Nadine Dorries declares an end to TV licence fee - but BBC warns move will have 'serious implications'

Nadine Dorries has declared an end to the BBC licence fee, prompting the corporation to accuse her of plunging the broadcaster into a “spiral of decline”.

In a war between the Culture Secretary and the BBC, Ms Dorries posted on social media that the next announcement about the licence fee “will be the last”.

She is expected to say in the coming week that the fee will be frozen at £159 until April 2024. She has further indicated that a new funding model will be found by 2027, when the Royal Charter is up for renewal.

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The breakdown in funding negotiations has caused deep anger. One senior source close to the BBC Board warned that Ms Dorries was “profoundly damaging” the corporation, with a deal that would force “well loved” dramas to be scrapped and the World Service to be pared back.

Ms Dorries posted the following on Twitter:

Sources close to the BBC Board said Ms Dorries was creating a “cut-price” broadcaster and urged her not to plough ahead with her plan to freeze the licence fee for two years.

It is understood Ms Dorries has concluded negotiations with the BBC and refused its pleas to increase the licence fee in line with inflation. It had argued for a rise equivalent to five pence a week on the licence fee and claimed it had suffered a “huge” 30 per cent real terms cut in income in the past decade.

An announcement is expected later this week, effectively forcing through a budget cut in real terms for the corporation.

The licence fee yields about £3.5 billion a year, with a further £1.5 billion from commercial sales. Reports suggested any continuing licence fee freeze could cost the BBC as much as £2 billion over the next six years.

The Government believes it would be unjustifiable to raise the licence fee when tax rises and an increase to fuel bills are in the pipeline.

Ms Dorries is also considering holding future rises in the licence fee to below inflation up until 2027, when the current Royal Charter comes to an end.

At that point - should there still be a Conservative government - the licence fee could be replaced by a new funding system. Streaming services such as Netflix and Amazon Prime Video charge customers monthly, reflecting a new way for many viewers to watch television.

BBC warns of 'serious implications'

The BBC Board, which includes Tim Davie, the director-general, Richard Sharp, a financier and the board’s chairman, and Sir Robbie Gibb, who was Theresa May’s director of communications in Number 10, has been left reeling.

The source said the BBC now had “serious concerns” for its future and the wider creative industries in the UK, which benefit from the broadcaster’s support of independent programme makers.

A BBC source said: “A global Britain needs a global media company. We currently have a world-beating media company in the UK. It’s the BBC.

“It’s not perfect. It needs to continue to reform, but it is valued by the public and respected around the world. Its future is not secure. The BBC Board’s strong view is that anything less than a licence fee deal at inflation will have serious implications.

“The BBC had been cut by 30 per cent over the last 10 years. You can’t keep cutting the BBC and expect it to deliver the same level of service.

“Even a year’s rise with just inflation would mean households being asked to pay less than a penny a day more than they do at the moment - this is a small increase compared to the rest of the media sector where prices have risen by 10 per cent or more.”

The source insisted that “a poor licence fee settlement” put at risk “the future of key services and programming, such as the world service and well loved dramas".

The source added: “We can’t continually cut the BBC without profoundly damaging it. We are at a tipping-point where a great value BBC risks becoming a cheap, poor-quality BBC.”

An ally of Ms Dorries, quoted in the Mail on Sunday, said: “There will be a lot of anguished noises about how it will hit popular programmes but they can learn to cut waste like any other business. This will be the last BBC licence fee negotiation ever. It’s over for the BBC as they know it.”

Ms Dorries has been a long-standing critic of the organisation, previously describing the BBC as “Left-wing”, “hypocritical” and “patronising”.

It is understood that negotiators had argued with ministers that the BBC was “continuing to punch above its weight” in the battle for viewers and competition from Netflix, Amazon, Disney and Apple.

The BBC, sources said, had enjoyed bigger audiences at Christmas than all the subscription on demand services put together.

The corporation has also argued that the new subscription services were driving up costs in the industry, making programming more expensive.

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