Plans to privatise Channel 4 have been axed, the culture secretary has confirmed.

Instead, it will remain publicly owned, with reforms to help boost its sustainability and commercial freedom, Michelle Donelan said.

The Department for Digital, Culture, Media and Sport said the broadcaster will remain in public ownership “but with greater commercial flexibility, increased investment in skills and jobs across the UK” as well as “new production arrangements to support its long-term sustainability and growth”.

It said the decision had been made following discussions with Channel 4 and the independent production sector and that a package of new measures would serve as an alternative to the sale.

Channel 4 welcomed the decision for it to remain “safely in the hands of the British people”, saying it would allow the broadcaster to further support creative jobs and skills across the UK.

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Ms Donelan’s predecessor Nadine Dorries had announced during former PM Boris Johnson’s premiership that the broadcaster would be taken out of public ownership.

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When Ms Dorries announced the plans, she said it was so the broadcaster can better survive in a media landscape dominated by the likes of Netflix and Amazon.

But a leaked letter written by Ms Donelan to Prime Minister Rishi Sunak, seen by The News Agents podcast on Wednesday, revealed the culture secretary was set to scrap the policy.

Announcing the government U-turn today, Ms Donelan said Channel 4 is “a British success story and a linchpin of our booming creative industries”.

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New culture sec talks to Sky news

She said: “After reviewing the business case and engaging with the relevant sectors I have decided that Channel 4 should not be sold.

“This announcement will bring huge opportunities across the UK with Channel 4’s commitment to double their skills investment to £10m and double the number of jobs outside of London.

“The package will also safeguard the future of our world leading independent production sector.

“We will work closely with them to add new protections such as increasing the amount of content C4C must commission from independent producers.”

Last night, Ms Dorries hit out at the reversal of the plan, tweeting: “Three years of a progressive Tory government being washed down the drain. Levelling up, dumped. Social care reform, dumped. Keeping young and vulnerable people safe online, watered down.

“A bonfire of EU leg, not happening. Sale of C4 giving back £2b reversed. Replaced with what?”

“A policy at some time in the future to teach maths for longer with teachers we don’t yet even have to do so,” she wrote, in an apparent attack on Mr Sunak’s plans for all pupils in England to study some form of maths until the age of 18.

She added: “Where is the mandate – who voted for this?”

Created in 1982 by the Conservative government of Margaret Thatcher, Channel 4 is entirely funded by advertising, out of public ownership. Everything it airs is commissioned from external production companies.

Channel 4 said in a statement: “For over 40 years Channel 4 has been a keystone of Britain’s universal, free, public service broadcasting architecture. We have spoken up for diverse and young audiences across the UK, nurtured new talent and held power to account.

“But standing still has never been an option for Channel 4 throughout our history. Indeed, our next stage of evolution is already well under way.”