Broadband (North of England)

Lord Vaizey of Didcot Excerpts

Tuesday 8th April 2014 Westminster Hall

[Helen Goodman (Bishop Auckland) (Lab)]

It is a pleasure to serve under your chairmanship this morning, Mr Sanders. I congratulate the hon. Member for Harrogate and Knaresborough (Andrew Jones) on securing this important debate. He made an excellent speech, and I want to pick up some of his points and perhaps embroider them a bit.

I know from my constituency in rural County Durham how true the hon. Gentleman’s comments are. Furthermore, it is right that he raised the issue of broadband roll-out for the whole of the north of England. I do not hold out much hope that the Government will pay significant attention to the north of England or to building infrastructure there. We have seen a repeated pattern of capital projects that are very significantly well funded in the south but not in the north. That is borne out by the map that Ofcom produced, which shows the overall performance in different counties of the broadband roll-out. There is a central belt of London, the south and the west midlands, where things are looking quite healthy, but in your area of the south-west, Mr Sanders, things are not good, and things are certainly not looking at all good in the north of England. I am grateful to the hon. Gentleman for drawing that to my attention.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

Cornwall is widely regarded as having the best superfast broadband in Europe. As my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) pointed out, North Yorkshire was the first place to start the rural broadband roll-out.

[Helen Goodman]

All I can say to the Minister is that he should look at the map produced by Ofcom. I am sure that he will quote Ofcom’s report back to the Chamber in a minute, but he should look at that map, because it also shows significantly worse performance of the broadband roll-out.

The points that the hon. Member for Harrogate and Knaresborough made about the rural economy were absolutely spot on. Indeed, I would say that roll-out of broadband is even more important in rural areas than in urban areas, because for businesses in rural areas, transport accounts for a very high proportion of their costs and without broadband connectivity, they can do little to bring down those costs, so securing effective roll-out in rural areas is particularly important.

I agree entirely with the hon. Gentleman’s complaints about the treatment of farmers and other small businesses by the public sector under this Government. It is completely disgraceful that farmers are expected to record their cattle movements online, that they have to deal with the Rural Payments Agency online, and that they have to upload their tax returns—their VAT returns—online, when they simply cannot do it. I find it astonishing that the Government think that is an appropriate way to treat farmers and rural businesses.

--- Later in debate ---

[Helen Goodman]

I am sorry to tell the hon. Gentleman that the Government have put a large amount of money into the super-connected cities programme—it ran into a rural challenge in Europe—instead of putting money into and prioritising rural areas such as his constituency and mine. I wish that what he is saying was true, but it is not. Will the Minister tell us in his winding-up speech what the spend in the super-connected cities programme is? It had a mammoth underspend a year ago and we have not had an update from him on the precise profile of what is going on with that programme, which I think is an extremely important point.

Twice the Government have been criticised by the Public Accounts Committee for their roll-out of broadband. All hon. Members and all Departments should take seriously criticisms that come from that Committee. Last July, it pointed out that the broadband delivery programme will be 22 months late and that the programme, because of the way in which the contracts have been set up and the geographical areas have been designed, was not promoting market competition.

As the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) pointed out, British Telecom now has even greater dominance in this area than it had previously. It is expected to win all 44 contracts being put out to tender by local authorities. The Public Accounts Committee also cast doubt on the transparency of the costs in BT’s bids and said that because there was a lack of transparency in the process and in the bids, it was impossible to tell whether we have achieved value for money. That is before we move on to the questions that have been raised not only by the hon. Gentleman, but by other hon. Members in the House about the behaviour in specific small locations.

This is not a success story; it is a story of promise and disappointment. The Minister admits that contracts are now being signed with late delivery dates. He has moved the goalposts on several occasions.

[Mr Vaizey]

Will the hon. Lady give way?

[Helen Goodman]

Perhaps the Minister is going to move the goalposts again now.

[Mr Vaizey]

I have not admitted that there have been late delivery dates.

[Helen Goodman]

Well, at the time when the objective was to reach universal access by 2015, the Minister said that he was signing contracts with delivery dates of 2016. He then shifted the goalposts and announced a target of 95% roll-out by 2017 and 99% roll-out by 2018.

Furthermore, the Chief Secretary to the Treasury announced last summer a £250 million spend on rural broadband. We have asked—we have not been given an answer—why this was cut from the £300 million that the Government are top-slicing from the BBC licence fee to put into rural broadband. Where is this £50 million going? Why is it not being used to prioritise the needs of rural areas and, in particular, the north of England, to which Government Members have referred?

There was a second report from the Public Accounts Committee in March 2014. It was not satisfied with the initial response from the Department and made further criticisms and further recommendations to the Department. I hope very much that the Minister will be able to tell us what the Government are doing about those recommendations.

First, the Committee raised the issue of a lack of information about not spots—precisely the point raised by the hon. Member for Lancaster and Fleetwood—and a lack of information about areas to which the rural broadband programme would not reach. The Committee said:

“The Department should work urgently with all local authorities to publish detailed mapping of their implementation plans, enabling searches down to full (7-digit) postcode level. The information should include speed of service, as soon as that is available.”

I hope that we will hear from the Minister on that.

Secondly, the Committee found that the Department had failed to act on its recommendation to secure a higher standard of cost transparency before the remaining contracts were signed. It had recommended that the Department

“collect, analyse and publish costs data on deployment costs in the current programme, to inform its consideration of bids from suppliers under the next round of funding.”

I hope that the Minister will tell us what he is doing about that.

