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The BBC should stand up to the government’s hypocrisy over free licence fees for over-75s

Perhaps there is a very British compromise to be found?

David Elstein
23 February 2019
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Image: Pixabay

The BBC has been holding a consultation about how – or whether – it should maintain the current provision of free TV licences for the over-75s. It offers a number of different options, with different costings, and Enders Analysis has kindly agreed to allow openDemocracy to publish its submission to the BBC: in effect, an impassioned plea for the government to “do the right thing”, and take back responsibility for an important piece of social provision, rather than undermine the BBC’s public service offerings.

This bomb started ticking four years ago when the BBC and the newly-elected Tory government came face to face over the broadcaster’s future funding. George Osborne, Chancellor of the Exchequer, was determined to deliver what he had failed to achieve five years earlier, when the BBC board and management refused – to the point of threatening resignation – to take on the cost of providing free TV licences for any household containing someone over the age of 75.

That giveaway had been one of Gordon Brown’s wheezes when he had been Chancellor, in 2001, and was becoming increasingly expensive as the number of people living to 75 increased, and as their survival beyond that age also extended. In 2010, the BBC – which had unwisely boasted of how it had delivered savings of £600 million a year from internal efficiencies – accepted a settlement that effectively swallowed those savings, leaving the licence fee frozen, but absorbing within it the cost of the World Service (saving the Foreign Office over £250 million a year), the Monitoring Service at Caversham and the Welsh language channel S4C, along with a subsidy to local TV and a contribution to the cost of rolling out rural broadband.

How legitimate these expenditures were as a charge to the licence fee was questionable: but the principle that the licence fee should only be used to fund BBC broadcast services had been breached years earlier, when the BBC agreed to allow hundreds of millions of pounds a year to be allocated to helping vulnerable households manage the switch from analogue TV to digital TV. The BBC’s calculation was that the increase in the licence fee that was authorised in order to cover this expense would accrue to the BBC once digital switchover was complete: but dangerous precedents had been set. Governments could express their preferences as to how the licence fee should be spent, and social projects could qualify as suitable for licence fee funding.

In 2015, with the surprise election of a majority Conservative government, Osborne and his colleague, Secretary of State for Culture, Media and Sport, John Whittingdale, reversed the 2010 strategy. Instead of freezing the licence fee, they would agree that it could be restored to an index-linked basis, which was something the BBC had long desired: but only on condition that the cost of funding the over-75s concession was shared during the period of the licence fee settlement, on a progressive basis. This had the merit of fulfilling the Conservative election manifesto promise of maintaining the concession until at least 2020 (renewed, as the Enders paper correctly notes, in the 2017 manifesto), but providing a route whereby its cost to the Treasury had a finite end date.

It is important to make two points about this deal. The first is that the BBC itself accepted that it was balanced, in that it had been granted concessions that matched in value the cost within the licence fee settlement period of the BBC’s requirements to contribute to the cost of the over-75s obligation.

In addition to annual rises in the licence fee, there would be reduced obligations to fund S4C and broadband rollout, and a long-sought change in the rules whereby the licence fee could be “modernised” – in other words, that it could become compulsory for users of the iPlayer, thus closing a loophole that was starting to drain away licence fee income, in the case of households that simply watched TV on playback rather than live.

Not for the first time, this was a “front-loaded” settlement, with the BBC’s upside in the early years only being overtaken by the downside in the last 18 months. Put another way, even in 2021/22, the annualized benefits for the BBC from the concessions granted will be only £50 million less than the full cost of the over-75s concession (expected to have reached some £750 million a year by then): or 1.25% of the value of the licence fee.

So it is hard to have much sympathy for the BBC as it decides what to do next. The analysis by a think tank, the public consultation, the setting out of different options and the ritual hand-wringing cannot obscure two key facts: that the BBC entered into this agreement voluntarily and that Osborne and Whittingdale made explicit that the BBC would be entitled, in 2022, to eliminate the over-75s concession entirely.

The Enders Analysis response to the public consultation is passionate, not least in its excoriation of the Conservatives. It is certainly hypocritical in the extreme for the Tories to have washed their hands of the licence fee concession, and then to urge the BBC to maintain the concession. Technically, I suspect that (contrary to the Enders document) the Tories have not actually breached their manifesto commitments to the over-75s, in that their free licences will last almost to the scheduled date of the next election (and certainly well past 2020, which was the extent of the 2015 commitment). Indeed, the 2017 manifesto argues for the Winter Fuel allowance (which is worth more than a free TV licence) to be better targeted, rather than handed out to millions of people who do not need it.

As for the hardship argument, it is hard to see why impoverished single mothers should so regularly be pursued for non-payment of the licence fee (tens of thousands every year), when wealthy pensioners are exempt (it is estimated that 20% of pensioners are millionaires). Nor can there be a serious argument that the elderly face being cut off from information and public debate: radio – which continues to be provided free – is a far more prolific medium than television in providing news, current affairs and discussion.

All the options canvassed by the BBC as an alternative to cancellation or full maintenance of the concession are unattractive, for similar reasons: the BBC should neither be deciding which group of people, if any, should be exempt from paying the licence fee, nor involved in implementing any system created to enforce such discrimination. Any modifications to the household obligation – such as lower payments for black and white TVs or for people who are registered as blind, or special arrangements for hotels or care homes – should be the responsibility of governments, not the BBC.

If there needs to be a means test to ensure that really poor over-75s who want to watch television but might struggle to find the required £3 a week to do so legally can so do, then the Department for Work and Pensions, not the BBC, should set the test and implement it: and, of course, fund the cost. The BBC needs to bite the bullet, and announce that it would be wholly unfair to the 20 million households where no-one is over the age of 75 to have 20% of all BBC investment in content sacrificed in order to maintain the over-75s concession. A poorer service for everyone is the wrong answer to this conundrum.

There would still be an element of discretion for the BBC if it decided to abolish the concession. Enforcement of the licence fee remains in the BBC’s hands (even if outsourced to Capita). The odium of dragging thousands of over-75s through the courts for non-payment is something the BBC could well do without, so it might covertly introduce a process of failing to prosecute where it was deemed prudent to avoid negative PR. Of course, word could get around such that many over-75s decided to call the BBC’s bluff when the letters stamped “TV licence dodger” started landing on doormats. In effect, for the over-75s, payment of the TV licence might become largely voluntary, which would be a very British compromise. Who knows, maybe the idea might extend to the rest of us in due course.

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