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Telescope 2017: A look at the nation’s viewing habits

2017-12-07T13:31:09+00:00

TV plays an important role in our lives, bringing the nation together. With technology evolving at an ever-increasing pace, the way we watch TV is rapidly changing as well. It’s important TV Licensing regularly examines the nation’s current and future viewing habits to provide guidance on when a licence is needed, keeping pace with changes in the viewing landscape. That’s why we’ve today launched our consumer trend report for the year, Telescope 2017.

This year’s report shows a rising trend in people watching live TV via social media. Audiences have told us they expect to watch more live TV on sites like Facebook and Twitter by 2027 as this year saw a surge in broadcasters sharing live content with a new audience via “live social”, led by Twitter and Facebook Live features and must-see interviews.

Linear live viewing, however, still remains central to the way we watch TV. In fact, ninety-one per cent of TV viewers watched live TV in a typical week in 2016, broadly the same as a decade ago.

The report also reveals the proportion of catch up viewing that takes place within seven days of broadcast is also continuing to grow. It’s been more than a year since the law changed to close the so-called “iPlayer loophole” so Licence Fee payers are now covered to record TV, to watch BBC programmes on demand on iPlayer – and to watch live TV however they see fit - online, via websites, apps or on the traditional TV set.

BBC iPlayer, of course, continues to play a huge role in the viewing landscape as the most popular on demand/streaming service among adults, reaching 6 million adults every week, who put in 246 million requests for programmes, on average, every month.

Read the full Telescope 2017 report on the TV Licensing website

Pipa Doubtfire is Head of Revenue Management, TV Licensing

Helping Vulnerable Customers

2017-09-05T14:01:33+00:00

Every year the vast majority of people buy their TV licence with little trouble. Some still prefer to pay once a year. Most favour the convenience of setting up a direct debit.

But we know that it’s not easy for everyone. Some people can struggle to afford the full cost of the licence fee. Others may have a disability or health condition which impacts on their ability to pay or makes it more difficult to communicate with us. Some may have problems living independently or have other issues to deal with.

Our visiting officers and contact centre staff interact with millions of people each year, in person and on the phone. And we work with more than 450 charities and money advice organisations so they can give the best advice and information to people who approach them for assistance.

We’ve briefed money advisers in more than 180 towns across the UK and have strong partnerships with national support groups like RNIB, Mencap, the Hindu Council and Age UK. We meet with hundreds of diverse stakeholders, like Mind, Shelter, the Red Cross and Women’s Aid, as well as community support organisations and housing associations. Volunteers and staff at these organisations help us by providing feedback and advice on the issues facing our customers, and we work together to identify ways to help their clients stay licensed.

But we recognise everyone’s circumstances are different. That’s why for the past 12 months we’ve been looking into what more we can do to help those who find it difficult to pay.

As a result, we’re making some improvements to help customers who are at risk of becoming unlicensed. And we’ve recently published our Vulnerable Customers Policy, which explains the full range of support that’s available.

Advice about TV Licensing requirements and spreading the cost of your TV Licence

Where possible, we’ve already been moving people to a more appropriate payment plan to suit their circumstances. As a result, more than 86,000 people changed the way they pay and we helped 126,000 customers stay licensed for longer last year.

The range of different payment plans we can offer is set down by the Government. These rules currently require that when people pay in monthly Direct Debit or cash instalments they buy their first licence in six months. But we know that some customers who sign up for a TV licence can then struggle to meet the higher payments required over those first six months. So we’ve been working to find a solution.

In response, we’ll be launching a Simple Payment Plan trial in April 2018 (subject to the Government putting the necessary Regulations in place) where eligible customers will be able to pay for a TV Licence in 12 equal monthly payments – or 26 fortnightly ones. This will be available to those most in need including those who’ve been referred by selected money advice organisations or by our own contact centre staff. The initiative follows David Perry’s recommendation, in the Government’s independent view of licence fee collection, that the DCMS and the BBC should explore ways of amending the current Regulations to offer simple and flexible plans for those facing difficulty in paying the licence fee.

We’re also trialling a helpline especially for organisations such as debt charities and Citizens Advice bureaux allowing them to speak directly to a specialist adviser who can discuss individual customer circumstances.

Our priority is to help people find the easiest and most suitable way to get licensed – but we have to enforce the law proportionately as well for those who avoid paying. It’s only fair on behalf of the honest majority. Prosecution is only ever a last resort – and we give lots of opportunities to help licence fee payers avoid ending up in court. Let me explain the process.

Before addresses are visited, TV Licensing sends letters or emails to unlicensed properties over a period of time and may also make contact by phone. Letters for those falling behind on payments plans or who’ve had plans cancelled explain how to spread the cost of a licence and let people know about the independent financial support available.

When an officer calls at an unlicensed address and finds evidence of unlicensed viewing, an interview is conducted under caution with the occupant, provided they are a responsible adult who lives at the address. We also ask if there is any other information TV Licensing should be aware of which may have prevented the household from being licensed. Our staff receive training to help them identify people who require additional support and we will always try to adapt how we work with customers if they have a disability, mental health issues or other vulnerabilities. It’s important to let us know of any particular circumstances, so we can make sure we take them into account.

First time offenders are given several opportunities to avoid prosecution by buying a licence before a case comes to court, and last year more than 115,000 cases didn’t proceed or were withdrawn on this basis. We now supply a Prosecution Code leaflet which explains the options available. We’ve made this public on our website and our officers hand it out to all evaders caught.

Additionally last year, we didn’t proceed with or withdrew more than 2600 cases because we decided it wasn’t in the public interest to proceed. Sometimes we’ll only be made aware of extenuating circumstances when a case gets to court – and even at this late stage we will still withdraw cases where appropriate.

TV Licensing works hard to keep people licensed and tries to avoid prosecution wherever possible. We’ll carry on doing so. We are committed to helping vulnerable people which is why we have put in place extra support. Our continued focus is on keeping people licensed, so please seek help and support if you need it.

If you are a vulnerable customer or calling on a vulnerable customer’s behalf, please call 0300 790 6114. For reasonable adjustments or alternative formats please call 0300 790 6076. Information is available on our website on alternative formats or languages, Easy Read, concessions, or reasonable adjustment assistance.

