Decriminalising TV licence fee evasion will cut BBC funding without helping the poorest

by Leo Watkins

On 9 December last year, mere days before the General Election, Boris Johnson was having a bad news day. He was televised in the morning trying to avoid being confronted by a reporter’s evidence of a young boy sleeping on the floor of an NHS hospital (with the insinuation being that he was being denied proper medical care). Later in the day, his health secretary, Matt Hancock, told journalists he had been assaulted by anti-Tory protesters outside Leeds general hospital. This account was repeated by senior journalists until video footage emerged showing that Hancock had actually only walked into a protestor’s hand.

Licence fee abolition as a ‘dead cat’

In response, a question from a reporter about TV licences at a press conference allowed Johnson to pull off a classic case of what his former campaign advisor, Lynton Crosby, infamously dubbed the “dead cat” strategy: you respond to a bad news cycle by putting something surprising and attention-grabbing on the table to distract everyone and change the topic of conversation. In this case, Johnson mooted the idea of getting rid of the TV licence altogether.^[1] (Of course, it helps if your fellow right-wingers in the press and the main broadcasters are all too happy to change the topic too.)

The BBC’s existence has long challenged beliefs that the market ought to be the sole judge of value, and that requiring the public to pay for some broadcasting with public service rather than commercial aims is an infringement on freedom. In addition, the right-wing press tends to believe that a key reason it finds it difficult to make money online is the combined fault of, on the one hand, digital giants like Facebook and Google for monopolising advertising revenue, and on the other, the BBC for providing a decent, free source of news which reduces the need to take out a digital subscription to a newspaper to have adequate sources of news. Digital ‘convergence’ has put the BBC and the national press in much more direct competition than in the past, when the latter had print and the former had radio and TV: mediums whose use overlapped to some extent, but not entirely.

Today, conservative ideology and evolving press commercial interests have combined to make any negative story about the BBC even more interesting to right-wing newspaper editors than it was before. As an experienced politician and former newspaper journalist himself, it’s fair to assume Johnson knew that when he threw the ‘abolishing the licence fee’ cat onto the table. And indeed, the right-wing press dutifully picked up on and prioritised the story.

After the Conservative victory on 12 December, the Government moved quickly to brief the media that changing the BBC would rank high on its priority list. There was some suggestion of ‘getting even’ with the BBC for its apparently unfair treatment of the Party during the election campaign – despite, or perhaps because of, vociferous complaints of the same from supporters of Labour and Jeremy Corbyn, and despite the Conservatives’ large Parliamentary majority.

Government control over the licence fee

The Government’s immediate options for changing the BBC are limited. The Government will get to appoint a new chair of the BBC board when David Clementi’s term finishes next year, but it can’t get rid of the licence fee before the end of the current Royal Charter period, which lasts until the end of 2026. The Charter does, however, provide for a ‘mid-term review’ of BBC governance, and an opportunity to set the licence fee level for the five years from 2022.

Government control over the level of the licence fee – the BBC’s primary source of funding – has, particularly since the 1980s, been used repeatedly as a means of exerting influence over the Corporation. In 2010, George Osborne imposed severe real-terms cuts on the BBC by keeping the licence fee level flat in cash terms. According to the BBC’s 2019/20 Annual Report, its income is 31% lower today than it would have been if the level had increased in line with inflation. While the BBC may draw an increasing amount of its income from commercial sources, 71% of its income in 2019-20 still came from the licence fee. And commercial revenue sources come with different constraints, like what foreign distributors want to buy.

The BBC is facing intense competition for audiences from big, new digital rivals whose spending on content is rapidly rising, like Netflix, Amazon, Disney and Apple, alongside familiar rivals like ITV and Sky (now owned by Comcast). There is dramatic cost inflation in the most in-demand formats, like original scripted fictional series. (Netflix reportedly spent an enormous $130m on two series of The Crown, for example.) In this situation, even real-terms increases in the level of the licence fee aren’t enough for the BBC to keep pace.

The BBC’s income from licence fees is determined not only by the licence fee’s level, but by its method of collection too. A high rate of licence fee evasion would slash its budget just as surely as an inadequate licence fee settlement. At the moment, the BBC manages collection efficiently: collection costs are a small percentage of revenue (3.6%) and the rate of evasion has remained low for many years, at around 6-7%. But that might not continue.

Decriminalising licence fee evasion

In February, Government sources briefed the press that the Government was planning to decriminalise licence fee evasion. The DCMS launched a consultation, claiming that “the broadcasting landscape has changed” since 2015 when an independent review of the matter by David Perry QC concluded there was “no compelling basis for change” to the current system. The DCMS didn’t commission a new review to demonstrate its claim. For the DCMS, the obvious danger of doing so is that an independent review can’t be relied upon to provide the desired answer.

