A new Frontier Economics report, published today, discusses a range of different approaches to reforming concessionary television licenses for over-75s. These include changing the age threshold for eligibility, reducing the value of the concession, or means-testing based on receipt of Pension Credit. The report examines these options against a number of criteria, including affordability, fairness and feasibility. It also explains what the consequences of maintaining the concession would be for the BBC’s budget.
Since November 2000, any individual aged 75 or over has been entitled to a fully concessionary licence for their primary residence. The current concession falls away in June 2020. In 2017, Parliament gave the BBC the duty to consult on what policy should be established for the older population aged over 65 beyond June 2020. Any new concession will be funded entirely by the BBC rather than the government.
The report sets out that there is a strong case for reform. Much has changed since the current concession was introduced in 2000, in particular the relative improvement in living standards for older households as demonstrated in a recent discussion paper published by Frontier. We estimate that if the BBC replicated the current concession, the cost in terms of foregone licence fee revenue would be £745 million in 2021/22 – equivalent to almost 20% of current service spending.
Frontier’s report will help to inform the BBC’s public consultation process. The final decision on whether and how to reform the concession will be taken by the BBC Board after consultation with the public.
Lord Gus O’Donnell, Chairman of Frontier Economics, who led the report, said:
“The world is very different now from when concessionary licences for over-75s were introduced almost two decades ago. Having taken on the cost of providing concessionary licences from the government, the BBC faces a difficult balancing act between supporting older pensioners who may rely on TV for companionship, and having the resources needed to meet its public service obligations to provide high-quality content for all viewers.
Our report sets out these trade-offs in detail for different ways in which the concession could, in principle, be reformed from 2020. We make it clear that, in our view, there is no simple solution. The report explains the pros and cons of each option and does not make any recommendation. It is important for the public to have their say first during the consultation period.”
A full press notice is available here.
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