Broadband

Lord Vaizey of Didcot Excerpts

Wednesday 4th March 2015 Westminster Hall

[Neil Parish]

My hon. Friend raises an interesting point. Naturally, some areas may have the cables and cabinets, so it is much easier to deliver there. However, if there is a difficult spot to deliver broadband in, with lots of small businesses, we have to find a way to deliver it. This is not just about businesses, but about our residents. Broadband is very much part of our infrastructure, just as railways and roads are. We will be left behind if we are not connected, so that is the purpose of this debate. I thank her for that intervention.

During the inquiry, we heard from BT that it believes that the current target of 95% coverage by 2017 may slip. Given the resources and the free rein that it has been given, I hope that the Minister will impress upon BDUK the need to hold BT’s feet over the hot coals to get the job done. The target for superfast broadband has changed a number of times. The original date for completion was 2012. For our constituents to have confidence that their homes and businesses will get superfast broadband, it is important that the targets for broadband coverage are not changed again. If BT fails to achieve its targets, there should be a mechanism to hold it to account. That is very much what I want to see.

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

For my hon. Friend’s benefit, I tell him that we have never changed our targets. We got rid of an unambitious target of 2 megabits at the end of 2012. We had an ambition, which I hope we will reach, of superfast broadband coverage of 90% by the end of 2015, and because of the huge success of this programme, we have added a further target to get to 95% by the end of 2017.

[Neil Parish]

I have huge confidence in the Minister, but as he can imagine, if someone is living in a constituency such as mine, where about 70% or 80% of people are not getting broadband, those figures do not mean an awful lot. Therefore, I urge him to ensure—I know that he will because he is such a wonderful Minister—that they will immediately get their broadband tomorrow. I am being slightly facetious, but let me reiterate that the purpose of this debate is not just to criticise, but to see whether we can do better. I am not criticising the Government, but when there is a contract from BDUK that has Government money, council money, business money and, in fairness, money from BT, let us make sure that it delivers on its promises.

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[Tessa Munt (Wells) (LD)]

I am afraid that I do not share the optimism of my colleague the hon. Member for Tiverton and Honiton (Neil Parish) about what will happen in Devon and Somerset. The Government’s own figures show that only 41% of residents and businesses in Somerset have access to superfast broadband. That goes nowhere near meeting the needs of local people or rural businesses in my constituency. Effective, reliable and affordable broadband is essential in the 21st century, and it is fairly shaming that we can in no way compare ourselves with places such as Korea, which seems to have magnificent broadband coverage. It is a bit of a shame to have to say that. [Interruption.] Did the Minister want to say something?

[Mr Vaizey]

I did, but I have changed my mind. I am just going to check the facts.

[Tessa Munt]

Okay. Effective, reliable and affordable broadband is essential to keep people connected and ensure that our rural economy prospers. I do not understand how providing superfast rural broadband appears to mean strengthening the broadband in towns, where we have some coverage already, while coverage peters out as we move into rural areas. Surely, the whole point of rural broadband should have been to start in areas where there is little or no coverage and work back towards the places that have at least some coverage. The whole thing seems to be back to front, as far as I am concerned.

The Minister is always very optimistic and loyal about this project, and I would be delighted to share his optimism, but I have no idea how the final 59%, let alone the final 5%, of people in Somerset will be anywhere near getting some sort of decent service by 2020. The idea of getting to 90% by 2015 and 95% by 2017 is an utter dream. I would also like the Minister to tell me what superfast broadband is. Every time I have asked BT the question, it has fluffed the answer. I want to know what people in my patch can expect by way of an upload speed and a download speed.

[Mr Vaizey]

I am now ready to intervene. May I briefly put on the record that as far as I am aware, 21,000 premises in the hon. Lady’s constituency will be covered under phase 1, which is getting to 90%? That is effectively the same amount as were covered commercially. The figure of 21,000 and the term superfast broadband are audited, so we do not say that those premises are reached unless they are getting speeds of 24 megabits a second.

