Examination of Witnesses (Questions 20-39)
DEPARTMENT FOR
CULTURE, MEDIA
AND SPORT,
DIGITAL SWITCHOVER
HELP SCHEME
& DEPARTMENT FOR
BUSINESS, ENTERPRISE
AND REGULATORY
REFORM
MONDAY 10 MARCH
2008
Q20 Chairman: You never thought of
doing what the French have done?
Sir Brian Bender: The Government
did consult on this some years ago and got little support, and
the conclusion at the time was that effective and clear labelling
would be more effective.
Chairman: Thank you. Alan Williams?
Q21 Mr Williams: Thank you, Chairman.
If the experience of Copeland is replicated, looking at the switchover
help scheme, a £600 million scheme, replicated everywhere,
it would mean an eventual surplus of £250 million. Would
that be a windfall profit to the BBC or would it become a windfall
tax to the Government?
Mr Stephens: First of all, I should
say I agree with the NAO's own conclusion that it is simply too
early to say what the eventual outcome of the costs will be, and
there are reasons why the Copeland experience, which I think covers
about 0.1% of the UK population, may not be replicated elsewhere.
What the Government has done is it has ringfenced the budget for
the help scheme within the licence fee, that means that as it
stands, the BBC does not get the benefit from unspent money under
the help scheme. The Government has reserved its decision on what
would happen if the help scheme were underspent, and there are
a range of possibilities, one of which is that the ringfence could
be removed and the benefit could go to the BBC; another is that
the benefit could be returned to licence fee payers, and there
are a range of alternatives in between those two options, and
no decision has yet been taken.
Q22 Mr Williams: How could you return
it to the licence payers who have paid the fee? How would you
process that?
Mr Stephens: I should emphasise
that no decision has been taken, Ministers are keeping all options
on the table.
Q23 Mr Williams: They are keeping
options open, but are they meaningful options. It sounds all right,
but think of the practicality of it. How are you going to return
it to people?
Mr Stephens: Under the latest
licence fee settlement, the six years of the licence fee was set
with the figure for the final year set at a minimum of no cash
reduction and potentially higher than that, so that variability
allows some mechanism. The licence fee is not actually set for
the year in question until shortly before the year, so there are
a range of mechanisms which, if Ministers wanted to, they could
use to return the money to the licence fee payer, or make other
uses of any potential surplus.
Q24 Mr Williams: I tell you what
I would like from you, I would like from you an indication of
what system could be used to ensure the money went back to those
who paid it, because I cannot see any conceivable way in which
it could be done. But the reality is that it may end up as a windfall
tax gain, I suppose, is it?
Mr Stephens: That is not necessary.
There are means by which the licence fee could be reduced in future.
As I say, we are talking at the moment about a hypothetical situation
which the NAO say there is not yet the evidence to conclude will
arise. Ministers have kept their options open for how they will
respond if it does arise.
Q25 Mr Williams: That was one of
the most Sir Humphrey-ish answers I have had from an official
in a long time, and that is saying quite a lot on this Committee.
Understandably, the ethnic minorities and people with lack of
English are lagging behind in the switchover and the understanding
of switchover. How can you overcome this?
Mr Stephens: It is an important
issue of concern. Figure 12 shows that there is an interesting
variation between awareness of switchover, which is low among
minority ethnic groups, and actual take-up and conversion of actual
sets, which is significantly higher than awareness, so it is not
all one way. Digital UK are currently reviewing the effectiveness
of their communications to minority ethnic groups, and looking
at ways in which they can improve their impact through, for example,
placing adverts and communications in the ethnic press.
Q26 Mr Williams: As one whose constituency
in Wales is going to go through the process in the next 12 months,
I am interested to see that the switchover date for London actually
coincides with the date of the Olympics. That seems to be an interesting
proximity of time. Do you think it was the best decision to put
London at that stage? Someone had to be there, but why was it
decided to be London at that stage?
