An end to free TV licences for the over-75s
The BBC has announced plans to scrap free TV licences for the over 75s.
New rules would result in as many as 3.7 million pensioners losing their right to a free TV licence, with only low-income households remaining eligible.
It comes as the BBC takes over the cost of providing free TV licences from June 2020, following their fee settlement with the government.
Continuing with the current arrangement, where all over-75s are eligible for a free licence, is estimated to cost the BBC around £745 million a year. This estimated cost is about a fifth of the BBC’s forecast budget in 2021/22.
By changing to a new scheme where only households with at least one person in receipt of pension credit getting a free licence, it is forecast to cost the BBC around £250 million a year by 2021/22, depending on the levels of takeup.
An estimated 900,000 households have at least one person claiming pension credit, but this could rise to 1.5 million homes by 2020.
In defence of the decision, the BBC warned that maintaining the status quo would have resulted in the closure of many channels and services. BBC Two, BBC Four, the BBC News Channel, Radio 5live and various local radio stations would have been placed at risk.
The BBC has already carried out a consultation with 190,000 people. They found that 52% were in favour of reform or abolition of free licences for over-75s.
Despite being forced to make the savings, the BBC was criticised by Prime Minister Theresa May, who said she was “very disappointed” with the decision.
A government spokesperson said:
“We’ve been clear that we want and expect the BBC to continue this concession. People across the country value television as a way to stay connected, and we want the BBC to look at further ways to support older people.”
It was a Labour government which initially granted free licences to the over-75s. A Conservative government then cut funding for this scheme.
With an ageing population and a growing number of over-75s, the BBC has been considering a change for the free licence scheme for many years.
It is, however, a controversial issue. Older viewers make up the biggest consumers of BBC television and radio, with the average age of a BBC audience member over 62 years old.
Abolishing free licences for the over-75s, and introducing this new scheme from next summer, will effectively mean that wealthier pensioners are subsidising the cost of licences for low-income pensioner households, with younger licence fee payers also contributing to the cross-subsidy.
Caroline Abrahams, charity director of Age UK, said:
“Make no mistake, if this scheme goes ahead we are going to see sick and disabled people in their eighties and nineties who are completely dependent on their cherished TV for companionship and news forced to give it up. But in the end this is the government’s fault, not the BBC’s.”
Steve Webb, Director of Policy at Royal London, said:
“Limiting free TV licences to those on pension credit creates a ‘cliff edge’ where those with incomes just a pound above benefit levels lose all help with their TV licence. Many of those who have worked hard and built up modest pensions but who are by no means well off will be hard hit.
“There is also an issue with people who are entitled to claim pension credit but do not do so – up to 1.3 million on the government’s own estimates. Taking away help from some of the poorest pensioners and from others on modest incomes will feel very unfair to those most affected.
“Other options for reducing the cost of TV licences would have included increasing the age of eligibility to 80. This would have focused on a generally poorer group of pensioners and a group which spends more time at home watching television, but would have avoided some of the problems of a means-tested solution.”
Although a TV licence only costs £154.50 a year, this will be a new item of annual expenditure for many over-75s, and one that needs to be factored into a long-term Financial Plan.