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BBC decision on pensioners’ free licences will cost £250m every year and lead to catastrophic cuts

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10 June 2019

The BBC has announced that up to 3.7 million pensioners, aged over 75, who previously received a free TV licence will now have to pay for it, but households with one person who receives Pension Credit will still be eligible. This will cost the BBC an extra £250million every year. The licence fee is £154.50.
Michelle Stanistreet, NUJ general secretary, said:

“Dumping the BBC with the responsibility for a welfare benefit was a wrongheaded act of sabotage by a government that cared little about the impact on our public service broadcaster. The NUJ and many other groups argued that this consultation was a window of opportunity for the BBC to take a step back and refuse to facilitate a divisive policy that will wreak significant financial harm on the corporation. The burden of sustaining free licence fees for all over-75s would have propelled the BBC into catastrophic cuts and led to the closure of significant services. However, tweaking the eligibility criteria still leaves the BBC in the unpalatable position of choosing which pensioners are entitled to a free licence, at the same time as costing the corporation a massive £250million every single year.

“The last two licence fee settlements have been carried out with no transparency, no independent scrutiny and no consideration for the future of public service broadcasting in the UK. That cannot be allowed to happen again.  

“Journalists and programme makers have borne the brunt of cuts at the BBC for many years and have simply had enough of the BBC being victim to political grandstanding. It is time for a radically different approach to running and preserving our public service broadcaster. The only answer is for the government to take back this benefit.”

The decision was made by the BBC board after the corporation agreed to take on the costs of the benefit as part of the last licence fee with the government. In 2015, the government announced the BBC would take over the cost of providing free licences for over-75s by 2020; expected to cost £745m - a fifth of the BBC's current budget by 2021/22. That works out as more than its current spending on all radio services, or about the same as on the bulk of its channels aside from BBC One, or on all its TV sport, drama, entertainment and comedy.

The BBC said around 1.5 million households could now be eligible for the free licences. Its press release said:

“The new scheme will cost the BBC around £250 million by 2021/22 depending on the take-up of the new scheme. The cost of this new scheme will require the BBC to divert some spending on programmes and services alongside continuing to find new savings while expanding its commercial revenue to cope. The decision does, however, prevent unprecedented closures of services which would have been required had we copied the government’s scheme.”

Tony Hall, BBC director-general, said it had not been an easy decision:

 “We also need to look at how the level of the licence fee is set in the future. The last two settlements have been made in the dark and without proper consultation. It is vital that future decisions are evidence-based and made after proper consultation and scrutiny. We need to find a better way. The Voice of the Listener and Viewer – who promote the interests of consumers - has suggested a statutory commission be established to set the level of the licence fee in the future. This, amongst other options, deserves serious consideration and discussion. It is vital that the BBC and our audiences never again face a Government-imposed process with no consultation and public debate. It is vital politicians ensure that future licence fee decisions are evidence-based and made after proper consultation.”

The BBC press release said: "The funding available today for the BBC’s UK public services is already 24 per cent lower than if the licence fee had gone up with inflation from 2010. The new scheme will cost the BBC around £250 million a year – a significant sum. While the decision protects services from damaging closures, the BBC Board is clear that diverting £250m a year of the BBC’s spend on programmes and services risks weakening the delivery of the BBC’s mission and purposes - particularly in a much more competitive global market. The decision does mean that the BBC’s income will now rise with general inflation from 2017/18 to 2021/22, so while it is tough, the decision will provide a measure of protection for its services in an increasingly challenging media market where costs in key areas are rising at a rate faster than general inflation."

In Parliament, following an urgent question put downby the Labour Party on Tuesday 11 June, Jeremy Wright, Secretary of State for Digital, Culture, Media and Sport, said he was disappointed with the BBC’s decision and intended to sit down and discuss it with the corporation. Former DCMS minister Ed Vaizey said the decision to transfer the benefit to the BBC from the Department for Pension and Work was forced on his department by the Treasury. The Secretary of State was asked why his government had gone back on its manifesto commitment to maintain pensioners benefits including the free TV licence for over-75s. Damian Green, MP for Ashford, said the BBC’s decision could result in costing the government more if it encouraged the many pensioners who do not claim pensioner credit to do so.

Shadow culture minister Tom Watson said: "This is now a test of honour, integrity and truthfulness for Boris Johnson, Jeremy Hunt and Matt Hancock.  If they can’t keep their 2017 manifesto promise to protect the freeTV licence for over-75s, they are not fit to be Prime Minister. It’s as simple as that." Tory leadership hopefuls Sajid Javid and Andrea Leadsom and Esther McVey have said they would continue the benefit for over-75s.
House of Commons debate

Tags: , bbc, broadcasting, licence fee, over-75s, tony hall, cuts