THE BBC has agreed to fully fund free TV licences for over-75s from 2020/21, the Culture Secretary has said.
John Whittingdale said the process will be phased in from 2018/19, adding the Government is pleased the broadcaster has agreed to “play its part in contributing to reductions in spending like much of the rest of the public sector” while further reducing its “reliance on taxpayers”.
He also announced legislation will be brought forward in the next year to “modernise the licence fee” to cover public service broadcast catch-up TV - an apparent nod towards allowing charging for people who opt to use the iPlayer.
The BBC licence fee of £145.50 is also expected to rise in line with the consumer price index (CPI) measure of inflation, Mr Whittingdale said.
The Tory frontbencher added the Government will “consider carefully” the case for decriminalising non-payment of the licence fee.
Labour labelled the “backroom deal” as “shabby”.
Ben Bradshaw, Labour’s former culture secretary, also accused the Government of attempting to make the BBC a “branch office” of the Department for Work and Pensions.
Replying to an urgent question in the Commons, Mr Whittingdale said: “The commitment made in the Conservative manifesto that all households with an over 75-year-old will be eligible to a free TV licence will be honoured throughout this Parliament.
“As requested by the BBC, they will take responsibility for this policy from thereon.”
Outlining the deal, Mr Whittingdale said: “Under this agreement, the BBC will take on the cost of providing free television licences for those households over 75 and this will be phased in from 2018/19, with the BBC taking on the full costs from 2020/21.
“Having inherited a challenging fiscal position the Government is pleased that the BBC has agreed to play its part in contributing to reductions in spending like much of the rest of the public sector, while at the same time further reducing its overall reliance on taxpayers.
“As part of these new arrangements, the Government will ensure that the BBC can adapt to a changing media landscape.
“The Government will therefore bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up TV.
“In addition the Government will reduce the broadband ring-fence to £80 million in 2017/18, £20 million in 2018/19, £10 million in 2019/20 and to zero in 2020/21.
“The Government will consider carefully the case for decriminalisation in the light of the Perry Report and the need for the BBC to be funded appropriately. No decision will be taken in advance of charter renewal.
“The Government anticipates that the licence fee will rise in line with the CPI over the next charter review period, subject to the conclusions of the charter review in relation to the purposes and scope of the BBC and the BBC demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector.”
Shadow culture secretary Chris Bryant said Labour would oppose the Government’s plans if they are a “smash and grab raid” on the BBC.
He criticised the “utter shambles” as he hit out at proposals being briefed to the media and spoken about by Chancellor George Osborne ahead of Wednesday’s Budget.
Mr Bryant said: “There was a time when chancellors were forced to resign because elements of their Budget were leaked.
“Now we actually get every single element of it briefed deliberately and then he has the chutzpah to pretend this is a proper process.”
Mr Bryant said the process of charter renewal and agreeing the BBC’s financial settlement must be “open and transparent”, adding licence fee payers must be consulted.
Addressing Mr Whittingdale, the Labour frontbencher said: “I’m sure you’re going to agree this is no way to run a whelk stall let alone the world’s most respected broadcaster.”
He said the BBC must join all public bodies in making savings during straitened times, adding: “But the BBC is the cornerstone of the creative industries in this country and viewers and listeners want a strong BBC making programmes that inform, educate and entertain.”
Mr Bryant said the announcement from Mr Whittingdale revealed a “shabby little deal”.
He asked when the charter renewal process will be explained to Parliament, if the BBC will have the power to end free licences for the over-75s, and whether the Government was planning to cut the corporation’s income by £650 million, £800 million or £1 billion.
Mr Bryant also asked if the BBC would be allowed to charge for use of the iPlayer and if those who have a licence fee will be required to pay extra for iPlayer use.
He went on to Mr Whittingdale: “If there is a means of protecting the public finances and at the same time securing the BBC’s future, we will wholeheartedly support it.
“But if this is just a smash and grab raid on the BBC, if it ends up undermining the BBC, then we will oppose you every step of the way.”
In reply, Mr Whittingdale said he had answered Mr Bryant’s questions in his original statement.
He said the charter renewal process will be open and transparent, with further details announced before Parliament’s summer recess.
Mr Whittingdale later added - in reply to Jesse Norman, Tory chairman of the Culture, Media and Sport Select Committee - that any bid for more cash from the BBC will be considered after the scale and scope of the corporation has been determined.
John Nicolson, the SNP’s culture, media and sport spokesman, questioned if the BBC would be able to means-test TV licences for the over-75s.
Mr Whittingdale replied: “There’s a very clear commitment in the Conservative manifesto that all households with an over 75-year-old will be eligible for a free television licence and that will be honoured throughout this Parliament.
“Following that, the BBC has requested to take on responsibility for that policy but that will be in the course of the next Parliament.”
Labour’s Mr Bradshaw (Exeter) told the Culture Secretary: “This Government has already forced the licence fee payer to fund broadband roll-out, the failed vanity project of local TV and now it’s making the BBC a branch office of the Department for Work and Pensions.”
He added the proposal was a “significant assault” on the BBC’s independence.
Mr Whittingdale said broadband roll-out funding would be phased-out, adding the licence fee settlement will be considered as part of charter renewal process.
Labour’s Paul Farrelly (Newcastle-under-Lyme) said: “We served together for 10 years on the select committee, during which we looked at the BBC many times.
“In our last report, in a conclusion proposed by you as chair, we said, ‘it was wholly wrong that the 2010 licence fee settlement, which permitted the licence fee revenue to be used for new purposes, was not subject to any public or parliamentary consultation. We recommend income from the licence be used only for the purpose of broadcasting or the production of public service content, on television, radio and online’.
“Could you explain why, just five months on, you now don’t agree with yourself and why so early in your appointment are you not sticking to your guns but allowed the Chancellor to call all the shots?”
Mr Whittingdale replied: “You and I have agreed many times when we served on the committee, but I don’t agree with you on this particular occasion.
“I would disagree that what I have announced today conflicts with what is in the select committee report. The licence fee settlement will be subject to the debate and to widespread consultation - this is not a licence fee settlement.
“What we have sought to do is give the BBC some confidence that when they come to plan for the future that if the charter review does not conclude there should be changes in the purposes and scope, then they can look forward to a rise in line with inflation after that time.
“But it does not rule out any option which we will consider during the process of charter review.”
Tory Philip Davies (Shipley) said: “Given the BBC gets more income every time a new home is built, would you agree with me the BBC has actually been pretty well protected during the period of austerity that other parts of the public sector have faced?
“And would you agree with me if the BBC ever feels short changed from sucking on the teat of the licence fee payer, it can always try its luck in the commercial sector through a subscription model?”
Mr Whittingdale said: “You are absolutely right that while it is the case the BBC licence fee has been frozen since 2010, nevertheless the BBC’s income has been rising year on year due to the growth in the number of households.
“That is something which is not widely recognised but which certainly should be taken into account in these decisions.”