BBC in cuts warning over $954m deal

The BBC in the UK could be forced to close channels if it cannot re-negotiate the £745m (US$954m) deal that provides those aged over 75 with free access to its content.

Tony Hall

The scheme is currently funded by the government but the pubcaster will pick up the tab from 2020 as part of its most recent licence fee agreement, leaving it with a soaring bill as people live longer and content costs surge.

The BBC said the expected £745m cost of covering the licence fee would be a fifth of the broadcaster’s total budget by 2021/22, equal to the cost of running BBC2, BBC3, BBC4, the BBC News Channel and kids’ networks CBBC and CBeebies.

The pubcaster says cuts are inevitable without action and has now started a 12-week consultation period over the scheme’s future, with four potential replacements.

These include: scrapping the free licence fee, although that is expected to cost around £72m; replacing it with a 50% discount; increasing the age of eligibility to 77, saving around £100m, or to 80, saving around £260m; or making it a means-tested scheme, potentially saving over £400m.

BBC director general Tony Hall said that as the cost of the scheme is rising “so is the need for our programmes and content. We are looking at options for reform, what’s fair, what’s feasible,” he said.

Frontier Economics, which undertook the research for the BBC, said the number of households receiving a free licence would rise from 4.6 million in 2022 to around 5.7 million in 2030. It has also pointed out that living standards for over-75s have risen substantially since the scheme was first introduced.

The scheme began over 20 years ago and is funded by the government, but in 2015 the UK’s ruling Conservative Party said it would end in 2020, with the BBC having to fund it if it is to continue.

In return, the government promised to allow the £145.50 annual licence fee to rise in line with inflation and to introduce legislation that would stop people watching its iPlayer catch-up service without a licence.