Superfast Broadband Delivery: Somerset

Debate between James Heappey and Michael Ellis

Tuesday 13th November 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Michael Ellis)]

It is a pleasure to be here. I thank my hon. Friend the Member for Wells (James Heappey) for securing the debate and my hon. Friends who have spoken. The debate allows me the opportunity to update hon. Members on the Government’s plans and progress towards ensuring universal high-speed broadband.

Broadband connectivity is just as, if not more, important in rural communities across the UK as in urban centres. That is why the Government and local partners are investing £1.7 billion in the superfast broadband programme, which has provided superfast coverage with speeds of more than 24 megabits per second to around 5 million premises in areas that would not otherwise have been covered by commercially funded roll-out. Coverage of homes and businesses in the UK continues to increase beyond the 95% policy objective that was achieved less than a year ago in December 2017—up from just 45% in 2010, when this Government entered office. That is a significant achievement.

At least £210 million of funding will be available to support further investment as a result of efficiency savings in the initial roll-out. High levels of take-up mean that gainshare funding from the additional profits from the network is projected to reach at least £712 million. That means a total of £922 million will be available to support further roll-out. Of that, £4.7 million will go on work that will cover areas including the constituency of my hon. Friend the Member for Wells, and that is being modelled by Openreach as we speak. He and other hon. Friends present will recognise that a substantial improvement has been achieved in their constituencies over the past few years, but that there is still more to do, which I accept.

Superfast coverage in my hon. Friend’s constituency has increased from 15.6% in 2013 to over 90%, while more than 96% of premises have speeds of 10 megabits per second or above. Connecting Devon and Somerset, or the CDS project, which is delivering across both Somerset and Devon, has to date provided superfast broadband access to over 300,000 premises that would have otherwise been left behind.

It was inevitable that reaching more rural homes and businesses would require building entirely new networks, which requires major civil engineering. Gigaclear seemed well placed to provide that following the open procurement exercise. The contracts were awarded on the basis of the supplier being financially robust enough to support the roll-out, providing the necessary broadband speeds under state aid rules, and representing good value for money for the required public investment. My hon. Friend asked a question about state aid; the short answer is that all projects begin by testing the market. We take the view that state aid is legal in an area where the market has delivered. I will write to him about that in more detail in due course.

There are a number of reasons why there has been a delay up until now. These include poor operational capacity and, frankly, poor decision making within Gigaclear linked to their supply chain management. Partly as a result of the adverse impact of the collapse of Carillion earlier this year, it has become apparent that the resources were not in place for the contracts to be managed successfully.

I recognise that communities that have not yet got the expected coverage, such as those in the beautiful rural parts of the constituencies of my hon. Friends the Members for Wells, for Taunton Deane (Rebecca Pow) and for Bridgwater and West Somerset (Mr Liddell-Grainger), will feel left behind. We recognise that that is not good enough, especially when timescales extend, potentially, out to 2022.

Outline remedial plans that push delivery back to mid-2022 have been provided. Both CDS and BDUK will, however, require key reassurances regarding capacity and resources, a commitment to accelerate deployment and robust evidence that these new proposals can be delivered. We are expecting those reassurances in the coming days.

[James Heappey]

While I accept that the state aid is still legal, does the Minister agree that it should—at the very least—force a reassessment of the priorities that Gigaclear is given, so that the Gigaclear state aid programme complements what the market seems to be providing?

[Michael Ellis]

Yes, I do. The BDUK superfast programme is being delivered under a European Commission decision from 2016, which followed on from another in 2012. As my hon. Friend will know, the 2016 decision expires in 2020. Government policy is that the state aid regime will stay in place, and the Competition and Markets Authority will take on the Commission’s role in approving schemes. My Department is working closely with the CMA to ensure that BDUK can continue to deliver projects after the 2016 decision expires.

Even with this further delivery, some premises will remain without coverage. We are working hard on our commitment to ensure universal high-speed broadband of at least 10 megabits per second by 2020. We have set out the design for a legal right to high-speed broadband in secondary legislation. Ofcom’s implementation will meet the Government’s commitment to give everyone access to high-speed broadband by 2020. In the meantime, the better broadband scheme is available for any home or business with speeds below 2 megabits per second, and provides a subsidy of up to £350 for any eligible premises for satellite broadband or, where available, other solutions. The scheme has now supported almost 20,000 homes and businesses, particularly in acutely remote locations.

In the light of the findings and recommendations of the future telecoms infrastructure review, we need to move to ensure a transformation in the UK’s digital infrastructure based on fibre to the premises—or full fibre, as it is called. Despite their delay, the contracts awarded by the CDS project already adhere to this goal and overall objective. Currently only 5% of premises have a fibre-optic connection. That is not good enough. We have a target of at least 15 million premises having a full-fibre connection by 2025 and nationwide full-fibre coverage by 2033.

That is achievable according to recent industry announcements. BT Openreach, CityFibre, Virgin Media, KCOM, Hyperoptic, Gigaclear and others all have plans for significant new fibre coverage. Fibre would, of course, make a huge difference compared with copper technology. CityFibre recently announced a £2.5 billion investment in fibre, and Openreach has announced its plans to reach 3 million premises by 2020, and 10 million by 2025 if the conditions are right.

The digital infrastructure investment fund, involving Amber Fund Management and M&G Investments, is now in place. It provides £400 million of investment capital, alongside private capital, for new expanding providers of fibre broadband. Network operators such as WightFibre and Community Fibre have already leveraged that funding. Our barrier-busting taskforce is established and tackling the barriers to fibre roll-out across the UK, and includes the production of a framework for fibre delivery to provide best practice guidance. We also introduced a five-year relief from business rates in England for new fibre infrastructure.

There is no doubt that there are challenges ahead. My hon. Friends made sound points that represent the best interests of their constituents. There is also no doubt that we are making good progress in providing rural broadband coverage. I recognise that there are issues with the remaining harder-to-reach localities. We do however need to finish the job and it is our strong intention to do that. We will also continue to push hard on full-fibre coverage, including through the project in Somerset. I welcome the continued interest and support from hon. Members ably representing their constituents—they keenly require and have a right to broadband service—as we continue to ensure we deliver our goal of a full-fibre future for the United Kingdom.

Question put and agreed to.