[Tessa Munt]

I thank the Minister for that clarification. If he has information about where that will happen, that leads me to my next question. Every time I have asked where the not spots are, I have been given all kinds of maps showing different colours. Most of my constituency is under consideration, or somebody is looking at the plumbing, or whatever. It seems unlikely that anyone will be able to make any headway in those areas. If the Minister is that sure, however, I am delighted.

I would be very grateful to have that information from him so that people who have no coverage can make alternative arrangements. I have heard reports, from my part of the country and others, of parish councils attempting to find out what is going on, and arranging for their own parishes to go online through some alternative to BT. Just when they have been about to hit the button and go for it, BT has suddenly come back to them and said, “Actually, we are going to do your bit after all.” That is not very competitive. If BT is not going to be up front, it is not fair for it to come back to communities that are trying to make their own arrangements and say, “Don’t do that, because we are coming in anyway.” That is slightly anti-competitive practice, and it does not look good, even if it is the truth.

The Department for Environment, Food and Rural Affairs and various other parts of Government, such as the Rural Payments Agency, have moved to digital. However, according to the figures that we have been given by the Country Land and Business Association, more than 10% of the countryside is without access to any broadband, and 12% has no digital footprint whatsoever. The trouble is that our suppliers expect farm businesses to be fully interactive online. Even though the basic infrastructure is not in place and Government-funded schemes are not delivering to remote and difficult-to-connect communities, they still have to use the various basic internet systems. Farmers find it difficult to innovate and to use new farming technology and software, which has to be downloaded from the internet. They also find it difficult to comply with other Government regulations by, for example, submitting VAT returns, getting vehicles taxed and processing animal tagging.

In my constituency, accessing the internet is also vital for jobseeker’s allowance claimants. Those who are looking for work, for whatever reason, have to show that they have applied for every possible job opportunity online. If they do not have internet access, it is absolutely impossible to meet the criteria, and their benefits may be stopped. Some of my constituents have to travel some distance to use the internet. They have to go to Bridgwater or to Wells, and there is little public transport. For people who are challenged financially and have little money because they have no job, but who are trying to find themselves work, it is incredibly difficult to compete and get the jobs that they need and want.

--- Later in debate ---

[Tessa Munt]

The hon. Gentleman has taken the words right out of my mouth. I hope the Minister will be in a position to address our concerns.

[Mr Vaizey]

I am happy to.

[Sir Alan Meale (in the Chair)]

Order. Minister, quite a few Members want to speak, and the debate should not be turned into a question and answer session between you and one Back Bencher or another. It is much more important that we have as full a debate as we can. In the generous amount of time that remains, you will get an opportunity to reply to all the questions put by Members on both sides of the Chamber.

--- Later in debate ---

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

It is a pleasure to serve under your chairmanship, Sir Alan. I apologise for my Tigger-like behaviour when I kept intervening earlier in the debate. As you rightly predicted, I now have plenty of time to set out the Government’s stall in response to the excellent contributions that we have heard.

I thank my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for securing this important debate and for making his points in such a fair and balanced manner. I also thank the hon. Member for Wells (Tessa Munt) for her usual forthright remarks. I thank the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) for his long contribution, and I thank the hon. Member for Hackney South and Shoreditch (Meg Hillier) for spreading the rumour about us, which will no doubt spread like wildfire thanks to the availability of 4G in and around Westminster. I am grateful for the interventions by the hon. Member for Somerton and Frome (Mr Heath), to whom I am paying homage with my extensive facial hair. Of course, I am always grateful for the response by the spokesman for the official Opposition, the hon. Member for Hartlepool (Mr Wright), a man for whom I have the utmost admiration, even if I do not always agree with him.

To utter that terrible phrase that tends to kibosh Tory Ministers, I will begin by going back to basics. I will set out in some detail exactly what the Government set out to achieve, and I will try to do that in as non-partisan a fashion as possible, despite the fact that this may be our last broadband debate before Dissolution. We came into government with the previous Government having set a target of 2 megabits of universal broadband by 2012, which was perhaps a perfectly respectable target at the time. The then Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for South West Surrey (Mr Hunt), looked at that target and said that it was not ambitious enough and that 2 megabits was not the kind of speed that people would expect to receive as the programme rolls out, and it is fair to say that his prediction was absolutely right. Indeed, one or two of the rural lobbying groups, possibly including the Country Land and Business Association, are now effectively asking for a universal commitment of 10 megabits. Most people now regard 7 or 8 megabits as the kind of broadband speed they need to do what one might call the basics, even though some people argue that 1 or 2 megabits is what people need to use the iPlayer.

