BBC to fund over-75 licence subsidies, government confirms

DetailsRebecca Hawkes | 07 July 2015

The BBC will be allowed to increase its licence fee in line with inflation after agreeing to foot up to 750 million a year needed to provide free licences for the over-75s, the government has confirmed.

The free TV licences, provided by the Department of Work and Pensions, are currently funded by the taxpayer at a cost of around 608 million. With an aging population, this figure is expected to rise to 750 million by 2020-21.

"The BBC is a world-class broadcaster and a cultural institution producing some of the best television and radio in the world. However, as a publicly-funded institution, it also needs to make savings and contribute to what we need to do to get our country's finances in order," culture secretary John Whittingdale told the House of Commons on 6 July.

The new policy will be introduced in stages, beginning in 2018-19, when the BBC will fund 250 million in free licenses for the over-75s. This figure will almost double in 2019-20, and leap to 750 million by 2020-21.

In return, the BBC retains the funding mechanism of the licence fee and a guarantee that its cost can increase in line with inflation until at least 2020.

BBC director general Tony Hall said: "Far from being a cut, the way this financial settlement is shaped gives us, effectively, flat licence fee income across the first five years of the next charter."

Legislation to ensure a licence is held before viewers use the BBC's iPlayer catch-up service could also be introduced by the government next year.