Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 140 - 143)



  140. I understand that. Getting the whole thing lodged, a net gain to the taxpayer of 40 pence is likely to be seen as less of a success than getting a net gain on 22 billion.
  (Mr Hendon) From the point of view of the taxpayer but from our point of view this was the third part of the third objective.

  141. The third part of the third objective. The interests of the taxpayer were so low down your order of priority then, were they?
  (Mr Hendon) As I said just now, it was the third part of the third objective because the principal objective was to get the spectrum exploited economically to generate wealth for the country. We wanted these services to be available to consumers. We wanted businesses to be able to make equipment and sell services using 3G. We wanted to put UK companies in a position of being able to go into other countries and exploit the same technology. The fair return for the taxpayer in the objectives of the auction announced by the Minister in Parliament was part of the picture and 40 pence would not have been a fair return for the taxpayer, but it was not the primary consideration.

Mr Steinberg

  142. This is a question purely because I do not understand the technology at all, I am a total layman. When we have talked about the cost that may well be passed on to the consumer because of the investment that has been made, purely as a layman, presumably the technology that has got to be developed has to be by the manufacturers of the equipment, people like Siemens and Nokia and—what I have got—Ericsson? Presumably they are the ones who will have to invest but why should Vodafone and BT Cellnet have to have any more investment in technology, they have got the frequency and it is the other people who have got to work on the frequency?
  (Mr Hendon) Yes, but all they have got from us is a bit of paper which says they are allowed to transmit on that frequency. They have got to build the network that will transmit on that frequency and that network involves transmitters and they have to build infrastructure to connect the transmitters together and switches to divert the calls to the transmitters. It is a big, expensive job. And they have to persuade people to let them put their aerials on masts.

  143. People like Ericsson and Siemens and Nokia, they are going to be keen to get on it.
  (Mr Hendon) They develop those things and then they sell them to people.

  144. Exactly. They are on an absolute winner.
  (Mr Hendon) Everyone makes money out of it.

  Mr Steinberg: Exactly.

  Chairman: Well, Mr Hendon, thank you very much, it has been a very interesting discussion on the biggest ever transfer from the public to private sector, an auction that raised £22 billion, and I suppose we must congratulate you. Thank you for your evidence.

  Mr Steinberg: You suppose, Chairman.

  Chairman: We will leave that on one side, thank you very much.

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Prepared 26 April 2002