/ Money, Technology

Why the government’s sitting on £1bn of TV licence fees

If you’re one of the millions who pay for their TV licence by direct debit or cash payment plan, did you know you’re giving a £1bn interest-free loan to the government?

When I moved house last year, I took out a new TV licence. Moving is an expensive business, so I thought I’d spread the cost of the licence by paying by direct debit.

What I didn’t realise until then was that anyone who pays for their TV licence by monthly direct debit is charged double for the first six months. You then have to make the regular payment from month seven. This effectively means that your TV licence account is six months in credit all the time.

You don’t get this money back until you no longer have to pay for a TV licence or you switch payment method by paying your licence fee in advance. So yes, for many of us that means holding out until we turn 75 or die. Great.

£1bn of TV licence cash overpaid

I initially told myself to get over it. It’s £72.75 that I’ll get back at some point. But the thought kept festering. Why on earth should they keep my money like this? So I decided to issue a request under the Freedom of Information Act, and that’s when I discovered the sheer scale of this interest-free loan.

14.7 million households pay for their TV licence by direct debit, with a further 1.5 million paying under a ‘cash payment plan’ or ‘monthly cash plan’, whereby you pay regular payments at PayPoint outlets.

Both systems operate on the ‘six months in advance’ principle, with the money held in the government’s Consolidated Fund account, from which the BBC receives a monthly payment.

Considering this amount of TV licences, our calculations show that a massive £1bn of extra payments is earning interest in the government’s coffers.

Protecting the BBC from losses

A government spokesperson told Which? that the system provides ‘an alternative to an annual lump sum payment, while also protecting the BBC from losses incurred if payments stop before the whole amount has been collected’.

Well, I have an impeccable track record of paying my bills on time, so I don’t see why I should have to keep my account over £70 in credit just in case I default.

There are already hefty penalties in place for anyone who doesn’t have a TV licence. And there are plenty of households that could do with that £70 right now. The government shouldn’t be cross-subsidising the cost of non-payers using the money of the responsible majority who choose direct debit.

Jan Simpson says:
30 November 2016

Just how many poor people are they suckering in to this illegal payment system? The girl I spoke to in TV licencing said “its the law”. I said “you can’t charge somebody for a future event they haven’t had yet”