The BBC Trust's assessment on how the licence fee was spent
How the BBC collects and uses the licence fee.
The unique financial challenges for the BBC
The way in which the BBC is funded places significant financial responsibilities on the BBC as an organisation. Specifically, it has to:
- maximise licence fee income through its efficient and effective collection
- maximise funding from other sources, most significantly BBC Worldwide, the BBC's commercial trading operation, in a manner consistent with the terms of its Charter and other obligations
- provide value for money by focusing expenditure on the programmes and services the public most wants from the BBC
- ensure that our output is then delivered as cost-efficiently as possible
Our results this year show how we have successfully managed these financial challenges and made sound preparations for the future. This is reflected in our Income Statement for the year. Our group surplus for the year was £328million (2011/12: £389million) although the result is inflated this year by profit of £78million on the sale of Television Centre, and was last year by a £95million profit on the sale of Worldwide's Magazines business as well as £45million of exceptional pension income.
Licence fee income increased by £50million this year to £3,656million. Included within licence fee collected is a sum to fund the digital switchover ('DSO') initiative. As savings against this funding are paid over to the Government by the BBC, they are extracted from our income. There was less activity originally scheduled for this year than last year, so the saving was smaller at £50million (2011/12: £92million) which has resulted in the net licence fee income being higher this year.
|Licence fee collected||3,706||3,698|
|Net licence fee||3,656||3,606|
Summary Consolidated Income Statement
For the year ended 31 March 2013
Licence fee income
|3,656||3,606||Reduced Digital Switchover funding and activity|
|Other income and revenue|
Commercial (mainly BBC Worldwide) income and Grant-in-Aid for World Service
|1,446||1,480||Sales growth in Global News and in World Service Grant-in-Aid offset by loss of income from sold Magazine business|
The cost of producing all content and of running the BBC
|(4,801)||(4,750)||Increases to reflect additional cost of Olympics and technology investment|
|Exceptional pension income|
One-off significant item
|-||45||Finalised benefit from pension reform|
|Exceptional impairment of tangible and intangible assets|
One-off significant item
|(52)||-||The in-year write-off of DMI assets|
Sums provided to fund future efficiency initiatives
|(43)||(103)||Relate primarily to Delivering Quality First initiatives|
|Total operating costs||(4,896)||(4,808)|
|Share of results of associates and joint ventures|
Our share of the profit of the businesses where we control less than 50%
|Gain on sale of operations and disposal of fixed assets|
Profit on asset disposals
|111||100||Profit results principally from the sale of Television Centre and Lonely Planet this year, and from BBC Worldwide's Magazines business last year|
|Tax and net financing income|
The net tax liability of the BBC on its taxable profits and the net interest on the BBC's pension assets and liabilities
|Group surplus for the year||328||389|| |
Licence fee collection
Despite pressure on household budgets, evasion rates are unchanged. There was a small increase in the total licence fee collected of £8million. As household budgets come under pressure, we are starting to see an increase in licence fee evasion rates over their prior year level. However, this has been more than offset by a reduction in our collection costs, so that the combined total has reduced in the year.
Effective financial management is a key part of the BBC’s unique relationship with its audiences. This includes spending the licence fee efficiently, ensuring people get delight and enjoyment from the BBC, and collecting a television licence fee from everyone who is required to buy one.
Our new collection contract with Capita started in July 2012 and has already started to deliver savings against the cost of the previous contract. Collection costs were £111million this year, down from £126million last year, and total cost savings of £220million are expected to be delivered over eight years, releasing funding to be spent on our programmes and services. The new contract also contains increased incentives on Capita to reduce evasion and help mitigate the lower increases in the licensable population that we are currently experiencing. Capita have also begun to deliver improvements to our collection processes which will help customers to find the right method of payment for them.
Licence fee statement
This is the third year in which we have prepared a licence fee revenue statement. This account sets out the amounts we collected in the year and paid over to HM Government. The National Audit Office (NAO) audits the statement. Alongside their audit work, the NAO examines our collection arrangements and reports on them to Parliament. More on the licence fee revenue statement can be found on our About the BBC website.