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Ofcom Funding for the year 1 April 2006 to 31 March 2007

2006/07 Budget and 2005/06 Outturn

1.1 Ofcom’s proposed work programme is set out in its Annual Plan, which was published in draft for consultation on 14th December 2005. The consultation closed on 10th February 2006, and having considered responses to the consultation the final version of the Annual Plan will be published on 4th April 2006.

1.2 For the third successive year and in line with its commitment to be an RPI- x regulator, Ofcom will operate under a budget which is lower in real terms than the operating budget for the previous year. At £129.5m the operating budget^(-1-) for 2006/7 will be 5% lower than the operating budget for 2005/6 and 12.6% lower than the budget for 2004/5, in real terms.

1.3 The £129.5 million operating budget is reflective of anticipated RPI increases and the rescheduling of some projects from 2005/06. The budget is based on an adjusted cash basis, which includes capital expenditure and actual contributions to pension schemes but excludes depreciation.

1.4 Greater efficiency savings and the re-phasing of some projects means that Ofcom expects to complete its work for 2005/6 at £129.5m; £3.5m below budget. Those efficiency savings will be remitted back to industry – in line with Sections 38 and 347 of the Communications Act 2003 – in the form of reductions in regulatory fees for 2006/7.

1.5 Specifically, this will mean that regulatory fees for 2006/07:

• Will reduce by an average of 3.7% for the television sector;
• Are broadly flat in real terms (an average 3.7% increase in nominal terms) for the radio sector;
• Will increase by an average of 11.0% for network and services operators to reflect increasing work in 2006/7 in a range of areas including implementation of the outcome of the Strategic Review of Telecommunications and increased focus on consumer protection and enforcement.

Comparison of 2005/06 Costs with those for 2006/07

1.6 The analysis in Annex 1 sets out in tabular form the planned expenditure and fees and charges for 2006/07 by sector.

Allocation of 2006/07 Costs across Sectors

1.7 The allocation of costs is determined in accordance with the methodology described in the Statement of Charging Principles published on 8 February 2005. The use of relevant turnover in determining the fees and charges, as specified by the Statement of Charging Principles, means that actual costs for some individual licensees will vary from the sector average.

1.8 These 2006/07 Tariff Tables set out the payments due by sector, but do not include details broken down by licensee; these remain confidential to the companies concerned.^(-2-)

Footnotes:

1.- Operating budget excludes estimated spend on the Spectrum Awards Programme and Spectrum Efficiency Scheme which are funded by special grants from the Government. The repayment of the Foundation Loan is also excluded.

2.- Allocation of costs for spectrum management is subject to final agreement with HM Treasury on the spectrum management cap.

The full document is available below:

• Ofcom’s Tariff Table 2006/7 [pdf]
  Full print version - Published 31|03|06

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