Examination of Witnesses (Questions 1-19)
DEPARTMENT FOR
CULTURE, MEDIA
AND SPORT,
DIGITAL SWITCHOVER
HELP SCHEME
& DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
MONDAY 10 MARCH
2008
Q1 Chairman: Good afternoon, and welcome
to the Committee of Public Accounts, where today we are considering
the Comptroller and Auditor General's Report on Preparations
for Digital Switchover, and the Review by the Comptroller
and Auditor General presented to the BBC Trust Finance and Strategy
Committee on The BBC's Preparedness for Digital Switchover.
We welcome Jonathan Stephens back to the Committee, who is Accounting
Officer and Permanent Secretary to the Department for Culture,
Media and Sport; Sir Brian Bender, who is Accounting Officer and
Permanent Secretary at the Department for Business, Enterprise
and Regulatory Reform; we also welcome Peter White, who is Chief
Executive, Digital Switchover Help Scheme Limited, on behalf of
the BBC. Mr Stephens, may I just ask you a general question about
budgetary control? This is not going through the normal processes.
As you may know, I am taking a lot of interest, as is the Liaison
Committee, in trying to make the whole budget system easier to
understand. Effectively this has been handed over to the BBC.
Is this good for Parliamentary scrutiny, do you think? Would it
not have been better for your Department to have done it? Because
that begs the question whether your Department could have done
it more efficiently than the BBC, but you may not want to answer
that.
Mr Stephens: Digital switchover
achieves very significant benefits for public service broadcasting.
Ministers therefore decided that it was appropriately funded by
the licence fee, which is all about ensuring universal access
to high quality public service broadcasting, and digital switchover
will significantly advance that objective.
Q2 Chairman: But you take my point
that it does weaken Parliamentary scrutiny?
Mr Stephens: No, I do not accept
that. Parliament has set up --
Q3 Chairman: You think that the Parliamentary
scrutiny of the BBC is as great as your Department, do you? Manifestly
it is not.
Mr Stephens: Parliament has set
up a system of accountability and scrutiny around the BBC, which
has been extensively debated in Parliament, set out in the Communications
Act and the BBC Charter, and the arrangements for digital switchover
simply reflect the existing accountability arrangements that are
in place.
Q4 Chairman: Well, it is not an answer
to my question, you are just saying what you want to do. Do you
think it is good that you should ask them to do a social assistance
scheme? That is what you are doing. Is that appropriate, for the
Government to ask the BBC to do a social assistance scheme?
Mr Stephens: As I say, digital
switchover achieves significant objectives for public service
broadcasting, it widens access very significantly to all the digital
public broadcast channels.
Q5 Chairman: We are not interested
in whether it is a good idea to have digital TV, that is a policy
matter, it is completely outwith -- is it a good idea to ask the
BBC to do a social assistance scheme for you?
Mr Stephens: The help scheme is
an essential part of that objective. The BBC is well equipped
to do it, they have extensive experience in management and procurement
of major contracts, they have used that to good effect with the
contract for the help scheme. The help scheme is all about assistance
to the most vulnerable of viewers. The BBC has a good and well-established
relationship with its viewers.
Q6 Chairman: If that is so, shall
we have a look at paragraph 4.10? "The Departments have recognised
the importance of capturing and evaluating the implications for
policy arising from the delivery of the help scheme but there
are currently no established arrangements for monitoring scheme
outcomes."
Mr Stephens: The Department has
set very clear objectives for the help scheme.
Q7 Chairman: But how can you know
whether they are meeting your objectives if, as it says here,
there are currently no established arrangements for monitoring
scheme outcomes?
Mr Stephens: Because we have set
clear criteria around who is eligible and require the help scheme
to provide help to all those who are eligible and request it.
We are deliberately not—
Q8 Chairman: There is £603 million
worth of public money involved here, why do you not set out scheme
outcomes or targets for them?
Mr Stephens: We have secured value
for money, first of all because switchover as a whole has been
subject to an assessment of costs and benefits, with the benefits
clearly outweighing the costs. Secondly, we have handed over delivery
of the help scheme to the BBC, which has an established accountability
framework, with the BBC Trust holding the BBC Executive to account
for value for money. Third, the BBC has undertaken a very successful
procurement competition for delivery of the help scheme. We appointed
an independent observer to that competition, and the independent
observer, an expert from the OGC, cited the procurement competition
as an exemplary model of its kind.
Q9 Chairman: If it is going so well,
look at what we actually -- this is very early days in this, but
let us look at what has happened in Copeland, figure 18, in terms
of forecast and out-turn, both take-up of free assistance and
take-up of paid-for assistance, and you will see that the actual
out-turn is very, very much less than the forecast, and I wonder
whether it is to do with the means testing for the £40 charge.
