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Television Licence Fee (Payment)

Volume 526: debated on Friday 9 April 1954

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Motion made, and Question proposed, "That this House do now adjourn."—[ Sir C. Drewe.]

4.1 p.m.

On 10th March I asked the Assistant Postmaster-General whether, in view of the increase of the television licence fee to £3, he would arrange for payments to be made half-yearly. He replied:

"No, Sir. The cost would be too great. We are, however, examining the possibility of introducing a special savings stamp card."
I pressed the Assistant Postmaster-General further on this matter, and he then made what I consider to be a shocking statement. At least, it would appear to shock us if it had not come from the hon. Gentleman. He then said:
"I would, however, suggest to the hon. Gentleman that if people can afford to spend £60 or more on a television set they can save £3 for a licence in one year."—[OFFICIAL REPORT, 10th March, 1954; Vol. 524, c. 2231.]
If he had not made that statement, I think that I would have let the matter rest in order to see what progress was made with the introduction of a savings stamp card; but in view of his treatment of the matter in that way, I felt that it should be raised again in the House, and I urge upon the Post Office once more to give some consideration to the hardship which is entailed to a large number of persons, particularly the elderly, the sick and others on pensions in raising this lump sim of £3 for the payment of the television licence fee.

After all, television is by no means the preserve of the better off. It is available to all, and as it happens those who are less well off, those on pension and the like, probably make more use of it and get the most enjoyment and relief out of it. It does bring some relief to what otherwise might be a lonely old age, and it certainly cheers up those who are confined to their home or are bedridden as the result of illness.

I think, therefore, that there is a strong case for some effort being made by the Post Office to enable this sum of £3 to be spread over a period and paid in quarterly or half-yearly instalments, so that the difficulty and worry which result in the cases of the less well-off section of the community could be met. This difficulty is particularly great in the case of television because of the high initial cost of the set and because of the fact that most people obtain their television sets on hire-purchase and pay for them by instalments.

Owing to the present law, under the Hire Purchase Credit and Sales Agreement, at least one-third of the initial cost has to be met in the first payment and subsequent payments have to be spread over a maximum period of 18 months. That means that considerable sums have to be found for the payment of these sets over a comparatively short period.

I shall give instances to the Assistant Postmaster-General of the cost of these sets. If one takes one in the cheapest category, the 12-inch tube set, the original price is about £48 and the first payment has to be about £16. If the payments are spread over another 12 months they come to £3 a month, and if over the maximum period of 18 months they come to about £2 a month, an additional 8 per cent. to 10 per cent. being charged on top of the original price to cover the administration of the hire-purchase system, interest and the like. If such sums have to be found monthly after the initial payment, it is not easy to find an additional £3 in one sum to meet the television licence fee.

The Treasury is already doing very well indeed out of the sales of television sets, for when £48 is paid for the cheaper type of sets Purchase Tax is included, which is, of course, 50 per cent, on the wholesale price. Therefore, the Government are already collecting immediately from the purchaser a considerable sum in Purchase Tax. Now, on top of the Purchase Tax and the monthly payments, they are asking for £3 to be paid immediately. I should have thought that there are ways of easing this burden. Licences for sound radio are still only to cost £1 and all I am asking is that there should be some easement in the case of television licences. Only some three million television licences are in issue to date, and by the end of the current year it is very unlikely that there will be as many as four million. If a gesture was made by the Post Office to permit payment by instalments, those people who find difficulty in meeting the £3 at once would benefit.

I should also like to draw the attention of the Assistant Postmaster-General to the heavy costs that are involved in the collection of these television licences. The lion. Gentleman said in his reply to my original Question that it would cost too much to collect by half-yearly instalments. I suggest that the present cost of collection ought to be substantially reduced. If it were, any additional cost involved in half-yearly instalments would come to no more than the savings that could be effected.

The Post Office took last year 7·5 per cent., which is 1s. 6d. per licence, for collecting the licence fee and for certain technical services for the B.B.C. If one eliminates the service rendered the B.B.C, one finds that something like Is. per licence is deducted for collection. I cannot believe that the Post Office is being fair to the B.B.C. in insisting upon a charge of 7·5 per cent. The division of the accounts is shown in the Post Office commercial account, and T notice that over £500,000 is included as expenses at local post offices for the issue and renewal of wireless licences. That amounts to 6d. per licence simply at the local post office.

I cannot believe that the additional work which falls upon the staff of the branch post office in issuing a single wireless licence can amount in value to 6d. It is very difficult to believe that, and I am confirmed in that opinion when I see that the Post Office also debits this account with the expenses involved at headquarters, and even with pension liability. In other words, it says that so many of the staff of the Post Office have so much of their time spent on the issue of these licences that therefore the pensions which they ultimately receive should also be met out of the expenses of collection, and practically £100,000 is deducted on that account.

