Rishi Sunak has shared that the BBC needs to be "realistic about what it can expect people to pay" for the TV licence fee during times of high inflation.

The Prime Minister has also welcomed £500 million in savings the corporation plans to make in the near future.

Most of the BBC's funding comes from the TV licence fee, which costs £159 per year at the moment.

The corporation said next year's cost was "unconfirmed" but that it had previously agreed increases in line with inflation to start from 2024, it reported.

Echo: The BBC will be making savings adjustments, such as shortening its Newsnight programmeThe BBC will be making savings adjustments, such as shortening its Newsnight programme (Image: PA)

Asked whether he thought the licence fee was sustainable, Mr Sunak said: "It's really important that when things are difficult, everyone is doing what they can to ease the cost of living on families".

BBC cuts back on programmes to make savings

As part of its plans to make savings the BBC will be cutting back on its Newsnight programme, shortening it by 10 minutes and focusing more on studio-based debates rather than investigative films.

As a whole greater focus will be put on digital journalism and live coverage across the BBC News division, with a "reduction in the amount of television packaging".

Speaking to reporters travelling with him to the COP28 summit in Dubai, Mr Sunak added: "The BBC like any other organisation that serves the public should be looking to do that and cut its cloth appropriately so I think that is very welcome.

“I think going forward, look the BBC – final decisions haven’t been made obviously – but the BBC should be realistic about what it can expect people to pay at a time like this. That, I think is the right approach.”

The Prime Minister did not directly say whether he would be limiting the planned increase to the fee.

A BBC spokesperson said: "The government and BBC agreed a six-year licence fee settlement in January 2022, which froze the licence fee for two years with increases in line with inflation from 2024.

"As is usual practice the government sets and confirms the cost of a licence each year and this remains unconfirmed for 2024/25.

"The BBC will continue to focus on what it does best: working to deliver world-class content and providing great value for all audiences."

Culture secretary says proposed £15 hike in licence fee would be too high

Culture Secretary Lucy Frazer has said that a £15 rise in the BBC licence fee would be “high” amid reports that Rishi Sunak is set to block a 9% hike in the annual charge.

Ms Frazer was asked on Times Radio about the Prime Minister’s suggestion that the BBC needs to be “realistic” about what people can pay.

Asked about a rise to over £170, she said: “Well, obviously, that’s high. This is something that we’re looking at, at the moment. And we’ll be making a decision on this in due course.”

For the past two years the licence fee has been frozen at the price of £159 but it was previously agreed it would rise in line with inflation after April 2024.