The case usually made for decriminalisation is quite simple. There are two main arguments. The first is that prosecutions for evasion are ‘clogging up’ magistrates’ courts, at great cost to the taxpayer. The Perry Review dealt with this argument by citing evidence that, in 2013, they may have represented 11% of cases handled, but only took up 0.3% of court time because they were quick to process and many defendants pleaded guilty by post. The cost to the taxpayer is small: around £5m a year. The Government, not the BBC, gets the proceeds from fines that courts impose for evasion.

The key argument, though, is that a criminal penalty is an unfair, disproportionate and heavy-handed sanction for evasion. However, that argument’s apparent strength is partly based on some basic misconceptions:

• The first misconception that those that think a criminal penalties for license fee evasion are unfair tend to harbor, is that anyone convicted of licence fee evasion gets a lasting criminal record. In fact, it’s a ‘non-recordable offence’ which doesn’t show up on DBS checks.
• The second misconception is that people hear ‘criminal penalty’ and think it means they will go to jail for TV licence evasion. That isn’t what happens. TV Licensing – the BBC by another name – isn’t looking for excuses to lock people up. In fact, even where evasion is proven, all that happens in the first instance is that TV Licensing sends people letters telling them to buy a TV licence. If they don’t, and if TV Licensing decides it has enough evidence against them, eventually they will be summoned to the local magistrates’ court for a hearing. At any stage, TV Licensing will drop proceedings if people buy a licence.
•  If convicted at the hearing, people get a fine whose level is set taking contextual factors, like ability to pay, into account. Payment can be instalments – £5 a week is the usual maximum for those in receipt of state benefits. The average fine in 2018 was £176, the legal maximum is £1,000. The Commons DCMS committee noted that the punishment is similar to using a vehicle untaxed or without insurance. Nobody goes to prison for licence fee evasion.
•  If someone repeatedly fails to pay a fine for licence fee evasion imposed by the court, despite having been proven able to do so, they may eventually receive a prison sentence – but only once all other enforcement methods have been exhausted. This is the same as for any other court-imposed fine for any other number of minor offences – council tax evasion, for instance. The Perry Review was at pains to point all this out back in 2015.

In 2018, proceedings were commenced against 129,446 people for licence fee evasion, of whom 121,203 were convicted (the majority of non-convictions were because people bought a licence in the meantime), and only five people were imprisoned for not paying court fines that included – but were not necessarily limited to – fines for licence fee evasion. To reiterate: imprisonment for court fines only occurs as a last resort, when all other collection methods have been exhausted.

The unfair distribution of the licence fee burden

It is nevertheless true that this system is manifestly unfair. The licence fee’s cost to each household takes no account of households’ disposable income and resultant (in)ability to pay. (Exceptions are those over-75, who get a free licence if in receipt of pension credit, those in long-term care, who pay £7.50 a year, and the severely sight impaired, who get 50% off.) On that basis, people argue that criminalising evasion amounts to criminalising people for being too poor to pay. They then say that, in order to ease the burden on the poorest, we should replace the criminal penalty for evasion with a civil one.

The premise of this argument is true, but its conclusion does not follow. Clearly, the flat cost of the licence fee – like the flat costs of other utilities like gas, electricity, water and household internet – is hardest to meet for those on the lowest incomes. When Amelia Gentleman, the Guardian’s social affairs correspondent, went to a magistrates’ court in 2014 to observe proceedings for licence fee evasion offences, she estimated that most cases involve people in poverty or financial difficulties. A wave of recent changes to council tax benefit eligibility, occasioned by local government austerity, seemed to have exacerbated those difficulties.

But not only does the argument’s conclusion not follow, it’s patently ridiculous. First of all, while the licence fee is indeed a distributionally regressive ‘flat tax’, changing the penalty for evading it does nothing to ease its financial burden on those who continue to pay it. The argument for decriminalisation implies actively wanting the rate of evasion to rise. Secondly, there’s no guarantee that it will be the poorest or the least able to pay who will successfully evade payment. The assumption that it will be, seems to reflect a Victorian class prejudice that the poorest are the most skilled at getting away with breaking the law. Of course, as far as tax evasion in general goes, the truth is the opposite. In reality, some people would get away with evasion and some wouldn’t; of those who did, many would be well-off people who are perfectly able to pay; the result would be arbitrary and unfair.

What the people making this argument therefore implicitly concede – indeed, seem actively to want – is that decriminalisation would cause an increase in evasion. It would do so, first, because replacing the criminal penalty with a civil one would hugely complicate enforcement. At the moment, to prove someone was guilty of the offence, TV Licensing just has to prove they were watching TV without a licence at some point. To prove you owe the BBC a civil debt, on the other hand, it would have somehow to prove the duration in which you watched TV unlicensed. The evidence-gathering necessary would often not prove cost-effective, given the amount likely to be recovered.

