George Osborne left government in 2016, and parliament exactly two years ago. But as the BBC announces that most over-75s will have to start paying the £154.50 television licence fee, the legacy of the former chancellor’s spending cuts is still being felt.
The seeds of the licence fee decision lie in a secret deal struck in the immediate aftermath of the 2015 general election, when the Conservatives returned with an unexpected parliamentary majority.
With the Liberal Democrats no longer in coalition, an uninhibited Tory government moved fast to impose new spending controls – hashing out a new settlement with the BBC director general, Tony Hall, in clandestine talks that lasted just a week. Under the agreement, the BBC would receive some funding boosts in return for taking the potentially financially ruinous responsibility for providing services to the over-75s.
Osborne’s politically deft move was to shift not only the cost of the licence fees for the elderly on to the BBC but also, after a short while, the responsibility for deciding whether the benefit should exist at all. It was a win-win-win for the Conservatives: the BBC would be financially weakened, the Treasury would have more money, and the public would blame the BBC when the axe finally fell.
The axe fell this week. This time it was Hall – who back in 2015 had warned there would “be hard choices” as a result of the deal he helped to strike – who made the announcement that most over-75s would have to start paying for BBC services unless they claim pension credit.
In June 2019 the BBC confirmed that it plans to make most over-75s pay the TV licence fee from 2020. The change will affect around three million households.
The BBC says the annual cost of the free licences is £745m. They argue that maintaining the status quo would have taken up a fifth of its budget, equal to the total amount it spends on all of BBC Two, BBC Three, BBC Four, the BBC News channel, CBBC and CBeebies.
The corporation has said it will continue to provide TV licences to over-75s who claim pension credit, a means-tested benefit designed to help older people. It estimates this proposal will cost it £250m a year, requiring some cuts but no channel closures.
The policy of free TV licences for the over-75s was introduced in 1999 by Labour chancellor, Gordon Brown, with the cost met by the government. However, in 2015 the Conservatives, guided by George Osborne, struck a deal under which the subsidy would be phased out by 2020, with the broadcaster having to shoulder the cost.
The government later gave the BBC responsibility for deciding what to do about the benefit, meaning any unpopular decisions on charging over-75s had to be made by the BBC rather than ministers.
Jim Waterson, Media editor
One BBC insider noted that after receiving hundreds of thousands of responses to a public consultation, the British public were split 52% in favour of change and 48% in favour of maintaining the status quo – the same result as the 2016 EU referendum. “The government can’t say that’s not a mandate,” they noted.
Age UK points out that many poor over-75s who are eligible to claim pension credit do not do so, because they are put off by the paperwork or refrain from applying on a point of pride. BBC sources optimistically suggest that the decision to bundle in a free TV licence will drive uptake of the wider benefit.
Extraordinarily, the Conservatives’ 2015 broken manifesto pledge to keep the licence fee free for over-75s was copied and pasted word for word into the party’s 2017 general election manifesto. The party later said this was a mistake, apparently made in a hurry because the manifesto’s authors were rushing to produce a policy platform on a tight deadline due to Theresa May’s decision to call a snap vote.
Although the BBC insists that the announcement had been planned before the Tory leadership election, unveiling the decision on the same day that candidates formally declared inevitably turned the licence fee into a live political issue.
A Downing Street spokesperson said May was “very disappointed” with the BBC’s decision and urged the broadcaster to reconsider, with government sources highlighting the high pay of many BBC executives as a potential alternative saving.
To complicate matters further, Northern Ireland’s DUP – no friend of the BBC – has strongly supported the continuation of the free licence fee, making the issue a potential negotiating chip in negotiations between the party and the Tories under the next Conservative leader.
Osborne is now a journalist, having to make cuts to staff at the Evening Standard that he edits. But his political legacy leaves a conundrum for Conservative leadership candidates: do they stay quiet and hope the issue of BBC funding goes away, weakening an institution that some view as a leftwing ideological enemy?
Or do they make a campaign pledge to restore the BBC’s funding, in a move that will benefit many older voters – who overwhelmingly vote Conservative and might just have a party membership card, which allows them to choose the next prime minister?
