MONDAY 1 JULY 2002

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

  160. Presumably their licences are backdated to the prosecution?
  (Mr Smith) Yes.

  161. 17,000 dealers sent in details, you said. How many do not send in details, given that about 40% of sets do not have to be notified?
  (Mr Smith) The 40% includes some pieces of equipment that do not need a licence and second sets in a home that is already licensed.

  162. It is not 40% not notified; it is 40% that do not have to be notified?
  (Mr Smith) Indeed.

  163. What publicity do you give to firms that do not send in details?
  (Mr Smith) We would publicise the fact locally, if we prosecute.

  164. You have publicised the fact that you prosecuted, for example, Sainsbury's and Argos?
  (Mr Smith) Yes.

  165. How much did they get fined?
  (Ms Patel) The average fine is about £350 per offence.

  166. What is an offence? For each piece of equipment not notified?
  (Ms Patel) For each offence of not notifying the BBC that they have sold or rented a television.

  167. Is it the number of televisions they have not told you about?
  (Ms Patel) No. It is the number of notifications they have to make, rather than the number of televisions. The offence is not notifying.

  168. A firm the size of Sainsbury's and Argos may end up with a fine of 350 quid?
  (Ms Patel) For each offence and they are usually typically prosecuted for five or six at a time.

  169. The figures have dramatically changed in terms of the proportion of evaders from something like 4 to 8% and I am wondering what level of confidence we can have in the new figures versus the old figures if there is such a change?
  (Ms Street) We take responsibility for the model. As the NAO makes clear, it is an estimate, not a measure. We are pretty confident that this is robust and the reason percentage points have gone up is because we have now adjusted it to take account of student residences and so on.

  170. It is an enormous quantum change, is it not: twice as much?
  (Ms Street) It is between 2 and 3%. When you were at five%, it has gone up to 7.8%. The other big assumption that has changed is that we now assume 97.6% of households have TV sets in working order.

  171. If you were doing 3.5 million visits a year and you thought that was the right number of visits for the number of evaders you thought were occurring, presumably if it got to twice as many you would do six million visits and the cost of collection should have risen proportionally, presumably from 100 to 200 million. You should really be spending a lot more money to collect from a lot more people. Is that right?
  (Ms Street) The point is that on any mode—this is a model that is very sensitive to assumptions—the evasion rate is dropping very effectively and the costs of collection have not risen.

  172. I know that but the percentage which we thought was 4 or 5% for people evading is now about 8%. If you had known that, would you have increased dramatically the number of visits and indeed are you going to because of that?
  (Mr Smith) The model reflects what we have been doing anyway. We have not waited for the new calculations to work out that there are businesses premises, hotels and so on that we can pursue.

  173. If you are running a business, the marginal value of investment depends on what you think the prospective return is going to be. If there are nearly twice as many people out there who could be paying this money and this was disclosed in new data, you might change your activity but you seem to be saying, "Not really. We are already doing what we have to do."
  (Mr Smith) 3.5 million visits is a much higher number because we are doing some of the things that the model suggests we ought to be doing.

  174. You were doing that before the new data.
  (Mr Smith) Because we had already done research.

  175. When did you know that these figures were wrong?
  (Mr Smith) We have been pursuing these categories since 1998.

  176. Since 1998, you knew you were underestimating all the reported figures?
  (Mr Smith) As far as we are concerned, once we know that a premise exists that might need a licence, it is included in our catchment and we start pursuing it.

  177. In terms of these 3.5 million figures, on figure eight, the pie chart where the costs of collection are, what is the cost of these 3.5 million visits? It does not seem to be there. In figure six we have a cost of collection of about £100 million.
  (Mr Smith) I cannot give you the exact figure but it is within the figure that says `TV Licensing Agents', 65.3 million. That figure includes the database, the 14 million mailings a year, the phone calls and the enquiry officers.

  178. So it is a subset of 56.1 million?
  (Mr Smith) Yes.

  179. You have these 3.5 million visits and people have mentioned that 80% of these are wrong, when somebody does not answer the door or they do not appear to be in. Do you think a high proportion of people know it is you so they simply hide behind the curtains and keep on watching the television? What do you do about that?
  (Mr Smith) Some people do try and evade—