A licence to make money

The way the UK’s national broadcasting service – the BBC – is funded, we are often told, is unique.

Which it plainly is.

The notion that every television receiver has to have an accompanying Licence, and the income from that Licence funds everything the BBC does, is distinctly unique.

I need to pause here to say that I am not uncomfortable with the concept of having a public tax to pay for the BBC!

I am, however, deeply uncomfortable with the business model that HMG operates around the Licence fee collection process.

Deeply uncomfortable on two points:

The first flaw in the logic is the example of a person owning a television receiver that is hooked up to a satellite dish, that they only use to watch Spanish (or whatever foreign country you prefer) television – because, under our unique BBC funding model, that person must still pay the television Licence.

If you own a television that is technologically capable of receiving tuneable signals, you have a legal obligation to pay the annual television Licence – because one day you might watch something on a BBC channel.

But the reality of the situation is that even if you never watch a BBC product, you must pay the Licence fee.

So, in a nutshell, the Licence fee is a tax, because there is no ducking or dodging it.

And because it plainly is a tax, this leads me to the second point that makes me so uncomfortable:

Bizarrely, the Licence-fee monitoring/collection department costs £123 million to run.

That’s £123 million *a year*, to collect an independent stream of taxation.

One has to take a step back from this peculiar situation and ask the obvious question, ‘Why?’

Why is the BBC spending £123 million *a year* to collect a tax?

OK, I’ll admit that the revenue that is collected through this tax goes to the BBC and not to HMRC, but once again, the question ‘Why?’ surfaces?

Why does anyone think that spending £123 million *a year* on collecting a tax that, frankly, almost every household in the UK *has to pay* is an economical method of generating an annual income stream?

The Licence fee generates £3.4 billion a year, so spending £123 million a year might look like a worthwhile expenditure to someone in the BBC and/or HMG, but I really can’t agree.

If the BBC needs to trim its expenditure, why is it not giving the annual spend of £123 million it costs to collect Licence fee income from tardy payers, a long, penetrative and searching stare?

Is it beyond the whit of someone in HM Treasury to look at this situation, and come to the staggeringly obvious conclusion that the best plan would be to stop spending £123 million a year collecting another taxation stream?

Is it beyond our national capability to save £123 million a year by attaching the £3.4 billion it costs to fund the BBC to our national income tax?

Is this so very unreasonable?

Is ‘not wasting money’ such a bad idea?

This peculiar situation is a mirror of the Road Fund Tax: The simplest way of collecting that revenue would be to attach a very small portion to the price of a litre of fuel.

Is all of this thinking so bad that only I can see the benefits, whilst being too close to my own logic to see any of the flaws?

Or is HMG so caught up in established funding models, that they are unable to see the obvious improvements that sit outside their comfort zone?

Answers on a postcard please, because I’m finding it difficult to believe that we’ve got any of this right.

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7 Responses to A licence to make money

  1. Allister says:

    We used to have a TV license in New Zealand. It was scrapped, I think, in the 90s. We still have a public-funded media company.

    We pay for our roads through a tax on petrol. But we pay for a lot more too. There are a ton of taxes on fuel. The real rub is that after adding all those taxes, they then add GST (like VAT) on top – a tax on tax!

  2. Masher says:

    “I would willingly sell my house and all its contents to help fund the BBC” – Not The Nine O’clock News, 1980.

    NZ’s taxes on fuel cannot be any worse than ours, surely? I read somewhere recently that something like 70p out of every pound spent on fuel, goes into the government coffers.

  3. Allister says:

    Some small corrections. We have TWO media companies, one for radio, one for television. There are issues afoot with radio right now with threatened cutbacks.

    According to this article (http://www.aa.co.nz/ABOUT/ISSUES/FUEL-TAXES-FINES-CHARGES/Pages/Petrol-tax.aspx) 56.129c goes in taxes and aside from the GST it does now all go to motoring coffers.

  4. Allister says:

    Oops. I meant to add that we pay around $1.70 per litre currently, though it has been as low as $0.95 that I can remember, and as high as $2.00.

  5. Brennig says:

    Allister, I’m assuming this is for unleaded petrol? NZ$1.70 is equal to £0.78. The current pump price at the supermarket in town for a litre of unleaded is £1.12/litre – or NZ$2.44. Would this be a big price difference in New Zealand?

    As far as breakdown of pump price goes, according to this website http://www.petrolprices.com/price-of-petrol.html if the price were £1.09/litre the breakdown would be:
    £0.56.19 fuel duty (that would be a tax)
    £0.30.27 product
    £0.14.2 vat (that would be another tax)
    £0.08.42 fuel delivery/retailer

  6. Allister says:

    Well, all our petrol is unleaded, but there is only about a 6c difference between 91 and 96 octane. http://www.aa.co.nz/motoring/owning/running-costs/petrolwatch/Pages/default.aspx

    Yes, $2.44 would get a LOT of attention here. But just using exchange rates doesn’t work because they fluctuate on the basis of butterfly wing movements. It might be better to compare with other consumables such as a viewing of Alice in Wonderland in 3D in Wellington city on Friday night. NZD$18.50 (or 10.75 litres of 91 octane).

  7. Brennig says:

    Allister, one ticket to see that film in Oxford is £11 or NZD$24.