The BBC is to assume full financial responsibility for the cost of free TV licenses for over-75s as part of a deal agreed between the corporation and the Government. The deal calls for the shift of costs from DWP to be phased in from 2018/2019 with the BBC only taking the full financial burden for the program, which is considered a state benefit, in 2020/2021.
In return for assuming this large financial burden, which at an estimated £650 million is budget for BBC Two, the government has agreed a number of concession on the future of the licence fee ahead of charter renewal. Under the pact, the government will cease funding their broadband program from the licence fee; changes will be made to close the iPlayer loop hole, which presently allows non-fee payers to watch BBC content; additionally the level of the licence fee is expected to increase in line with CPI across the period of the next charter, subject to the formal review process.
The litany of concession will be formally locked down in the next year during charter renewal, and John Whittingdale, Secretary of State for Culture, Media and Sport, said that the licence fee CPI increase would be dependent on the BBC demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector. This deal, which sees the BBC saddled with a huge financial burden, will not be popular with the vast majority of the industry but has been viewed by BBC insiders as the best of a number of bad options.
“We have secured the right deal for the BBC in difficult economic circumstances for the country. This agreement secures the long term funding for a strong BBC over the next Charter period”, said BBC Director General Tony Hall. “It means a commitment to increase the licence fee in line with inflation, subject to Charter Review, the end of the iPlayer loophole and the end of the broadband ringfence. In the circumstances, the BBC has agreed take on the costs for free licence fees for over-75s, and after the next parliament, will take on the policy.
Both the BBC Executive and the BBC Trust have accepted this deal with the Tory government, though BBC Trust Chairman Rona Fairhead has sent a letter to both Whittingdale and George Osborne expressing her displeasure over the manner in which this agreement was hammered out. Notably, this is another “shotgun deal” done behind closed doors, rather than being a transparent process.