This is taken from BBC News Online:

BBC licence fee 'to rise by 3%'

Culture Secretary Tessa Jowell is expected to announce the TV licence fee will rise by 3% over each of the next two years, the BBC has learned.

The deal, to be outlined in full in the Commons, will see the current fee of £131.50 rise to a maximum £151 by 2012.

Borrowing limits will also be tighter than requested. The BBC had wanted an above-inflation hike in the licence to boost programmes and digital services.

Unions have warned that such a deal would lead to "heavy job losses".

The corporation had argued it needed an extra £5.5bn over the next seven years to pay for more original programmes, new digital and local services and increased costs.

It also said the money was needed to provide free digital set top boxes for the elderly and infirm, and meet the £400m cost of relocating 1,500 posts from London to Salford.

The BBC's business editor, Robert Peston, said the corporation wanted to be able to borrow up to £400m - double what it is currently allowed to do.

But the borrowing limit will be increased to between £220m and £230m.

After the first two 3% rises the increases will slow before reaching the maximum agreed 2012 figure.

In an earlier e-mail to staff, BBC Director-General Mark Thompson said the corporation would face "some very difficult choices" if forced to accept a below-inflation increase.

Unions have also warned that such a deal would seriously hit programmes.

John Whittingdale, Conservative MP and chairman of the Culture, Media and Sport committee, told the BBC he thought the deal was a fair one.

He said: "I think you do need to bear in mind that even though the BBC is not going to get a licence fee increase the size that it asked for, the amount of money the BBC gets is determined not just by the level of the licence fee, but also by the number of people paying it.

"And the number of households has been rising steadily and is likely to go on doing so. So in actual fact, I think the settlement will continue to deliver a real terms increase in the amount of money available to the BBC."

The government has already announced that a £600m portion of the settlement will be "ring-fenced" to help pay for the digital switchover.

The deal will also ensure the £400m move of some departments to Salford goes ahead.

Ms Jowell is expected to follow her announcement by giving a keynote speech to the Oxford Media Convention.

Ms Jowell is said to have argued the BBC's case over tense negotiations during the past 24 hours, but the Treasury described the bid as "far too much".

"At one stage, she threatened to postpone Thursday's planned parliamentary announcement of a new licence fee settlement," our correspondent said.

This is taken from The Guardian:

Leaked BBC licence fee deal confirmed
by Tara Conlan
Thursday January 18, 2007

The culture secretary, Tessa Jowell, has announced the BBC's licence fee will rise to £151.50 by the year 2012 - but also gave a veiled threat of diverting money to Channel 4.

After three years of consultation and wrangling, Ms Jowell told the House of Commons this afternoon that the new settlement will last for six years.

And she confirmed figures leaked by the Treasury before Christmas that the licence fee will rise by 3% for two years, then by 2% in years three to five, followed by an increase of up to 2% in 2012-13.

She said the BBC Trust would be given £600m of "ring-fenced" funds to help the elderly and vulnerable switch to digital television.

Although she said it is "the government's expectation" the BBC Trust would take the lead in assisting the government with its policy of targeted help for the digital switchover, the Trust can oppose it.

Ms Jowell admitted the Trust has not yet agreed to take part in the scheme, saying: "There are details of the settlement still to be discussed."

She went on: "We will be in further discussion with the Trust about the details of the scheme but certainly the governors, the Trust has only been in existence a few weeks, were very clear that subject to the conditions we've agreed - ring-fencing and no detriment to services - then they agree in principle."

The BBC is concerned that the project will cost more than £600m and it will be left to pick up the bill - leading to cuts in programme budgets.

But, following a question by Liberal Democrat MP Richard Younger-Ross, Ms Jowell said: "If the costs exceed the estimates we've set out, they will not be met by the BBC. They will be met by the public purse in other ways."

In response to a question by opposition spokesman Hugo Swire, Ms Jowell confirmed that if the targeted help costs came to less than the projected £600m, the BBC would not just be free to spend any surplus money as it saw fit.

"[Any money left over from targeted help] will be available for the BBC to return to licence fee payers, or consult with them about how it might be used."

But, as predicted by Mediaguardian.co.uk, there was a veiled threat made to the BBC Trust of top-slicing the licence fee.

Ms Jowell announced that she is still "keeping open" the idea of the BBC giving Channel 4 £14m and "making available spare capacity" digital spectrum for a TV channel and three radio stations.

She said: "We are keeping open the possibility that we may require the BBC to contribute to the first six years of switchover costs, totalling no more than £14m."

However, following the row over Celebrity Big Brother, some politicians reacted with anger at the prospect of money being diverted from the corporation to Channel 4.

Ms Jowell added the settlement "will allow the BBC to move key departments" to Salford and also announced the BBC's borrowing limit of £200m will rise by 12%.

She said her department thinks the corporation can "realise up to 3%" savings from 2008, and said the findings were backed up by a report from the National Audit Office.

The culture secretary was asked by Mr Swire if she would apologise for the fact most of the details had already been leaked.

"As is so often the case with this government, the house is the last to know these details," said Mr Swire.

He went on to highlight the influence the chancellor, Gordon Brown, and his "clunking fist" has had on the licence fee.

During the negotiations, the Treasury took a harder line than Ms Jowell - ensuring her department could not be as generous as she had originally envisaged.

Mr Swire accused Ms Jowell of "three years of dithering and indecisiveness" and asked: "Isn't the reality that it's the chancellor's announcement, not the secretary of state's and it's as much a defeat for her as the director general of the BBC?"

Mr Jowell later denied angrily it was Mr Brown's settlement, insisting the BBC was her responsibility: "This is a settlement in the public interest and in the interest of the BBC."