BBC licence fee Contents

1TV licence fee evasion and enforcement

1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the BBC, the BBC Trust and Capita.1

2.Everyone in the UK who watches or records television programmes as they are broadcast must be covered by a valid TV licence, and, since September 2016, so must anyone watching or downloading BBC content on iPlayer. This includes residential households, businesses, hotels and student accommodation.2 In June 2016, there were just over 26 million licensed premises, with the TV licence fee representing £3.74 billion (78%) of the BBC’s overall £4.83 billion income in 2015–16. The Secretary of State for Culture, Media and Sport sets the level of the TV licence fee, as well as any concessions and the payment plans through which the licence fee can be paid. In 2010, the government froze the annual cost of a colour TV licence at £145.50. The licence fee remained at this level until April 2017, when it rose to £147 following the government’s 2016 commitment, in A BBC for the future: a broadcaster of distinction, to increase the cost of the licence fee in line with inflation.3 4

3.The BBC has responsibility for issuing TV licences and collecting the licence fee. It holds contracts with a range of providers who support the collection of the licence fee. The two largest by value are with Capita and Proximity. The BBC paid Capita £59 million in 2015–16, with Proximity’s contract costs forming the majority of the £16 million that the BBC spent on TV licence communications and letter campaigns in the same year. Capita provides customer services, processes payments, collects arrears and enforces licence fee collection. Its current contract with the BBC began in July 2012 and, after a recent renegotiation, ends in 2022 with the option to extend by up to a further five years. Proximity provides marketing and printing services for the BBC under a contract that began in 2010 and that has been extended twice to 2018. Both contractors are supported by subcontractors who provide a range of services, including information and communication technology (ICT) services. Along with the BBC, all companies operate under the TV Licensing trademark.5

Licence fee evasion rate

4.We asked the BBC and Capita about their performance in reducing TV licence fee evasion and catching evaders. We heard that, despite the increase in TV licence revenue every year since 2010–11, the BBC is concerned by the lack of progress in reducing evasion.6

5.The BBC’s estimated evasion rate (the percentage of premises that should have a TV licence but do not) was between 6.2% and 7.2% in 2015–16. It has not moved towards the level targeted by the BBC and Capita of 3.95% by 2020.7 TV licence fee evasion is also higher in certain areas of the UK. It is estimated to be 10% in Scotland and 9% in Northern Ireland. The BBC considers that a different regulatory environment and smaller fines explain the higher rate in Scotland, while in Northern Ireland there have been historical difficulties in accessing households, though this situation is improving.8 We are worried by the current level of licence fee evasion as every percentage point reduction in the national evasion rate would give the BBC around £40.5 million of extra revenue, which means that the total cost of evasion is estimated to be between £251 million and £291 million. The BBC and Capita do not have a current realistic target for licence fee evasion.9

6.We do recognise that the estimated evasion rate increased in 2015–16 primarily because of correcting an error by the Broadcasters Audience Research Board (BARB), which had previously underestimated the number of households that use a TV.10 The BARB error also meant that some recent BBC revenue collection targets and contractor payments were calculated using inaccurate data.11 As a result, the BBC had to renegotiate its contract with Capita, including: revising the payment mechanism so that the BBC and Capita have greater certainty about costs; and preventing Capita from reducing the amount it spends on the contract without BBC approval. The BBC forecasts that the net revenue collected under the new terms will be at least equal to that under the previous arrangements.12 Had the BBC not renegotiated the Capita contract and kept the the previous contract payment mechanism, the BBC estimates that it would have lost between £15 million and £20 million of income a year that would not have been pursued by Capita.13

Enforcement visits

7.Capita’s performance in catching licence fee evaders has been poor, with fewer evaders being caught during enforcement visits.14 In 2015–16, Capita carried out three million enforcement visits but only caught 298,000 evaders, 18% fewer than in 2010–11 when it carried out just 2.7 million visits.15 The BBC and Capita are unclear about the exact reasons for this poor performance.16

