flickr.Paul Brannan. Some rights reservedOn Tuesday morning, Radio 4 broadcast a Media Show debate, before an invited audience, on the future of the BBC. In a typical display of BBC “balance”, the panel constituted four present and former senior BBC executives, and the former political editor of The Sun. Not surprisingly with Radio 4, the audience was strongly and vocally in favour of the BBC and the licence fee.

This is fair enough. Most people approve of the BBC at some level, and most support the compulsory licence fee, even if that means turning a blind eye to the consequent criminal prosecution of hundreds of thousands of non-payers, the great majority of whom are impoverished and female.

The BBC panel members were insistent that replacing the licence fee with a voluntary subscription system would have the undesirable side effect of diminishing the BBC’s near-universal reach, insofar as people might choose to exercise the right not to pay for the BBC. What for some people is a rather Orwellian all-pervasive forced penetration of our homes, allowing the BBC to claim a 60% share of all news consumption in the UK, is for a BBC executive both natural and necessary.

After all, the BBC is the nation’s main truth-teller – except, of course, when it isn’t. Within seconds of the government’s publication of its Green Paper on the future of the BBC, BBC management had condemned it as being the precursor to a “much-diminished” BBC. In fact, the Green Paper was a rather anodyne document asking a series of very obvious questions without suggesting any actual conclusions.

Tuesday’s broadcast was similarly indicative of a mindset at Broadcasting House that struggles with reality. A week before the publication of the Green Paper, the Chancellor, George Osborne, and the Secretary of State for Media, John Whittingdale, concluded a deal with the BBC whereby the government progressively sloughed off the wasteful welfare benefit dreamed up by Gordon Brown, exempting households with an over-75 in residence from paying the licence fee. The annual cost is currently over £660 million a year, and – as the population ages – is forecast to exceed £720 million by 2020.

To compensate the BBC for its share of the total bill in this Parliament, Osborne conceded an equivalent amount, by reducing required BBC expenditure on broadband roll-out and S4C, and guaranteeing an annual cost-of-living uplift in the level of the licence fee after 2017. He and Whittingdale also made clear in a letter to the BBC that the underlying level of the licence fee itself would be determined by the outcome of the review of the BBC Charter triggered by the Green Paper, and by the BBC demonstrating efficiency savings at no less than the average Whitehall level.

When Whittingdale confirmed this in his interview for Tuesday’s debate, presenter Steve Hewlett wondered if he had done a u-turn, or whether the BBC had misrepresented the deal done in July, when it claimed that the BBC’s financial package for the next five years had been signed and sealed in that deal. Reluctantly, representatives of BBC management and the BBC Trust conceded on Tuesday that, if the scale and scope of the BBC significantly altered as a result of Charter review, it would be natural for the underlying level of the licence fee to be adjusted.

Even so, Richard Ayre, a long-serving Trust member and even longer-serving BBC executive, insisted to the Radio 4 audience that the July deal was worse than the settlement imposed by the coalition in 2010, which had frozen the licence fee and saddled the BBC with additional annual costs of nearly £500 million. Yet the July deal is actually cash neutral, with the only uncertainty being whether inflation runs ahead of the BBC’s promised cost savings.

The clear implication from Ayre was that the BBC would suffer a continuing £700 million annual loss after 2020 as a result of the ending of the over-75s concession. Yet Whittingdale has been crystal clear: it is entirely up to the BBC whether it reverts to charging over-75s for a licence fee (as was the case up to 2001), or simply abandons that slice of potential revenue. Needless to say, the BBC should never have agreed to Brown’s attempt to drag it into welfare politics: now it has the unpleasant choice between abandoning up to 20% of its revenue, or pursuing over 4 million over-75s through the magistrates’ courts in an attempt to extract the money from them.

What is abundantly clear (though the BBC has avoided saying so) is that Osborne has not inflicted a continuing revenue cut on the BBC (though the cost-of-living concession will continue). For three years, the BBC will be forced to share the cost of the concession, but then in 2020 the concession will be abolished. What happens next is entirely up to the BBC.

Many – probably most – over-75s are able to pay the licence fee. Some may even cheerfully cough up voluntarily during the 2017-20 period, to reduce the impact on the BBC of the government’s progressive withdrawal from the scheme. But millions of them may find themselves, in 2020, facing the menacing flood of threatening letters from TV Licensing that hundreds of thousands of under-75s currently receive. With no direct debits in place, they will be pursued relentlessly, dragged through the courts, fined and possibly face imprisonment.

To avoid that public relations catastrophe, the BBC may choose to make payments by the over-75s voluntary: which will leave magistrates, dealing with much younger cash-strapped single mums, pondering why they are being asked to impose the full severity of the law in such deserving cases when the BBC clearly has the discretion not to enforce the law.

Decriminalising non-payment of the licence fee would defuse this situation, leaving the poorest households, young and old, facing only civil penalties for non-payment. This would clearly cost the BBC some hundreds of millions of pounds a year, which is why a review by David Perry QC this year concluded by recommending retention of criminal penalties.

But Perry’s terms of investigation did not include alternative methods of funding the BBC that would eliminate evasion, such as encrypting its television broadcasts, and allowing access only to those who chose to pay a subscription.

The BBC viscerally opposes subscription: it wants the universal access to homes that only criminal enforcement can deliver. Tellingly, the one word never mentioned in Tuesday’s broadcast was “choice”. If Mr Ayre is so certain that the public is willing to pay for the BBC, he should have no qualms about allowing choice. But as with the truth about the over-75s dilemma, some things – even in a 45-minute Radio 4 broadcast – seem to get stuck in the BBC’s throat. The nation’s favourite truth-teller, and overwhelmingly dominant news supplier, can sometimes be rather coy.