MONDAY 1 JULY 2002

MS SUE STREET, MR GREG DYKE, MR JOHN SMITH AND MS ZARIN PATEL

  60. I did not say that. What is the plan?
  (Mr Dyke) The Government's proposal is to switch off the analogue signal some time in this decade.

  61. I thought it was a lot nearer than that.
  (Mr Dyke) It is between 2006 and 2010. However, at the moment less than 50% of homes have digital television. Therefore, it strikes me as a brave Secretary of State who is going to switch off the analogue signal so that half the people in this country cannot receive television. I would not like to be that Secretary of State. I do not know about you.

  62. That is not the point. What we are saying here is that if someone does not pay their television licence, it should be quite easy just to switch that off, so that they cannot see it. I cannot see how you can argue universality on that.
  (Mr Dyke) That is not the position, which is available. We do not know who in this population has digital television and who does not. We have no means of knowing that. Sky obviously knows who has their service.

  63. That is the point I was trying to make. Sky know what I have got and they can switch off if I do not pay.
  (Mr Dyke) Sky could clearly do it but they certainly would not tell us their customer base.

  64. When you have this facility, would you use it?
  (Mr Dyke) That would be up to your decision, not ours. It would be for Parliament to decide whether we should change the arrangement.

  65. Surely they would if somebody did not pay?
  (Mr Dyke) Personally, I doubt that you will ever get a digital system in this country where every set is addressable by somewhere, which is what you would need. You would have to address every set and I doubt whether that will happen. I think you will get a digital system which quite clearly is addressable and some on satellite is addressable, because it has been encrypted, but on digital terrestrial I think it is unlikely.

  66. In the past clearly the BBC has contracted out the bulk of its collection and enforcement to the private sector but an amazing statistic we have been given is that the BBC has changed these arrangements three times since 1999. Why have you done that?
  (Mr Dyke) John can explain in more detail. I will say that in 1999, having had one contractor for a long time, they re-advertised it and opened it to tender and someone else won that so that it could be done cheaper—the sort of thing Mr Field referred to—and achieve a lower rate of evasion. They have achieved that but in the process they have not made any money. What they have said to us at the end of the day is, "We do not want to continue this contract because we cannot make any money out of it".

  67. So they are happy for you to finish it?
  (Mr Dyke) That was the case. Yes.

  68. Why did you replace the Post Office?
  (Mr Dyke) Because they were the people who packed it in.

  69. Why did they pay £20 million compensation?
  (Mr Smith) That is correct. I will amplify that. We have had the Post Office in one guise or another I think ever since the licence fee has been in existence. I cannot speak for earlier than the decade just ended. Certainly in all the period the BBC has been in charge, i.e. from the Nineties onwards, we have had the Post Office involved in this in one guise or another: either their subsidiary Subscription Services Ltd or Post Office Customer Management or eventually Envision. Right up until 1996, we had never, and the Home Office before us had never, tendered the contract, opened it up to competition, to see who else was out there in the marketplace who might do this differently or better. We decided in 1996 that it was time to do that. We were looking for three different things: firstly, we wanted a different incentive system to operate within the contract so that the contractor was incentivised to achieve a higher level of sales because, after all, that is the thing that matters for us. So we looked for a different type of contract that had different incentives in it. Secondly, we wanted a completely fresh approach to marketing on the grounds that there must be a point when you are constantly reducing evasion where, to go any further, you need a completely different approach to the messages that go out to the public, and we need a different approach to the marketing with more data segmentation, et cetera. Thirdly, we felt, and have felt for quite some time, that we needed a new database. The database that is there is known as LASSY. It has been there a very long time, at least ten years. It is not the most flexible based database or the most informative. We wanted those three things and we tendered and Envision won it in a fair and square tender.

  70. Why did Consignia have to give you £20 million compensation?
  (Mr Smith) The next stage was that Envision was then formed which was the Post Office, Bull and WPP; we wanted a computer system and a new marketing approach. They formed Envision together and ran it for a while. I think two things did not work perfectly during that short period. One is the level of very aggressive sales improvements which they have forecast, which we would have liked. They discovered they could not achieve those aggressive sales forecasts. Because the contractual incentives they had proposed assumed that they would make those forecasts, we found and they found that they were starting to make losses on the contract. We were not making losses on the contract. They were making losses on the contract. From their point of view, they were not willing to carry on.

  71. So one public sector paid another public sector compensation. The private sector would not have got away with that.
  (Mr Smith) This is the commercial reality of tendering contracts.
  (Mr Dyke) Surely we did exactly what you would encourage to do. We got the opposite. Actually, we got a very good deal which they could not afford to deliver.

  72. Is there a clause in the Capita contract if they do not deliver?
  (Mr Dyke) Of course.

  73. What is that?
  (Mr Smith) If you would forgive me, Chairman, could we let you have details of the contact in confidence?[2]

  74. All right. Let us move on to something which is not quite as big an issue as that. It interests me because it happened to me and it is to do with the conversion of a big property into a number of flats. 2.12 refers to this problem. I understand that if a flat is converted you will have problems unless people tell you the addresses of those flats. I had a flat which had three addresses: 17, 17A and basement. Consequently, I kept getting three demands for a television licence. I can understand that. What annoyed me intensely was that I kept phoning up the help line and telling whoever it was that my address was the basement flat but the demands still kept coming. This was an absolute waste of time. They just did not seem to change the record. Surely that is a waste of resources, is it not?
  (Mr Smith) Yes, and it should not happen.

  75. I can assure you it did happen three times.
  (Mr Smith) Would you be willing to let us have the details of that?

  76. I have moved! I thought I would get out as they were harassing me for a TV licence. It should not happen, should it?
  (Ms Patel) It should not happen. You should complain and we should turn that round quickly.

  77. The Chairman touched on this subject as well and you gave an answer, Mr Dyke, which was fair enough. I still do not think it was robust enough. It was to do with dealers and the fact that in the report it states that something like 40% of sets sold are not reported by the dealers. The answer was given that second sets are bought, and you gave a high figure of the number of dealers who do this, but what about the dealers who do not respond and do not give you the information? What do you do about them?
  (Mr Dyke) We prosecute them, if we can.

  78. How many have you prosecuted?
  (Mr Smith) First of all, we visited 4,200 dealers in the last year and took prosecution statements from nine, from some fairly high profile companies.

  79. Who does it? Is it Comet or Dixons, these sorts of people?
  (Mr Smith) It is interesting that you mention Comet and Dixons. Because they are such high retailers of television sets, they send us their data electronically every month. To be honest, they are so accustomed to selling sets, that is what they do, that it works pretty smoothly. It is with the more irregular vendor of television sets where things can go wrong because they are not used necessarily to selling television sets in the way that Comet or Dixons are. We have prosecuted: Argos, Sainsbury's and Big W, which is part of Woolworths, and Safeway will be up in Loughborough Court tomorrow for a similar matter.