The British Broadcasting Corporation (BBC) licence fee is a contentious issue in today’s open market of media. As such, this makes a great case study of real-world data to analyse and demonstrate in Excel graphs, as I explored in a recent dedicated video (embedded below) after the hike in the TV licence fee. But the BBC have recently released their 2023/24 licensing revenue report, via their subsidiary called ‘TV Licensing’, which is a massive eye-opener for this UK Corporation’s present and future.
This bombshell report landed with a dull thud, yet has not been deemed newsworthy by any mainstream media outlets. However, there are massive implications for the Corporation itself and the public, given the BBC’s latest licensing report.
In this blog, I share some historical context about the BBC, its ‘TV Licensing’ brand, and highlights from their most recent report showing record low licenses purchased and a big drop in revenue for the BBC from this “Telly Tax”. I’ll answer the a range of key questions including the below.
- History and purpose of the BBC licence fee
- Who are ‘TV Licensing’?
- Pros and cons of the BBC licence fee model
- Do you actually need a TV license and how to cancel it
- Why Sky, Virgin and other ‘competitors’ like the BBC getting easy money
- License fee cost to households versus inflation over time
- Is the BBC a dying brand?
“Act in the public interest, serving all audiences through the provision of impartial, high-quality and distinctive output and services which inform, educate and entertain.” – BBC Mission Statement
I hope you find it informative, educational, and entertaining read! Please comment below your thoughts or even help by supporting my work if you like this sort of interest-piece.
Historical Context of the TV Licence Fee
The BBC licence fee is a mandatory payment backed by law, collected from households in the UK that view live television broadcasts or use the BBC iPlayer. As of March 2024, the fee stood at £159 per year, but was hiked up to £169.50 in April. The money is collected by TV Licensing, a division of the BBC, and is used to fund the corporation’s various services.
For example, the BBC reports that it spends 20% of its £5.4 billion revenue on BBC One alone (£1.1 billion). They calculate that this costs the average viewer 9p per hour that they are watching the BBC One channel.
The concept of the licence fee originates to a century ago, when in 1922 the British Broadcasting Company, the precursor to the British Broadcasting Corporation (BBC), was funded by a ten-shilling fee. The current form of the TV Licence was established in 1946, and it has since evolved to adapt to changes in technology and media consumption.
The BBC Charter serves as the foundational document justifying the Licence Fee. The Charter outlines the BBC’s mission to inform, educate, and entertain while being independent and impartial. The fee’s purpose is to allow the BBC to fulfil its public service mandates without commercial pressure.
While the bulk of the TV Licence revenue funds the BBC’s television, radio, and online services, portions of it are allocated to other purposes. For instance, some funds support the roll-out of broadband to rural areas and finance the Welsh language broadcaster S4C. The table above provides an overview of the licence fee through the ages. Here’s more on the historical development of the TV licence.
I plot below the cost of the TV licence compared to inflation for over 50 years. The growth in the licence fee accelerated beyond inflation during the 1990s and especially the 2000s. However this gap has begun to close in more recent times, especially following last year’s spike in inflation to around 10%.
How much will the TV licence cost in future? Well, in January 2022, the government announced the licence fee settlement through to the end of 2027/28. This included the fee rising with inflation from April 2024 through to the end of the current Charter in 2027/28. That means the fee will rise from its current £169.50 to between £180-£190 by April 2027 (assuming inflation of between 2-4%).
Who is ‘TV Licensing’?
Who exactly are TV Licensing? ‘TV Licensing’ sounds like an official organisation, but it’s just another department of the BBC itself, tasked with gathering the revenue of the wider BBC. It could just as easily be called ‘BBC Income Division’ or ‘Sales Team’. In their own words on the BBC’s TV Licensing website…
“’TV Licensing’ is a trade mark of the BBC and is used under licence by companies contracted by the BBC to administer the collection of the television licence fee and enforcement of the television licensing system. The BBC is a public authority in respect of its television licensing functions and retains overall responsibility.”
In plain English, this means the BBC has the authority and responsibility to collect and enforce its own income generation via TV licences, and that it chooses to perform this under a separate brand and subcontract the work to other companies. It has been doing this since 1991. Currently, the main company the BBC use to administer all this for them is Capita, who are contracted until 2027.
While the TV license provided the BBC most of its £5.4 billion income for 2023/24 (2022/23: £5.7 billion), the rest comes from its commercial arm competing in the private sector. That side of the revenue stands at £1.9 billion (2022/23: £2.1 billion) and includes direct grants of over £100 million from the UK government. You could say it has the best of both worlds, public sector guaranteed income via an effective ‘TV tax’, grants from the government, plus the ability to generate revenue globally.
