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The Tories’ free TV licence betrayal of over-75s could add another £1.6billion to the welfare bill, experts warned today.

Crafty George Osborne, who was Chancellor 2015 when a deal was stitched up, believed forcing the BBC to fund the lifeline would save the Government £745million a year from 2020.

But the Treasury’s own watchdog yesterday revealed the move could backfire - ultimately costing more than it saves.

The Office for Budget Responsibility confirmed spending on Pension Credit was set to rise because of the move to restrict free licences to only those who receive the benefit.

Many who are eligible but do not currently take up the benefit are now likely to do so amid a planned advertising blitz by the BBC to raise awareness of entitlement, the OBR said.

(Image: Roland Leon/Daily Mirror)

The Department for Work and Pensions should be braced for a surge in demand for Pension Credit, it suggests.

OBR chairman Robert Chote said it “illustrates the dangers of unintended consequences when governments come up with clever ways to save money”.

Its fiscal risks report says: “DWP estimates there were around 470,000 people aged 75 or over who were entitled to the guarantee element of pension credit in 2016-17 but who did not receive it, almost 40 per cent of the total number entitled.

“These had an average entitlement of £65 a week, resulting in around £1.6billion of unclaimed benefit among this age group. So around half of that group would need to start claiming to wipe out the expected savings from transferring responsibility to the BBC and the BBC cutting its domestic spending by a corresponding amount.”

(Image: Roland Leon/Daily Mirror)

While “very large increases in take-up are unlikely”, the Corporation’s plan to publicise the availability of Pension Credit will lead to more people taking it up.

It adds: “It is relatively unusual for a government to delegate parameters of welfare policy to a broadcasting company in an attempt to save money, and it is perhaps not surprising that this may have unintended consequences.

“The BBC’s decision to means-test free TV licences via a link to pension credit receipt may well raise welfare spending by more than it reduces BBC spending ... The net effect on the public finances would therefore be to push the budget deficit up not down.”

Stressing the move posed a fresh risk to public coffers, the OBR goes on: “The likely cost of the BBC’s recent decision to means-test free TV licences for the over-75s by linking it to pension credit – thereby potentially prompting a material number of those currently not taking it up to do so – poses a fiscal risk that we had not previously envisaged.

The Corporation announced this Spring that only over-75s receiving Pension Credit will be eligible for free licences.

Just 1.5 million OAPs are likely to be continue receiving free licences, while an estimated 3.7 million will lose out.

The Mirror is campaigning to save the benefit, with more than 18,000 readers backing the fight by completing coupons in the paper.

More than 600,000 people have signed Age UK’s Switched Off petition calling for free licences to be preserved and the Government to take back responsibility.

Setting up a system to means-test eligibility will cost the BBC £38million, with £13million annual running costs, MPs heard.



Bectu broadcasting chief Philippa Childs said: “The Office of Budget Responsibility is confirming what we have said all this time - that the Government should not be outsourcing responsibility for decisions on welfare benefit policy.



“Since the BBC’s announcement, there has been an unexpected consequence highlighting how many older people should have been in receipt of the Pension Credit.



“This shows the Government should take back responsibility.



“By passing the buck onto the BBC, it has fundamentally undermined this public service broadcaster by changing the nature of its relationship with its loyal viewers and dedicated workers.”

(Image: PA Archive/PA Images)





Age UK charity director Caroline Abrahams(CORR) said: “Our national broadcaster is not equipped to provide, nor should be administering, a welfare benefits scheme.



“We’ve said all along that this is the Government’s job and that’s why we call on our new Prime Minister to live up to the Conservatives’ manifesto pledge and continue to fund the free TV licence entitlement.



“Otherwise this situation has all the makings of a slow motion car crash, with many older people inexcusably getting hurt along the way.”



Labour’s Deputy Leader Tom Watson, the Shadow Culture Secretary, said: “There are no winners here.



“This Government’s disastrous decision will strip 3.7 million older people of their television licences.



“The responsibility for funding free TV licences should never have been offloaded to the BBC. The BBC is a broadcaster, not a branch of Government.



“If the Tories wanted to cut the concession they should have said so in the manifesto and let the public decide. But they didn’t, they promised to keep it, and now they must keep their word.”