We had to find money for the programme and get state aid approval before letting the contract. We found £530 million from the TV licence fee, some of which was originally set aside for the digital television switchover, on which there was an underspend. We knew the core figure, and we decided that it should be match funded by local authorities, obviously not just to increase the available pot of money but to give local authorities ownership of the programmes. That was a conscious decision, and some people might say that it was a wrong decision, but I think it has proved to be right that local authorities will own and co-fund the contracts and will be partners in delivering in local areas.

We can dip into other pots of money. European money, for example, has been important in certain areas, and let us not forget the contribution of the company that eventually won the contracts—BT. This morning I looked at figures showing that some £410 million is being spent on delivering rural broadband in Scotland, with £120 million of that coming from BT. BT is not simply an open mouth into which taxpayers’ gold is being poured; BT is making its own contribution.

I agree with all hon. Members representing rural areas who have spoken today—the hon. Members for Hackney South and Shoreditch and for Edinburgh North and Leith represent urban constituencies—and recognise that leaving broadband delivery to the marketplace is not enough. It does not make commercial sense for a private company to invest many millions of pounds upfront when it is unlikely to get a return on its investment because, frankly, there simply are not enough people in rural areas to take up broadband services. A subsidy was needed. We made it clear from the outset that, with that money and this scheme, we thought that superfast broadband speeds could reach 90% of the population. Again, with the benefit of hindsight, people might criticise us and ask, “Why didn’t you go for 100% from the very beginning?” However, we went for 90%. In effect, we thought that was achievable and realistic; it was a promise that we could keep. The programme has gone well.

[Roger Williams (Brecon and Radnorshire) (LD)]

I pay tribute to the Minister for his commitment to the project and the investment of £57 million in the Welsh roll-out. However, there were always people who were not to be connected to rural broadband and in Wales that was set out under postcodes. In the rural areas, postcodes cover communities that are spread widely and some people have not been able to get broadband even when it was said that it was available. A £1,000 grant has been offered—in England I think it is called the voucher scheme—for those who cannot get broadband, but people in postcodes that were told they would get rural broadband now cannot apply for the £1,000 to get access through satellite or some other technology. Does the Minister see how that is frustrating for constituents of mine and, indeed, many other people?

[Mr Vaizey]

I understand the hon. Gentleman’s frustration. As he knows, I was recently in his constituency, sitting in a digger, trying to do my bit to deliver superfast broadband to his constituents. From looking at the figures and as I understand it, no commercial coverage of any kind was planned for Brecon and Radnorshire, but under this scheme some 26,000 people should get superfast broadband by the end of 2016 who otherwise would not have done. However, I will come to the issue of people who feel as though they are in one category and cannot self-help, as it were, or apply to other schemes.

[Neil Parish]

One of my questions—the Minister may get on to this in a minute—is not whether BT is providing the money as well as the taxpayer, but whether we are getting value for money out of the contracts.

[Mr Vaizey]

I can give my hon. Friend an unequivocal answer—yes. Our latest audit found that the scheme cost is, I think, £92 million below what we expected. With clawback provisions—if more people take up broadband than expected and, therefore, more revenue comes in—we find that we can go further. In Cornwall, for example, a scheme started under the previous Government had a target of 80% coverage, but with the same money we will now reach 95%.

The hon. Member for Hartlepool quoted the National Audit Office report from, I think, 18 months ago, which was when I had to tour the studios with the right hon. Member for Barking (Margaret Hodge) to contest her conclusions. That report got wall-to-wall media coverage, but last month’s NAO report, which gave the scheme a clean bill of health and said that we had made a lot of progress, got absolutely no coverage at all. In fact, I wrote down a quote from the right hon. Lady. She said that there

“does seem to have been some progress, which we…welcome”.

