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BBC hires Gus O’Donnell’s firm to cut £650 million costs

21 December 2015
BBC hires Gus O’Donnell’s firm to cut £650 million costs

The BBC has hired Frontier Economics in the hope of reducing its upcoming £650 million annual licence fee bill.

The company, chaired by former cabinet secretary Gus O’Donnell, will explore the possibility of voluntary licence fees for the over-75s, and investigate how the overall annual costs could be reduced.

The move comes after the BBC agreed to take on the £650 million costs, imposed by chancellor George Osborne in July.

The deal, which will be phased in from 2018 to 2021, will cost the BBC £232 million in the opening year, increasing to £453 million in 2019-2020 before they take on the full £650 million cost from 2020/21.

The figure is expected to rise over the coming years as the number of households with over-75 residents increase.

The government deal could also see the BBC charge license fees for the use of on-demand application BBC iPlayer.

“We want to explore the options, in particular on how voluntary payments might work,” said a BBC source. “It’s early days, this work is only just beginning.”

The BBC has also asked the firm to investigate whether there may be options to reform the free deal for over-75s.

It is not anticipated that Frontier Economics will file a report until late next year.

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