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BBC has a 75 Year Old Problem

Updated: Mar 18, 2019

The BBC wants to abolish free license fees for everyone aged 75 and over.

This as least is the transparent intention of its recently closed consultation discussion document setting out the issues (Review of Over-75s Funding BBC November 2018.)

Far from being an even handed presentation of the issues the document is part of a heavily slanted public and political lobbying process to re-introduce the fees.

Clearly the BBC need to somehow conjure up some positive consensus about something they know will be deeply unpopular.

You can understand their problem. Were they not the BBC, an organisation who’s sense of self-worth is as elevated as their guaranteed state funding, you may have some sympathy.

Their liability on this is significant and the risk they’ll end up having to pay large. And the subsidy, introduced by Gordon Brown nearly 20 years ago, will cost the BBC £745m a year when it ends in 2020. That is a significant chunk out of the fees they raise from the license fee - £3.8b for 2017.

Then again how did the BBC end up have to be responsible for this? Surely some fiendish Tory plot to undermine the left leaning Trots in Broadcasting House?

Alas no. It was the BBC who opted in the last negotiation of the license fees in 2010 to “take-back-control” of the over 75s license fees in return for considerable concessions from the Government.

Remember those negotiations got the BBC the privilege of inflation-proofing their whopping state-backed income. Not for the BBC the ups-and-downs of the market place. Much better to keep with a funding system dreamt up in the stone-age (1946) long before anyone even contemplated the idea of multi-channels or SVOD.

Most critically it protected the very notion of the license fee in an age where moving to subscription is a viable option. Or for example making Radio 1 & 2, both nakedly commercial propositions, ad funded.

So the BBC did exceptionally well in the negotiation & now generates more revenue than ITV, even excluding the money it gets from BBCWorldwide’s international revenues.

But as part of this golden deal it did accept that the concession to 75s, which it used to manage in the past anyway (by not granting it) should be taken back.

That meant the BBC accepted that they should pay for the 75+ viewers as part of the deal they got on the license fee and extending their license, not taking ads and not moving to a subscription service model.

That is certainly how Theresa May and Jeremy Corbyn view the matter. Both of whom have made recent (Jan 2019) statements setting out that they both see this matter as a clear example of the BBC trying to wriggle out of a clear commitment to take over the 75+ funding.

Of course this is all hugely unfair to the BBC.

The politicians took all the credit when the subsidy was introduced. Had they wanted to they could have enshrined the obligation in law. They didn’t as it was unjustifiable. They knew that sooner or later, especially as the population is ageing, the subsidy would become untenable. License payers also benefited too without really noticing they were in fact paying for the subsidy through other taxes.

And now when the politicians want to stop the funding they get the BBC to take the blame and leave them to the wrath of fee payers who believe that the subsidy is an eternal absolute obligation funded by the man on the moon.

I suspect the BBC’s report on the options ahead is an exercise in mitigation. Their partial analysis is a deliberate passive aggressive kite floating exercise. By covertly threatening to abolish the subsidy they hope that people will be relieved when some elaborate and hard to explain but socially plausible half-way house is offered in its place.

My bet is on the BBC going for an option of subsidised licenses for everyone under a certain household income irrespective of age. That gives the appearance of fairness and universal generosity whilst having the benefit of significantly reducing the overhead.

The reasons why the BBC would go down this route are simple. The current subsidy is very clear to understand and implement meaning almost everyone 75 or over who would benefit from the subsidy currently applies for it. But an income based approach would give the BBC the option to game the thresholds to minimise the subsidy.

For example, making the subsidy depend on household income would cut out the subsidy for a large chunk of people over 75s who live with their younger families. Also, making the system complex and means-tested puts off people applying.

The trouble for the BBC with this approach is that it’s transparently sneaky. But ultimately the BBC have no choice but to go down this route. Continuing the subsidy is unjustifiable as it’s simply too large a proportion of their budget to take out.

I expect all of these issues would have been fully understood at the time of the budget being agreed with government. But the deal on the table from the Government was too attractive to turn down for the BBC and the option to spin their way out of the obligation seen as a risk worth taking.

The pity is that the BBC are now engaged in a fake consultation as they clearly plan to implement the cuts irrespective of any feedback they get. It’s a depressingly familiar corporatist approach that runs the real risk of lasting reputational and political damage.

The option to be honest and clear about the subsidy is still there. But I fully expect the final report on the subsidy and its inevitable recommendations to abolish it to be buried in some slow news week some time well in to the Summer holidays of 2019.

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