DRWG considers making digital radios VAT-exempt

The Radio Magazine: The Digital Radio Working Group has looked into the possibility of making digital radio sets tax-exempt in an attempt to boost sales.

Presenting its initial findings at the Radio Festival, the industry-wide group said it was vital that the next generation of digital radio receivers supported all of the technologies used in Europe, which would in turn encourage car manufacturers to fit digital radios as standard.

The DRWG chairman, Barry Cox, said building a pan-European digital radio receiver was “immensely important”, but could take between three and six years.

Laurence Harrison, the director of consumer electronics at Intellectt and a member of the DRWG panel, said none of the issues currently facing digital radio were insurmountable.

“There are no technical reasons why DAB should not be in-car,” he said. “We need to be doing a better job to sell the benefits of DAB.”

He said one of the options considered by the group was the suspension of VAT on digital radios – which would effectively make the sets around 15 per cent cheaper.

According to the group, around 200,000 cars in the UK are currently DAB-enabled, and a third of new cars now offer DAB as an optional add-on.

The Ofcom director of radio, Peter Davies, said the group was looking at how to build digital coverage up to the same level as that achieved by FM, and how to improve reliability in Scotland, Wales and northern Ireland. “Listeners recognise that DAB is the natural replacement for analogue radio,” he said.

His comments were echoed by John Mottram, the head of radio broadcasting policy at the Department for Culture, Media and Sport, who added: “Radio stuck in an analogue world risks becoming increasingly irrelevant to listeners.

“We believe the market is not yet ready for a switchover date. We believe the potential consumer backlash could damage the growth of the industry in the short term.

The DRWG is due to report back to the DCMS by the end of the year with its findings. The group is made up of representatives from the BBC, commercial radio, Ofcom and the radio manufacturers.