Last year, it cost the BBC £145.4 million for the administration of collecting the £3.7 billion from TV licence fees. This is higher than prior years, equating to nearly 4% of the total revenue collected.
BBC Licence Fee Pros and Cons
There are numerous pros and cons to the licence fee. Clearly the cost of collecting all the money isn’t ideal for the BBC. But first, let’s begin with six positives which those in favour of this fee tend to argue:
- Competition: The TV Licence is definitely a positive for the BBC’s competitors, like Sky, Virgin, Netflix, and others. There is a strategic reason why these hidden allies don’t push back on their biggest rival getting ‘easy money’ without competition: It means the BBC are not fishing in their pond for £4 billion of advertising and subscription revenue to fund its services, thereby protecting their own revenue base.
- Quality Content: Although a subjective factor, the existence of guaranteed licence fees for the BBC is argued to enable it to produce high-quality, diverse content without the influence of commercial interests. On diversity and as per the image above from its annual report, the BBC boasts an on-screen diversity profile far exceeding the population demographic for minority ethnic, LGB, and Transgender individuals.
- Public Service Broadcasting: As a (mostly) public-funded body, the BBC supports educational, cultural, and informational programming that serves the public interest, which private organisations aren’t obliged to fulfil (though this is a somewhat antiquated concept since the emergence of Corporate Social Responsibility practices in recent decades, and there’s plenty of educational content on free platforms like YouTube).
- Universal Access: The fee ensures that everyone has access to the BBC’s services, regardless of income or location.
- No Adverts: BBC programming is free from the existence of external advertisers interrupting the viewer/listener experience. However, BBC viewers and listeners are still subjected to a significant volume of the BBC advertising its own stuff. In fact, the BBC itself reports that it spent on average between 20-30 minutes per day last year promoting its own material on each of its top TV and radio channels, with most occurring between 12 noon and 11 pm.
- Affordable: At £14 per month, the licence fee is affordable for most and is set at a relatively “competitive” price per month compared to a Sky, BT, or Virgin Media subscription. Services like Amazon, Netflix, and Now TV however are comparatively cheaper.
There’s also however a myriad of cons pointed out by critics of the mandatory fee, here’s six:
- Competition: While the lack of competition is always good for the multi-£billion media corporations, for customers it’s a con. There’s no incentive to produce content people actually want and can lead to more vanity/pet projects that, if done in a free market, might prompt customers to vote with their feet for influence. People can’t just ‘opt out’ of paying the BBC if they want to watch live content provided by other companies.
- No Customer Voice: Linked to competition, when organisations don’t have to compete for sales, producing what people actually want and are therefore willing to pay for comes secondary. There is therefore no real customer say in content or even the wider approach of the corporation. For example, many people disagree with its priorities, political agendas, and even salaries for its stars (e.g. Gary Lineker’s takes an entire town’s worth of licences to fund).
- Regressive Nature: The TV licence is the same for all households, which can disproportionately affect low-income families. The BBC in its consultation with government for its funding from 2028 are already considering a means-tested licence fee, akin to how tax works.
- Enforcement Issues: Non-payment of the Licence Fee is a criminal offense, punishable by fines and even imprisonment in severe cases. This stringent enforcement disproportionately affects women, the elderly, and low-income households. Many people further believe it plainly unethical to imprison people for not paying for a TV license, whereas other violent and sex offenders walk free.
- Changing Media Landscape: With the rise of streaming services, the licence fee is becoming an increasingly obviously outdated model. This compulsory payment model violates the basic consumer principle of choice. Logically, it bemuses many to pay money to the BBC when they don’t consume any of its content. People have become accustomed to pay for content they want to watch. Further, the act of watching or recording things live is becoming increasingly antiquated in an age of on-demand, augmented reality, and AI.
- No archive of popular content: The BBC charges extra through its ‘BritBox’ subscription service to access popular programmes aired years or decades ago, in effect making licence fee payers pay twice.
Can you think of any others not mentioned here?
