The BBC risks compliant television licence fee payers questioning the fairness of the system if collection and enforcement is not modernised. The Public Accounts Committee, which examines the value for money of government projects, warns that while the BBC is a trusted institution, its relevance across the United Kingdom is under pressure. It suggests that the increasing number of homes not paying for a television licence represented a potential loss of £1.1 billion in revenue over the last year.
Last year, the BBC collected £3.8 billion of licence fee income, and 23.8 million television licences were in force.
3.6 million households in the United Kingdom declared that they did not need a television licence, which costs £169.50 a year and is legally required to view any live television or video service. That represents a potential loss of £617 million in revenue. A further £550 million was lost to people simply not paying for a licence.
There were nearly 2 million enforcement visits to unlicensed households in the last year, but the BBC said it had become harder to get people to answer their doors, which limits the enforcement effectiveness.
In its report, the committee says the BBC should modernise licence fee collection and enforcement, saying that it has not adopted opportunities to digitise the licence and still relies on postal correspondence, with 40% of households still receiving a paper licence.
When asked by the committee why it did not limit use of the online BBC iPlayer to licence holders, the BBC said that its household-address based licensing system does not match individual based BBC account data. It said it chooses not to limit access in order to preserve universality.
The report is also critical of lack of transparency on returns from its commercial activities, noting that the BBC failed to report in its last annual accounts progress against a commercial returns target of £1.5 billion for the year.
The committee drew on evidence provided by Tim Davie, the director general of the BBC, provided before his recent resignation.
The current Royal Charter under which the BBC operates runs until the end of 2027 and dues for review.
In a time of intense competition for attention, younger audiences are choosing other media providers, putting the BBC mission to ‘serve all audiences’ under pressure, the committee says in its report.
Only a little over half of younger people feel the BBC reflects them.
When questioned on the timeline for a switchover from broadcast to online, the BBC told the committee that without universal affordable broadband, a switchover would be “a self-inflicted wound” and reiterated the BBC’s commitment to maintaining significant broadcast services during the transition.
The Public Accounts Committee is seeking an explanation from the BBC of how it will ensure access with all audiences across all platforms, in line with its role as a universal public service.
Conservative MP Sir Geoffrey Clifton-Brown, the chair of the cross-party committee, said: “The BBC is an organisation under severe pressure. Its own founding aspiration to be a truly universal broadcaster reflecting all its viewers means that this pressure, from both within and without, is inherent in its mission.
“Our report offers a snapshot of the BBC’s efforts to deliver value for money as it seeks to thrive in an increasingly fragmented media landscape, and illustrates the tensions it must navigate in multiple areas of its business — in efficiently collecting the licence fee; in providing that universal service; in staying relevant to its audiences.
“On the licence fee, our report makes clear that the ground is shifting beneath the BBC’s feet — the traditional enforcement method of household visits is seeing fewer and fewer returns at a time of heightened competition for almost every aspect of the BBC’s activities.”
It says that “without a modernised approach focused more on online viewing, the broadcaster will see faith in the licence fee system ebb away.”
The BBC said: “As was made clear in the committee session, the licence fee needs reform. We are actively exploring all options that can make our funding model fairer, more modern, and more sustainable, but we’ve been clear that any reform must safeguard the BBC as a universal public broadcaster.”
The report, BBC Accounts and Trust Statement 2024-25 is published by the House of Commons Committee of Public Accounts and is available from the Parliament web site.