Mr Stephens: It is critical to
understanding this that we deliberately do not set a target for
the level of take-up. The scheme is there to ensure that all those
who are eligible for it and want to receive help can receive help,
and the figures from Copeland demonstrate that all those who wanted
to receive help did receive help, so in those terms, it is successful.
Q10 Chairman: They did not ask for
it. If you do not mind me saying, that is not answering the question
at all. There is a much lower out-turn than forecast, and I would
suggest it is something to do with the £40 means tested charge.
Mr Stephens: The evidence from
Copeland does not support that. Of those explaining why they did
not take up the scheme, only 2% cited cost as a factor; more than
60% explained that they were already getting help, either from
friends and relatives, or had already converted.
Q11 Chairman: All right, have you
read paragraph 4.22? "The BBC's lessons learned research
for Copeland concluded that the charge may have had a significantly
greater deterrent impact on take-up in Copeland than anticipated
... "
Mr Stephens: Yes, I quite accept,
and my BBC colleague may want to comment on this, that there were
important lessons learned about how to present the charge. There
is evidence from Copeland that suggests that people did not understand
just how extensive was the service being offered.
Q12 Chairman: " ... it was perceived
by many people as a relatively expensive way of going digital
... "
Mr Stephens: I understand that
was the perception, and that is one of the lessons to be learned
from Copeland. It is not actually reflected by the facts of what
is available under the scheme, because the scheme does not just
provide a set-top box, it is critically designed to provide assistance
in terms of identifying the options, and actual physical assistance,
in terms of making the connections, installing the equipment in
the home. So the primary objective of the scheme is not financial,
it is all about providing physical assistance to vulnerable members
of society.
Q13 Chairman: Perhaps I could ask
the BBC, could you look at paragraph 2.6? We know that there are
currently, it says here, 3.75 million homes, 15%, that are wholly
dependent on analogue services. You have ringfenced £803
million to inform and support viewers. This may be wrong, but
I have worked that out as £215 for each of the 3.75 million
homes without digital TV. Would it not simply have been cheaper
and simpler to give them £200 to equip themselves?
Mr White: I would split the figure.
I think the £200 million for marketing is different to the
£603 million for the help scheme. The help scheme may need
to help people with second sets, so people may have already converted
a first set, but it may be entirely appropriate for them to still
want and need help for a second set, maybe in a bedroom.
Q14 Chairman: It seems a bit of a
sledgehammer to crack a nut. You have £803 million to inform
and support viewers. It is a lot of money, is it not?
Mr White: It is what was agreed
with the DCMS and the licence—
Q15 Chairman: I just wonder if you
are going to spend this money.
Mr Stephens: Perhaps I could pick
that up. Clearly there is no desire to spend the money if it is
not needed. The help scheme is essentially a demand led scheme,
so if there is not the take-up, if people get friends and relatives
to assist them in the switchover, that is highly desirable, and
if it saves on licence fee money, that is also desirable. The
contract with the supplier of the help scheme has been set up
to ensure that only the costs of help actually delivered are paid.
Q16 Chairman: Thank you very much.
Just one question to you, Sir Brian, about the attitude of business.
Would you like to look, please, Sir Brian, at paragraph 3.16?
It tells us there that: "two thirds of the staff in these
stores were unable to explain what it meant", this is about
this tick logo. "A follow up mystery shopping exercise ...
found that around half the retail staff in stores were still unable
to give a satisfactory explanation of what it meant." A bit
worrying, is it not?
Sir Brian Bender: It is early
days. The recognition was much higher in Copeland than elsewhere
in the country. As I think the Chief Executive of Digital UK,
Chairman, said in a letter to you, as more than three quarters
of the public are now able to recognise the digital tick logo,
it will play an increasingly important part. It was Digital UK
themselves that did the mystery shopping that identified the data
that is in the NAO Report, and they have now put in hand some
more actions to address retailer understanding. An advisor scheme
for stores, pocket cards for staff, partnerships with unassisted
stores, trade advertising; so they are on the case, because that
figure has to improve.
Q17 Chairman: I would hope it will.
In paragraph 3.17, we see that 1.8 million analogue televisions
were still sold in 2007. We read in the next paragraph that the
French have a typically French solution, they simply banned the
sale of analogue TVs. Why did you not just simply ban them?
Sir Brian Bender: I would say
first of all our legal advisers are not confident that is legal
under the EC Treaty.
Q18 Chairman: It has not stopped
the French.
Sir Brian Bender: The second point
I would make is the market is moving anyway, so 73% of TVs sold
last December were digital. One retailer has now said they will
only stock digital. The third point is you can actually receive
digital TV with an analogue set, spending £20 or £30
on a set-top box.
Q19 Chairman: But these 1.8 million
people are buying something which they are going to have to buy
a box for. In France they have a very simple solution.
Sir Brian Bender: It comes back,
I suggest, Chairman, to your last question, which is how effective
retailers are at informing their customers about what the options
are.
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