The Government and the BBC should agree a funding formula to restore free licences, according to the Digital, Culture, Media and Sport Committee of the UK House of Commons, which has called for free TV licences to be restored to those over the age of 75 who are not in receipt of Pension Credit.
In its report on the BBC’s Annual Report, MPs criticise the then government for seeking to ‘bounce’ the BBC into accepting a deal that exposed it to funding free TV licences for all those over 75 beyond 2020. BBC Director-General Tony Hall is also criticised for his handling of negotiations, particularly in failing to seek the formal agreement of the Executive Board before recommending to the BBC Trust the deal struck with the Government.
“This is an invidious position for the BBC to put itself in. It agreed to fund a pensioner benefit that it couldn’t afford and as a result, false reassurances were given to the over 75s that their free licence fees would be maintained,” commented DCMS Committee Chair Damian Collins MP. “The BBC and the Government much reach an agreement to allow the funding of free licence fees for the over 75s to continue after 2020.”
“The BBC finds itself here as the result of a deal done behind closed doors that allowed no transparency for licence fee payers. Detailed minutes which would have shone a light on the crucial decision making process are absent or incomplete which is a matter of great regret. We hope that the new Unitary Board will ensure more transparency on important decisions made by the BBC in the future.”
“This issue has also exposed that if the current trends in inflation for TV production costs continue, the value of the licence fee will continue to diminish as a source of revenue for the BBC. The rapidly changing viewing habits of younger audiences, particularly those under the age of 34 who are moving away from broadcast TV to online and on demand channels, poses a further threat to BBC licence fee revenue in the future. We are seeing clear evidence that the funding model of the BBC will become unsustainable without substantial increases in commercial revenue from BBC Studios and new subscription on demand viewing services like Britbox.”
The Report finds:
The Report finds potentially far-reaching unintended consequences arising from the licence fee decision with the “absurd situation” of the BBC being pushed into decisions that individuals make about their uptake of welfare payments. As a result of its policy, the BBC has found itself to be administrator of welfare benefits that should, rightly, only ever be implemented by the Government. However, the BBC must now execute the policy for which it took on responsibility.
The Committee suggests that it was clear from correspondence between the Government and the BBC in 2015 that there was no automatic assumption that the BBC would continue to bear the costs of a blanket licence fee exemption for over 75s. For Government Ministers to suggest otherwise was disingenuous. Whatever assumptions were made in 2015 about the funding of free licence fees for all of those over 75, this was not a sustainable proposition for the BBC alone.
Written evidence from members of the public describe the BBC’s decision a “cruel blow,” “wrong,” with it imposing “an additional financial burden we cannot afford.” Charities Independent Age and Age UK thought it was inappropriate for the BBC to be making decisions on licence fee concessions.
The Committee says that the next round of negotiations between the Government and the BBC, set to take place in 2021, should agree a funding formula that maintained the free over 75s licence fees.
The Government should set out proposals for how it can support this measure in the future, alongside the commitment that has been made by the BBC
Both the BBC and the Government are criticised for holding the 2015 negotiations over future funding and the licence fee concession “behind closed doors.” While the Committee shared concerns raised by the BBC that this was a “flawed process” that gave no opportunity for consultation with licence fee payers, it was wrong that the then government sought to bounce the BBC into accepting the measures.
The Report found the impression given by the BBC in evidence before the Committee that it had reluctantly taken on responsibility for the policy at odds with correspondence from 2015 that indicated this was a responsibility it had requested.
In July 2019, senior BBC executives told the Committee continuing to fund licences for all over 75s would require “unprecedented closures of services”, including BBC Two, the BBC News Channel, and Radio 5live. MPs note this was radically different to what the BBC had said in 2015 and in advice given by the Director-General to the BBC Trust board. When Lord Hall was pressed by Committee members about reassurances he had given to the Trust in 2015 about the BBC’s finances, he said minutes of the meeting were “inadequate”. MPs suggest it was possible that the BBC never intended to fully fund the over 75s licences beyond 2020, but “unsurprisingly this is not reflected in the minutes of their meetings at the time of the negotiations”.
Government and the BBC should set out what steps they are taking to ensure the 2021 licence fee negotiations are conducted in a wholly different way with a sensible timescale allowing parliamentary oversight and involvement of licence fee payers
Responding to the DCMS Committee report into TV Licences for over 75s, Sir David Clementi, Chairman of the BBC, said:
“Under the 2015 agreement, the BBC was given responsibility for the policy, and related funding, of the concession for over 75s. We are pleased that the committee recognise that there was no automatic assumption that the BBC would continue to bear the cost of these free TV licences. There is also clear recognition from the committee that it would be unsustainable for the BBC to take on the full cost of all these free licences alone.”
“The Committee report is also clear that the value of the licence fee will continue to be under pressure from inflation in the TV sector.”
“The Committee say that the Government’s process in 2015 was flawed and we agree with this; it was never a process the BBC would have chosen. That’s why there must be a different way of doing things in the future. In terms of the agreement itself, we are satisfied that it was properly discussed within the BBC and properly authorised.”
“We will continue to implement the decision we have taken – after extensive consultation – on over 75s licence fees with great care and responsibility.”