What will be the digital switchover surplus?

By Chris Wynn

Much of the current debate within the UK broadcasting sector centres on what will happen to the digital dividend – the spectrum released by analogue switch-off – with television and communications players vying for pieces of the action.

A more interesting topic for public-service broadcasters now is the question of what will be done with the “digital surplus” – the money left over from the £603 million that has been ring-fenced for the digital-switchover help scheme.

This sum was put aside to help just over seven million people with digital conversion and includes the costs of paying for equipment, installing it and offering public support.

The ring-fenced money comes from the BBC’s licence fee as part of the agreement with government under which the Corporation took the lead role in driving switchover and was given a better licence-fee settlement than it had feared.

At the time there was a debate on whether £603 million was enough. But now it looks like that the sum could be too much. Way too much.

Under the deal with the government, any surplus would not return to the BBC and the Department for Culture, Media and Sport would decide what to do with it. Given the plight of UK public-service broadcasting and an anticipated shortfall in its funding, introducing the “switchover surplus” into the equation might well make sense.

Admittedly, the government has bigger fish to fry, such as saving the UK economy from financial meltdown. But there are reasons why it might consider using any help-scheme surplus to safeguard the provision of public-service broadcasting, which culture secretary Andy Burnham believes is not “fatally damaged” but nonetheless needs to be addressed urgently.

First, it could help plug a widening hole in funding for public-service broadcasting after 2012 when switchover is completed and by when it is clear exactly how much money is left from the scheme.

Second, giving any surplus back to broadcasters would offer a greater incentive for the BBC to run the scheme as efficiently as possible, knowing that the money would be returned to programme making.

Third, it could act as a reward to the public-service broadcasters for making switchover a reality. Two years ago UK broadcasters could have been forgiven for thinking that they would be awarded a guaranteed slice of “digital dividend” in return for driving switchover – which has opened the doors to new competitors – but this will not be the case.

Barbara Follett, the minister for culture, creative industries and tourism, said this week that it was premature to talk about leftover funds but told a House of Commons debate on switchover: “If there is, the government has agreed to discuss this with the BBC Trust first and look at innovative and useful ways to use that money.”

The big question is whether any surplus would be big enough to provoke a meaningful debate about its future use. The National Audit Office estimated in February that there could be a £250 million surplus – that would represent take-up of 42 per cent, way above the level so far attained in Selkirk.

Such a sum would go a long way towards propping up public-service broadcasting, or a little way towards saving another high-street bank.