The BBC estimates that the cost of decriminalisation would be around £300m annually – due to increased collection costs and reduced income – equating to around 9% of its licence fee income in 2019-20, or 6% of its total income.^[2] In other words, this policy is another Conservative attack on BBC funding, pure and simple, cynically dressed up by its supporters as a sincere concern to protect the poorest. The insincerity of that concern is even more clear from a cursory examination of the alternative enforcement method: civil penalties enforced through the civil court system.

For a civil penalty to have anything like the deterrent effect necessary to prevent widespread evasion, the BBC has estimated a financial penalty of around £500 would be required. Such a penalty would not take into account people’s ability to pay, by definition. The result is that some people would, perversely, end up owing more from a civil penalty than a court fine for evasion.

To collect unpaid penalties or debts, the BBC would have to get a county court judgement (CCJ) authorising bailiffs to go and seize property. CCJs linger on people’s credit records, often for several years. They impact people’s ability to get a phone contract or car insurance, to take out a loan, or even to get a job (some employers check credit records). This doesn’t seem a way to ease the burden on people living in poverty.

The way forward: two suggestions

There are two real solutions to the unquestionable and appalling fact that, in Britain today, some people are so poor they find it hard to afford the £157.50 annual cost of a TV licence. The first would be to alleviate the underlying poverty. It is eminently within the state’s power to do so. But in the low-growth, post-2008 era, it would require a willingness on the part of the state to raise taxes on the well-off and aggressively reduce tax avoidance by wealthy individuals and large corporations. The whole trend of Conservative policy over the last decade has been in the opposite direction. Austerity hit the poorest the hardest, which is probably why the number of licence fee evasion cases rose after 2010.

The second solution would be to exempt low-income households from paying the licence fee. In Germany, low-income households are exempt from the broadcasting levy. In Finland, the broadcasting income tax is not payable below a defined income threshold. Free TV licences for the poorest million households in Britain would therefore be neither internationally unprecedented, nor financially unaffordable. It would cost the Government a mere £157.5m a year, approximately 0.02% of the 2019/20 Government budget, less than the cost of two RAF F-35 stealth fighter jets (cost: £92m each).

In the long run, the licence fee could be replaced with a more progressive and universal funding mechanism. The Finnish broadcasting income tax, for example, seems to be the most egalitarian funding mechanism in Europe. The UK Government’s Minister of State for Media, John Whittingdale, was chair of the DCMS committee when it looked at that option alongside the German household broadcasting levy. The Times reported that the BBC internally favours the latter.

But some parts of the Conservative Party – and some in Number 10 – would seem to want the BBC to become, either wholly or in part, an ‘opt-in’, subscription-funded service. How much of the BBC you get would be contingent on your ability to pay. Quite apart from the cost and practical challenge of deploying conditional access to the technology across the country, the consequence would be to punish poverty in a different way: by depriving people of access to BBC programmes and services if they can’t afford them.

Ultimately, this issue comes down to whether you agree that, as a society, we should make at least some journalism, education and culture freely available to everyone – regardless of ability to pay. When you consider the enormously important, formative role that these things play in the lives of children, for example, the contribution to cultural-educational inequality and exclusion implied by the private, subscription-funded route becomes especially egregious. If we accept that, then it follows that some kind of tax is necessary to pay for it. But there are methods of taxation much more progressive than the licence fee, which we could and should use to do so.

The arguments for decriminalisation are based on false premises and absurd logic, motivated by a Conservative agenda to further reduce the BBC’s funding, make the current system intolerable to the BBC itself, and get it to accept a future of private, subscription funding – at least in part. But the right-wing vision for the BBC is an elitist and exclusionary one, dishonestly presented as a concern to expand freedom of choice. It should be exposed as such, and fought. Decriminalisation will require primary legislation, so it will soon be up to MPs and peers to decide whether they agree with this agenda. This situation calls for a high-profile campaign to oppose the measure, as part of a more general effort to reframe the debate on the future funding of public service broadcasting in progressive terms.

^[1] Johnson: “At this stage we are not planning to get rid of all TV licences, though I am certainly looking at it. … I think the system of funding out of what is effectively a general tax…bears reflection, let me put it that way. How long can you justify a system whereby everybody who has a TV has to pay to fund a particular set of TV and radio channels? That is the question.”

^[2] Television Licence Fee Trust Statement for the Year Ending 31 March 2020, p. 28, paragraph 10

Leo Watkins is a PhD student in Media and Communications at Goldsmiths, University of London and lead researcher for the Media Reform Coalition for the UK component of the Media Influence Matrix Project, set up to investigate the influence of shifts in policy, funding sources and technology on contemporary journalism. The project is funded in the UK by the Joseph Rowntree Charitable Trust and is due to report in spring 2021.

This blog was originally published by Media@LSE and is reproduced with their kind permission.