BBC bosses fear that the coalition government is gearing up for a £500m-plus raid on the licence fee, by forcing the broadcaster to meet the full cost of free television licences for the over 75s. The benefit – which was introduced by Gordon Brown when he was chancellor – costs £556m, and is currently paid for out of general taxation. But ministers are considering passing the bill on to the BBC as part of this week's comprehensive spending review.
Insiders say there have been "very informal discussions" between the corporation and government for what is recognised as a highly sensitive proposal. However, the BBC has also made it clear that it is opposed to the idea, which would force the broadcaster to make substantial cutbacks in its radio and television budgets that are funded out of its total £3.6bn licence fee income.
Any household where a single person over 75 lives is currently eligible for a free television licence, worth £145.50 a year. Because there are so many families with at least one pensioner, a total of 4 million homes receive the benefit – amounting to roughly one in six households across the UK.
The cost of providing the benefit is so large that it almost exactly matches the entire £575m budget of BBC Two, the channel behind Top Gear and Masterchef. The cost to the BBC would be so great it would amount to a 26% cut in real terms to its income, and would be likely to require budget cuts across the corporation to foot the bill.
A spokesman for the BBC Trust said tonight: "Anything at this stage is speculation, as we have yet to see the detail of the comprehensive spending review. That said, it would be unacceptable for licence fee payers to pick up the bill for what is a universal benefit."
BBC executives are particularly unhappy that the broadcaster may be asked to pay for a perk that it did not introduce – or ask to be introduced – and one that benefits all elderly licence fee payers regardless of their family or individual income. But the broadcaster is hoping that ministers will drop the proposal in last-minute horse trading.
Since the election of a Conservative-led government, the BBC has been bracing itself for cutbacks in its funding. Although the BBC's current licence fee funding settlement formally runs until 2013, Jeremy Hunt, the culture secretary, has warned the corporation it will have to save money in the future.
In July Hunt said he could "absolutely" see the BBC licence fee being cut when the next funding settlement is struck. At the time, Hunt added: "The BBC should not interpret the fact that we haven't said anything about the way licence fee payers' funds are used as an indication that we are happy about it. We will be having very tough discussions".
Last week, meanwhile, Mark Thompson, the BBC's director-general, joined a group of newspaper owners, BT and Channel 4 in warning of the danger to "media plurality" if the £8bn merger between Rupert Murdoch's News Corporation and BSkyB were allowed to go ahead. The BBC – in common with the owners of the Daily Mail, Daily Telegraph, Daily Mirror and the Guardian – fears Britain will be dominated by Rupert Murdoch's companies, which would have a combined turnover of about £7.5bn, more than 50% larger than the entire BBC today.
The Guardian
