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BBC 2017: Tell me about the 16 options to collect the BBC 4 billion quid a year?

This is a look at sixteen options to fund the BBC in the coming decade. I know you will be surprised by how the options have stacked up: the question is do we change the Licence Fee to one of these smart ideas?

Does Paying six British pounds a month to fund Broadcasting have your Corporation?   Photograph: Shutterstock
Does Paying six British pounds a month to fund Broadcasting have your Corporation? Photograph: Shutterstock
published on UK Free TV

After the feedback from posting the original table (on the BBC 2017: Which of these 14 options is best to collect 4 billion quid a year? page), I have added in two extra lines to the graphic to show the "German Model" (thanks to KMJ,Derby) and "ad funded" (thanks to trevorjharris).



Reference material

Much of the inspiration for thinking up these funding methods came from this Ofcom - Facts & Figures page. I have reproduced the graphic down the right hand side for your reference.

Funding method: Mobile phone contracts surcharge

  • How it works: Extra tax on each mobile contract phone line
  • Who pays: Anyone with a mobile phone/broadband contract pays £6 per month extra.
  • Who watches the BBC services: Everyone
  • Payments collected by: Mobile phone operators
  • Pros: Simple to collect from small group of corporations, low individual charge
  • Cons: : Not technically progressive

I thought it was odd this came out on top, but there are obvious advantages. People with PAYG phones would be excluded, so low/no income people would be self-excluded (or those who object to the BBC on principle). As homes with two mobile phones would be revenue neutral, and businesses that supply mobiles to workers would be making a contribution.

The number of contracts would be stable and so the actual monthly value could be adjusted easily. Low income charities might feel the pinch if they have low-cost high-users mobile phone contracts as part of their public services.

It does not seem unreasonable that a household with three or more mobile phone contracts could probably afford £6 a month extra.

Funding method: Tax on TV subscriptions

  • How it works: Extra payment from pay TV viewers
  • Who pays: Households with Pay TV
  • Who uses: Everyone
  • Collected by: Sky, Virgin, BT, TalkTalk etc
  • Pros: Easy to collect from a few large corporations.
  • Cons: : Progressive tax, but falls "unfairly"

This is a simple method of collecting money from homes that have self-selected to pay more for their television service. It would be a charge on 10.5m Sky TV subscribers and 3.8m Virgin TV subscribers. This would mean raising £21.30 a month from each of these homes: they would be £9 worse off, but non-subscribing homes would be £12 a month better off. This would be Progressive, but not in a fair way.

Funding method: Mobile phone contract tax

  • How it works: Extra tax on total mobile phone contract bill
  • Who pays: Anyone with a mobile phone contract has percentage (say 5%) charge on total bill
  • Who uses: Everyone
  • Collected by: Mobile phone operators
  • Pros: Simple to collect from small group of corporations
  • Cons: : Poor stability of income

This is an attempt to make the "Mobile phone contracts surcharge" fairer by adding on (as it does with VAT) an additional charge to the total value of each monthly mobile phone contract bill.

This would make it more progressive: low users would pay less. However the income would be less predicable and this would also be - as most contracts have a device-funding component - a tax on hardware purchase.

Funding method: Broadband bill tax

  • How it works: Tax on having a broadband
  • Who pays: 21.7m households pay £14 per month (or £11.50 per month if 5m mobile broadband also pay)
  • Who uses: Everyone
  • Collected by: BT, Virgin Media, Sky, TalkTalk and others
  • Pros: Easy to collect from small number of private companies
  • Cons: : Basically the TV Licence by another name. Could slow down broadband take-up.

This will be revenue neutral for most homes. For most people it would just have the added convenience of making the payment on an existing communications bill. There is certain logic to having the BBC services linked to broadband, especially going forward.

Funding method: General taxation

  • How it works: Annual payment made from total government tax take
  • Who pays: Everyone (more or less) and businesses
  • Who uses: Everyone
  • Collected by: HMRC
  • Pros: Easy to arrange. Divert 0.61% of existing government revenues to BBC
  • Cons: : Political interference unavoidable.

If there could be a way to fix the BBC's income in a way that did not allow a Chancellor to put pressure on BBC News, then this would be an obvious way to fund the BBC. It is the nature of the beast that makes such a proposal only possible in Cloud Cuckoo Land.

Funding method: Council tax add-on

  • How it works: Additional council tax item
  • Who pays: All households. Set so Band D pay £12.50 a month extra
  • Who uses: Everyone
  • Collected by: Local councils
  • Pros: Straightforward to collect. Some level of progressiveness to the tax
  • Cons: : The collection is backed by criminal sanction.

