Value for Money Examination 47; Television Licence Fee Collection Summary

A current television licence is required in respect of all premises where televisions are kept. In June 2003, 1.35 million properties were licensable and the annual licence fee was ?150. Licence fee income, net of collection costs, is made available for public service broadcasting. The Department of Communications, Marine and Natural Resources (the Department) has overall responsibility for the management of the licence fee collection process. An Post, acting as agent, issues television licences and collects associated fees. An Post staff also make inspection visits to unlicensed properties. Occupiers of properties with television sets but without current licences may be prosecuted. The challenge in managing the collection of television licence fees is to ensure that licence fee collection is as cost effective as possible while ensuring that the requirement to have a licence is enforced and evaders are pursued. The examination focused on the period 1998 to 2002 and considered

  • how the Department evaluates the effectiveness of television licence fee collection
  • how the agency relationship is organised to support effective collection
  • the efficiency of the collection procedures used by An Post as agent of the Minister.

Managing Effectiveness

The main objective of the fee collection system is to maximise the amount of revenue available for public service broadcasting by minimising the level of evasion in a cost-effective manner. A method of calculating evasion had not been agreed. However, estimates of evasion rates made during the examination show that evasion fell from around 16% of licensable premises in 1998 to an estimated 12% by the end of 2002. Reflecting this fall in evasion, the proportion of total collectable revenue available for public service broadcasting has increased from 75% of total revenue in 1998 to about 80% in 2002/2003. Together with increases in the fee level in 2002 and 2003, growth in the number of licensable properties, and a reduction in collection costs in real terms, this has resulted in the amount of money available for public service broadcasting increasing from ?114 million in 1998 to about ?165 million in 2003. Despite the drop in the evasion rate, evasion is still significantly higher than in the UK.

Managing the Agency Relationship

The future collection arrangements are somewhat uncertain since An Post has signalled its intention to withdraw from the licence fee collection business. If the withdrawal occurs, the Department will need to develop mechanisms for the appointment of a new collection agent and put a more flexible arrangement in place to cover any future transfers of the licence collection business between agents without interrupting revenue flows.The examination noted that the annual agreements with An Post focused entirely on licence sales. Performance measures or service levels in relation to other necessary outputs such as maintenance of the database or prosecution of evaders had not been built in to the agreements. Up to 2002, payment to An Post for licence fee collection was on a flat rate basis. It received ?8.89 for each licence sold in 2002. The payment to An Post per licence sold fell in real terms over the period examined. Up to 2002, the agency agreements did not provide incentives to An Post to incur additional costs in respect of inspection and prosecution activity in order to secure additional licence sales. However, the 2003 agreement now provides for an incentivised payment structure with additional amounts payable to An Post for the achievement of licence sales over a target level.

Efficiency of Collection

Revenue due from licence renewal is collected in a timely manner. About three quarters of revenue from licence renewals in 2002 was collected within a month of the renewal date and about 94% was collected within six months. Most licence sales are made in post offices but some progress has been made in the provision of efficient payment mechanisms such as direct debit and the call centre.

The maintenance of an up-to-date accurate database of licensable premises is crucial to enable efficient targeting of evaders. There is scope to improve the accuracy of the database through recording relevant information, categorising it and recording prosecution activity.

Inspection of unlicensed premises encourages individuals to purchase a licence. In 2002, licences were purchased for over half of the premises inspected following the inspection.

There is wide variation between different regions in the proportion of unlicensed premises. Licence sales targets for individual inspectors have been based on prior year?s performance with an additional amount to cover expected growth in the licensable population. Targets could more appropriately be based on a target compliance rate for each region.

In most cases where evaders are detected and do not quickly purchase a licence, An Post commences prosecution proceedings. Analysis of a sample of prosecution cases in 2002 showed that about half of the summonses were returned unserved. No further action was taken in these cases.

Where cases did get to court, there was a high rate of conviction and the average fine imposed was ?174. On average, lower fines were imposed in the case of convicted evaders who had purchased a licence prior to the court hearing. Very few convicted evaders bought a licence after the court hearing but no strategy has been adopted to pursue them, even though higher fines may be imposed for subsequent prosecutions.