Here’s an amusing note on the value for money front: Thanks to some innovative research they refer to in their annual report, the BBC published an astutely banal observation and finding that those operating in a free-market environment have known for centuries:
“The BBC believes there is a link between the perceived value of BBC content and the take up of TV licences.” – BBC Comptroller and Auditor General conclusion, BBC Trust Statement 2023/24
So there’s a connection between how valuable people think something is and whether they choose to buy it… Who knew?! Thank goodness for research! Continuing this blog’s research probe into the BBC’s stats and figures, let’s now explore the exodus of cancellations and ‘evasions’ by those who might perceive the fee being of low value…
BBC TV Licences Reach Record Low
According to the detailed BBC Trust Statement for 2023/24, the number of paid-for TV licences fell by 556,000 from the year before. There are now just 23.9 million TV licences in force, the lowest since they began publishing these figures in 2006/07, when there were 24.6 million licenses.
“In 2023-24, 3.3 million premises declared that they did not need a licence (2.8 million, 2022-23), which could represent £524 million of additional income… Licence fee evasion represented £466 million of lost income to the BBC last year.” – BBC Trust Statement
This is in addition to the big exodus of 500,000 licences lost in 2022/23, and follows a declining trend in TV licenses (despite the growing population) since the peak of 25.9 million licences in 2017. The figures below demonstrates these recent changes in licence volumes and the impact on revenue for the BBC.
With steady, small growth until 2018, there have been increasing losses since, totalling nearly 2 million fewer licences in the last 5 years. This has led to shrinking reported revenues from the licence fee in the same period.
“Licence fee evasion is measured as the difference between licences and the number of licensable places.” – BBC definition of their ‘evasion rate’
As quoted above, the BBC assumes that all households without a TV licence are ‘evading’ it. (For more detail on calculations and TV licensing data, you can review the annual BBC Trust Statements.) Their current estimate of this evasion rate is 11%, the highest in their published records since 2006.
Despite the legal requirement of having a TV Licence for certain activities (see ‘Do I need a TV licence’ section), the BBC conversely describe those with a licence as ‘customers’ to whom they have made ‘sales’. So according to the BBC definitions, you are either an ‘evader’ or ‘customer’, there’s no in-between.
Let’s remind ourselves of that fantastic discovery and conclusion the BBC recently reached as it pondered its customer base:
“The BBC believes there is a link between the perceived value of BBC content and the take up of TV licences.”
Do I Need a TV Licence?
So do you need a TV licence at all? Put simply, if you don’t watch/record things live or use the BBC’s iPlayer service, you don’t need a licence.
BBC themselves explain that there is a legal requirement to buy a licence only…
“…if watching or recording programmes as they are being shown on any TV broadcast service; viewing live streams via an online TV service; or by downloading or watching programmes on BBC iPlayer (live, catch-up or on-demand).”
Most people use watch things live on Sky, Freeview, Virgin, BT, and such TV services. So if this sounds like you (even if you don’t watch or use any BBC stuff whatsoever), you do need a licence to stay lawful. If you are unsure, the BBC provide a helpful question set to help you determine whether or not you need a TV licence to be using your device lawfully, replicated below for info.
How To Cancel Your TV Licence
So have you figured you don’t need to spend the £169.50 (and rising) cost per year? Did you get the message screenshotted below when checking whether you need a licence? Then there are two main ways you can cancel your TV licence.
- OPTION 1: Just stop paying it without notifying anyone, cancel any direct debits or simply just don’t renew it.
- OPTION 2: Don’t renew as per 1, but politely notify the BBC using their online form to tell the BBC you don’t need a TV licence.
Which option you choose depends on how much BBC TV Licensing marketing junk mail or other contact you want to receive from the BBC, via their TV Licensing division…
OPTION 1
Option 1 will cause the BBC to add you to their ‘licence evasion’ list. They assume the people who don’t tell them they don’t use their services are in fact lying and do indeed use their services. Ultimately this means they send lots of automated letters each year as the core basis of their marketing campaign to increase ‘sales’.
“The BBC is working harder to make additional licence fee sales: across 2023-24, the BBC trialled new communications campaigns and spent more on marketing and postage.” – BBC Trust Statement
These marketing letters are created in an official-looking design, carefully constructed to give the auspices of legal proceedings, describing some sort of investigation is happening, and that you might get into trouble. The BBC receives countless ‘sales’ for services not required, because people often mistakenly think they need to pay. They either don’t realise it’s not required or they’re unsure about ‘testing the system’ after being scared by the carefully constructed, influential marketing. Either way, the BBC happily turns a blind eye to such ‘overpayments’.
Here’s a helpful website sharing an array example letters spanning nearly 20 years, along with far more detailed information and analysis of the legalities, language used, a set of Q&A, ‘detector vans’, and other matters relating to TV licensing. The site is clearly a labour of love for a BBC TV Licensing enthusiast and has some fun stories to read!
