Broadband - Business, Innovation and Skills Committee Contents

Examination of Witnesses (Question Numbers 200-219)


24 NOVEMBER 2009

  Q200  Roger Berry: Minister, could the Committee have the evidence for that at some stage in the future?

  Mr Timms: Okay, yes.

  Q201  Roger Berry: That would be good. I am sorry, I interrupted you. You were saying that parking that issue on one side there is the issue about what has been happening to the cost of telecoms, and do you want to finish that?

  Mr Timms: Simply that Ofcom data indicates that the average household phone bills have gone down by more than 50 pence just in the past year, and that is part of a continuing trend. So I think one needs to set the proposed increased of 50 pence a month against that trend.

  Q202  Roger Berry: The information that we have—and it is just a question of the Department checking this—is that the cost of telecoms fell by £3.83 per annum, whereas obviously the levy would amount to £6 per annum.

  Mr Timms: We have the Ofcom data to which I am referring here. I think Rachel has it in front of her.

  Ms Clark: I do not have it in front of me but we can certainly write to the Committee with it.

  Mr Timms: We certainly have it.

  Q203  Roger Berry: You do not recognise my figures? Obviously the £6 you will recognise but you do not recognise the £3.83? But you have other figures?

  Ms Clark: I do not have the exact figures here but I am told that on average the monthly bill has decreased by more than 50 pence a month in the last year for average households.

  Q204  Roger Berry: If you could let us have that obviously that will help in our considerations. Like many other Members, I have had pensioners and others whose only comment on all of this has been that they do not see why they should be paying for it, for reasons that I have given. There have obviously been calls that this is financed from general taxation, which by and large is progressive—although it actually depends how you do it; it is not that progressive. People have suggested that the money should come from general taxation. Has the Treasury ruled that out completely?

  Mr Timms: I think it would be very difficult given the fiscal consolidation that is going to be required over the next decade, the commitment in the Queen's Speech to pass legislation on this, and I think it will be very difficult to commit credibly to support from general taxation to this particular purpose. I think the great strength of this proposal is that it gives us a ring-fenced pot that one could be confident would continue to be available throughout the period we are talking about, and therefore confidence for investment.

  Q205  Roger Berry: I think that is debateable but let us not debate that. Why not make those who benefit from this pay?

  Mr Timms: They will; they will pay the 50 pence per month as well.

  Roger Berry: Why not make only the people who benefit pay as opposed to those who do not benefit?

  Q206  Chairman: That is actually not true, Minister, because those who are on Virgin Media will not be paying the levy, surely?

  Mr Timms: They will.

  Q207  Chairman: They have a copper wire line.

  Mr Timms: They will.

  Q208  Chairman: But if you do not use a BT line you do not pay the levy?

  Mr Timms: That is not the case, you will pay. That is why it is called universal.

  Q209  Chairman: The 50 pence tax? I am happy to admit ignorance in public—I have long lost any pride in that. But if you are a cable provider and you do not use a BT service you will not pay the 50 pence levy?

  Mr Timms: You will.

  Ms Clark: You will.

  Q210  Chairman: But there is no copper wire involved.

  Ms Clark: Technically the Virgin Network is a copper coaxial double cable but the legislation is being drafted to ensure that the Virgin Media Network is included.

  Mr Timms: And people who only have fibre would also pay.

  Chairman: Sorry.

  Roger Berry: The evidence the Committee received from Mr Stearn of Consumer Focus, where he said that he would not have to pay the levy because he gets broadband from cable, seems to be behind the question that the Chairman has asked.

  Chairman: Exactly; that was my understanding.

  Q211  Roger Berry: We do need to clarify precisely what is the position.

  Mr Timms: I am afraid he will, yes; I am sorry to disappoint him, but he will.

  Roger Berry: If Consumer Focus has got it wrong you can forgive the Committee for perhaps not quite understanding. We do need to clarify this.

  Q212  Chairman: Roger asked you a question about why the beneficiaries should not be the prime contributors.

