Funding of free TV licenses to transfer to the BBC?

Today’s Mail carries news that the BBC may have to fund free TV licenses. This would be a fantastic move and one we suggested in our book How to cut public spending. The Department for Work and Pensions transfers over half a billion pounds a year to the BBC to cover “lost income” for providing the licenses for all residents over 75 with a National Insurance number.


This is a absurd settlement and the BBC should provide these licenses as part of the broader public service commitment that we so often hear about. Licence fees generate around £3.6 billion for the beeb, so £500 million is more than adequate to facilitate such a move and may mean that the BBC takes greater care with how it spends licence-fee payers’ money.


The mass ranks of middle-management that receive overly generous remuneration could be scaled back and the BBC could finally realise that if ‘talent’ demand obscene salaries then they are best left to commercial stations to battle for. Viewers wouldn’t lose out as their favourite personalities would still be on tele but the BBC wouldn’t involve itself in contractual games that it shouldn’t be playing. Of course, this proposal has sparked fury at the BBC. But when you’re paying £54 million on top-earning stars and have raised the licence fee over a number of years it’s hard to justify asking the taxpayer to pay again for free TV licences.


Some at the BBC have said the corporation are prepared to fight the move “tooth and nail.” But Mark Thompson, the BBC Director-General, has responded by offering to remove the burden of funding the BBC World Service from the Foreign Office and cover the £300million annual costs out of its own budget in exchange for free licenses. This seems to be a concession that the BBC have had it easy for years – the DG knows that something has to give but he’s trying to save the Corporation a couple of hundred million.


When the BBC reduces its costs it doesn’t necessarily mean savings for the Treasury – paying for free licenses would change that. But when license fee payers are already paying £145.50 per year for a license, it would be completely unacceptable for an increase in this to cover costs the BBC should already be budgeting for.This is a measure that would mean the BBC plays its part in reducing the deficit.


It seems that this may be only the beginning of a long tussle between the BBC and the Government. After the quangos review last week the BBC should be in no way be exempt from drastically cutting their costs. It’s no good for them to say that they are cutting costs while the licence fee remains so high.


We will all have to watch closely as the negotiations begin in May 2011 over the size of the next license fee settlement. But what is obvious is that the Coalition should firmly stand its ground.

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