Pipa Doubtfire is Head of Revenue Management at the BBC.

TV Licensing Annual Review 2016/17

2017-07-19T11:00:00+00:00

Pipa Doubtfire, Head of Revenue Management at the BBC, leads the TV Licensing Management Unit which is responsible for collecting the Licence Fee, along with companies such as Capita and Proximity, operating under the “TV Licensing” trademark. Here she reveals the latest performance figures, published today in the 2016/17 TV Licensing Annual Review.

In the past year, TV Licensing collected a record £3.8 billion to fund BBC programmes and services and the number of licences in force reached the highest ever level of 25.8m. Alongside this, we maintained evasion at the very low level of 6 or 7 per cent, meaning around 94 per cent of homes and businesses across the UK are correctly licensed. We’ve also been able to reduce complaints by 50 per cent since 2010/11.

In September, a law change meant a licence is now needed to watch or download BBC programmes on demand – including catch-up TV on BBC iPlayer. Although the vast majority of people already were covered by a licence, we worked hard to inform unlicensed households, utilising all channels, including media communications and marketing via radio trails, digital ads, letters, emails and our website, as well as pop up messages on iPlayer itself. We also contacted more than 800 stakeholder organisations to update communications for their clients. The change resulted in around an additional 83,000 sales and additional revenue of around £12m revenue for BBC programmes and services.

A further difference this year was the cost of the fee rising with inflation in April for the first time since 2010. We made a number of changes to help Licence Fee payers, particularly those who may struggle to make payments. This included extending monthly refunds to include all types of refund payments and trialling a dedicated phone line to support money advisers and their clients.

We’ve also spent time making our website easy to use and as intuitive as possible. There were around 27m visits to the site last year – up 35 per cent on the year before - and 8m transactions. More than a quarter of our customers - 7.5m - now receive their TV Licence by email.

This strong and consistent performance would not be possible without the commitment of everyone in TV Licensing and the Licence Fee Unit who work to raise awareness of when a licence is needed and to collect and enforce the fee. Together, we help the BBC deliver distinctive, world-class content for Licence Fee payers, as well as investments in home-grown children’s services and digital and technological innovation.

Pipa Doubtfire is Head of Revenue Management at the BBC

Prince Harry’s girlfriend, a poorly goldfish and a “smart” TV – a year of top TV Licence excuses

2017-05-12T10:15:00+00:00

TV Licensing’s job is to collect the Licence Fee in the most cost-efficient way to deliver the best value for the licence payer and ensure as much money as possible goes towards funding the BBC’s programmes and services. Every one percentage point rise in evasion costs the BBC £40m in lost revenue, so it’s important we work to ensure everyone is aware of licensing requirements.

We know licence fee payers think it’s fair we catch those who attempt to avoid paying, so our latest awareness campaign highlights the excuses people have given when caught watching live TV or BBC iPlayer without a licence over the past year and explains that however creative, these excuses won’t protect people from the consequences of evading.

To accompany the excuses we worked with comedian Kevin Eldon, who composed a selection of poems based on the excuses. You can see the results below and on the TV Licensing YouTube channel from today. The Top 10 excuses are listed at the bottom.

This external content is available at its source: https://www.youtube.com/watch?v=lKwBCLnG6Vc&list=PLeIQfYvJDsfQHotRWCFjd_IM_OG0sOv0e&index=1&t=2s

This external content is available at its source: https://www.youtube.com/watch?v=6pm2xSyPOBQ

This external content is available at its source: https://www.youtube.com/watch?v=U1B336EGpUg

The Top 10 excuses from the past year:

Sorry, I can’t buy a licence because I’m giving CPR to my goldfish.

My tag interferes with the TV signal.

I don’t watch the BBC [as the theme tune to EastEnders played out in the background]

I’ll pay it next year when the Rangers are back in the Premier League, pal.

I have a smart TV and it’s that smart it can work without a licence.

I don’t need a TV Licence because when we got divorced a court gave her half of everything. So I got the TV and she got the licence. Go find her!

I am exempt from buying a TV Licence, as I am Prince Harry’s girlfriend.

I am not paying for my licence now that the BBC are showing porn. Gary Lineker in the nude on Match of the Day – disgusting

[With reference to a flat screen TV showing The Simpsons] Customer: It's not a TV, it's an LCD fire. Enquiry Officer: And it's got Bart Simpson-shaped flames

I only have one leg, I shouldn’t have to pay.

Sian Healey is Head of Communications and Policy for TV Licensing

See also Parrots, microwaves and the King of Scotland
Watch the 50 animated excuses for not paying the TV License on YouTube

BBC response to the O&O market impact report

2016-03-02T14:28:47+00:00

Yesterday the Department of Culture, Media and Sport published a weighty assessment of the market impact and distinctiveness of the BBC’s services by Oliver & Ohlbaum (O&O) and Oxera.

We have now had time to digest the report. It suggests that in some areas the BBC has become less distinctive - particularly on BBC One - in recent years.

Having gone through the detail of O&O’s analysis we are not sure that the evidence presented supports such a claim.

In fact, one of O&O’s conclusions is that they don’t have the data to check the long-run distinctiveness of BBC One versus ITV1 across all relevant dimensions and “we are not sure how relevant this is to the current or future dynamics of BBC One and ITV1 and its impact”.

The data, in fact, tells rather a different story – a story of BBC One that is not only distinctive compared to ITV1 but more distinctive than it used to be.

Genre mix

For instance, Ofcom’s industry data shows that despite a similar level of spend, BBC One broadcasts in peak-time a much broader range of programming than that offered by ITV. ITV broadcasts close to double the number of peak-time hours of Entertainment and Soaps (45% to 25%). Almost half of BBC One’s peak-time schedule is allocated to News and Current Affairs and Factual programming, against just 30% on ITV1.

Genre mix on BBC One and ITV (% peak time)

Compared to ITV1, BBC One offers more News in peak-time (295hrs to 242hrs), more Current Affairs in peak-time (48hrs to 37hrs) and more Specialist Factual in peak-time (123hrs to 70hrs). BBC One offers audiences more Comedy and Drama in peak-time schedules but fewer hours of Soaps, Entertainment and Sport.

