The BBC licence fee will increase in line with inflation each year until 2027, the government has announced.
It will mean bills will rise by £5, or an extra 42p a month, from April next year – bringing the total cost of a TV licence to £174.50.
The hike comes after a £10.50 rise brought the charge to £169.50 in April this year.
The annual fee faced years of scrutiny under the previous government, and was frozen at £159 for two years before it was increased at a lower rate than the corporation expected.
In a statement to Parliament on Friday, Culture Secretary Lisa Nandy said she wanted to see the BBC “thrive for decades to come”.
She said through a review of the corporation’s Royal Charter, there would be an “honest national conversation about the broadcaster’s long-term future, ensuring the BBC has a sustainable public funding model that supports its vital work but is also fair and responsive to those who pay for it”.
Lisa Nandy told Parliament she wanted to see the BBC ‘thrive for decades’. Pic: PA
“In the short-term, we are providing the BBC with funding certainty while supporting thousands more households facing financial hardship to spread the cost of a TV licence,” Ms Nandy said.
The household payment, which funds much of the BBC’s operations, will be increased each year in line with the annual consumer price index (CPI) inflation rate.
To help households struggling with financial pressures, the government said it would expand the Simple Payment Plan (SPP), which allows those eligible to spread the cost of a licence into more manageable fortnightly and monthly instalments.
The expansion will allow an estimated additional 9,000 unlicensed households experiencing financial difficulty to pay through the SSP, the government said.
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An estimated 500,000 homes could be using the SSP by the end of 2027, according to BBC analysis.
The BBC has been under increasing financial pressure and last month revealed a raft of planned changes, including the axing of in-depth interview show Hardtalk, as it looked at reducing more than 100 news roles.
Tim Davie, director-general of the corporation, told Sky News in March that a commercial model for the licence fee would be a mistake that could leave the UK’s media market “looking exactly like America”.
A BBC spokesperson said on Friday: “We welcome confirmation that the licence fee will increase in line with inflation next year.”
They said they also looked forward to the debate about the future and that, as part of these discussions, the corporation would “run our biggest ever public engagement exercise in 2025 so that audiences are at the heart of shaping our future”.