Starting in April 2024, the BBC licence fee will increase to £174.50, marking a £5 rise from the previous fee of £169.50.

This increase is part of a plan to adjust the fee annually in line with the consumer price index (CPI) inflation rate until 2027.

The government aims to provide short-term funding certainty for the BBC while also supporting households facing financial hardship with flexible payment options.

To further assist those in need, the government will expand the Simple Payment Plan (SPP), allowing more households to pay the licence fee in manageable instalments.

Despite the fee increase, the BBC is under significant financial pressure, leading to cuts including the cancellation of the interview show Hardtalk and the reduction of over 100 news roles.

The BBC has faced budget shortfalls due to previous below-inflation rises, necessitating an additional £100 million in cost savings.

This fee increase comes amid a broader cost of living crisis affecting many residents across the UK.

The government's upcoming review of BBC funding will replace a previous Conservative funding review and aims to foster a national conversation about the BBC's future.

Nandy emphasized the importance of the BBC's programming, including educational content and trusted news, and announced plans for a public engagement exercise regarding the BBC's future funding.

Culture Secretary Lisa Nandy indicated that the current funding model for the licence fee will remain in place until 2027, while exploring other funding options for the future.

The fee increase will now be calculated using an annual inflation rate rather than a monthly rate, providing a more stable financial framework.

It's important to note that some individuals, particularly those on Pension Credit, can avoid paying the licence fee through a lesser-known loophole that allows for a free licence.