BBC Licence Fee Settlement

The Secretary of State  announced on 17 January in Parliament that BBC income will not rise in line with inflation during  2022 and 2023. As a result VLV believes that the BBC will be forced to cut services for UK licence fee payers at a time when it is up against strong competition from global streaming platforms. This move could prove to be very damaging for its reach, popularity and impact. 

If the BBC does continue to provide the same level of output as today, VLV analysis shows that this is likely to lead to a deficit of between £3 and £5 billion by 2027, depending on production cost inflation. This is clearly unsustainable.

Inflation in production costs are currently estimated to be between 5% and 35%, depending on the genre of programme being made. If inflation in production costs averages 6% for the coming 5 years, VLV estimates this will lead to a deficit of £3 billion. If inflation averages 9%, this increases the deficit to £5 billion.

VLV’s analysis of BBC public funding since 2010 shows that prior to today’s settlement BBC public income had already declined by 25% since 2010 in real terms. This is the third time the government has effectively cut BBC funding. Previous settlements in 2010 and 2015 were equally damaging. 

Since 2010 the BBC has managed to absorb the cuts in its funding and cost increases without closing any services, largely through efficiency savings and reducing costs on content. Ofcom recently noted that BBC content spend had dropped by 28% in real terms between 2010 and 2020. VLV considers there is not much more which can be cut without losing services or increasing the number of repeated programmes.

VLV has long argued that the process for setting the BBC’s funding should not be conducted behind closed doors without any parliamentary or public scrutiny. 

VLV proposes that an independent body should be established to recommend a level of funding for the BBC and that no decision should be reached until there has been Parliamentary debate. This would provide greater transparency and reinforce the independence of the BBC, including protection from political decisions by the Government of the day.