Coming from her, that is a massive vote of confidence.

[Tessa Munt]

Will the Minister answer a simple question for me? He has already talked about return on investment. If people have contracted with a company to receive broadband at a certain speed but they then suffer slow speeds, poor connections and constant drop-out, they receive no return on their investment. How can they get their bills adjusted to reflect what they receive, because there is a definite variance between what they contracted for and what they get?

[Mr Vaizey]

That is an interesting point. If I wanted to dodge the hon. Lady’s question, I would say that that was a contractual matter between BT and its customer, or indeed any other provider and its customer, but it is an important point that I shall take seriously. We have already tackled relatively straightforward issues, such as stopping companies from advertising their speeds as the fastest speed that could be possibly received. We have asked them to advertise only the average speed that people are likely to receive. However, I want to look at whether we can have different levels of contracts for people who clearly receive slower speeds.

[Tessa Munt]

I thank the Minister very much indeed. Will he do that in the next few weeks, while he has still got the power?

[Mr Vaizey]

I know that the hon. Lady has nothing but admiration for my abilities. That is certainly something that I want to look at and, given that I said that in an open debate, she can be assured that we will look at and discuss that with BT and others.

Let me go back to basics—it is good to see one of the leading members of the Public Accounts Committee, my hon. Friend the Member for South Norfolk (Mr Bacon), returning to his seat, as I have already prayed in aid the National Audit Office. No doubt, he will seek to correct that position.

[Sarah Newton (Truro and Falmouth) (Con)]

While the Minister is going back to basics, I want to applaud him and the efforts in Cornwall on superfast broadband. He rightly points to some good results. However, I would really like him to address the point, which he mentioned, of the people who will not get fibre. What will we do to ensure that they have access to alternative technologies? Where those technologies are satellite, which—as the hon. Member for Brecon and Radnorshire (Roger Williams) rightly pointed out—are much more expensive than BT packages, what will we do to enable them to have equality of access and ensure that they are not priced out?

[Mr Vaizey]

I understand the point that my hon. Friend makes. Time is pressing, but I will answer her question now. We were clear about 90% coverage. People can question whether that target was ambitious enough, but when the programme was going well enough, we found more money—the Treasury gave us an additional £250 million—to go to 95%.

I stress that that was not us moving or revising the target. We said, “Phase 1 is going well. We think we can go further. Here is £250 million and we think we can go to 95%, again by 2017.” To answer the question from the hon. Member for Hartlepool, yes, some of those contracts extend beyond 2017. I used to be a lawyer. Thankfully, I am no longer, but, if he has ever met a lawyer, he will know that if they could write into a contract a completion date in 2117, they would do so to give themselves enough wiggle room. However, the end of the contract does not signify when the project is likely to end.

Of course we want to get to 100%, and all the advice we received said that getting to that last 5% could cost £2 billion. Those were, to put it bluntly, back of a fag packet calculations—they were by sophisticated people and on sophisticated fag packets, but that is what they were—so the previous Secretary of State, my Friend the right hon. Member for Basingstoke (Maria Miller), who deserves a lot of credit for the work she did across a range of issues, found £10 million from the Treasury for some pilot schemes, which are now well under way. Some of them are delivering superfast broadband and we are auditing them at the moment.

My hon. Friend the Member for Truro and Falmouth (Sarah Newton) is quite right that satellite is quickly emerging as one of the key solutions for the last 5%. We now want to do an analysis of what that is likely to cost, go to the Treasury with an evaluation, and think how best that can be delivered. That will probably involve some of the smaller providers. That is the plan and hopefully by 2018-19 we can be close to 100% superfast broadband access.

My hon. Friend the Member for Tiverton and Honiton said that he wants the pace to be picked up. We have passed the 2 million homes mark under the programme and we are adding 40,000 homes a week—50,000 a week in some instances. However, this is an engineering project and it cannot be delivered overnight.

