Source : The London Times

The BBC licence fee will rise from £ 131.50 to £ 151 in six years in a funding deal to be announced by Tessa Jowell, the Culture Secretary, today.

Although the announcement will confirm that the BBC has got far less than it wanted, Ms Jowell will present the deal, which will bring a series of modest annual increases for viewers, as helping to secure the future of the BBC with a funding agreement "in line with inflation".

Nevertheless, it is likely to lead to several thousand job cuts over the course of the agreement, which ends in March 2013, as the public broadcaster achieves the efficiencies demanded by ministers. Most of the agreement was made in negotiations between Ms Jowell and Gordon Brown before Christmas. However, the Government was scrambling to find an acceptable way to ensure that the BBC can afford the £ 200 million-plus cost of moving its sports and children's departments, plus Radio 5 Live, to Salford.

Ms Jowell will confirm the figures in a statement due to be made in the House of Commons at lunchtime, before heading to Oxford to justify the arrangement before a conference of television executives.

Whitehall insiders said that Mr Brown had refused to accept a more generous settlement at a time when other public services were facing belt tightening. The BBC had wanted inflation plus 1.8 per cent, but the Treasury refused to accept an inflation-linked settlement.

Mr Brown's officials were also unimpressed by the BBC's justification for its bid, which included a demand for "superinflation" -high pay increases for big stars.

The Treasury wanted to impose a tougher settlement, with minimal increases below the rate of inflation. However, after negotiations between Mr Brown and Ms Jowell, the figure was revised slightly, ensuring that the BBC was not saddled with a "channel-closing" deal.

The corporation's case was further weakened after it agreed to pay £ 18 million to secure the services of the presenter Jonathan Ross for three years.

Although the broadcaster insists that viewers expect to see the biggest names, the sums involved were not received well at Westminster.

The BBC's position was also hampered by the defection of its Chairman, Michael Grade, to ITV at a key point in the discussions, although he believes that by the time he had left, he was unable to affect the outcome of negotiations.

The licence fee will rise by 3 per cent in each of the next two years, 2 per cent in the next three, and another 2 per cent in 2012-13. The retail price index is 4.4 per cent, which formed the baseline for the BBC's bid. However, the ministers believe that the correct reference point is the consumer price index used by the Bank of England, which last month reached a record 3 per cent.

Over time, the difference in money available to the corporation will be significant. Had the BBC got what it wanted, it would have had £ 600 million more to spend in 2012. Over the period to 2013 it will now have about £ 3 billion less available to it.

© The London Times