This is another form of the TV Licence by another name. The simplicity of all households paying (if they have a TV or not) and the use of the existing collection system of the local councils are key benefits. For most homes this would be revenue-neutral. Band A could pay 50% and the top band 200%, with the in-between bands pro-rata. There could be also a single-occupancy discount.

The usual issues with the council tax (no-income person living in a large house) would arise, but there would be a linkage between wealth and contribution.

If you can pay for the streets to be cleaned this way, why not the BBC?

Funding method: Electricity bill tax

  • How it works: Tax on electricity consumption
  • Who pays: All households, businesses etc
  • Who uses: Everyone
  • Collected by: Power companies
  • Pros: Simple to collect. Pre-payment meter options for poor households.
  • Cons: : Basically the TV Licence by another name. Loss of power for non-payment.

This method is used in other countries (such as Greece) and could provide a stable, predicable income. It is a per-household charge (but would also require payment from non-domestic use). Would be revenue neutral for most people, but no chasing for payment from the TV Licensing people .

Funding method: Licence fee

  • How it works: Each TV owning household makes annual payment
  • Who pays: Households operating a TV set (almost all 26.22m)
  • Who uses: Everyone
  • Collected by: TVLC
  • Pros: Existing system
  • Cons: : Not progressive. Relies on criminal sanctions backstop

The main objections, such as perceived unfairness for non-TV owners (who are sent terrifying ... letters), and the non-Progressive nature of the tax (every home pays the same, from single poor occupant to rich large family), are usually a Trojan Horse argument. The 3% who do not pay are disproportionally vocal online, as they do not have a TV to entertain them.

Funding method: Subscription via Sky, Virgin etc

  • How it works: Subscription system gatekeepers
  • Who pays: TV Households choosing service
  • Who uses: Subscribing households, radio free
  • Collected by: Sky, Virgin
  • Pros: Uses existing TV subscription systems. Could be compulsory.
  • Cons: : Considerable overhead costs in denying non-payers access

I have game-played this option here: BBC, plc 2017: BBC announcement.

Funding method: Adverts

  • How it works: Less programmes, 16 minutes and hour of adverts
  • Who pays: People who buy products and services
  • Who uses: Everyone
  • Collected by: From advertisers
  • Pros: No TV Licence
  • Cons: : Probably put ITV and Channel 4 off air.

I have game-played this option here: BBC plc 2017. June: Media Talk discusses the ad-funded Auntie

Funding method: German Model

  • How it works: As per TV licence, but all household pay
  • Who pays: All households
  • Who uses: Everyone
  • Collected by: Either TVLC or added to Council tax
  • Pros: Easy and cheap to collect
  • Cons: : No opt-out, flat rate so non-Progressive

The German funding model, where a flat charge is made to every household whether there is TV usage or not, is one option This would stop expensive process of determining if non-payers are evaders or those "freaks" who do not actually have TV set.

This could be done either by giving TVLC the right to charge every home, or by adding a flat charge of £12.50 a month to Council Tax bills of all shapes and sizes.

Funding method: VAT add-on

  • How it works: Change to VAT rate by +0.9% to specifically fund BBC
  • Who pays: Everyone
  • Who uses: Everyone
  • Collected by: HMRC
  • Pros: Very easy to collect.
  • Cons: : Political interference unavoidable.

Put VAT up to 20.9% to fund the BBC and not expect constant political meddling? Are you mad?

Funding method: Tax on electrical/TV purchase

  • How it works: Extra tax at point of sale
  • Who pays: People buying new TVs
  • Who uses: Everyone
  • Collected by: Retailers
  • Pros: None
  • Cons: : Tax rate would be very high to provide level of funding. Online retail makes charge easier to avoid.

The charge would be so high as to double the price of a television. This is basically a non-starter. Even if the charge was to all electrical items and white goods, this would be hated by retailers and loved by people visiting the rest of the EU to buy stuff there.

Funding method: PAYE add-on Basic and Higher

  • How it works: Change to PAYE rate specifically to fund BBC
  • Who pays:Everyone who earns income. Small change to basic rate of tax paid by all earners over £10k.
  • Who uses: Everyone
  • Collected by: HMRC
  • Pros: Very easy to collect.
  • Cons: : Basic rate of tax politically hard to increase. Political interference unavoidable.

Putting up the basic rate of income tax is politically not an option.

Funding method: PAYE add-on

  • How it works: Change to "40%" band to fund BBC
  • Who pays: 5 million people who earn over £32k. Would mean upping the 40% to 42% or £60 pm flat charge
  • Who uses: Everyone
  • Collected by: HMRC
  • Pros: Very easy to collect.
  • Cons: : Political interference unavoidable partially breaks link between payment and service.

Getting the "middle earners" to pay for the BBC would render the link between the public and the BBC broken. When not pandering to the politicians, the BBC might become really, really middle class. Or at least have no defence to such an accusation.