OPTION 2
Option 2 on the other hand gives you a ‘free pass’ to evade their mass-marketing. Notifying the BBC through their online form seems to make them less suspicious of you, and so they exclude you from their marketing letters for a couple of years. If you still don’t need a licence two years on, you just redo their form.
The BBC report that 3.3 million households have made what they call a ‘no licence needed declaration’. Over 800,000 declarations were made in the last two years alone, and the BBC are fully expecting more to follow as live TV becomes ‘old hat’ to the younger generation.
Whichever option you choose, be aware: The BBC’s (via TV Licensing) might even send round one of their reported 233 ‘Visiting Officers’ from their ‘Enforcement Division’ (employed by Capita). They make over 1 million visits each year. Presumably they exist to make sure the householder really doesn’t need a TV licence and to gather evidence on the premises that you are breaking the law. They apparently have no legal powers of entry or anything and can be turned away in the same manner as a cold-caller salesman, but more info on these is again on the site above all about the TV licence.
In their latest Trust Statement, the BBC report they took approximately 24,000 people to court for licence fee evasion (although there is no detail on what the outcomes were and how many of these were required to pay anything). It also reports that they are disproportionately prosecuting women, forming 74% of the cohort.
Is the BBC a Dying Brand with Funding Drying Up?
While still popular overall, the BBC is becoming a dying brand for the younger generations according to their own latest annual report. The main bulk of the BBC employs over 17,600 full time equivalent employees on an average salary of £52k. But that number is reducing along with the exodus of licence fee payers.
According to surveys they commissioned, the BBC is now only the ‘most used’ media brand among the 35+ age groups. YouTube is more popular for the under-35s, while the under-16s also prefer using Netflix. In fact, the BBC’s own surveys report that those aged 16-34 only rate the BBC as 5/10 for its relevance to them.
Other surveys the BBC conducts suggest it is losing trust among its audience while its impartiality ratings slump, as per snapshot below from its annual report. Impartiality is not just the written legal rule justifying the existence of a licence fee; it’s also the unwritten demand of the public, informing their decision to be either a ‘customer’ or an ‘evader’ based on whether they feel the BBC is upholding their side of the bargain.
The Leigh Tavaziva, the BBC’s Chief Operating Officer reports blithely in the 2023/24 annual report:
“Although licence fee income declined year-on-year, the vast majority of our audiences remained committed to paying the licence fee.”
But as the BBC becomes less relevant, and more young adults come to realise you don’t actually need a TV license for using things like Netflix, Amazon, YouTube and such on your TV, no doubt their publicly generated revenue is only heading in one direction. Leigh notes too that the total revenue losses are exacerbated when viewed with inflation taken into account…
“In real terms, the licence fee generated 30% more income in 2010/11 than it does today – a difference of more than £1 billion a year.”
£1 BILLION a year is now being lost in licensing compared to just over a decade ago. And looking at the TV Licensing report history (which goes back to 2006/07), against the Bank of England CPI inflation calculator, this figure actually stands at £1.7 billion over that longer term. At this rate, this would amount to another £2 billion shortfall over the next decade.
Given the acceleration in license fee cancellations and estimated ‘evasion’ rates, the shortfalls will soon bite far harder. This will either make for very difficult decisions for the BBC in making cuts to staffing or content, while leaning more on its commercial enterprises. Or it might lobby the government to for solutions. This might include unpopular legislation such as replacing its guaranteed income with more direct tax revenue, increasing the license fee again (e.g. too nearer £200), and/or to widening the scope of who actually needs a TV license.
The BBC appears to already be on the case, as reported in its annual statement, with the review even considering a new means-tested approach (tax) and a goal of doubling its commercial sales and profits by 2027/28. Under the BBC’s commercial arm, it’s already bought out the BritBox subscription service.
“The BBC will be researching options for the future of the licence fee. In December 2023, the government announced a review of how the BBC should be funded after its Royal Charter ends in 2027-28. The BBC’s research will explore options for reform, for example, how payment could reflect customers income, and how to ensure enforcement is fair and proportionate. Media analysts expect the pressure on the licence fee will continue as more viewers switch solely to streaming services.”
Whatever the future of the BBC TV Licence, it remains for the next few years and no doubt will be debated further. I hope you have been ‘informed, educated and entertained’ by this analysis and the associated Excel charts. See my BBC TV licence video for more on how to recreate them.
Kind Regards, Adrian
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I refuse to pay for the BBC’s brand of state propaganda, lies of omission and manufacturing of consent for Western imperial wars. I also refuse to pay an entity which gaslights genocide and supports those complicit in genocide.