The government has confirmed that the BBC licence fee will be frozen for two years.

It means the BBC budget will be reduced in real terms, as inflation in the UK is expected to hit a 30-year high of 6% or more in April.

Culture minister Nadine Dorries said the agreement ‘gives the broadcaster certainty while protecting the public from a price hike’.

Households will need to pay £159 per year until April 2024, when the fee will rise in line with inflation for four years.

The corporation currently gets around £3.7 billion per year from the licence fee, which funds a range of services ranging from news to nature programmes and Strictly Come Dancing.

It covers TV, radio, the BBC website, podcasts, iPlayer, educational content for children, as well as other apps.

Ms Dorries said labelled the BBC a ‘great institution’ and noted it has 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.

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

The Labour front bench could be heard shouting ‘taxes’ before Ms Dorries added: ‘We simply could not justify putting extra pressure on the wallets of hard-working households.

‘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.’

Yesterday, Ms Dorries said this announcement about the BBC licence fee ‘will be the last’.

She wrote on Twitter: ‘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.’

For the twenty years until 2020, pensioners did not have to pay the licence fee and the cost was covered by the government.

But the Conservatives announced in 2015 that they would phase this out.

After the announcement today, BBC Chairman Richard Sharp and Director-General Tim Davie issued a joint statement saying: ‘Given the breadth of services we provide, the Licence Fee represents excellent value for money. There are very good reasons for investing in what the BBC can do for the British public and the UK around the world.

‘A freeze in the first two years of this settlement means the BBC will now have to absorb inflation.

‘That is disappointing – not just for Licence Fee payers, but also for the cultural industries that rely on the BBC for the important work they do across the UK.

‘The BBC’s income for UK services is already 30 percent 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.

‘While there will be challenges, we do have the financial stability of the Licence Fee, which is crucial. We have the certainty of a six-year deal for the funding of the BBC: two years cash flat and four years keeping pace with inflation.

‘We have great faith in the BBC and its future. We will do everything to ensure the BBC continues to punch above its weight for Britain and for audiences around the world. We will continue to drive an ambitious programme of reform, moving more of our output across the UK, transitioning the organisation to a digital future and delivering distinctive and impartial content. We have a uniquely talented team of people at the BBC who are focussed on delivering this for the public.

‘We actively look forward to the national debate on the next Charter and, of course, all options should be considered. The BBC is owned by the public and their voice must always be the loudest when it comes to determining the BBC’s future.’

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