The British government’s assessment of DE Act implementation costs  to justify the SI Costs Order presents a positive cost-benefit. But is the government painting too rosy a picture?

 The government presented  a one-off cost of £11.5 million, and “average annual costs” of between 6-20 million, against a benefit, calculated using Net Present Value techniques, of between £84m - £164m. But the government figures did not include the running costs for Ofcom.  More significantly, they  fail to include the costs of the Appeals Process. When those costs are factored  in, the picture changes quite significantly.   Using the

 most reasonable of the government estimates, and based on the government’s own target for the volume of  notifications to be sent, appeals could add anything between £10.6m  to £59.8 m to the cost of implementing the measures in the DE Act.

 The running costs for Ofcom are estimated at £5 m per year.  ISP costs are estimated to be between £1.5m and 5m.

 Thus, using realistic figures from the government, the lowest estimated running costs for the DE Act are £22 million per year. But there is a potential for costs to rise up to around  £ 85 m per year.  

 In that light, the government’s stated benefit of £84-164 m looks much less attractive.

 The government may be cavalier with the figures because  the rights-holders will be footing most of the bill, with the ISPs picking up the tab for the remainder.  From a purely civil service, administrative viewpoint, the government does not have to justify public spending. DCMS can relax in meetings with the Treasury.

 But from the  public interest viewpoint, it raises a serious  question.  The document in which these figures are presented, is being put before Parliament to justify secondary legislation. Even if the funds do not come out of taxes, they will – one way or another – come out of the what  we pay for ISP services, and  for music and films. The public will be paying, even if the Treasury is not.

 And thus Parliament, as our elected representatives, is entitled to have correct and full information on which to base its decisions. In this case, it should have the full costs.

Please attribute this article: Monica Horten (2011) The 84 million-a-year bill for DE Act  http://www.iptegrity.com  29 September 2011 .

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