It is very difficult to believe that the Post Office is treating the B.B.C. fairly. If those persons who wished to pay half-yearly were allowed to do so, is it not reasonable to assume that the cost would not rise to any great extent? Would it be necessary to employ a single additional person in a branch post office in order to collect the fees half-yearly instead of yearly? Surely it would fit in with their other duties. I do not believe that the staff in a branch post office are so fully employed throughout their working day that they cannot do this extra work without increasing the number of staff or being involved in additional expense.

I ask the hon. Gentleman to look at this question again and to give us figures this afternoon to show what he assesses would be the additional cost if people were given the option to pay half-yearly. It could not be so much that the Treasury could not afford it. The Treasury already does very well out of broadcasting and television. Not only does the Post Office take 7½per cent., which is 1s. 6d., but the Treasury takes 15 per cent, of the net licence revenue, which is 2s. 9d. out of every £ of licence fee. In addition, the B.B.C. has to pay Income Tax, which last year was 4d. for every £ of licence fee. Surely the B.B.C. should not be liable to Income Tax on money which it receives from the Treasury from licence fees if it puts part to reserve for future capital expenditure.

If those three items are added together—1s. 6d. to the Post Office, 2s. 9d. for the Treasury and 4d. in Income Tax—it will be seen that 4s. 7d. out of every £ collected in licence fees goes into the Treasury in one way or another, which leaves 15s. 5d. out of the £1 licence fee or 30s. 10d. out of the £2 fee. When the normal person pays his £1 for a sound licence or £2 for a television licence, he thinks he is paying that money in order to receive his radio or television programmes. He assumes that all of it will go for his instruction, entertainment and enjoyment. But in practice nearly one-quarter is taken off and he gets the benefit of only three-quarters of the money which he has paid.

The position will be even worse as a result of the recent change in Government policy, the decision to raise the licence fee to £3 for television and to hand over £750,000 to commercial television. That means, if it is divided over the three million television licences now in existence, that 5s. out of every T.V. licence is being diverted from what might otherwise be usefully employed by the B.B.C. in order that it might be used by commercial television. In other words, the television licence holder will be taxed to the extent of 5s. in order that commercial television may be brought into operation during the next 12 months.

This is not justified and is an added argument why those persons who are being asked to pay £3 should be offered lenient conditions under which it can be paid. In a large number of cases those who are being called upon to make this contribution to commercial television would far rather see the B.B.C. give complete coverage of its programmes to the country, because at present 17 per cent, of the country is not getting television, and then would prefer to see the B.B.C. put on an alternative programme rather than that it should be given by commercial television.

I ask the Assistant Postmaster-General to look at this again. I appreciate that an examination is (being made of the possibility of a saving stamp card, and perhaps the hon. Gentleman will be able to tell us something about that? I am not sure, however, that it would meet the purpose, because when the television set is bought in the first place the £3 has to be found immediately and subsequently it will not be easy to find the money, as I have pointed out. If the suggestion is that viewers should purchase stamps weekly and that cards should be stamped, then the complications seem to be as great as the administrative difficulties and as costly as in the case of half-yearly or quarterly instalments. So I appeal to the hon. Gentleman on behalf of the television viewers who purchase sets often at some sacrifice, who have to pay for them by monthly instalments, and who will find it difficult to meet this £3 licence fee in one sum.

I have no doubt that everyone who owns a television set will be able to find the £3 in one way or another. Of course they will. They will not sacrifice their sets for the sake of £3, but it will be difficult for them, and the suggestion I have made would relieve the elderly, the old-age pensioners and the sick from an additional worry. So if the Assistant Postmaster-General has a better nature, and I will give him the benefit of the doubt this afternoon that he has, will he cease to be as hard as he has been over this matter in the past, and will he in this small way consider coming to the assistance of those who are already finding it difficult to meet the £2 and who will find it more difficult in the future to meet the £3 licence fee?

4.18 p.m.

I am sorry if any remarks of mine in answer to his Question of 10th March have provoked the hon. Gentleman to taking the Adjournment debate today and remaining unnecessarily in the House. He has put two propositions to me. The first was that the television licences should be collected by instalments and the second was that there should be greater economy in the work of the Post Office in collecting the money. These two propositions largely cancel each other out, because if we were to accept this suggestion that the licence fee should be collected half-yearly, it would put up the cost to the Post Office and not reduce it.

The hon. Gentleman appealed to my better nature. Exactly the same appeal was made to my predecessor and he felt he could not accept it. For reasons which, I hope, will convince the hon. Gentleman, I am sorry to say that I cannot accept it either, and I will try to explain why. The hon. Gentleman feels that £3 is a large sum of money to be put down at one time. I must remind him, however, that the cost of any licence must be related to the cost of the article to which that licence applies. As he pointed out, it must be remembered that a television set costs £50 or £60 and so I think that anyone who incurs that expenditure should be able, by one means or another, to find a licence fee of £3.

If he will wait a minute I think I can convince the hon. Gentleman. I know that many of these sets are bought on the instalment plan and that some people hire them. I do not think it is necessary for us to create an entirely new system to meet the wishes of people who are unable to find the £3 at any one time.

