BBC licence fee set to rise above £200 as millions of households stop paying

The number of households paying the fee is forecast to fall by 2.7 million over the same period, leaving just 19 million contributors.

That represents a sharp downgrade from the OBR’s previous estimates in March, which anticipated 21 million people would still be paying by the end of the decade.

Around half a million licence fee payers are abandoning the system each year. BBC bosses have acknowledged a “steeper than projected decline” in recent months.

The corporation faces a growing exodus of viewers to streaming competitors including Netflix and Disney, while younger audiences are gravitating towards YouTube and TikTok.

A series of scandals has compounded the problem, most notably the editing of a Donald Trump speech that prompted director general Tim Davie to step down earlier this year.

These challenges now fall squarely on the shoulders of Matt Brittin, the new BBC chief.

Mr Brittin has described the compulsory charge as a “busted flush” as growing numbers of Britons refuse to pay.

The gap between usage and payment illustrates the scale of the problem. The BBC says 94 per cent of households use its services every month, yet only 80 per cent actually pay the licence fee.

Ministers are now weighing up several options to overhaul the BBC’s funding model before its current charter expires next year.

One proposal under consideration would extend the fee to cover streaming platforms such as Netflix, while others have suggested tying BBC funding to existing household bills like broadband or council tax.

Supporters of a broader levy argue it could actually reduce the individual charge by spreading the cost across more households.

Culture Secretary Lisa Nandy has also explored whether advertising or subscription models could provide an alternative revenue stream.

The Government is expected to set out its preferred approach in a white paper due before Christmas.

The urgency of reform has been heightened by repeated freezes to the annual charge, which have caused the BBC’s licence fee revenue to drop by roughly 30 per cent in real terms. The Government is expected to set out its preferred approach in a white paper due before Christmas.

The urgency of reform has been heightened by repeated freezes to the annual charge, which have caused the BBC’s licence fee revenue to drop by roughly 30 per cent in real terms.

Mr Brittin is leading an aggressive savings programme aimed at cutting £500million over the next two years.

The restructuring could result in as many as 2,000 jobs being lost, and the broadcaster has already begun axing programmes and confirmed that BBC Three will close as a channel.

The cost-cutting measures risk provoking a backlash from staff.