Why hasn’t the television licence fee gone up with inflation?

Not for the first time, the Dáil has been talking about the future funding of public service broadcasting, which according to Minister for Communications Denis Naughten is in "deep trouble".

One of the reasons it is in deep trouble, the Minister says, is that the high rate of annual licence fee evasion (14.6 per cent) means that everybody who pays the €160 fee “pays €39 to cover the cost for those who will not pay”.

It’s a slightly odd way to express it, but this does convey an ongoing unfairness. If you take €39 from each of the 1,027,596 television licence fees that were purchased in 2017, you would get a total of €40 million. This is the sum estimated to be lost annually to the broadcasting sector as a result of an evasion rate that is twice that of the UK.

"Those who pay subsidise those who do not," one of Naughten's predecessors, Eamon Ryan, observed in Thursday's debate. (Separately, some 429,463 households get a free licence, but this is covered – sort of – by the Department of Social Protection. )

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The debate saw the presentation to the Dáil of a recent Oireachtas communications committee report, the key recommendation of which is a politically sensitive call for the Revenue Commissioners to take over licence-fee collection duties from An Post. The nitty-gritty of the rate itself only comes in later. After the Revenue has taken charge and sorted out the evasion problem, the committee advises that the level of the fee should be reviewed every two years "in light of the Consumer Price Index" (CPI).

Naughten’s people are now drafting amendments to broadcasting legislation that would allow him to put collection services out to tender. Once these amendments have been enacted, he will be able to hold a public procurement competition for a new collection agent, “if required”.

Evasion priority

Quite a lot has to happen, in other words, before the committee’s suggestion of CPI-related reviews kicks in. Naughten’s priority, he told the Dáil, was to reform the current collection model and reduce the evasion rate, rather than “imposing additional charges on the public”. Indeed, he has previously ruled out any increase in the licence fee.

It is true that to increase the rate of the licence fee now would only compound the burden of the long-suffering compliant. And then there's the risk that even a small increase would make a lot of people annoyed at the government, not just RTÉ, and trigger a backlash of angry, awkward "what exactly are we paying for here?" questions.

Meanwhile, in the UK, the licence fee is going up this month in line with the rate of inflation by £3.50 to £150.50 (€171). This follows an inflation-linked £1.50 rise last year, while further increases are pencilled in for each of the next three years.

Here, although indexation is mentioned in the Broadcasting Act, the television licence fee has been stuck on the same rate since January 2008, when it increased by €2 from €158.

RTÉ director-general Dee Forbes pushed the point when she appeared before the Oireachtas committee last summer. “To keep pace with inflation, stamps have increased in price, newspapers, pay-TV subscriptions, health insurance, phone bills, hospital fees, electricity, broadband, bus fares – almost anything one can think of, so why not the TV licence?”

If the fee had “simply kept pace with inflation”, Forbes said, it would have reached €175 by now, generating a further €15 million in annual funding.

The CPI has been relatively subdued since January 2008, but the last €2 increase in the licence fee fell way short of the boom-time inflation rates that then prevailed: if the €158 fee that existed in January 2006 had increased in line with the CPI, it would be more than €175 today.

Dramatic shrinkage

But nobody was worried about public media funding a decade ago, as RTÉ, the main but not the only recipient of the licence fee, was coining it in from television advertising. Alas, RTÉ’s 2007 commercial revenues of €245.5 million have since plunged to €158 million – a dramatic shrinkage that has contributed to the sense of an existential crisis in the market.

Larry Bass, chief executive of Dancing with the Stars-maker Shinawil, has been blunt: if the Government does not both crack down on evasion and substantially increase the licence fee, "we will not have any Irish television content worth watching".

For Bass, if we are "serious about being Irish", we would not give up on public service broadcasting. For former minister Pat Rabbitte, public service content went hand-in-hand with "the concept of society". For the voters of Switzerland, who last month decisively rejected a referendum motion to abolish its licence fee, the national culture of small countries depends upon public funding for its preservation.

A switch in the collection mechanism from An Post to the Revenue won’t happen overnight, if it happens at all. If the desire really is to “support a vibrant broadcasting sector” that is agreed to be in financial “deep trouble”, then faster, simpler measures are available – an inflation-linked increase in the licence fee is just one of these. Either the fear is that they cannot be made to fly or the desire must not be that strong after all.