Culture Secretary Lucy Frazer has launched a review into how the BBC should be funded in future.
The government said today that it will continue to freeze the price of a television licence until April.
From April 2024, annual licence costs will rise by less than previously expected, following changes brought in to minimise the cost to households.
The annual price of a TV licence will increase to £169.50, up from £159 per year at present, from April 2024.
The price rise is the equivalent to customers paying an additional 88p per month, but the government said it is £20 cheaper than it would have been if it had not acted.
The UK government is expected to appoint a panel of independent experts from the broadcasting sector and business more broadly to review funding options for the BBC.
It said on Thursday that it will examine how alternative models can help secure the broadcaster’s long-term sustainability amid an evolving media landscape, while reducing the burden on licence fee payers.
A review will explore how sustainable the licence fee model for the BBC is and posit evidence-based alternative models for funding the BBC.
Analysis will include externally commissioned research from non-governmental providers, the government said.
Last year, it froze the licence fee for two years amid the sharp rise in the cost of living.
The current annual fee of £159 was expected to remain unchanged until April 2024, before rising in step with inflation for the following four years.
The government said today that “in recognition of the ongoing cost of living pressures faced by families”, it has today decided to change how the inflation-linked uplifts to the licence fee are calculated for 2024.
The previous methodology for calculating inflation was against the averaged annualised October to September Consumer Price Index (CPI) figure of 9%.
Under the new methodology for 2024, the government said it will use the annual rate of CPI in September 2023 of 6.7%, an approach used to calculate uplifts to benefits.
Licence fee payers will have saved £37 since 2022 due to the measures by the end of 2024, government said.
Culture Secretary Lucy Frazer stated: “This settlement has highlighted other challenges faced by the BBC with the changing media landscape making the battle for audiences more competitive and the number of people paying the licence fee decreasing.
“We are also launching a funding review of the BBC that will take a forensic look at the licence fee, and whether a reformed funding model could better support our national broadcaster to remain sustainable and affordable for audiences while driving growth in our creative industries.”