The report asks whether BBC One is reducing its commitment to high public value content. Ofcom’s data and evidence shows that BBC One has maintained a healthy mix of genres. For example, comparing two equivalent years 2010 and 2014 (both major sports years with football World Cups) demonstrates this.

BBC One peak genre mix (2010-2014)

And, of course, BBC One is far more distinctive today than it has ever been. Thirty years ago, a fifth of BBC One’s peak-time schedule consisted of expensively acquired US series such as Starsky and Hutch, Kojak, Dallas and The Rockford Files. Now that figure is zero. BBC One now typically broadcasts 537 minutes of peak-time News each week compared to 272 minutes in 1982, with over 30% more UK-originated peak-time Drama over the same time period.

What the audience thinks

This distinctive mix of output is recognised by audiences. Since 2010 we have asked audiences whether the programme they’ve just watched is ‘fresh and new’ – our lead measure of distinctiveness. BBC One’s ‘fresh and new score’ – calculated by aggregating all the individual responses to individual programmes – has climbed since measurement began from 64.7% in 2010/11 to 71.6% in 2014/15.

This upward trend in BBC One’s score, built bottom-up by aggregating responses to individual transmissions, is also reflected in the top down measures used to track distinctiveness by Ofcom.

Ofcom assesses distinctiveness top-down as part of an annual survey of public perceptions of the delivery of public service broadcasting (PSB). Audiences are asked in the questionnaire for their perceptions of whether each PSB channel that they watch regularly ‘shows programmes with new ideas/different approaches’. Results for BBC One have been rising with 43% of BBC One viewers rating the channel thus in 2006 increasing to 53% in 2010 to 62% in 2014 (the most recently published data). At 62% BBC One ranks first on this metric, and also ranks top when viewers are asked to assess channels in terms of ‘The style of the programmes is different to what I'd expect to see on other channels’. 62% of BBC One viewers rate the channel in this way (compared with 59% of BBC Two viewers, 57% of Channel 4 viewers, 52% of ITV viewers and 41% of Channel 5 viewers)[1].

O&O recommendations

Despite this clear trend, the O&O report concludes that requiring BBC One to commit to a wider range and significant number of new titles in its schedule could reduce BBC One’s audience share of viewing to below 20% (from 22% in 2015); and therefore might increase commercial advertising-funded rival income by £33 to £40m a year.

Let’s be clear what such proposals would mean. On a first analysis, this would mean, for instance, cutting a very long list of long-running shows like Silent Witness, Countryfile, The One Show, Casualty, Holby City, Masterchef, Pointless, The Apprentice, Watchdog, Who Do They Think They Are?, Songs of Praise, Have I Got News For You, The Antiques Roadshow and all their associated shows. Replacing all these shows with new titles, as the report suggests, would be impossible given the £700m savings the BBC has to make over the next few years, and which the report makes no reference to.

So the result would be to reduce what all audiences get from the BBC, for a gain to commercial television of around a quarter of one percent of total TV revenues.

Taken together with O&O’s recommendations for BBC Radio, the net gain would be less than 1% of total TV and radio industry revenues.

We share the ambition of a BBC that should be even more distinctive so that we can build on our strong record, but it's an odd ambition to want fewer people to watch great TV. On the same day as this report was published, the Government published the results of their public consultation into the BBC and its Charter. Over 80% of people responding to the Government’s consultation said the BBC is serving audiences well. Almost three quarters said the BBC’s services are distinctive and about two-thirds think it has a positive wider impact on the market.

So we don’t believe in reconfiguring the BBC to maximise commercial profits rather than asking how can the BBC be improved to best meet audience needs. This report proposes a BBC designed for the convenience of its competitors not the enjoyment of audiences, to the long-term detriment of both.

[1] Regular viewers of the channel rating 7-10 out of 10 for delivery. Available at: http://stakeholders.ofcom.org.uk/binaries/broadcast/reviews-investigations/psb-review/psb2015/PSB__2015_audience_impact.pdf

James Heath is BBC Director of Policy & Charter

Read also Is BBC One really the same as ITV?

Collecting the Licence Fee

2015-11-03T16:14:39+00:00

Charlene Boucher, an Enquiry Officer for TV Licensing, shares some of her experiences in a special video diary for the About the BBC Blog.

November is Anti-Bullying Month and to coincide with the campaign TV Licensing is using the opportunity to tackle the increasing problem of verbal and physical attacks on its enquiry officers who visit unlicensed properties.

Attacks on enquiry officers have more than doubled in the last financial year: 89 enquiry officers were victims of physical assaults by members of the public, up from 37 in the previous year. Several incidents resulted in staff being admitted to hospital.

In total, 360 enquiry officers faced physical and verbal assaults in the last financial year. In Worcester one female officer was told, "I will smash your face in if you don't f**k off.” Another officer in Dundee had a hammer waved in his face. And, in another incident, an officer was physically picked up and thrown over a five foot hedge.

Many officers have had death threats made to them after knocking on doors, while others have been punched and spat at, had TVs thrown at them and also been filmed whilst being abused, with clips posted on YouTube.

721 incidents featuring abuse on enquiry officers were recorded in the last year, up from 294 in the previous year. As part of Anti Bullying Month, we've published two exclusive videos featuring enquiry officers Charlene Boucher and Tracy Morris.

Tracy Morris also works for TV Licensing as an Enquiry Officer and has a different definition for some of the words she's called by members of the public.

Tony Hall sets out our plans for the BBC's programmes and services

2015-09-07T10:22:24+00:00

BBC Director General Tony Hall speaks at the Future of the BBC Event on Monday 7 September at the Science Museum in London.

This morning, Monday 7 September 2015, BBC Director General Tony Hall presented his vision for the future of the BBC at an event at the Science Museum in London.

He said:

"When I was asked to return to the BBC I knew that I would be here for the great Charter Review on which we have now embarked and I welcomed that prospect.

That is because I saw that while the Review would present great challenges, it would also give us great opportunities. Opportunities to hear the views of others, to learn, to reflect on new ways we can serve our audiences - and to change as technology changes.

Therefore, opportunities to reshape what we do as the needs and expectations of our audiences change and grow. And opportunities for this generation of the BBC to leave its mark on the information age.

And as we conduct this open, thoughtful exchange about the future of the BBC, we should set out our starting point.

