Licence fee to be frozen for two years amid speculation it could be scrapped altogether

Nadine Dorries told MPs that Ministers have had to “think very carefully about imposing a potential increase” on the licence fee given the rising cost of living and the new plans represent a “fair settlement” for the national broadcaster.

The BBC has criticised the “disappointing” decision, saying it will lead to “tougher choices” that will impact viewers.

Speaking in the House of Commons, Ms Dorries described the BBC as having a “unique place in our cultural heritage”, but added: “The global cost of living is rising and this Government is committed to supporting families as much as possible during these difficult times.

“Given that climate, we had to think very carefully about imposing a potential increase on the TV licence, particularly given that any increase would expose families to the potential threat of bailiffs knocking on their door or criminal prosecution.

“When it comes to monthly bills, this is one of the few direct levers that we have in our control as a government.”

She added: “Every organisation around the world is facing the challenge of inflation. I simply do not believe that those responsible for setting household bills should instinctively reach into the pockets of families across the country for just a little more every year to cover their costs.

“So today I am announcing that the licence fee will be frozen for the next two years and that it will rise in line with inflation for the following four years.”

Over the weekend, a tweet from Ms Dorries sparked speculation that the fee will be abolished completely in a few years time, as she told her followers that “this licence fee announcement will be the last.”

She added: “The days of the elderly being threatened with prison sentences and bailiffs knocking on doors, are over.

“Time now to discuss and debate new ways of funding, supporting and selling great British content.”

The possibility was not ruled out, as during her Commons address Ms Dorries said a review is forthcoming and it is “time to begin asking those really serious questions about the long-term funding model of the BBC and whether a mandatory licence fee with criminal penalties for individual households is still appropriate.”

BBC chairman Richard Sharp and director-general Tim Davie issued a statement arguing that there are “very good reasons for investing in what the BBC can do”.

“A freeze in the first two years of this settlement means the BBC will now have to absorb inflation,” they said.

“That is disappointing – not just for licence fee payers, but also for the cultural industries who rely on the BBC for the important work they do across the UK.

“The BBC’s income for UK services is already 30% lower in real terms than it was 10 years ago. We will set out the implications of the settlement later, before the end of the financial year, but it will necessitate tougher choices which will impact licence fee payers.”