TV licence collection hit by a lack of vision

It has long been taken for granted that the cornerstone of BBC funding – the TV licence fee – is quietly being collected without a hitch.

But the consortium that had been contracted to administer, collect and enforce the TV licence fee was disbanded in March – five years before the end of its contract – having failed to achieve some of its contractual objectives.

Envision, the consortium made up of Consignia (formerly the Post Office), Bull Information Systems and WPP, had in October 1998 been given the task of managing the contracts associated with TV licensing, among them direct marketing, public relations and telemarketing.

The BBC is now seeking partners to help it administer the TV licence payment and collection process (MW last week) and has entered into interim contractual arrangements with Consignia and WPP, pending the outcome of the tender. The tender includes a review of the £10m above-the-line creative advertising and media buying accounts, held by TBWA/London and New PHD respectively. These agency arrangements were put in place by the BBC and are not part of the contract with Envision.

The £30m below-the-line business held by OgilvyOne and the public relations account held by Ogilvy PR were managed through Envision and will also be part of the review.

The first stage of this tender process starts on Friday (May 4), when the BBC hosts a briefing day for all potential contractors.

The review comes at a crucial time for the BBC, which has been granted an increase in the licence fee last year of 1.5 per cent above inflation (£104 to £109 from April 1, 2001 for a colour licence). This rise was granted in order to give it an extra £200m a year until 2006, to help fund its digital expansion.

The BBC refuses to divulge the nature of the contractual objectives that were not fulfilled by Envision, claiming that they are “commercially confidential”.

The BBC admits that there has been some growth in licence sales, but it was not in line with expectations.

The financial performance of Envision also failed to meet the expectations of the BBC, according to a briefing document for potential bidders accessible on the corporation’s web site.

According to the BBC, there are 23 million licence holders in the UK and £2.3bn in licence fee revenue was collected for the year 1999/2000. The corporation estimates that revenue will increase to £2.4bn for the financial year 2000/01. Whether or not the BBC has managed to meet this target will not be known until its next annual report and accounts are published in June.

It is estimated that there were 24.88 million households in the UK in 2000 (source: GHS/Regional Trends, National Statistics/Mintel). According to Mintel, 97.8 per cent of households have a TV set.

The briefing document also shows that the cost of collection of the licence fee as a percentage of the total revenue is likely to rise for the year 2000/01 to 11 per cent. It had dropped from a peak of 12.6 per cent in 1997/98 to 10.3 per cent for 1999/2000. This reversal may have led to the issue of the tender.

Consignia has been in charge of customer management including the helpline, licence collection and the team that catches licence fee evaders. The Post Office’s relationship with the BBC goes back to the time when TV licences were first introduced in the 1920’s.

A spokesman for Consignia says: “Targets weren’t being met and obviously the BBC has decided to have a rethink. At this stage we are not sure if we are going to pitch. We will make a decision in due course.”

The BBC says it is committed to stamping out evasion and claims licence-fee evasion has been reduced to a record low of 5.4 per cent, down from 10 per cent in 1992. There were 130,000 convictions for licence-fee evasion last year.

The BBC has moved away from the intimidatory approach of trying to convince people they have a social obligation to pay. The consequences campaign, created by TBWA, which broke last year, is softer and is aimed at people at risk of forgetting to pay their licence fee, rather than hardcore evaders.

Despite the termination of its arrangements with Envision, the BBC claims it is prepared to consider not only suppliers for individual parts of the tender, but also one provider to meet all requirements.

A BBC spokeswoman says: “We are open to proposals for a single contract, encompassing all areas of the operation, or separate contracts to deliver the different functions.”

But one insider who has worked on the business says: “The BBC may find it a bit of headache trying to run its business without a central service or something like Envision. For one reason or another Envision may not have worked for them, but to manage all those relationships will take a lot of energy.”

In order to service such an important part of its business, the BBC may find itself working with an organisation almost identical to Envision.