The BBC’s decision to scrap universal free TV licences for the over-75’s is part of the larger debate about our growing ageing population.

Free TV licences for the over-75’s were introduced by Gordon Brown in his 2000 Budget. It was a classic rabbit-out-the-hat Budget measure, designed to please at a relatively modest initial cost.

Wind forward to 2015 and a government looking to ease spending cuts discovered a neat way to deal with the rising cost of free TV licences: it passed the problem onto the BBC. In exchange for government agreement on a financing deal that provided an index-linked licence fee and closed loopholes on catch-up TV, Auntie accepted the poisoned chalice of responsibility for the free licence scheme from 2020.

While the BBC’s recent announcement has been met with predictable political outcries, it always looked as if the broadcaster would be forced to drop the universality of the over 75 free licences. As the corporation has pointed out, maintaining the status quo would cost £745m – a fifth of its total budget.

A look at population numbers casts an interesting light on the problem. National Statistics data and projections show:

* In 2000 the UK had 4.37m people aged 75 and over.
* By 2020 the corresponding figure is projected to be 5.84m – an increase of 1.47m or about one third.
* The overall population is projected to have grown by about a seventh over the same period – less than half the pace of the growth in
over-75’s.

Simply on the basis of the growth in the over-75 population and the increase in licence fee, the cost in 2020 would be double that of 2000. So the argument around free TV licences is a microcosm of the much larger issue of an ageing population and intergenerational fairness. It is also a reminder of the dangers of relying on the government to fund a comfortable retirement. Private pension provision is a must…if only to fund later life TV viewing.

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Past performance is not a reliable indicator of future performance.

The contents of this article is for information purposes only and represent the opinion of Pryor Portfolio Management Limited only. No action should be taken on the basis of this article alone. We always recommend you seek more detailed independent financial advice before taking action – feel free to contact us at any time.