  Mr Timms: The beneficiaries, that is to say people receiving next generation broadband services, at the moment there would be rather a small number of those. I think that we do require a broad-based levy in order to raise the scale of funding that is required.

  Q213  Roger Berry: This does look dangerously regressive to some people, Minister.

  Mr Timms: I get a fair number of letters, as you can imagine, making the point that nobody likes an additional tax. I think the question is: is this purpose sufficiently important for the country as a whole to warrant 50 pence a month on a phone line? And my view is that the answer is yes.

  Q214  Roger Berry: Currently we have many people who can access broadband who do not because either they do not want to or they cannot afford it; 40% do not access it at the moment either because they cannot afford to do so or do not wish to do so. Is that not 40% a more pressing concern than next generation?

  Mr Timms: That is of concern but I do not think it is a question of one or the other; I think we have to deal with both and we have a big commitment to digital inclusion. Martha Lane Fox has been doing some very good work on this for us. We set up the Digital Inclusion Consortium and it needs to be both/and rather than one or the other.

  Q215  Roger Berry: I accept that. The 50 pence levy will raise about a £1 billion for next generation access.

  Mr Timms: That is £1 billion over seven years.

  Q216  Roger Berry: The Digital Inclusion Taskforce's budget is £12 million over three. It does suggest to me that greater parity is being given to one rather than the other, rightly or wrongly; but surely £1 billion over seven years compared to £12 million over three, if that is the extent of government effort it does seem to me that NGA has been given a very significantly higher priority than inclusion.

  Mr Timms: I would point to other parts of government spending which are contributing to digital inclusion—the budget for the UK Online Centres, for example, and other things we are already doing. If you look at the targets that Martha Lane Fox, for example, wants to set those are pretty ambitious and we think that we can make very substantial progress on this. Clearly investment in infrastructure is a heavy draw on funding inevitably, but we can make progress on digital inclusion as well.

  Q217  Roger Berry: We all know where the popular discussion is of public finances and it does seem to me that the reason you have given for wanting to put the 50 pence levy is that the Government is not brave enough to say, "We will finance it through taxation because that would be a fairer way of doing it." But actually lots of our infrastructure projects—hospitals, schools, et cetera—are financed by billions of pounds of government investment and yet the outcomes of those investments seem to me more obvious and the benefits are obviously more obvious than this one. Do you not think that people who are not going to benefit from this for quite some time are rightly feeling that the 50 pence levy is just unfair? Is my sample of constituents atypical and are they being unreasonable?

  Mr Timms: The case that I would want to argue to them is that they will also be better off once Britain is able to take full advantage of next generation broadband. We will see a growth of new businesses; we will see an increase in prosperity; we will see better public services and everybody will benefit from that, and I hope increasingly that we will see people who write to me as well and say they are not planning to use broadband actually able to take advantage of the services and enjoying them.

  Roger Berry: I think we may just agree to disagree on this.

  Q218  Chairman: I am fascinated with this argument but open-minded, believe it or not, despite my aggression at some times during today. But we do not tax aspirin to build new hospitals. We do not say, "We will put a levy on every Paracetamol sold in Boots to build a new hospital in a town." I am very struck by Roger's parallel; we do not do it that way. Why is this different? You are saying that broadband access is more important than health, or the other way around?

  Mr Timms: I think that the commitment of the current Government and indeed the Opposition to funding for the Health Service, together with all the other public services, is going to absorb the resources that are going to be available realistically to governments over the next few years. What is needed to make progress in this area is a clearly separately identified pot of funding. That is what the levy will provide.

  Q219  Chairman: I must say that I am moving rather to Roger's view that I think we will have to agree to disagree on this. I just do not understand why my in-laws, who are perfectly wealthy, should pay another £6 a year for a service that they are never, ever, ever, ever going to take up, while my son, who is an obsessive broadband user, will get the benefit of it. If we do it this way at all why are we not taxing the users of broadband, rather than the people who do not want broadband?

  Mr Timms: I do not think we can tax the users of broadband because how does one identify who they are?

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