BBC concerned about £745m cost of free TV licences for over-75s as it launches public consultation

The BBC will “fundamentally change” for the worse if it has to provide free television licences for the over-75s, the broadcaster has said as it launched a public consultation on the issue.

The cost of the scheme will transfer from the Government to the BBC in June 2020.

While the option to continue the scheme remains open, the corporation made clear that services would have to be cut as a result. The £745m-per-year cost would be the equivalent of one-fifth of the BBC’s annual budget - or the total spend of BBC Two, BBC Three, BBC Four, the BBC News Channel, CBBC and CBeebies combined.

Other options put forward today are:

:: Scrapping the concession altogether

:: Giving over-75s a 50 per cent discount

:: Raising the minimum age from 75 to 80

:: Means-testing so that only those in poorer households would be eligible

The BBC said it was “not backing any particular option over another” and all the options have “merits and consequences”. A final decision will be made next summer.

A three-month public consultation opens today and Sir David Clementi, BBC chairman, said: “We want to hear from the public. We will listen to their views and balance all the options and arguments before making a decision.

“The Board does not underestimate the significance of the decision, its implications for the BBC and its audiences.”

Shadow media secretary Tom Watson called for the Government to "step in and save TV licences for the elderly".

"The Government should never have privatised welfare policy in this way. Labour opposed this move from the start," he said.

"The prospect of elderly people losing their free TV licences makes a mockery of the claim that austerity is over," he said.

A spokesman for the Department for Digital, Culture, Media and Sport said: "We know people across the country value television as a way to stay connected with the world.

"The BBC will take on responsibility for free licences for the over-75s from 2020 and it is right that they've confirmed no decisions will be taken until the public have been fully consulted.

"We've been clear that we would want and expect them to continue with this important concession.

"Ultimately it is the BBC's responsibility to ensure its substantial licence fee income is used effectively to deliver fully for UK audiences."