BBC spending could fall 20% in real terms over the next five years under the government’s plans to hand the corporation the bill for providing free TV licences to the over-75s, according to the Office for Budget Responsibility’s analysis of Wednesday’s budget.
The OBR predicts BBC spending will fall by about £400m from £3.9bn this year to £3.5bn in 2020/21 as the BBC takes responsibly for the bill in phases. The cost to the BBC at the end of the five years is expected to be £745m annually.
However, the OBR figures do not take into account the phasing out of the top-slicing of the licence fee for broadband rollout which will save the corporation £80m a year by 2020 or the impact of the modernisation of the licence fee to include the small number of homes which only watch TV catchup services.
The predicted fall in spending at the BBC compares with a 0.8% fall across public spending. The calculation relies on the licence fee being linked to inflation, which the government has said is dependent on the BBC charter renewal process deciding the corporation’s scope should remain the same and it can prove it is as efficient.
The analysis appears to contradict BBC director general Tony Hall’s insistence that the corporation had got a “good deal” in its negotiations with the government.
Included in the spending figures is a small increase in expected licence fee receipts of about £100m a year, following a sharp downward revision made by the OBR in March.
“Our forecast of BBC spending is down significantly from 2018/19 onwards compared to March,” said the OBR. “Most of the change reflects the government’s decision progressively to stop compensating the BBC for the licence fee revenue forgone by requiring it to provide free TV licences for those aged 75 and over.
“When the government begins to withdraw this funding, we assume that the BBC will reduce its spending by almost the same amount, but with some small and diminishing offsetting contribution from its reserves.”
