By Jeremy Hutton, Policy Analyst
Since September, the BBC has been deliberating over how to cover the cost of free television licences for over-75s, which from 2020 it will have to fund directly. Recently, Broadcasting House has published a report into what to do about the perk, launched a public consultation and covered the debate frequently on BBC services. If it sounds like a dilemma, it probably is a dilemma. And frankly, this sounds like quite the dilemma.
Problem number 1: By 2021-22 the cost of offering free television licences will cost the BBC £745 million. According to the BBC, that is the approximate equivalent of total spending on BBC 2, BBC 3, BBC 4, the BBC News channel, CBBC and CBeebies. Needless to say, should the corporation attempt to simply swallow the cost of the over-75s subsidy, the services offered would be decimated.
Problem number 2: As a share of the BBC’s television audience, the over-75s are not a fringe group. Rather, those in older age brackets watch substantially more television than younger generations. Over 54s for example compose just 28% of the population but 51% of television viewership. Similarly, over 65s watch more than triple the amount of television every day that 16-24s do (344 minutes against 114 minutes).
These issues have forced the BBC to confront a problem that the subsidy makes inherent. Should the young subsidise the old for something often considered a luxury? And who should BBC programming appeal to? Its funders or its viewers? However, that second problem is not just a matter of changing viewing habits, but is tied to the broader concern of loneliness amongst the elderly. For those living in rural communities, those who are widowed, or those who simply struggle to get around due to health problems, the television is often the only company they have. For these isolated pensioners, it is a substantial link to the outside world. Though I’m not totally convinced television might not encourage isolation rather than treat it, I acknowledge it has real value to thousands of elderly citizens across the UK, and nobody wants to rob them of their television sets.
On the other hand, throughout the period of austerity, pensioners have greatly benefited from the pensions ‘triple-lock’ whilst working incomes have largely remained stagnant (until relatively recently at least). In contrast in 2000 (when the subsidy was introduced) 46% of over-75 households were in the bottom three income deciles, that figure has now fallen to 32%. Furthermore, over-75s now account for just 17% of the two lowest economic deciles; in 2000 that figure stood at 28%. As such it stands to reason that a great portion of over 75s who may once have struggled to pay the fee, certainly should be able to now. But again, it would be wrong to exclude the poorest of the elderly from all television access because they cannot afford the TV licence. One option would be the establishment of a means-testing system which would maintain the subsidy only for the poorest households. This is a step in the right direction, it would stop short of harming over-75s at the lower end of the wealth spectrum and charge those who could afford it. Whilst nobody likes paying their TV licence, it is fundamentally unfair that the working population are subsidising the elderly for a luxury they can (mostly) afford to pay for.
The bizarre element of this argument however is that the market does actually provide for an audience that does not wish or is not able to contribute towards the BBC. Beyond ITV and Channel 4 there are dozens of Freeview television channels such as Dave or GOLD which can all be accessed in various ways through a smart TV or a computer. It is a criminal offence to use live TV services without a television licence, but watching programmes through catch-up (BBC excluded) is perfectly legal without a licence. But because the BBC are protected by special legislation, television audiences are unable to simply shun BBC services and embrace the free, private alternatives. But if it were not so protected, and not able to directly enforce this form of taxation, it would simply have to adapt to survive, like any normal business.
At present, the licence fee is the best option on the table, and over-75s should, possibly with some exceptions, pay for it. The subsidy was not particularly needed when it was introduced, it is needed even less now. But the BBC is the only reason the licence fee is necessary, and it is wrong that it is able to distort the market and hold private networks at ransom in the way it does.