Let us put aside for the moment distributional issues and think of this in purely economic terms. One line of argument (which is frequently used in relation to benefits for old people) was that old people had contributed to the system and therefore should now get the benefit of free TV. Where is this argument going? To what system have they contributed? There is not a system of funding the BBC which involves people paying in when they are young in order to receive a benefit when they are older. Should old people get free food because they have contributed to a system of funding food in their lifetime? Should they get free theatre tickets because they have contributed to a system of funding theatre tickets? Other arguments related to the perceived needs of pensioners to have a television for company and their inability to pay for it.
When it comes to free TV licences, it is difficult to find a policy for which there is a less convincing economic justification other than perhaps the pensioners’ winter fuel allowance.
We give money (or things) to pensioners for two reasons. One is that many pensioners are poor and they receive income through redistribution like other poor people do. The correct approach here is to determine according to a variety of criteria (economic and the desire to ensure that all people can have basic needs met or other principles of distributive justice) the extent to which older people’s incomes are raised by welfare payments. The treatment of old and young people might differ and older people who need specific services (such as long-term care) and who cannot afford it might get other needs-based payments.
However, there is no justification for giving pensioners free TV licences on this basis. We should give them money, like we give everybody else money. When we give them free “things” instead of money it reduces economic welfare and prevents people who for ethical or other reasons do not wish to have a TV from having the same level of welfare as those who do wish to have a TV.
Of course, there is a sense in which pensioners receive money from a system into which they have paid – that is how the state pension is marketed. The fact that the fund and the process of paying in is a fiction, we will leave for another time. According to this criterion, we pay money to pensioners according to how much they have paid into the system in terms of national insurance contributions. This might not be the best way to run a pension system, but it is not totally irrational. But, why would we give such people TV licences rather than money? We would only do so if we wished to reduce the welfare of older people by imposing our choices on them.
On what ground should we give somebody a TV subscription simply because they are old? It is difficult to think of any. If we believe that old poor people do not have enough money to live in dignity, then we should give poor pensioners more money and allow them to spend it as they wish. If we believe that old people in general do not have enough money as a result of getting too little for what they have paid in, we should increase the non-means-tested, contributory benefit, the state pension. Indeed, if the “paid in” argument is accepted, then we would have the perverse conclusion that we should give free TV licences only to (generally) richer pensioners in receipt of the state pension.
The BBC should go further than it has and cease providing free TV licences altogether. They are a relatively recent innovation and there is no justification for this benefit.
Perhaps the support for free TV licences arises from recognition of a fundamental injustice. People should not have to pay for TV channels they do not watch just because they have a TV. The BBC should move to a subscription model and be a members’ organisation rather like the National Trust. All other free TV channels would remain free, but, when people’s TV licence runs out, they would continue to be able to watch all free TV channels. To continue watching the BBC, they would have to pay the subscription. Subscribers would then receive a pin number which would allow them to watch BBC services on all devices. Free-to-air TV would still remain for pensioners, but they would have to pay for the BBC.
If it is an injustice to require pensioners to pay for TV channels because it is, in effect, a television tax, then it is an injustice for everybody. We should stop taxing televisions and start charging for the BBC.