Mr Stephens: Since I am responsible
for both of them, I have a particularly close interest in that
coincidence. The switchover timetable was fundamentally determined
by a whole range of technical considerations, about the interaction
between the numbers of transmitters that needed to be converted,
and in particular, and this is particularly relevant to the South
East, the interaction with other nations, and the potential interference
from France and elsewhere, so the timetable was purely set for
technical reasons. The aim in London and the South East is for
the switchover to be accomplished before the Olympic Games. There
will obviously be no switchover during the Olympic Games. Clearly,
if there is any reason to think that there might be a risk to
successful delivery of the switchover, then there is the ability
to take that into account and revise the timetable if necessary.
Q27 Mr Williams: The timetable ran
into some difficulties as a result of adverse weather conditions.
That is not very encouraging on the very first venture, is it?
How adverse was the weather that created this effect, and why
is there no contingency in your overall plan for weather difficulties?
Sir Brian Bender: Perhaps I can
take this, not least to give Mr Stephens a bit of a rest. There
is built-in contingency at each stage. It was the wet summer that
caused the problem. That used up a fair amount of contingency.
The mitigating factors on that are increased working hours to
reduce some of the constraints, and, potentially, use of reserve
transmitters. I think there are two Members of the Committee who
are in the Granada region; in that particular case, one possibility
will be launching on a reserve antenna, so that is how the contingency
is trying to be re-established.
Q28 Mr Williams: How much variation
as a result of weather could the contingency deal with?
Sir Brian Bender: I can provide
a note on that, but essentially, as part of the Government's arrangements,
there is a workstream on what is called the broadcast infrastructure.
They identify whether or not a particular date is at any risk.
If it is, they put up what is called a red alert, and that could
lead to a change of date, ultimately if Ministers and Digital
UK decide that the date is at risk. But there is a workstream
that involves the relevant experts who look at the technical issues
to do with the changes in engineering transmission.
Q29 Mr Williams: So like me, you
are hoping for a sunny summer next year in Swansea and South Wales.
Sir Brian Bender: In most cases,
there is plenty of contingency. The Granada area has been the
most difficult, because of the scale of what is needed, but as
I say, they have mitigating circumstances, both in hours worked
and use of reserve antenna to ensure it can be launched on time.
The last time it was looked at, the assessment was that it should
proceed as scheduled.
Chairman: Thank you, Mr Williams. Austin
Mitchell?
Q30 Mr Mitchell: Can I just pursue
the point that the Chairman was raising, paragraphs 3.16 to 3.18,
about our failure to ban the sale of non-digital equipment, Sir
Brian? The story is in fact longer than that, is it not, because
the television companies have been making representations for
a long time to the All-Party Parliamentary Media Group that the
sale of equipment which was described as digitally equipped, or
had some kind of deceitful promotion to indicate the word "digital",
but it was not equipped for switchover, should have been banned
years ago. We were urging that and the companies were urging that,
were they not?
Sir Brian Bender: Two comments
on that. First of all, as I said in reply to the Chairman, the
Government did consult on this in I think about 2001, and the
conclusion was the one I described. Secondly, the crucial question
is the recognition and staff training on the digital tick logo,
because if you as a consumer want to buy relevant product, you
can have confidence in that, but you also need to have confidence
in the retailers, and that is where the Chairman's earlier question
about retailer training and awareness comes in.
Q31 Mr Mitchell: It was a species
of deceit that was being perpetrated on the public. People were
being encouraged to buy these sets because the word "digital"
was there in the promotion, and they are useless for practical
purposes now.
Sir Brian Bender: Digital UK has
a consumer protection strategy, they work with Trading Standards
Officers and others to clamp down on cowboys in this area.
Q32 Mr Mitchell: These were not cowboys,
these were big chains that were selling these sets.
