The BBC has announced it is scrapping the free TV licence for over-75s.
3.7 million pensioners will have to stump up the annual fee from next year.
However, anyone in receipt of pension credit over the age of 75 will be able to receive a free licence from June 2020. This new scheme will cost the BBC around £250 million by 2021/22.
The BBC says the current scheme is “untenable” and would have cost the corporation £745 million per year – equivalent to around one fifth of its budget.
The current licence fee costs £154.50 for a colour licence and £52 for a black and white licence.
BBC chairman Sir David Clementi says: "The BBC has conducted the biggest and most wide-ranging consultation in its history. It has proved invaluable in helping the Board make its decision. While many supported copying the Government’s concession - so that all over 75s received a free TV licence - there was also strong support for reform. There was least support for abolishing the concession entirely.
"Ultimately, the Board did not think it right to abolish all free TV licences. While research suggests pensioners are now better off than they were when the concession was first introduced nearly 20 years ago, the simple fact is that many are still in poverty - and many want the companionship the BBC can provide. This was a point made by many and we listened and ruled abolition out.”
The BBC says that up to 1.5 million households could still receive a free TV licence, if the household has at least one over-75 person. However, only 900,000 households are currently in receipt of pension credit, so those who are eligible but don't receive it would need to apply before getting a free TV licence.
Over-75s will have to self-verify that they are in receipt of pension credit in order to qualify. The BBC says this method is “used widely by the public and private sector.”
Those over-75s who become eligible to pay the licence fee will be given the option of a payment plan, which the BBC says will make it easier for them to meet the financial obligation in future. The BBC will set out further details of this “shortly.”
Steve Webb, director of policy at Royal London and former pensions minister says means testing the free TV licence using the pension credit system will create a "cliff edge" for those earning just £1 more than the threshold.
“Limiting free TV licences to those on pension credit creates a ‘cliff edge’ where those with incomes just a pound above benefit levels lose all help with their TV licence. Many of those who have worked hard and built up modest pensions but who are by no means well off will be hard hit," he says.
"There is also an issue with people who are entitled to claim pension credit but do not do so – up to 1.3 million on the government’s own estimates. Taking away help from some of the poorest pensioners and from others on modest incomes will feel very unfair to those most affected."
BBC Director-General Tony Hall says: "This has not been an easy decision. Whilst we know that pensioner incomes have improved since 2000, we also know that for some the TV Licence is a lot of money. I believe we have reached the fairest judgement after weighing up all the different arguments. It would not be right simply to abolish all free licences. Equally it would not be right to maintain it in perpetuity given the very profound impact that would have on many BBC services.
"This decision is fairest for the poorest pensioners. Around 1.5 million households could get free TV licences if someone is over 75 and receives pension credit. It protects those most in need. And importantly, it is not the BBC making that judgement about poverty. It is the government who sets and controls that measure."
The BBC says that the decision means its income will now rise in line with inflation and provide a “measure of protection” for its services.
Mr Hall adds: "It is fairest for all audiences - of all generations, old and young - who we know value the BBC and the programmes and services we provide. It means these services can continue.
“We also need to look at how the level of the licence fee is set in the future. The last two settlements have been made in the dark and without proper consultation. It is vital that future decisions are evidence-based and made after proper consultation and scrutiny. We need to find a better way."
But Mr Webb says: "Other options for reducing the cost of TV licences would have included increasing the age of eligibility to 80. This would have focused on a generally poorer group of pensioners and a group which spends more time at home watching television, but would have avoided some of the problems of a means-tested solution”.
If all pensioners who will have to pay next year have the courage to not pay this fee this would bankrupt the BBC. What could they do except try to take millions of OAPs to court for non payment.
Also on checking the BBC programmes one Monday evening all but 2 programmes were repeats!!
I am over 75
It is disgusting that people over the age have to pay the licence for TV again when every other TV channel you get free because they get it from advertising. It is about time the TV licence was scrapped completely and the BBC starts doing advertisements.