Financial Effects of the Act
26.The Government does not envisage that significant public expenditure implications will arise from this Act. The Act provides simply for the setting up and preparation of OFCOM to receive functions, not the carrying out of those functions. The current cost of regulating the communications sector is in the region of £118 million. Once fully operational, the Government would expect the costs of OFCOM to be met almost entirely from those it regulates. However, as is common with setting up new statutory bodies, the Government will share with industry the cost of initial establishment, in the form of an advance or an initial grant in aid. It is intended that subsequent repayment of any advance would be met out of the powers that OFCOM would have to charge fees to the sector under the subsequent Communications Bill. The Government envisages that the initial planning costs of establishing OFCOM so that it can prepare to receive its functions will be of the order of £5 million spread over the period of transition.
27.By adding to the existing regulators' statutory functions, the Act allows existing regulators to recover a proportion of the establishment cost from the communications sector. These powers mean that the net cost to public expenditure will be significantly less than the overall gross cost of the practical transition. In the long term this Act and the subsequent Communications Bill is expected to have little impact on net public expenditure, but will be more fully assessed in the draft Explanatory Notes which will accompany the publication of the draft Communications Bill.
28.There will be almost no effect on public service manpower under this Act. However, the expectation is that civil service manpower would decrease by some 870 when the Radiocommunications Agency and Oftel are moved into OFCOM under the Communications Bill.