‘A fair system helping those most in need’

By Lord O’donnell

The BBC has made the fairest decision in its power to make. Let’s not forget that it was the Government, in 2015, which decided to stop funding free TV licences for the over 75s. It fell to the BBC to decide on – and fund – any new concession for older audiences.

The new scheme is fairest, first and foremost, because it protects the poorest older pensioners. By providing over-75s who are in receipt of Pension Credit with free TV licences, it supports those who are most in need.

It’s fairest too because it protects the programmes and services that all audiences value, and that older audiences tend to rely on most. When the BBC commissioned Frontier Economics, the organisation which I chair, to explore potential options in an independent report, we found that replicating the Government’s scheme would cost the BBC around £750million a year, rising to £1billion by the end of the decade.

In practice, the BBC couldn’t afford to do this without cutting programmes and services. The BBC said

continuing the current scheme would cost the same as the annual budgets of BBC Two, BBC Four, the BBC News Channel, Radio 5 Live, a number of local radio stations and more. These closures would profoundly damage the BBC for everyone, and especially for older people who use the BBC most.

As our report highlighted, incomes and wealth of older people have improved significantly since the original concession was introduced in 2000. The economic rationale for providing free licences for over-75s has weakened. Frontier found that any Pension Credit means test would clearly focus the concession on those older households which are more likely to find it difficult to pay.

None of this is to say t there aren’t older pensioners profoundly in need of extra support. The reality is that up to 1.5 million over-75s are currently eligible for Pension Credit, and therefore for free TV licences. Only around 900,000, however, claim.

One overlooked aspect of the new BBC scheme is that it’s likely to help raise the visibility of Pension Credit so that more people claim what they are entitled to. That is something all of us should welcome.

Lord O’donnell is the former head of the Civil Service