We live in one of the most creative and advanced information societies in the world. And the BBC has been vital to that success.

In that British way, with a healthy helping of accident and a fair bit of design, we hit on something that worked. An organisation that could ensure extraordinary universal public provision while fostering one of the most impressive and diverse media markets anywhere in the world.

And the licence fee has been critical to that. Because the BBC was funded by the licence fee, it had creative freedom. Because it was funded by the licence fee, it could be universal. Because it was funded by the audience, we needed to nurture a relationship of trust and consent.

Creative freedom. Universal reach. Trust and consent. These are the watchwords of the BBC."

The audience was made up of luminaries from the broadcast world including Sir David Attenborough (pictured above).

At the end of his speech - which you can read in full on the Media Centre website - or watch in the video at the top of the page, Professor Brian Cox took to the podium, you can hear what he had to say in the video below.

Professor Brian Cox introduces an element of the BBC's proposed 'Ideas Service'

Read the report The Future of the BBC 2015
Also see the press release on the Media Centre - An open, more distinctive BBC
And read Tony Hall's speech in full

The BBC and market success - is the licence fee a tax that grows the economy?

2015-08-26T11:29:00+00:00

A key theme in the Government’s Charter Review consultation paper is the scale of the BBC and its impact on the media sector. It poses the questions: ‘‘is the BBC crowding-out commercial competition and, if so, is it justified?’’ and ‘‘where does the evidence suggest the BBC has a positive or negative wider impact on the market?’’

It’s best to start with what we know. First, the BBC is becoming a smaller part of the UK broadcasting sector. Its share of broadcast revenues has fallen from c.40% to c.20% today. Its audience reach and share has remained broadly stable but this is a function of audience satisfaction not economic dominance. In online, the BBC accounts for 3% of the total time spent by UK audiences.

Second, few other countries are in better creative shape than the UK. There aren’t many industries where the UK goes toe-to-toe with the US, but the creative industries still can. Britain’s competitive position hasn’t come about by accident but is, at least in part, because of this country’s vision and foresight in creating institutions like the BBC. UK broadcasting is based on competition for quality between public and private institutions with different remits and funding structures. Ofcom’s latest PSB review says the BBC ‘‘remains the cornerstone of the PSB system and is the key driver of investment across the system’’; the licence fee is c.20% of TV industry revenues, but c.40% of what is spent on original British programmes (excluding sport).

So our hypothesis is clear – the BBC makes UK broadcasting and the wider creative sector stronger. To test this further, we need to know how and by how much, the BBC contributes to growth. Or to put it another way, we need to know what would happen to the sector without the BBC or with a diminished BBC?

It’s worth pausing here. I’m not arguing that the primary purpose of the BBC is to promote economic growth. The BBC exists to provide universal access to services that educate, inform and entertain millions of people each day in ways that the market alone wouldn’t. And in doing so, the BBC makes our quality of life better and our culture richer.

At the same time, the BBC’s public service remit requires it to invest in new, home-grown creative ideas and talent, and the licence fee enables it to do so at scale. Economic value is, therefore, a corollary of the BBC’s public purpose.

To answer the how question, we identified, with the help of Frontier Economics, the principal channels through which the BBC supports private sector growth. I’ve written about these in a previous post. The BBC is the largest single investor in TV and radio original content* and provides a ‘shop window’ to the world for UK talent and programme-makers; its investments stimulate output in other creative industries such as music and help make markets as iPlayerdid; and the BBC strengthens the productive capability of the creative sector across the UK by, for example, training some of the greatest professional talent in the world and kick-starting local creative economies such as MediaCityUK in Salford/Manchester.

We’ve asked PwC to quantify some of these effects by modelling the impact on the creative sector and the whole UK economy of changes in licence fee investment. They’ve used the same kind of model that the Government uses to assess the economic effects of tax changes. Importantly, it takes into account the fact that a change in licence fee income will not only change the BBC’s expenditure with knock-on impacts across the creative sector, but could also affect other broadcasters’ spending and household expenditure. It measures the net effects of policy changes.

PwC have modelled two hypothetical scenarios. The first involved a 15% nominal increase over a five year period in the BBC’s licence fee income. Since we’ve agreed our funding with the Government as part of the last Budget, this isn’t a pitch from us – the figures were chosen simply to assess the BBC’s impact. PwC’s analysis suggests the increase would likely boost creative sector GVA by £435 million, total economy GVA by £319m and create 16,200 extra jobs in 2021/22, compared to the counterfactual where the BBC’s licence fee revenues remained unchanged.

The growth is driven by a number of factors. Firstly, the rise in licence fee income results in a net increase in investment in original TV content (£221 million by 2020/21) and the wider creative industries which has a multiplier effect. PwC says it is difficult to predict whether a higher licence fee would ‘crowd-out’ or ‘crowd-in’ commercial activity. To be prudent, they assume that an increase in BBC spending would reduce other broadcasters’ revenues and expenditure to some degree. Secondly, an increase in the licence fee would mean that households have slightly less income to spend on other goods and services.

The analysis concludes that increased licence fee investment would far outweigh either of the downside effects. This is because the licence fee channels resources into one of the most productive parts of the UK economy, the creative industries. Every £1 increase in licence fee income generates an extra 60 pence of economic value. Far from increasing the deficit, this is an area where public investment reduces it.

PwC’s analysis also demonstrates that the effects work in reverse, too. The second hypothetical scenario involved a 25% nominal decrease in licence fee revenues over the five year period. This would likely reduce creative sector GVA by £997 million, total economy GVA by £630 million and lose 32,000 jobs in 2021/22, compared to the counterfactual where the BBC’s licence fee revenues remained unchanged.

The last few years have provided us with a real-life experiment in what happens with a smaller BBC. As spend on the BBC’s UK services has fallen in real terms over the last five years due to the licence fee freeze and external obligations (e.g. broadband), so – as Ofcom’s PSB review highlights – overall investment in original UK TV content has gone down. The market has not filled the gap.

The available evidence supports the hypothesis that the BBC makes UK broadcasting and the wider creative economy stronger. From TV to music, writing to film, the BBC is a key part of why the UK is such a great exporter of creativity. There is a real risk that a diminished BBC would reduce the competitive pressures in broadcasting, leading to a new equilibrium in which investment in a wide range of UK original content is lower than before. The question we should be asking, therefore, is: "How can the BBC do more to support British creativity and the creative economy?"

