LONDON: UK state-funded broadcaster, the BBC, has been dealt a financial blow by government ministers who have reportedly ignored the broadcaster's pleas and agreed a below-inflation rise in the annual licence fee - paid by every television set-owning household in the country.

The plans, expected to be officially announced early 2007, will see the fee rise 3% next year and the year after, and 2% for the following three years.

BBC executives had asked for a hike of 2.3% above inflation, which would have increased the current £131.50 ($258; €195) fee to £180 by 2014.

Those demands were toned down subsequently, but director general Mark Thompson warned that a below-inflation rise would imperil the digital switchover subsidy and the corporation's partial shift out of London to Manchester.

The final deal was hammered out by culture secretary Tessa Jowell, apparently rooting for the corporation, and chancellor Gordon Brown, who is preparing for a tough public spending round and his ascension to the Prime Minster's throne next summer.

He is also concerned that substantial licence fee rises in the run-up to a General Election - his first as leader - would be unpopular with voters.

The BBC is putting on a brave face. A spokesman said: "Discussions about the licence fee settlement are continuing and we await a decision."

Data sourced from; additional content by WARC staff