BBC braced for job cuts after licence fee increase

The BBC was today braced for cuts in programming and heavy job losses after ministers set a below inflation increase in the licence fee.

A deal reached between Culture Secretary Tessa Jowell and Chancellor Gordon Brown will see the fee rise by an average of 2.4 per cent a year over the next five years.

The projected inflation rate is 3.9 per cent, and the BBC had asked for a 5.7 per cent increase.

Next year viewers will pay £135.45 for a licence, compared to £131.50 now. The settlement, not yet approved by Tony Blair, will be seen as a personal defeat for Ms Jowell, who lobbied for extra funds to cover the costs of the digital switchover and the BBC's move to Manchester.

In 2012 — the year of the digital switchover — the licence fee will rise between zero and two per cent.

Unions called for urgent talks with BBC managers. Gerry Morrissey, assistant general secretary of broadcast union Bectu, warned the deal could lead to job losses and would seriously hit programmes. But some BBC executives said that the outcome, although less than wanted, was "not a complete disaster."

The Department for Culture, Media and Sport and the BBC insisted the settlement, which breaks the longstanding link between the licence fee and inflation, had not been finalised.

A BBC spokesman said: "Discussions on the licence fee settlement are continuing and we await a decision and announcement in the New Year."