Sir Brian Bender: The other thing
I would say, and repeat the point, is you can actually receive
digital on an analogue set, spending £20-£30 on a set-top
box, so the Government did not wish to ban, for the reasons I
described. Nonetheless, the market is moving, so 70%-odd are now
sold digital, and I think it is Curry's that have moved to 100%
digital.
Q33 Mr Mitchell: My point is it was
a long time before even sets which cannot be prepared for digital
by the addition of Freeview were stopped, and then the sale of
non-Freeview equipped sets was going on, people were buying them
right into 2007 and 2008. That is monstrous, is it not?
Sir Brian Bender: If shops are
selling stuff ostensibly that can be used, and cannot, that is
not right, and that is where I would hope that Trading Standards
and others would be bearing down on them, as well as making sure
consumers know about the digital tick logo. Because that must
be the answer, in terms of moving forward, to make sure that customers
know that if you buy something with the digital tick logo—
Q34 Mr Mitchell: It is clear that
Government lacked guts, is it not?
Sir Brian Bender: Well, I do not
-- the Government decided not to ban, having done a consultation.
As it happens, as I said earlier, legal advice is that that could
have been challenged successfully in the courts.
Q35 Mr Mitchell: If you have to maintain
the freedom of letting people be conned, it seems a fragile freedom
to merchandise to me. Mr Stephens, why is our timetable so extended?
I notice on the figure on length of time, switchover times in
other countries, that apart from Italy, where they do things more
slowly anyway, ours is the most extended timetable around and
ends up later, whereas Japan apparently is proposing to do it
all on one day, big bang day, when everything will be converted,
Ah So. One minute you will get digital where you could not before.
Why do we lack ambition in this fashion?
Mr Stephens: It is dictated essentially
by the conditions within each country. A number of the other countries
that are doing it very quickly, in very short timescales, have
very high levels of cable penetration, which is not true in the
UK. In the UK, there are more than 1,100 transmitters to be converted,
a very complex and regional interface of transmitters, and a number
of overlaps with neighbouring countries, so the timetable through
to 2012 seemed a realistic and ambitious but managed way of delivering
switchover.
Q36 Mr Mitchell: It is not very ambitious
in terms of the technical ability to get high definition television.
If you are going to get that, you are going to have to use some
of the existing channels when they are converted. The basic provision
is fairly low actually in its technical equipment competence.
Mr Stephens: In terms of access,
the current coverage of the existing digital public broadcast
channels only reaches about 80% of households, so something like
a fifth of the country are unable to receive the full range of
digital public broadcast channels. After switchover, that will
be virtually universal access.
Q37 Mr Mitchell: People want to be
able to get interactive services, and they want to be able to
get high definition television, and on the basic provision, they
will get very little of that.
Mr Stephens: High definition is
a separate issue. It is not available via digital terrestrial
television at present, it is only available via satellite broadcast.[1]
Q38 Mr Mitchell: But people think it
is going to be. As well as being unambitious, we have created
a real dog's breakfast. Here you have two Departments involved,
and then you decide to hand it to the BBC, and then they decide
to employ private contractors to do the job, and you have a Switchover
Programme Group, attended by the two Departments, Ofcom, Digital
UK and Digital Switchover Help Scheme Limited, they meet regularly,
and the BBC is accountable for delivery, it has a Switchover Governance
Board. Why do you have to make such a dog's breakfast of it? Why
can you not have a simple structure and have it done by a Government
department?
Mr Stephens: Because it is a fundamentally
complex programme, a programme which the National Audit Office—
Q39 Mr Mitchell: It is not complex,
it is very simple.
Mr Stephens: A programme on which
the National Audit Office has commented that these governance
arrangements are managing a programme that has established good
progress, that has built momentum, that has exceeded expectations,
in terms of the rate of conversion and turnover, and has built
successful and co-operative working relations across all those
who need to be involved; not my words, the National Audit Office.
1 Correction by witness: High definition is
currently available via satellite and cable. Back
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