I want to talk about competition. We had an open competition: we put in place a state aid approved framework contract and anyone could have bid for the contracts. At the beginning, a consortium led by Fujitsu did indeed bid against BT. However, there are constraints when bidding for such contracts. To take Connecting Devon and Somerset, for example, the aim is to try to connect 360,000 homes, but there are not many players in that space, much as I would wish there to be. If a company takes money from the taxpayer—I think it was the hon. Member for Somerton and Frome who asked who owned the assets—there will be open access, so the TalkTalks of this world will provide their retail services on such networks, built partly by the taxpayer and partly by BT. That is open access. That is why, for example, a player such as Virgin Media, which some might think has the scale to compete against BT, did not want to play in this space, because it does not want to run an open-access network. I again give credit to the last Government for the structural separation of Openreach from BT. Openreach is an open platform to which others are allowed access, at prices that are regulated by Ofcom—

[Mr Heath]

Can I bring the Minister back to his “fag packet”, because one of his problems is that he has raised expectations? In Somerset, we may be a bit rough and ready; we are certainly very rural. However, we do not have big mountains, we are only under water part of the year and it was entirely predictable that the rotten old copper cables that ran three and a half miles from my house to an outhouse in Upton Noble were not going to be sufficient, so I do not understand why that was not factored in originally. Why was the contract not let on the basis of delivering fibre to those communities, rather than on the basis of some notional figure, which has failed to be met?

[Mr Vaizey]

I really fail to understand the point that the hon. Gentleman is trying to make, and I will not invite him to make it again or we could be here all night. In his constituency, 26,000 homes will get coverage under phase 1 of the programme, and nearly 2,500 more homes will get it under phase 2, so we are talking about 28,500 homes in his constituency that will get coverage.

The programme is run by the local authority. To make a blunt point, we are seeking bang for our taxpayer buck. To pluck a figure from the air, if it will cost £50,000 to connect a village of 20 people and one of 200 people, which group will be chosen? That is potentially a political decision as well. One might take a view that connecting those 20 people is better, in the sense that they are at the end of the queue, so let us bring them forward. However, that is something that we also left to local authorities, because we wanted them to partner this programme. It was not for us in the centre of Whitehall to decide between village A and village B.

[Tessa Munt]

Can the Minister comment on what appears to be utterly anti-competitive behaviour? I have written down in my notes some fairly serious allegations, and this story has been covered in both the Western Morning News and the Western Daily Press. It is claimed that BT said it would withdraw from the tender process for the contract for Connecting Devon and Somerset if CDS did not use the Broadband Delivery UK framework and run a closed tender process in which BT was the only bidder.

[Mr Vaizey]

I will happily look at evidence the hon. Lady has of any anti-competitive practices by BT. I will try to unpack what she is alleging. First, BT is free to bid or not to bid for these contracts. We should remember that when we are busily kicking BT, which we do in all these debates; for a quiet life, BT might not bid for any of these contracts.

[Tessa Munt]

As I understand it, in the national parks, parts of Exmoor and Dartmoor have been parcelled off, so that the contracts for those areas can be tendered competitively. Ironically the suppliers there have to confirm that they are not participating in any “anti-competitive activities” and they have to sign a “certificate of non-collusion”—

[Mr Vaizey]

I get the point. I am running out of time, so let me simply say that BT is free to bid or not to bid, and it is free to say to a contracting authority that it wants to use the framework contract to save time and make life more efficient, and that if the authority is going to use a different contract it will not bid. That is entirely up to BT and I do not think that is anti-competitive behaviour.

Obviously, we have a debate—a constant to-ing and fro-ing—with BT, because we audit its figures and invoices. Again, it is worth making the point that BT invests this money up front; it does not receive any money from the Government or the taxpayer until it has done the work. It is not handed a cheque to meander kindly down the road and do the work when it feels like it, and if there is some good football on the telly on Wednesday night, it will not do the work. It does the work and then it gets paid.

As I say, we audit those figures and they show value for money. BT is a national provider, and therefore it was in a very good position to win those contracts. However, there is competition throughout the country.