Could not the hire purchase people include the licence fee, at least while the instalments were being paid for the set?

They could, but it would mean entirely recasting the system of collecting licence fees.

I believe that as a principle of good government we ought to resist a demand for a new facility when that facility is either unnecessary or is already available in another form. The Post Office would be faced with a very practical difficulty if we had people taking out licences twice a year, even at a slightly increased cost. We could charge a bit more for the licence, but it would certainly mean more staff and, what is equally important, it would lead to even greater overcrowding in our post offices.

Almost everybody realises that our post offices, especially on Fridays and Saturdays, are grossly overcrowded, and the trouble is that successive Governments have loaded on to the post offices more and more services which they are called upon to perform. My whole policy and that of my noble Friend is to try to decrease the work done by the Post Office rather than to accept any new application which would increase it.

I should like to convince the hon. Gentleman that what he is asking is not only undesirable from the administrative point of view, but quite unnecessary. But let us assume that the owner of a television set finds some difficulty in putting down the £3 in one instalment. The cost of a television licence will be 2d. a day, or less than the cost of one cigarette. If it is difficult for anybody to find £3 in one go, there is nothing whatever to prevent him from starting saving in one of these National Savings stamp books; all he has to do is to put in two 2s. 6d. stamps a month, or, if he prefers it, three 6d. stamps a week for 40 weeks, and the licence fee is met.

But it will mean a lot of work if he puts the money in and then has to draw it out again.

It will mean a lot of work for a limited number of people, but if we make it optional for people a large number of people who pay the fee yearly will pay it half-yearly.

I have been studying the numbers of people who make use of these savings books, and I find that the great majority are people who use this service not as a permanent investment at all but for this very sort of purpose, for television licences and the like. Last year the value of stamps sold was £35 million, but £27 million worth were cashed. That must mean that people are using this service now for the very purpose that the hon. Gentleman has in view. I therefore suggest that if they were to use this service to save-up for their licence payment they would be using it for the purpose for which it was intended.

Now I come to the hon. Gentleman's second point, namely, that we ought to cut down the cost of collection. I notice that he specified collection only, and did not refer to the engineering costs of detecting evasion, interference, and so on. The total amount of money which was spent on this was £1,250,000 a year. The hon. Gentleman said that it was 7½per cent., but I must correct him. It is now 8½ per cent.

Approximately Is. of every £1 we collect goes towards running the licensing service which, I admit, is fairly comprehensive; but I do not believe that we can make it less so, unless we are to run the risk of losing a lot of money.

Let me explain what happens. First of all, every licensee gets a reminder that his licence is about to expire. If no action is taken, he gets a second reminder, and, finally, a third reminder by registered letter. Slightly fewer than 2,500,000 of these people had to have second reminders last year, and nearly 500,000 people had to have third reminders. There is no doubt that if we did not adopt this system and if we only sent a postcard out once, we should lose almost 2,500,000 licences, or at least a large percentage of them, and many people would not renew their licences at all, with the result that the whole thing would break down.

The other point is that there is 7½d. in every £ collected for the cost of investigating interference, and as television grows, that, too, unfortunately, tends to grow with it.

The hon. Member raised the question of Income Tax and the B.B.C. and also the question of the deduction by the Chancellor of the Exchequer. It is no good people talking of the Chancellor of the Exchequer as though he were a foreigner. If he does not raise taxation in one way, he must raise it in another—

There is no reason why the B.B.C. should be exempt from paying Income Tax, unless we are to exempt other people from paying Income Tax.

Is there any way in which we could reduce the cost of collection? We could, of course, cease to send reminders. Does the hon. Member suggest that we should do that? We could not cease to take account of the pension liabilities for the people who perform this service for the Post Office. Is it right that the cost should be put on to someone using other Post Office services? I do not think the hon. Member means that.

There is another way in which we might help and which we are considering now. A man who buys a television set could produce a licence to the dealer. There are, however, difficulties about that. One is that our system of licences does not entail the licensing of every set. One may have half a dozen television sets in one house and only pay one licence if all of them are for the same family. In addition, many people make their own sets. If we were to collect the money through the dealers, we would have to bring in legislation to register the dealers, and that would entail inspectors and a rigmarole of procedure.

We are reluctant to do that. On the whole, the present system works very well. I do not want the hon. Member to think that I am hard-hearted or unco-operative. I am grateful to him for bringing the question forward today. But I trust that I have succeeded in persuading him of some of the difficulties of doing what he suggests and the undesirability of making a radical change in the whole of the licensing system.

Above all, I hope that the effect of this short Adjournment debate will be to make more widely known the existence of these National Savings stamps. In these National Savings stamps I believe that we have the only effective means whereby old-age pensioners and others with television sets who find some difficulty in putting down £3 at one time may save the necessary money over the course of the year.

Is the hon. Gentleman introducing a special savings stamp card for this purpose, or is he relying on the existing card?

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes past Four o'Clock.