*BBC invests c.£2.2 bn of licence fee income directly in creative sector; £1.2 bn outside of the BBC, with c.£450m in small and micro creative businesses. 86% of its creative suppliers are small or micro.

James Heath is BBC Director of Policy & Charter

Read The PwC Report: The impact of a change in the BBC’s licence fee revenue

BBC funding arrangements

2015-07-09T17:00:00+00:00

The Government’s decision to transfer the cost of the over 75s TV licence fee concession to the BBC has been widely reported – less so, the other elements of what has been agreed. To understand the net financial impact on the BBC, both sides of the equation need to be considered.

In short, the effect of the agreement will be flat cash funding for BBC content and services over the first five years of the next Charter period, after implementing a programme of £1.6 billion of cumulative savings over this Charter period by 2016/17.

The agreement means we will continue to make tough choices and simplify the BBC in the next Charter, building on the savings already planned to close the BBC’s £150 million per annum funding gap and manage the on-going inflationary pressures in our cost base. But, alongside, we now have the planning certainty we need to give the BBC financial stability and the opportunity to continue our reform programme.

Let’s first look at the cost part of the equation. The cost of over 75s TV licences will be transferred to the BBC on a phased basis, starting in 2018/19 with the full liability met by the BBC from 2020/21. We estimate this will reduce the BBC’s licence fee income by around £725m pa. We will give those eligible households an opportunity to voluntarily pay for a TV licence and so make a contribution to the cost of the BBC’s services. In the next Parliament, the BBC will take-on responsibility for the over 75s policy and how this balances with funding services to audiences.

As part of the new arrangements, the BBC has agreed a package of funding benefits to compensate for the over 75s obligation. In yesterday’s Summer Budget speech, the Chancellor said: “the BBC has agreed to take on responsibility for funding free TV licences for the over 75s and in return we were able to give our valued public broadcaster a sustainable income for the long term.’’

The new arrangement includes a commitment to:

modernise the licence fee, to adapt it to cover catch-up as well as live TV. This will make the licence fee model sustainable, fairer and safeguard the funding available for our content and services over the period. We estimate that the financial benefit will be around £100 million pa against our baseline. The Government has said it will bring forward legislation within 12 months to make this happen;
phase-out the ‘ring-fenced’ money from the licence fee – £150m a year – which is being used to support broadband roll-out; and
increase the licence fee in line with CPI over the next Charter period, subject to Charter Review conclusions on the purposes and scope of the BBC and us undertaking equivalent efficiency savings to other parts of the public sector. The licence fee has been frozen for seven years at £145.50. Linking the licence fee to CPI would deliver income of around £350 million per annum, at the Bank of England’s target inflation rate of 2%. If CPI is below this level over the period then the planned efficiencies in the BBC’s cost base will be available for offsetting the loss of over 75s income rather than offsetting inflationary pressures

Forecasting how all these factors will add-up over the period is complex; we anticipate that the new arrangements will result in flat cash funding for BBC services over the first five years of the next Charter period. In real terms, the licence fee funding available for BBC services will be down by around 10%.
The way the financial settlement is structured gives the BBC some room for investment in digital transformation in the early years of the next Charter before the full cost of over 75s is absorbed. This will help us to manage the transition we all know is coming to an online world.

We believe that the substance of what has been agreed is a strong deal for the BBC in very tough circumstances.

Of course, once the Charter Review process starts there could be further pressures faced by the BBC such as decriminalising the licence fee which would, in our view, lead to an additional cost of £200m pa. As part of the agreement, the Government has said it will consider decriminalisation in light of the Perry Report and the need for the BBC to be funded appropriately.

James Heath is Director, Policy

Read the letter received by Tony Hall on 3 July 2015 from Rt. Hon George Osborne MP, Chancellor of the Exchequer and First Secretary of State, and Rt. Hon John Whittingdale MP, Secretary of State for Culture, Media and Sport.
Read Tony Hall's letter (sent by email on 6 July 2015) to Rt. Hon George Osborne MP, Chancellor of the Exchequer and First Secretary of State, and Rt. Hon John Whittingdale MP, Secretary of State for Culture, Media and Sport.

The facts about our income and expenditure

2015-06-15T15:56:24+00:00

You might have read today’s story in the Daily Mail about how much of the licence fee goes on funding our programmes. I wanted to explain why the Mail’s interpretation is misleading.

The paper's central accusation is that the BBC’s income is approximately £5.1bn and only £2.4bn of this goes on ‘content’. The implication they leave is that much of the rest of the money is wasted.

The reality is the BBC has a record on efficiency which has been acknowledged by the National Audit Office and Parliament's Culture, Media and Sport select committee - and which ensures more money goes on programmes and services for licence fee payers.

We’ve got nothing to hide, so let me explain the figures (they're available in full in the financial statements of last year's annual accounts if you want to study them in detail).

Firstly, our income

Last year we received £3.7bn from the licence fee. As you would imagine this accounts for the majority of our income and what we spend on programmes.

However, not all of this benefits the BBC - last year around £285m went to pay for the Government's broadband roll-out programme (£150m), Local TV (£16m), BBC Monitoring (£7m), the Digital Switchover Help Scheme (£7m) and S4C (£105m, of which we spent £24m on content for S4C).

We also received around £240m from the Government for the BBC World Service. It’s the last year we’ll receive this though, as from April 2014 we have had to pay for these costs out of the licence fee.

Separately we have three commercial businesses (BBC Worldwide, BBC Global News and BBC Studios and Post Production). The Mail claims that we ‘pumped money’ into these businesses. This is nonsense. These all run as commercial entities, separate from the BBC - so they don't get any of your licence fee. They earn money when they sell things (programmes abroad, use of studios etc) and, just like any business, have costs (investing in TV productions and channels abroad as well as things like staff salaries, buildings etc). At the end of the day if they earn more than they spend they make a profit that can be reinvested in their business or can be returned to the BBC - so last year it meant an extra £174m to spend on programmes and services for UK licence fee payers. Last year collectively these businesses took in just over £1bn in revenue but around £900m was accounted for by operating costs and investments.