Funding method: PAYE add-on, top 1% of earners

  • How it works: Changes to make top 1% pay
  • Who pays: top 1% of earners ... pay £12.5k each
  • Who uses: Everyone
  • Collected by: HMRC
  • Pros: Very easy to collect.
  • Cons: : Totally breaks link between payment and service.

The idea of the "1%" paying for the BBC sounds attractive from an envious point of view, but would shift the corporation from service the public to serving the elite.

I hope this fleshes these proposals out in your mind a little more than the raw numbers did. As ever I will be interested to know if you feel that one of these proposals has your support or interest.

All questions
I have replaced my old dish and although i am getting full signal strenghth i ca1
Can I use a digibox on Jersey?2
Can recieve the free view channels thru the sky box without activating the car3
Is there a calculator or pc program to give dish azimuth and pitch settings for 4
Is there any way of sharing the RF 2 output on my sky box to enable me to contro5
In this section
BBC salami-slicing returns to overnight services?1
#GreatBBC campaign launched2
Goodbye BBC Red Button!3
Want to know how much the BBC spend in England, Scotland, Wales and NI per home?4
S4C and Welsh Exceptionalism?5
BBC future: make sure you make the deadline6

Comments
Tuesday, 1 April 2014
Briantist
sentiment_very_satisfiedOwner

8:03 AM

MikeB: The above comparison is for TV, so the total TV ad spend is less than the TV part of the licence fee. If the TV channels adverts had to pay for radio as well, it would be more: another 20%.

Sky pricing is as follows (you must pay for a year)


Basic access charge: £21.50 a month
This gets you Sky+HD box and installation and the "Entertainment" pack of 35 channels: Sky Atlantic, Sky 1, Sky Living, Sky Living It, and Sky Arts 1 & 2, Gold, Watch, Dave, Dave Ja Vu, Alibi, Drama, Home, Good Food, Really.

ANOTHER £5.50 gets you another 45 channels.

ANOTHER £5 gets you 50 of these channels in HD.

ANOTHER £22 a month gets you Sky Sports 1 to 4 (in HD if you paid the fiver above, of £5.5 if you didn't).

ANOTHER £16 a month gets you Sky Movies "up to five new Sky Movies premieres a week.". (HD for £5 or £5.50)

MUTV £6 MORE
Chelsea TV £6 MORE

2TB Sky+HD box: £279 extra (no, it's not an SSD!) one-off

MULTIROOM: £11.25 a month per room: Sky HD box: FREE, Sky+HD box:L £229 one-off, Sky+HD 2TB: £279 one-off

So: Sky+HD box with Entertainment Extra+ Sports Movies and HD and multiroom: £76.50 a month (with discounts).

Most basic package: £21.50 a month

"Over 35 channels (Sky Altantic, Sky 1, Sky Living, Sky Arts 1, Sky Arts 2, Sky Living It, Comedy Central, Syfy, FOX, MTV, Universal, Gold, Watch, Dave (free on Freeview), Comedy Extra, DMAX, Sky 2, Dave Ja Vu, Alibi, Sky Poker, TCM, Lifetime, Drama (free on Freeview), Home, E!, Movies 24, Quest (free on Freeview), TLC, Shed, Good Food, Really (free on Freeview), Home&Heath, Style, Sky News (free on Freeview), Sky News Arabic, TV5MONDE, LiveOK, Star, StarPlus, Star Gold).

240 free-to-air channels
Catch Up TV
6 free-to-air HD channels"

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Briantist's 38,846 posts GB
T
trevorjharris
sentiment_satisfiedGold

10:53 AM

Sky will often give special deals. For instance I get movies for only £4 per month and often get sports half price for 6 months. I also get fibre broadband at half price and multiroom for £2.50 pm.

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trevorjharris's 366 posts GB
S
steve
11:35 AM

£279 for a 2TB HD+box upgrade LMAO - what a rip off!

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steve's 1 post GB
Briantist
sentiment_very_satisfiedOwner

12:17 PM

steve: I just got a Humax FREESAT-HDR1010 White freesat+ G2 Box 1TB Hard Drive PVR from Richer Sounds for £249. Humax FREESAT-HDR1010 White | freesat+ G2 Box 1TB Hard Drive PVR | Richer Sounds

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Briantist's 38,846 posts GB
Briantist
sentiment_very_satisfiedOwner

12:22 PM

trevorjharris: That's nice of them! The six-month limit on the deals keeps you on-side I guess.

It doesn't cost them the £72 (movies) or £66 (sports), of course. They're just factoring in that you've paid back your set-top box subsidy.

As I recall the sports deal usually goes out in the "off season" to stop people unsubscribing and re-subscribing. You have to admire BSkyB's marketing.

