A BBC-commissioned report looking at free TV licences for the over-75s has laid out four options for the future.
In 2020, the BBC takes over funding of the licence fees from the government, at an estimated cost of £745m a year.
The Frontier Economics report has looked at the costs and viability of scrapping the free fees or giving a 50% concession to over 75s.
They also looked at increasing the age threshold for eligibility and means-testing.
The BBC will now look at this report and produce its own public consultation paper exploring different pathways.
The cost of covering the free licence fees forecast for 2020 would constitute a fifth of the BBC’s licence fee income.
The cost will have to be considered against the BBC’s ability to provide high quality public service broadcasting content for all audiences.
Last month Frontier issued a discussion paper that suggested older households have seen “a marked improvement” in their living standards since the policy was introduced.
It said pensioners are now less likely than any other age group to live in poverty.
The report says that there is a case for reform of the current over-75s concession.
Future option suggestions
1. Scrap free licence fees for over 75s
The report estimates that residual costs to shut down the concession would cost £72 million – or 10% of the cost of continuing with it.
When the government introduced the free licence fee for over 75s in 2000, it was argued the benefits would (largely) go to poorer households. However, that argument has weakened with the improvement in living standards for the over-75s.
2. Replace with a 50% concession for all over-75 households
A 50% concession is in line with the current concession offered to those with visual impairments.
It estimates the cost to the BBC would be around £400 million in 2021/22, which is 56% of the cost of reinstating the current concession – the extra 6% is due to admin.
3. Increase the age threshold for eligibility
Raise age threshold to 77
Aligns with increased longevity and reforms to state pension age but retains an arbitrary threshold.
The report estimates that it would cost £645 million which is 87% of the cost of reinstating the current concession in 2021/22.
They note the vast majority of households containing someone older than 75 also contain someone over the age of 77 so relatively few households would lose out.
Raise age threshold to 80
This would align with other pensioner benefits that begin at 80 such as the over-80s increase in winter fuel payments.
The estimated cost is £481 million – that’s 65% of the cost of reinstating the current situation.
People over the age of 80 are more likely to live alone so this could help to target the concession at those who are most reliant on television for company.
4. Means-test eligibility for the concession
Link free TV licences to over-75s who get pension credit
Pension credit is a government-defined measure of need – so this would improve targeting of those at need of a free TV licence.
It’s estimated this would cost £209 million or 28% of the cost of keeping the current concession.
Link free TV licences to anyone receiving pension credit regardless of age
Improves targeting and would align with other benefits.
The estimated cost to the BBC is £327 million – 44% as much as that of reinstating the current concession.