So when the Mail says our income was £5.1bn that includes over £500m of money we didn't get to spend on the BBC’s UK Services and £900m of money that simply couldn’t all be spent on content as it was used to keep these businesses running. No business - including the Mail - can operate without costs. To claim otherwise is misleading.

Our expenditure

Actually more than 90% of the money we control is spent on content, distribution and their related support costs - making TV, radio and online content and bringing it to you. That leaves just 9% of spend on the professional support needed to run the BBC. That figure has been independently verified.

You might wonder why this is so different from the figures in the Mail. For starters, when the paper says that we spend £2.4bn on programmes it excludes crucial things like the distribution costs of getting programmes to your homes, all the equipment in our newsrooms, edit suites, studio lighting, and research and development – without which you wouldn’t have any programmes or new services. Our creative people also need desks and places to work, which is also in the infrastructure and support costs.

The article goes on to say that "most of the remaining cash was swallowed up by costs that included running its ostentatious buildings, middle managers and services such as human resources and marketing." Again, this simply ignores the kind of crucial programme costs listed above and the fact that by selling off unnecessary buildings and using more modern, efficient, ones, we’re saving £75m a year in running costs.

So the figure quoted by the Mail is like calculating the cost of running a newspaper without including printing presses, newsprint, and a delivery network to get newspapers into shops and homes.

In fact, the amount we spent on making our programmes and services and bringing them to you last year was around £3billion.

Last year we published a report which showed how we're now saving £1.1billion a year by becoming more efficient – so more of our money goes into programmes and services. And don’t take our word for it. Parliament’s Culture, Media and Sport Committee said in a report earlier this year: "The BBC has highlighted to us that over the last 20 years, the licence fee has stayed almost flat in real terms, but the BBC had expanded its offering, suggesting greater value for money and organisational efficiency."

It added: "The BBC's achievement of cumulative savings of £1.1 billion since 2007 is commendable given the relatively small negative impact they have had on audiences" appreciation and on reach of its services."

Another £400 million a year is due to be saved by 2016/17 - taking the total to over £1.5 billion a year. We'll never stop looking for ways to do things even more efficiently, but we’re proud of the work we've already done to save money to invest more in programmes. We publish full details of our income and expenditure in our accounts for everyone to view so these 2013/14 figures have been public since July 2014 and analysed by many people and no one has seen anything remarkable in them until now.

Ian Haythornthwaite is Director, Finance

Making savings at the BBC

2015-03-10T11:00:00+00:00

Whenever people talk to me about the licence fee I feel confident in pointing out what great value it is it is at £2.80 a week.

Compared to 20 years ago, when there were two televisions stations and five national radio stations, our audience today has got four times as much television, twice as many national radio services plus iPlayer, apps and a global web service.

It all shows doing more for less has clearly been a mantra at the BBC for a long time.

Back in 2010 the BBC’s settlement with Government brought about a six year licence fee freeze, at £145.50, and the Government allocated a significant portion of our funding elsewhere to national broadband roll-out, the World Service, S4C and local television.

This meant the BBC faces 26 per cent less in real-terms to spend on public service content than it otherwise would have by 2016/17. Our plan to cope with that change was to increasingly cut our annual costs so we were saving £700 million by 2017.

That plan, named Delivering Quality First, placed a particular emphasis on finding efficiency or recurring savings - ways of saving on costs on an ongoing basis. Two-thirds of the money would come from improving the way we work on a day to day basis, securing better deals when buying-in goods and services, cutting property running costs, reducing staff numbers and finding more efficient ways of working. A small increase in commercial income from BBC Worldwide was also projected. Then the remainder would come from reducing the scope of services such as shared evening programmes across local radio in England and changes to the BBC Two daytime schedule.

We have a good track record. Last week a group of influential MPs commended the BBC’s efficiency. Today we have been given our mid-term report card by the National Audit Office who have confirmed that our overall savings of £374m to the end of 2013-14 exceeded the projected milestone of £367m.

BBC savings bar chart

We have done this in large part by renegotiating existing contracts saving millions, working in fewer buildings, keeping headcount down and limiting salary increases. Public service broadcasting staff costs came down by 17 per cent in the first two years of the programme.

Proper financial tracking meant we were able to anticipate some time lags between implementation of projects and the fruition of savings. As a result we have already offset any differences through one off savings to ensure that our financial targets are still met in full. The evidence suggests that greater efficiency has not been at the expense of quality output. For us and our audiences that is essential.

That is why 91 per cent of the spending we control now goes on content, distribution and related support costs – exactly where the public wants to see it spent. The remainder goes on the professional support needed to run the BBC and we’ve cut that proportion by a quarter in the last four years.

Overall we expect cumulative savings across the whole Charter period to reach £1.5 billion a year. This is a significant sum as we have discretion over £3.2 billion of licence fee funding.

Yes, we still have more to deliver to meet our financial targets for the end of the Charter. The NAO is right to say that the remaining savings will be a “greater challenge” and the pressure on content and services will inevitably increase, but we are on track to meet our targets.

There are no major areas of spending that the BBC has not reviewed. We have saved more since the NAO completed its analysis. We are right on track to hit our targets for 2014-15 and have identified more opportunities to make savings. Applying our strategy of “compete or compare” – extending competition wherever possible and comparing what we do with the best practice in the market where it doesn’t – will help us find ways to reduce cost beyond 2017.

We have taken a step in that direction already by announcing the creation of BBC Studios – first within the public service but potentially in future, subject to discussion with the Trust and Government, becoming a wholly-owned subsidiary of the corporation - to produce bold programme-making at great value for money for you.

Since this Royal Charter began the number of people we reach has gone up, people’s trust has gone up, and your view of our quality has gone up, too.

So we know that the BBC of today is leaner, and I am confident we're ensuring we get great value from the licence fee. The challenge now is to keep on innovating and finding ways to do more with less to deliver the rest of the savings we need to make.

Anne Bulford is Managing Director, Finance and Operations

Read the Press release on the Media Centre
Read also Efficiency at the BBC: Delivering quality content for the licence fee payer

Enforcing the TV Licence – busting some of the myths

2015-01-22T17:47:09+00:00

Following today’s Daily Mail article criticising the way the licence fee is enforced, I wanted to take the opportunity to explain how we operate, and our approach to evasion. Licence fee evasion remains low at between five and six per cent, one of the lowest rates in Europe. So we know the vast majority who need a licence have one - a comparatively small number of people will receive letters or visits from our enquiry officers.