8.Overall, only slightly more than a third of visits by Capita are categorised as successful. For example, in March 2016, 36.5% of visits resulted in successful outcomes, including a payment being made, an evader being caught, or establishing that a property does not need a licence.17 One of the potential reasons that visits are not more successful is the timing of them.18 Capita has provided us with data showing that 53% of enforcement officers’ visits take place on weekdays between 08:00 and 15:59, when many people are absent at work or for other reasons.19 Another cause of Capita’s poor performance is that it has struggled to meet its staffing target of 380 officers. At the end of March 2017, Capita was employing only 324 enforcement officers.20 One reason Capita has struggled with recruitment and retention is the difficult job that enforcement officers face, with 78 physical assaults against 73 individual officers in 2015–16. Seven of these assaults resulted in the officer requiring at least one day of sick leave.21

9.Following recent press reports that Capita is pursuing targets to catch evaders, including targeting vulnerable people, we also questioned the company about the conduct of its staff. The press reports led Capita to suspend two members of staff and, at the BBC Director-General’s insistence, it has carried out an investigation.22 This investigation is still ongoing but Capita told us that indicative findings suggested these issues were not systemic or widespread.23. We were also reassured to hear evidence that Capita’s enforcement officers received commission on top of basic pay based on the number of sales made rather than the number of evaders caught.24 However, Capita could do more to benchmark the performance of its enforcement officers against other organisations that carry out similar work.25 Furthermore, while the BBC scrutinises Capita’s performance and has various key performance indicators related to enforcement activity, there is more that it could do in this area.26

Gender disparity in prosecutions

10.The current collection and enforcement approach has led to more women than men being caught and prosecuted for TV licence fee evasion. In 2015, 70% (133,000) of the 189,000 prosecutions for evasion were against women, up from 64% (70,000 of 110,000 prosecutions) in 2002.27 Following on from findings and a recommendation in the 2015 TV Licence Fee Enforcement Review (‘the Perry Review’), the Department for Culture, Media & Sport and the BBC are currently examining the gender disparity in TV licence fee prosecutions.28 Their work is incomplete, but the BBC told us of some early findings: that there are 10% more female households; that women are more likely to be the named licence fee holder; and that they are more likely to answer the door to enforcement officers.29 It is unclear when the review will be complete. At that point, the BBC and Capita will need to act quickly to address any systemic unfairness in their approach to enforcing the licence fee with men and women.30

2 C&AG’s Report, para 1

3 TV Licence set to rise from £145.50 to £147, BBC press release, 1 March 2017

4 Department for Culture, Media & Sport, A BBC for the future: a broadcaster of distinction, Cm 9242, May 2016, pp 92–93

5 C&AG’s Report, para 3

6 Qq1–2; C&AG’s Report, para 7

7 Q1; C&AG’s Report, paras 8, paras 2.5–2.13

8 Q110; C&AG’s Report, para 2.8

9 Qq1–2, 158, C&AG’s Report, paras 8, 2.7

10 Qq3–4; C&AG’s Report, para 6

11 Q3; C&AG’s Report, para 13

12 Qq3–7; C&AG’s Report, paras 6, 13

13 Qq5–6

14 Qq8–10; C&AG’s Report, para 10

15 Qq77–81; C&AG’s Report, paras 10, 3.6

16 Qq77–84, 87

17 Q86; C&AG’s Report, para 3.5

18 Qq82–84

19 Capita (BBC 02)

20 Q97; C&AG’s Report, para 3.7

21 Capita (BBC 02). Six of the seven assaults resulted in sick leave of between 1 and 10 days, with one assault resulting in 60 days sick leave.

23 Qq33–35

24 Qq50, 73; Capita (BBC 02)

25 Qq62–63

26 Q14; C&AG’s Report, para 4.9

27 Q14; Ministry of Justice, Statistics on Women and the Criminal Justice System 2015 (24 November 2016). According to Ministry of Justice statistics, in a further 961 prosecutions the person’s sex was recorded as unknown

28 Q14; Department for Culture, Media & Sport, TV Licence Fee Enforcement Review (July 2015)

29 Q14

30 Q14

24 April 2017