§ Mr. McNulty
To ask the Secretary of State for Culture, Media and Sport what plans he has in respect of the level of next year's television licence fee; what account this level takes of the five year formula announced by the previous government; and if he will make a statement about future licence fee levels. 
§ Mr. Chris Smith
In December 1996, following a report by independent consultants, Braxton Associates, on the BBC's expenditure needs, the previous Government announced a television licence fee formula for the five years from April 1997. Under this formula, licence fee increases for the period as a whole were set just below inflation as measured by the Retail Prices Index (RPI). However, the increases from 1 April 1998 were set at RPI plus 3 per cent., reflecting primarily the additional costs faced by the BBC in launching its new digital services.
The Government have carefully considered the five year formula and have concluded that it remains appropriate. It allows the BBC to plan its business properly for the period as a whole and is based on an independent assessment of its financial needs. The real-terms increase this year is paying for new digital services for licence fee payers. The 1999–2000 increase under the formula will also be marginally above inflation, at RPI plus 0.5 per cent. However, the formula specifies changes in the licence fee in 2000–01, and 2001–02 at RPI minus 1 per cent. and RPI minus 2.5 per cent. respectively. Application of the RPI figure of 3.6 per cent. for the year to September 1997, plus 3 per cent., to the current unrounded licence fees produces new rounded totals of £97.50 for a colour licence and £32.50 for a black and white licence. The necessary regulations to bring these fees into force will be laid before the House in due course.
The Government's existing Agreement with the BBC guarantees the licence fee until the end of the five-year period (i.e. until the end of March 2002). The Government intend to conduct well before then a wide-ranging review of the future level of the licence fee.