Helping people pay

It is a criminal offence to watch or record live TV without a valid licence. Anyone doing so, on any device, is breaking the law. We give people every opportunity to pay for a licence, and will do everything we can to help them to spread the cost so they stay licensed. We know some people do struggle financially, and our teams work with more than 420 money advice and community groups across the UK to provide advice about small weekly instalment payments and concessions. Contrary to what the article suggests, those aged 75 and over are required to have a licence if they need one, but it’s provided for free. It is only fair there are consequences for people who deliberately evade but we’d always prefer people pay for a licence, and only prosecute as a last resort. Prosecution decisions are based on the Crown Prosecution Service guidelines and include both an evidential and public interest test before cases proceed to a magistrates’ court.

Prosecutions in context

Every UK household which watches or records live TV needs a licence. We have a database of 30m addresses with 25 million TV Licences in force. Prosecutions are small in number (only 0.6% of the addresses on our database in 2013 according to Ministry of Justice figures) when compared to the numbers of those who are properly licensed.

Who is taken to court?

When a TV Licensing enquiry officer visits a property, and finds TV equipment being used without a valid licence, they will take a statement from any responsible adult living at the address. It’s that person who may then be prosecuted. Officers might visit at any time of day, including evenings. While we don’t know for certain why more women are prosecuted than men, I’d refute any suggestion that this is due to improper behaviour by our officers, who operate by a strict code of conduct.

Court time taken up by TV Licensing cases

Licence fee evasion cases account for a significantly smaller proportion of magistrates’ court time than their numbers might suggest. Because the vast majority of cases are heard uncontested and in bulk they actually only account for 0.3 per cent of court time in the most recent data available.

Goodwill payments

The article suggests that TV Licensing was “forced” to make £100,000 in goodwill payments to people who have complained to us for about being unfairly pursued. This isn’t the case, the figure refers to goodwill payments made for all complaints to TV Licensing (including those about administrative errors, or matters of policy) over a six year period. In an operation the size of TV Licensing, with 25m licences in force, mistakes can happen. When they do occur we do everything we can to resolve customer issues. As is common practice we may offer a gesture of goodwill in a small number of cases where we have been at fault. In the case cited in the article, we offered Mr Troy our apologies and made a goodwill gesture in recognition of the fact that errors were made in handling his case.

What should the sanctions be for TV Licence evasion?

The Government has engaged David Perry QC to review how the licence fee is enforced and the Department for Culture, Media and Sport recently published the terms of reference of the review. The review will assess ways of enforcing the fee bearing in mind criteria including value for money, fairness for all licence payers and effectiveness in deterring evaders. It will report in June 2015. At present, there are no changes to the way we enforce the fee, and evaders face prosecution and an average fine of £170 levied in England and Wales.

We’re looking forward to engaging with the Government’s review. It’s important that any new system is both proportionate and successful in maintaining the current low levels of evasion and collection costs. An increase in evasion and collection costs would mean less money available to invest in content and services for the public.

Pipa Doubtfire, Head of Revenue Management, TV Licensing

Modern buildings equal better value for the Licence Fee

2015-01-20T16:05:18+00:00

As the Director of Workplace and Safety, I lead the team that manages the BBC’s properties across the UK. Our buildings provide the production and broadcast capability that allows us to serve our audiences both in the UK and across the globe. We have distinct services in Scotland, Wales and Northern Ireland together with our regional and local radio stations across the country. Many of our buildings are highly specialised with studios, editing and playout facilities which need to run 24 hours a day, 365 days a year. The output of the BBC has increased enormously over the past 20 years from two to nine television stations and five to 10 national radio stations as well as BBC online, iPlayer and Red Button.

Our buildings have also had to keep pace with the rapid changes in technology and the way we all consume media now – such as 24-hour news and the internet. About 15 years ago we recognised that many of our buildings were rapidly becoming out of date and unable to support the ‘digital revolution’ in broadcasting. So we embarked on a programme to modernise the estate and make it more efficient and to do so without increasing the cost to licence fee payers. Along the way we also addressed some other things including the need to better reflect the geographical spread of our audiences across the UK outside London.

How we've saved money by reducing our property portfolio

That programme is nearing completion. Most of our buildings have been modernised – more than 60 per cent are less than 15 years old compared to 5 per cent in 1999 – and over half of our staff now work outside of London. We have also reduced the number of buildings we occupy from over 250 to 154 and the overall space by nearly 30 per cent. The BBC now spends 4 per cent less in real terms on property than at the start of this programme. Between 2010 and 2017 we will have reduced the cost of running the estate by £67m a year.

We have replaced buildings like Television Centre, Bush House and White City in London, Queen Margaret Drive in Glasgow, Oxford Road in Manchester and Pebble Mill in Birmingham – in many cases much loved, but run down and technically obsolete – with modern, technologically advanced buildings such as Broadcasting House in London, Pacific Quay in Glasgow, MediaCity UK in Salford and the Mailbox in Birmingham.

It is right to say that we have invested significantly in these buildings particularly in New Broadcasting House. In doing so, we have consolidated into one building the news, world service and television operations that were previously spread across three major sites. As a consequence this brings nearly half of all output under one roof using an unprecedented level of technological sophistication and resilience. Its open and accessible design has brought us closer to audiences with over 100,000 people visiting the building each year. And this doesn't include the countless passers-by dropping into the media café to overlook the newsroom, flocking to see their idols go in and out of Radio 1 or watching The One Show being made in the public piazza.

But we’re not quite finished yet. We still have some major sites that need to be modernised – we've announced a major new development in the centre of Cardiff to house our broadcast operations in Wales, and we're looking at options for Belfast and Bristol. We will also continue to improve on how efficiently our buildings are used and how they perform environmentally, continuing to drive down costs in real terms. But we have achieved a significant amount so far; particularly given that the Licence Fee has been held flat at £2.80 a week for six years. Today the National Audit Office, the public spending watchdog, has said that we have made good progress:

“The reduction in space has significantly exceeded the reduction in staff numbers, which indicates the BBC is using its estate more efficiently.”… “This reduction coincided with an increase in its broadcast and digital output.” It added that the BBC has “replaced many ageing buildings with a smaller number of modern facilities that are better suited to its needs and more accessible to audiences.”