Still they do spend more on marketing than anything else. Incoming programs!

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Briantist's 38,846 posts GB
Thursday, 3 April 2014
R
R Shead
2:09 PM

The scoring scheme has a number of serious flaws, hence the ridiculous result. The most obvious flaw is "How many people pay for something?". The only way in which the scoring for this could be increased would be as a Poll Tax or an Oxygen Tax - and I doubt that anyone would think that that was a good idea.

The criteria should be "How many people who want to watch BBC programmes pay something towards them?". The scores for subscription services would then increase and scores for schemes based on taxing mobile phones, electrical goods or broadband (which are as daft as taxing sales of cream cakes or lawn mowers) would fall.

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R Shead's 18 posts GB
Briantist
sentiment_very_satisfiedOwner

3:53 PM

R Shead: I presume that you mean by "ridiculous result" one that's not your choice.

It's not supposed to be a definitive list, just a way of arranging the different options.

"How many people pay for something?". The only way in which the scoring for this could be increased would be as a Poll Tax or an Oxygen Tax - and I doubt that anyone would think that that was a good idea. "

Well, the priciples I set out in the first part, BBC 2017: Which of these 14 options is best to collect 4 billion quid a year? | BBC 2017 | ukfree.tv - 11 years of independent, free digital TV advice says that "more people pay less" is better than a "per household charge" (the current situation). It is fair on single-person households that they pay half and where there's several working adults in a house, they contribute more. How is that unfair. Just screaming "poll tax" is just silly.

If you'd like to give me a score for "How many people who want to watch BBC programmes pay something towards them?" I would be interested. But given the BBC's current weekly reach is 97% then you're really only making a semantic change.

Still, the point is: it is a thought exercise.

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Briantist's 38,846 posts GB
R
R Shead
8:04 PM

Briantist

Your own comment on the result was that you thought it was "odd". I suggest that calling it "ridiculous" is only a matter of degree.

The maximum score for the category "How many people pay for something" is only 6. My point is that the only way that this can be increased to a 9 is by charging everybody and I suspect that this will not be popular. (Personally, I thought the Poll Tax of 1990-3 was a good idea, but that's irrelevant.)

Assuming that the BBC is meant to be a Public Service, like Health, Education, Defence, Law Enforcement etc, (if it isn't, then that's a different argument) then the only sensible way to fund it is out of general taxation - which is supposed to be the fairest, most cost effective way to fund such activities. It probably isn't "fair", but at least there are, in theory, methods in place for correcting the unfairness - the Budget and the Ballot Box.

Inventing a tax on one commodity to pay for the provision of another unrelated activity is never a good idea. It can claim fairness only by proxy, it distorts the market for the taxed commodity and its overheads exceed those of collection by general taxation. (I admit that the last point depends on the efficiency of the HMRC.)

It's also not clear (to me) about the meaning of the category "Can people opt out?". Obviously it doesn't just mean "Can people choose not to pay and hence not receive the service." That would either be true or false and score 9 or 1. You appear to be assessing the impact of the consequential effects opting out.. Thus, opting out by not having a mobile phone with a monthly contract has less impact (and hence a higher score) than the current method for opting out (not possessing a TV), and opting out by reducing one's income below the PAYE thresholds is very inconvenient (and hence has a lower score).

But if this is what the category is trying to assess, does not having broadband really equate to not having an electricity supply? And I can see no justification whatever for claiming that opting out by not buying any electrical goods at all is really better (less inconvenient) than opting out by not possessing a TV?

And finally, for the moment, I can make no sense at all of the category "How easy is it [to] understand?" Are you really saying that "I want to buy a fridge so I have pay extra in order to fund the BBC" is more understandable than paying for the current licence? Or that the concept of funding the BBC out of general taxation is so complicated that it more difficult to understand than the current licence?

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R Shead's 18 posts GB
Briantist
sentiment_very_satisfiedOwner

9:19 PM

R Shead: If you're not clear about my criterial then I did lay them out here BBC 2017: Which of these 14 options is best to collect 4 billion quid a year? | BBC 2017 | ukfree.tv - 11 years of independent, free digital TV advice

for example

"How do people opt out of the system if they don't wish to take part?

You can opt out of paying for the BBC is you select to not have a TV. The score here is low if the proposed system has no opt-out for those who oppose the service. "

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Briantist's 38,846 posts GB
Briantist
sentiment_very_satisfiedOwner

9:32 PM

R Shead: Your points are interesting.

Don't sweat the scoring system too much, it was there to organise the possibilities into some kind of order.

The point is that all these alternatives have merits and problems, thus the inability of anyone over the last 90 years to come up with a workable alternative to the hypothecated tax on owning the receiver!

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Briantist's 38,846 posts GB
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