Recommendation 12

The BBC faces a number of emerging financial challenges. These include:22 • A significant change in policy for over-75s TV licences which the BBC estimates will leave it £200 million a year worse off. Under the 2015 licence fee settlement, the government gradually withdrew its funding for free TV licences for all over- 75s, while the BBC was given statutory responsibility for deciding the policy regarding free licences to this age group from 2020–21. In August 2020 the BBC continued to offer free licences to those aged over 75 who are in receipt of pension credit and began charging other over-75s for their licences. • A sharp inflation in content production costs. The BBC reports that the costs of its non-continuing drama production have increased by nearly two-thirds over five years; • The financial impact of the COVID-19 pandemic. According to the BBC, this totalled more than £200 million to date and was balanced through a savings programme of £125 million and the cancellation of some events due to COVID-19. • A decline in overall licence fee income of £310 million between 2017–18 and 2019–20.