§ Mr. SalterTo ask the Secretary of State for Culture, Media and Sport if he intends to set next year's television 421W licence fee at the level indicated by the five-year formula announced by the previous Government; and if he will make a statement about future licence fee levels. [64272]
§ Mr. Chris SmithOn 11 December 1998,Official Report, column 636, the Government announced their intention, after careful consideration, to retain the television licence fee formula for the five years from April 1997 introduced by the previous Government. The formula, based on a report by independent consultants, Braxton Associates, is based on an assessment of the BBC's financial needs and the potential for improved efficiency and the development of alternative sources of revenue. It is designed to allow the BBC to plan its business properly for the period as a whole.
Under the formula, licence fee increases for the five-year period as a whole are set just below inflation as measured by the Retail Prices Index (RPI). However, the increases from 1 April 1999 are set at RPI plus 0.5 per cent., reflecting primarily the additional costs faced by the BBC in launching its new digital services. The formula provides for changes in the licence fee of RPI minus 1 per cent. and RPI minus 2.5 per cent. in 2000–01 and 2001–02 respectively.
Application of the RPI figure of 3.2 per cent. for the year to September 1998, plus 0.5 per cent., to the current unrounded licence fees produces new rounded totals of £101.00 for a colour licence and £33.50 for a black and white licence. The necessary regulations to bring these fees into force will be laid before the House in due course.