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• Read the report: BBC Annual Report and Accounts 2018-19: TV licences for over 75s
• Read the report summary: BBC Annual Report and Accounts 2018-19: TV licences for over 75s
• Read the report's conclusions and recommendations
• BBC Annual Report inquiry page

Committee's Report

BBC put itself in ‘invidious position’ of administering welfare benefits

The Digital, Culture, Media and Sport Committee is calling for free TV licences to be restored to those over the age of 75 who are not in receipt of Pension Credit. In its report on the  BBC’s Annual Report MPs criticise the then government for seeking to ‘bounce’ the BBC into accepting a deal that exposed it to funding free TV licences for all those over 75 beyond 2020. BBC Director-General Tony Hall is also criticised for his handling of negotiations, particularly in failing to seek the formal agreement of the Executive Board before recommending to the BBC Trust the deal struck with the Government.

Chair's comment

DCMS Committee Chair Damian Collins MP said:

“This is an invidious position for the BBC to put itself in. It agreed to fund a pensioner benefit that it couldn’t afford and as a result, false reassurances were given to the over 75s that their free licence fees would be maintained. The BBC and the Government much reach an agreement to allow the funding of free licence fees for the over 75s to continue after 2020.

“The BBC finds itself here as the result of a deal done behind closed doors that allowed no transparency for licence fee payers. Detailed minutes which would have shone a light on the crucial decision making process are absent or incomplete which is a matter of great regret.  We hope that the new Unitary Board will ensure more transparency on important decisions made by the BBC in the future.

“This issue has also exposed that if the current trends in inflation for TV production costs continue, the value of the licence fee will continue to diminish as a source of revenue for the BBC. The rapidly changing viewing habits of younger audiences, particularly those under the age of 34 who are moving away from broadcast TV to online and on demand channels, poses a further threat to BBC licence fee revenue in the future. We are seeing clear evidence that the funding model of the BBC will become unsustainable without substantial increases in commercial revenue from BBC Studios and new subscription on demand viewing services like Britbox.”

The Report finds:

• 2015 funding negotiations a ‘flawed’ process on all sides that gave no opportunity for consultation with licence fee payers
• Wrong of the 2015 government to seek to bounce the BBC into accepting the measures
• BBC has put itself in invidious position as administrator of welfare benefits

BBC ‘administering welfare benefits’:

The Report finds potentially far-reaching unintended consequences arising from the licence fee decision with the “absurd situation” of the BBC being pushed into decisions that individuals make about their uptake of welfare payments. As a result of its policy, the BBC has found itself to be administrator of welfare benefits that should, rightly, only ever be implemented by the Government. However, the BBC must now execute the policy for which it took on responsibility.

It was clear from correspondence between the Government and the BBC in 2015 that there was no automatic assumption that the BBC would continue to bear the costs of a blanket licence fee exemption for over 75s. For Government Ministers to suggest otherwise was disingenuous. Whatever assumptions were made in 2015 about the funding of free licence fees for all of those over 75, this was not a sustainable proposition for the BBC alone.

Written evidence from members of the public describe the BBC’s decision a "cruel blow," “wrong,” with it imposing “an additional financial burden we cannot afford." Charities Independent Age and Age UK thought it was inappropriate for the BBC to be making decisions on licence fee concessions.

The next round of negotiations between the Government and the BBC, due to take place in 2021, should agree a funding formula that maintained the free over 75s licence fees.

• Recommendation:
  The Government should set out proposals for how it can support this measure in the future, alongside the commitment that has been made by the BBC

‘Behind closed doors’ negotiations in a ‘flawed’ process:

Both the BBC and the Government are criticised for holding the 2015 negotiations over future funding and the licence fee concession “behind closed doors." While the Committee shared concerns raised by the BBC that this was a “flawed process” that gave no opportunity for consultation with licence fee payers, it was wrong that the then government sought to bounce the BBC into accepting the measures.

The Report found the impression given by the BBC in evidence before the Committee that it had reluctantly taken on responsibility for the policy at odds with correspondence from 2015 that indicated this was a responsibility it had requested.

In July, senior BBC executives told the Committee continuing to fund licences for all over 75s would require “unprecedented closures of services”, including BBC Two, the BBC News Channel, and Radio 5live. MPs note this was radically different to what the BBC had said in 2015 and in advice given by the Director-General to the BBC Trust board. When Lord Hall was pressed by Committee members about reassurances he had given to the Trust in 2015 about the BBC's finances, he said minutes of the meeting were "inadequate".  MPs suggest it was possible that the BBC never intended to fully fund the over 75s licences beyond 2020, but “unsurprisingly this is not reflected in the minutes of their meetings at the time of the negotiations”.

• Recommendation:
  Government and the BBC should set out what steps they are taking to ensure the 2021 licence fee negotiations are conducted in a wholly different way with a sensible timescale allowing parliamentary oversight and involvement of licence fee payers

BBC Equal Pay:

The Report notes some evidence that the BBC is continuing to take steps to resolve equal pay issues set out by the DCMS Committee 2018 report but flags there was still a long way to go.  Many employees who had been treated unfairly were still waiting too long for an outcome.

It welcomed the introduction of gender pay splits to aid transparency about salaries and highlight differences between how men and women are paid within a given job pay range.

• Recommendation:
  We expect the BBC to include an update on the impact of this change in its next annual report, and to take further, timely action on fair pay in the wake of damage to its reputation as a result of the findings in our 2018 inquiry

Public Service Companies:

MPs welcomed the BBC accepting responsibility for meeting the liabilities for contractors who faced large tax bills as a consequence of working through Personal Service Companies. However the Committee remained concerned that the issue was one of many with roots lying in poor management, leadership and governance at the BBC.

• Recommendation:
  We expect the broadcaster to ensure that the earmarked funds are used to support those presenters who told us they were facing "life-changing" liabilities as a priority, rather than higher paid presenters who are likely to be more able to manage uncertainty in future income.

A full list of recommendations can be found in the report.