3% licence fee rise to be confirmed today

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

The licence fee is currently £131.50, and will rise to £151 by 2012. This April will see a rise of £3.50, to £135.

As reported before Christmas, the first two years will see rises of 3%, then 2% for three years and between 0% and 2% for the final year.

Jowell will also set a borrowing limit of £230 million for the BBC, up £30 million pounds, but below the £400 million the corporation was seeking.

She will also confirm that £600 million of the settlement will be set aside to fund the digital switchover. The BBC is also believed to have agreed to the £400 million move of some departments to Salford.

Shadow Culture Secretary John Whittingdale told the press: “It is still a good deal for the BBC because more people will be paying licence fees and the corporation’s income is guaranteed — unlike commercial broadcasters who are suffering from a decline in advertising revenue.”

The BBC, as well as many broadcasting and voluntary groups, have been lobbying the government to increase the settlement to give the corporation enough resources. 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.

Director general Mark Thompson said in his speech to a London conference this morning that the settlement was "a real disappointment," but also added: "The new BBC Trust will of course make its own response once the Secretary of State has announced the settlement. But I can say on behalf of the management of the BBC that, if it is six years, the duration of the settlement makes good sense."