[Mr Bacon]

Interestingly, the Minister said earlier that Fujitsu bid against BT. No, it did not. It bid to be inside the contract, even though it had told the previous Secretary of State, my right hon. Friend the Member for Basingstoke (Maria Miller), that if it got inside the contract it would not bid for any work. She got down on her hands and knees and begged it to be inside the framework contract, because otherwise there would be only one successful bidder inside the framework contract. That is what happened, even though the Department knew that if Fujitsu entered the framework contract, it would not be bidding for any work.

[Mr Vaizey]

That is not my understanding, but I will happily write to my hon. Friend and explain what I think happened. However, I still fail to see the point that he is trying to make. The point I have just made is that these were quasi-national contracts—big contracts, to cover 360,000 homes—and very few players were willing to participate in that competition. Nevertheless, it was a competition—

[Mr Bacon]

Will the Minister give way?

[Mr Vaizey]

No, I will not give way again, because I want to make the point—

[Mr Bacon]

The Minister said he failed to understand my point—

[Mr Vaizey]

We could keep going to and fro, but you have made it clear, Sir Alan, that you want this to be a debate—

[Mr Bacon]

rose—

[Sir Alan Meale (in the Chair)]

Order. The Minister is not giving way to the hon. Gentleman.

[Mr Vaizey]

As I was saying, you want this to be a debate, Sir Alan, and not a question and answer session.

There are competitors. Virgin Media, for example, has just announced £3 billion worth of private investment to reach 4 million homes in cities. I think the hon. Member for Hartlepool mentioned York, where TalkTalk, with Sky and CityFibre, is planning to build a network, but that will not be delivered overnight. Again, those involved must get investment to do that.

I will say this again and again and again—I make no apology for working for what BT is doing. We can argue about its customer service, and I am not BT’s representative. As a constituency MP, of course I deal with my constituents’ tales of woeful customer service from BT—I do not know how many millions of customers a week, or a month, BT deals with regarding faults on the telephone line, or whatever. I do not seek to be an apologist for BT’s poor customer service when it comes across my desk.

I will, however, stand up for BT as a great British company, which has worked tirelessly on this project and for which it seems to have received an endless supply of grief. BT has provided value for money; it has delivered what we have asked it to deliver; and it is working at pace. I was delighted to meet some BT engineers during the Christmas period while they were installing a cabinet in my constituency.

I am also pretty fed up with people doing down Britain in terms of our comparison with the rest of the world. The hon. Member for Wells talks about South Korea. Well, South Korea is a very different country to the UK. It is densely populated, with a lot of tower blocks that can be connected pretty easily. Nevertheless, its average speed is about 21 megabits, whereas our average speed—[Interruption.] Please stop heckling. As I was saying, South Korea’s average speed is 21 megabits and ours is 18 megabits.

Also, of course, when people talk about the speeds in other countries, they never talk about what that speed costs; they never talk about the equivalent of hundreds of pounds that people would have to spend every month to get these 1 gigabit speeds. And they also never talk about take-up. The fact is that some of this superfast broadband in South Korea, which people are so pleased to talk about, is used by very few South Koreans, because South Koreans do not want it as it is too fast and too expensive.

That brings me neatly to London, where the very misleading survey that was used in the Evening Standard does not come close to showing how competitive London is. The survey cited a company that said, “Oh, we couldn’t get any broadband. It’s terrible. We’re in the centre of London.” In fact, that company actually has superfast broadband running past its door, but it does not want to pay the price for it. However, thanks to the publicity that has been generated, I gather that it has been offered free superfast broadband by a local business provider.

When we launched our voucher schemes—more than 10,000 businesses now have these vouchers—we had around 500 suppliers on our books. There is no shortage of business broadband in London or in many other cities, but there is a shortage of businesses willing to pay the price for it. That is why we have asked Ofcom to review the price of leased lines and the business market. We want to see those prices coming down, and indeed BT’s prices have come down.

I have taken rather too many interventions and perhaps not put my points as forcefully as possible. However, I will say that I am proud of this programme; I am delighted that 2 million premises have received superfast broadband as a result of the programme; I am delighted that 40,000 premises will get superfast broadband this week, and that another 40,000 premises will get it next week; I am delighted that the programme is being delivered by a great British company; and I am delighted that that company is delivering massive value for money to the great British taxpayer.