There is a fair solution to the over-75s licence fee problem

The best option would be to introduce means testing so that the elderly who really need a free licence fee get it

When Lord Hall, the director-general of the BBC, pronounced the 2015 Charter settlement a good deal for the Corporation he was right – up to a point.

In increasingly turbulent times the BBC’s future had been protected for another 11 years and the freeze on the licence fee finally lifted.

The deal could be more reasonably characterised as the best possible deal that could be obtained in the prevailing political circumstances.

It could have been so much worse.

The then Culture Secretary John Whittingdale, now a fully paid up member of the Dad’s Army failed coup against Prime Minister Theresa May, called without warning and announced that the BBC should take on the cost of the licence for the over-75s forthwith.

It was only when the BBC said that as a result it would have to announce the imminent closure of BBC 2, all the BBC local radio stations – much beloved by back-bench MPs – and the national radio stations of Scotland, Wales and Northern Ireland that the threat was withdrawn.

Except that it was not withdrawn – only kicked down the road until 2020 when the BBC will have to pick up a bill of £745 million a year, an amount that will continue rising to £1 billion by 2030 thanks to an aging population.

In a clever political manoeuvre the Government also transferred to the BBC the right to make a decision on what happens next.

The BBC, not the government, can face the opprobrium of being the scourge of poor pensioners. The Daily Mail is already in the field denouncing a BBC “plot” to axe the free licence fee.
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The “plot” actually involves a consultation on what to do about a devilishly tricky problem where there is no good outcome for the BBC.

Accepting the hit of paying for free licence fees for the over-75s and you have to somehow fund the equivalent of what it costs to produce BBC Two, BBC Three, BBC Four, the BBC News Channel, CBBC and CBeebies. Serious cuts to services would be inevitable.

Not too many over-75s would want to lose much of that, including the children’s channels for when their grandchildren come to visit.

At least Whittingdale, who always wanted a smaller BBC, would presumably be happy.

It would be a counter-intuitive thing to do to effectively take a wrecking ball to the BBC at a time when it needs more money, not less, to make programmes that can stand up in the intensifying battle against Netflix, Apple and Amazon.

A Labour Government might take the cost back into government – after all it was Prime Minister Gordon Brown who suddenly announced the free licence fee for the elderly without consultation in 2001.

But if there were a Corbyn Government, it might have other priorities in a post-Brexit world than free licence fees for the over-75s.

So accepting the hit would have serious consequences for significant parts of one of the UK’s most successful industries.

It would also be equally difficult politically to end the concession abruptly for 4.64 million households, rich and poor.

Naturally the Government, which gave the BBC the right to choose after 2020, now says through a spokesman for the Department of Digital, Culture, Media and Sport that it “wants and expects” the BBC to continue with “this important concession.” Of course it does, but not much word on the consequences.

There is also the socio-economic problem that runs counter to over-75 sentimentality – that it is the young who are discriminated against and are carrying a disproportionate social burden while the elderly overall are becoming better off.

The jump in the number of retirees with private or occupational pensions means that in the decade since 2008, according to the Office of National Statistics, the median disposable income of retired households rose by £3,200 (16%) while non-retired household incomes grew by £900 (2.9%).

But some pensioners are indeed poor and rely on television more than most and are probably – at least for now – among the BBC’s most loyal supporters.

All of that argues for a more graduated approach, with the options under consideration ranging from a 50% concession for all over-75 households, raising the age threshold to either 77 or 80 and means testing eligibility. Lifting the threshold to 80 brings it in line with many other benefits and would mean around 2 million households would have to pay the full licence fee of £150.50.

A half price licence fee for all over-75s would bring in more money for the BBC and would be the same amount as those who are blind have to pay. And as Lord Hall emphasises, it would restore the principle of universality – the notion that everyone helps to fund the BBC.

The best and most fair option would be to introduce means testing so that the elderly who really need a free licence fee get it, those receiving pension credits from the Government. It would end free licence fees for multi-millionaire pensioners.

It would also be best financially for the BBC and would affect around 900,000 costing the Corporation £135 million a year – a lot of programmes but rather more manageable than the impossible £745 million a year rising to £1 billion.

There is another anomaly lurking in the undergrowth – the fact that households with an over-75 citizen receive the concession even though there are wage earners living under the same roof. That could be addressed but might not make enough difference to cope with the scale of the gap – a fifth of all BBC income.

In an ideal world politicians would step up to the plate and continue to take responsibility for the licence fee concession they instituted and do something about the expectations, and mess, they have created.

This is unlikely to happen.

The BBC therefore should bite the bullet, face down the anger of the Daily Mail and explain who it was that backed the Corporation into a financial corner.

The tough but fair decision would be to go for means-testing to ensure that the concession will still be received by those who absolutely need it.

As for the rest of us, we will have to keep paying and grin and bear it.