The BBC will have to bear the cost of free licence fees for the over 75s, the Government has confirmed.
Culture secretary John Whittingdale announced in the House of Commons today that the corporation will have to bear the cost of the licence fee exemption, which currently stands at £650m and represents around a fifth of the BBC’s £3.17bn licence fee revenue.
Whittingdale told MPs the changes would be phased in from 2018-19 with the BBC bearing the full cost by 2020-21.
The first impact of taking on the cost of free licence fees for over-75s will be felt by the BBC in 2018/19, when it will amount to £250m. Its financial commitment will nearly double to £450m the following year, and £750m by 2020/21.
The culture secretary said, in return, that the Government will bring in proposals on paying to use catch-up services like iPlayer, meaning that the corporation could potentially charge people to use the service.
Shadow culture secretary Chris Bryant called the announcement “an utter shambles”, adding it was “no way to run a whelk stall let alone the world’s most respected broadcaster”.
In a further blow to the BBC, Whittingdale said that decriminalising non-payment of the licence fee will be “carefully considered” by the Government.
When the idea of making the BBC pay for the licence fee exemption was floated five years ago, it prompted the BBC Trustees and then director-general Mark Thompson to consider resigning en masse. Thompson later wrote in his memoirs that the move would have pushed the BBC “down the cliff”.
The Government’s plans emerged over the weekend in a newspaper briefing by Treasury officials, followed by an interview given by Chancellor George Osborne to the Andrew Marr Show.
In it, Osborne suggested that the BBC could cuts its spend on online content.
“If you’ve got a website that’s got features and cooking recipes – effectively the BBC website becomes the national newspaper as well as the national broadcaster. There are those sorts of issues we need to look at very carefully,” he said.
“You wouldn’t want the BBC to completely crowd out national newspapers. If you look at the BBC website it is a good product but it is becoming a bit more imperial in its ambitions.”
Director-general Tony Hall confirmed the deal in an email to staff. He wrote: “Discussions have been taking place over the last few days and my approach throughout has been to secure the best possible outcome for our audiences.
“I believe that the arrangements we have agreed with the Government will deliver financial stability. This has been my primary concern, and indeed the concern of the executive board and the BBC Trust.”
Rona Fairhead, the chair of the BBC Trust, was critical of the way the announcement was made.
In a letter to Whittingdale she wrote: “We accept this decision is a legitimate one for the Government to take, although we cannot endorse the process by which it has been reached.
“Clearly, beyond the current Charter period it is for the Government to determine both its policy on the over-75s concession and how that is funded. We could not, ultimately, obstruct any decision that you made.
“We acknowledge that nonetheless, following discussion with the BBC Executive and the Trust, you have agreed a number of significant mitigations… It is our presumption that the Government will not now seek to impose further costs on the BBC during the Charter Period.”