Tuesday, 19 October 2010

At last, a pain-free cut

BBC executives are reported to be hopping mad at suggestions that in future "responsibility" for providing elderly people with "free" TV licences might be "transferred" to the corporation.

I do hope it's true. I'm amazed that the taxpayer ever picked up the bill for this "benefit".

According to a BBC Trust source quoted in the Mail, "It would be unacceptable for licence fee payers to pick up the bill for what is a DWP universal benefit."

There's so much slippery thinking and vested interest contained in those few words that a little elucidation may be in order.

First of all, "licence fee payers" will not be expected to pick up the bill, unless it is proposed that the licence fee as a whole is to be increased proportionately to compensate for the claimed £500 million cost of supplying "free" licences to the over 75s. And of course it isn't. What is proposed is that the BBC find the missing millions by making cuts. The reason for invoking "licence fee payers" is that the BBC Trust, established by the last government as a replacement for the Board of Governors, is supposed to "represent the interests" of licence fee payers (otherwise known as taxpayers). In fact, it represents the interests of the BBC in almost precisely the same way the Governors once did. The interests of the BBC and of the public are assumed to coincide, which is why a cut to BBC funding is bizarrely explained as a cost borne by licence payers.

Secondly, the "free" TV licences are only a DWP universal benefit because the previous government decided to compensate the BBC the full sum it lost by exempting over 75s from paying the Fee. This strange decision may have been bad news for taxpayers (in other words, for the national budget) but it served the purposes of both the BBC (which continued to rake in the cash from the steadily-increasing number of elderly households) and of Gordon Brown, who could represent the move as a distribution of state largesse. He could "give" something to older pensioners rather than merely exempt them from a form of taxation. But a TV licence is not a thing - like a prescription drug or a welfare payment or even a bus pass - that anyone "receives", so the analogy with other "free" services given to the elderly is inaccurate. It is merely a legal requirement imposed on every household in the UK in which there is a television set.

The scheme isn't just costly and bureaucratic, it also embodies a fiction - that it was a "universal benefit" rather than a tax break, and as such something that the Coalition, looking for savings, might save money by "taking away". But the government never gave the money to pensioners in the first place. It gave the money to the BBC, to spend on Jonathan Ross's salary, or pointlessly relocating to Salford, or beefing up the Director General's pension package, or whatever. Of all suggested cuts to benefits, removing this subvention is the only one that will cause no pain to its notional recipients. Nor will it do that much harm to the BBC, which like every other part of the public sector cannot be exempted from the spending squeeze. Without the proposed change, the BBC would be handed ever-larger dollops of taxpayers' money, unearned, on behalf of over 75s, for the purely statistical reason that the number of such households is increasing. BBC bosses may have begun salivating at the prospect and worked out how to spend the money, but that is not in itself a reason to carry on with this wholly unnecessary drain on the Treasury.

To the pensioners themselves, the distinction between a benefit and an exemption matters little: they no longer have to pay their poll tax to the avaricious agents of the state broadcaster, and that is that. On the other hand it matters a great deal to the BBC. The corporation, and its supine Trust, has already started squealing and is said to be "furiously opposing" the move. This is largely because of the money they will lose, of course, but the principle at stake may prove to be even more significant. Paying the licence fee on behalf of elderly people wasn't just an unnecessary burden on the Treasury, it also preserved - technically at least - the principle that every household in Britain must have a TV licence. Now that dam will be breached. Having abolished the compulsory licence fee for those aged over 75, the government may find it psychologically easier to take the next logical step of abolishing compulsory payment for everyone else.

One can but hope.