This confirms that the strategy the BBC set out to deliver at the start of this was the right one.

Better buildings mean better value for money. The efficiency they provide means we can spend more of the licence fee income in producing more of the world class programming that is expected of us.

Paul Greeves is the BBC's Director of Workplace and Safety

See the full report here
Read the press release on the Media Centre
And the press release on the BBC Trust website

Christmas shows the BBC at its best

2014-12-24T10:51:04+00:00

This article first appeared in the Sun newspaper on Wednesday 24 December 2014.

Without some things, it just wouldn’t be Christmas — the tree, turkey and a festive dose of EastEnders.

Millions of people will spend some of their Christmas Day watching the BBC.

If you don’t see who’s having a pint at the Queen Vic you might be sitting with the kids to watch Doctor Who or Strictly — or laughing at Mrs Brown’s Boys when they’ve gone to bed. Or maybe you’re looking forward to the first of two Miranda specials.

Christmas shows the BBC at its best, bringing you so many of the nation’s favourite shows. For just £2.80 per household every week, I think you get incredible value from the licence fee all year round whether you watch our programmes, listen to the radio or use BBC iPlayer or our websites.

I know in recent weeks The Sun has questioned that and some readers may have their doubts as well. So let me try to convince you.

The millions of families who will watch our programmes this Christmas show how the BBC can bring Britain together at special moments. Just like when Rory McIlroy won the Open this year and Lewis Hamilton became Formula One World Champion — moments seen live on the BBC.

Look what else you get for your licence fee — the World Cup, Olympics, Match of the Day, CBeebies and CBBC, new British dramas like The Missing and The Fall, the best natural history programmes, all of our radio stations, the BBC website and impartial news from around the world.

There’s something for everyone — because if everyone pays in through the licence fee you should all get something back as well, and not just at Christmas. But to make great programmes we need great people at the BBC. The people we need would otherwise work for others who can pay seven figure salaries.

Because our money comes from you, it’s right that the BBC should pay much less.

But there is a level as well beneath which we wouldn’t get the right people. Talent — such as a finance director who saves the BBC hundreds of millions of pounds — costs.

To make sure every penny is put to good use, we’ve saved lots of money by cutting staff numbers and senior managers, limiting pay increases, selling off costly buildings and negotiating better contracts. We’re more efficient, but I know there’s more still to do so we’re not resting on our laurels.

We aren’t perfect. But where we’ve made mistakes we’ve learnt from them. Capping the amount people can receive in pay-offs when they lose their job was one of the first things I did when I returned as Director General.

The Sun and the BBC agree on lots of things — we both want to celebrate the best of Britain, and we both know that you want value for money. I hope you’ll agree that’s what you’re already getting. As you enjoy the amazing programmes we’ve got lined up for you this Christmas, I’m confident we’ll give you even more next year.

Tony Hall is Director-General of the BBC.

This article first appeared in the Sun on Wednesday 24 December 2014.

Efficiency at the BBC: Delivering quality content for the licence fee payer

2014-11-27T12:58:36+00:00

As Managing Director of Finance and Operations at the BBC, my responsibilities extend to looking after finance, legal, technology, and business support services. I first worked at the BBC in the 1990s, rejoining about 18 months ago. The role I have now is to make it as easy as possible for everybody to do great work. That comes about in two ways: by keeping things simple; and, making sure as much money as possible goes into the content people see and experience.

Working here we all have a very special responsibility to get best value for the licence fee. That comes with a duty to make the best quality content and keep support costs as efficient as possible. At the same time we've had to face some very tough challenges. The combination of a licence fee 'frozen' at £145.50 for since 2010 and the additional obligations the Government attaches to the fee means that we have in real terms 26% less to spend on public service content than it would have been by 2016/17. So when I came here to work with Tony and the team my job was to put financial rigor and efficiency right at the heart of the corporate agenda.

In February 2014, Tony Hall gave a speech at the Oxford Media Convention where he argued that although the BBC had done much to become efficient, we must never stop looking for ways to do more. At the same time, Tony asked me to carry out an efficiency review, looking both at the BBC’s record and where we can go further to deliver value for money for Licence Fee payers.

The BBC now vs. 20 years ago.

We already get quite brilliant value out of the licence fee. If I look back to 20 years ago when I was first at the BBC, there were two televisions stations and five national radio stations. Now we've got four times as much television, twice as many national radio services plus iPlayer and a global web service. There's much, much more content available out there - more for less. The £145.50 Licence Fee equates to £2.80 a week – comparatively excellent value.

The report published today shows the BBC is now a much improved organisation. We are now more efficient than we were. We're better run, better organised and we're doing more for less. We have delivered £1.1 billion annual savings since 2007. And in just 4 years we have reduced the proportion of licence fee spent on professional support by a quarter (since 2010).

This has been achieved through property rationalisation, procurement and a wide range of initiatives in every part of the BBC.

On property, we have reduced our estate significantly. The BBC now occupies 154 buildings down from 213 and plan to save £67m a year by the end of Charter. We have also reached our target of more than half of staff being based outside London.

On personnel and pay, we’ve been able to save £150m per year through pay restraint and agreed headcount reductions. The BBC pays in line with, and in some cases below, the overall market. We've reduced the number and paybill of senior managers by more than a third.

And on procurement, we have saved £70 million this year by re-procuring major long-term contracts and good and services contracts. Our current IT service contract was renegotiated, and combined with some new ways of working, will deliver almost £90 million in cumulative savings by the end of Charter.

In all, the BBC will deliver over £1.5 billion of cumulative annual net savings by the end of this charter period in 2016/17. This is a significant in the context of £3.2 billion of licence fee that the BBC controls.

We still have more to deliver, some £400 million and through our "compete or compare" plans we will continue to look for opportunities to simplify and reduce costs.

Everyone at the BBC is dedicated to producing great work. For 3p per hour of output and 40p a day we believe the Licence Fee payer can be confident they are getting good value from an organisation committed to delivering the best and to delivering value of money.

Read the full report on Inside the BBC