, a former ITN and Ofcom executive who advised the government over BBC charter renewal, said: “If you just looked at it in terms of the finances, you’d say that governments always do these sorts of fiddles. But if there’s something more going on, then that’s when you get concerned about independence.”
Pat Younge, a former BBC Studios executive, said on Twitter (now X): “Ripping up a 6-year deal to fund the BBC is an act of astonishing bad faith and threatens the BBC’s independence. It risks lasting harm to our national broadcaster.”
Alongside the license fee deal, the government has launched a review of the BBC’s funding model beyond 2027, which will likely involve examining alternatives including subscription and advertising. The government said it will assemble a panel of media industry experts to support the review, but is yet to name those who will contribute to the work.
The government gathered a similar panel in 2020 when the Public Service Broadcasting Advisory Panel fed into work on new UK media legislation. The government was not transparent about the panel’s conclusions and refused to release minutes from its meetings under Freedom of Information laws. The DCMS declined to commit to greater transparency during the BBC funding review.
The BBC said: “The BBC is focussed on providing great value, as well as programmes and services that audiences love. However, this outcome will still require further changes on top of the major savings that we are already delivering.
“Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the UK. We will confirm the consequences of this as we work through our budgets in the coming months.”
