The BBC licence fee will rise by just over £10 next year as the Government reduces the planned increase due to the pressure of the cost of living, according to reports.

For the past two years the licence fee has been frozen at £159 but it was previously agreed it would rise in line with inflation after April 2024, which would see it increase by 9% – or £15 – to £173.30.

The Sun newspaper reports that ministers have pressed the corporation to settle in line with September’s consumer prices index (CPI) rate of inflation of 6.7%, which would instead bring it up by £10.65 to £169.65 per year.

Culture Secretary Lucy Frazer is expected to make an announcement on the licence fee in the Commons on Thursday.

Earlier this week on BBC Radio 4’s Today programme, Ms Frazer insisted ministers were looking at the planned rise amid concerns over the cost of living.

She said she had been discussing the issue with the broadcaster for a number of months and that ministers would have a further discussion with director-general Tim Davie before they made an announcement.

Ms Frazer also told Times Radio on Monday that a £15 rise in the licence fee to more than £170 would be “high”.

Prime Minister Rishi Sunak told reporters over the weekend that the BBC should be “realistic about what it can expect people to pay at a time like this” and the BBC should be looking to “cut its cloth appropriately” as the country continues to deal with the heightened cost of living.

The lower fee increase will come as a blow to the BBC, which is seeking to make £500 million of savings in the face of high inflation and the two-year freeze on the fee, which provides most of its funding.

The corporation previously announced its nightly current affairs show Newsnight will be reduced to a 30-minute programme, axing more than half of the show’s 60 jobs, as part of the cost-cutting measures in its news output.

An extended hour-long edition of BBC News At One will move to Salford while BBC Breakfast, also broadcast from Salford, will be extended by an extra 15 minutes daily.

The corporation expects the raft of changes to save the news division £7.5 million.

Earlier this year the BBC also announced it would broadcast 1,000 fewer hours of new TV programmes this year as part of a drive to save money.

Other cost-cutting measures include moving a number of World Service TV and radio broadcast services online, and merging the domestic and global news channels.

The licence fee announcement will come just a day after veteran TV executive Dr Samir Shah was named as the Government’s preferred candidate to become BBC chairman.

The role was vacated earlier this year by former Goldman Sachs banker Richard Sharp, who resigned after failing to declare his connection to an £800,000 loan made to Boris Johnson.