Thirdly, the Committee reiterated its previous conclusion that the Department’s procurement approach failed to deliver meaningful competition. This was the recommendation:

“Before the next round of funding is released, the Department should work with local authorities to identify opportunities to promote competition and value for money; including considering alternative solutions, joint working and fair capital contributions from suppliers.”

I hope that we are going to hear from the Minister about that as well.

[Mr Vaizey]

You are not going to.

[Helen Goodman]

The Minister can say that in his winding-up speech, so that it is fully audible and on the record for Hansard and the great British public.

The Department has committed another £250 million to spend beyond 2015 and it is working on the assumption that, as in the first round, when it was spending £530 million of central Government money, that will be matched by local authorities, but I want to ask the Minister how realistic he thinks that is, following the very tight squeeze that has been put on local authority spending by his colleagues in the Department for Communities and Local Government, whether he thinks that it is still a realistic expectation, and what he will do if the local authorities find that they are not all as well resourced as North Yorkshire, which has clearly done a very good job for its local businesses, its farmers and its citizens.

The plain fact is that the north of England is particularly badly served. For example, in North Lincolnshire, superfast broadband availability is only 54%. In Lincolnshire, it is 49%. In the East Riding of Yorkshire, it is only 21%. In Cumbria, it is only 26%. These are serious problems. They are raised by our constituents and by the Country Land and Business Association and they are absolutely clear to everyone who is not sitting in the Whitehall Department, the Department for Culture, Media and Sport.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

It is a great pleasure to serve under your chairmanship, Mr Sanders, and to respond to this important debate, called by my hon. Friend the Member for Harrogate and Knaresborough. I am delighted that he is happy with our programme. It is always a great pleasure when one of the asks from someone introducing a debate is for us to keep on doing what we are already doing so successfully, but that is not to say that I will not take into account the other serious points that he made. I also thank my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) for his contribution, which was perhaps more of a critique than that of my hon. Friend the Member for Harrogate and Knaresborough.

Let me begin by giving an overview of the national programme. I have to say, without wishing to attract too much opprobrium, that as far as our programme is concerned, my glass is very much half full, as opposed to half empty. The Government came into office in 2010 determined to do something about the digital divide—determined to bring broadband to millions of homes that were not going to get it under a commercial deal. Let me explain that BT itself has delivered superfast broadband to something like two thirds of British homes commercially, without a penny of taxpayers’ money. In addition, its main competitor, Virgin Media, delivers very fast broadband to millions of homes—it covers about 50% of the country—without a penny of taxpayers’ money.

However, we are talking today about delivering broadband to areas where commercial companies simply will not go, because they would not get a return on their investment. That applies not just to BT, but to Virgin and any other competitors. We therefore put £530 million on the table. That is not an insubstantial sum and it has been matched by local authorities. It has also been contributed to by BT, which is putting its own money into this programme; it is not simply taking all the taxpayers’ money and spending it without any contribution of its own.

BT expects a return on its investment in about 14 or 15 years. This is not a get-rich-quick scheme from BT. It is true that it has won every contract. We went into partnership with local authorities, because we thought that local authorities were best placed to help to co-deliver this programme with us. They would know the best places to go and be able to do the joining up on the ground, particularly in relation to planning.

On the commercial roll-out, we have had numerous cases in which BT and others have wanted to go where local authorities simply were not prepared to give planning permission for the cabinets, so to have the planning, the power and the local co-ordination on board was going to make a difference. I think that it does make a difference.

When we put together the original framework contract, we had nine potential competitors lining up against BT, but most of them dropped out. At the end, when the first contracts were being let, there was a significant competitor—a consortium led by Fujitsu—but it did not beat BT on those contracts and it has now fallen away, although it provided useful competition.

Why did those people drop away? If Virgin Media, for example, already has 50% of the market, in terms of footprint, why did it not compete? The reason is state aid rules. State aid rules require that if people accept public money, they have to accept certain obligations, and the obligation that lies on BT as it rolls out this network is that it must provide access to any other retail telecoms provider. In shorthand, that is, for most consumers, TalkTalk or Sky, which are the most well known providers, but obviously there are numerous others as well. If people compare our market with any similar market in Europe or elsewhere, they will see that BT, as the incumbent operator, the former nationalised state monopoly, has the lowest market share of any incumbent operator. People can compare with Deutsche Telekom, France Télécom and so on—BT has the lowest market share.

We recently overtook Germany in broadband roll-out. We now have more availability and take-up of superfast broadband than Germany—and, in fact, all the other major European economies. The reason is that we have competition as well; we have not only the infrastructure, but competition, which keeps prices down. People can look across at America. There, they will pay twice as much as they will here to get the same broadband. That is because BT is regulated by Ofcom. Retail providers’ access to BT’s network is, and will continue to be, regulated. When BT builds out under the rural broadband programme, the customer will not be obliged to take a BT service. They can take a service from TalkTalk, Sky or any other retail provider that uses the network.

I happen to think that the rural broadband programme is going very well, and the Chancellor agrees with me, because he put in an extra £250 million. We are accused of moving the goalposts, but that is not the case at all. We have a £530 million programme, which is actually some £1.2 billion when local authority and BT money is taken into account, to bring superfast broadband, by which we mean about 24 megabits a second, to 90% of British homes. We want to go further, so we have found another £250 million. With match funding, which we expect most councils to be able to provide, we expect that 95% of British homes should get superfast broadband by the end of 2017.

Finally, there are the remaining 5% of homes, such as the isolated farmhouse or the house in the middle of a moor, which could cost thousands and thousands of pounds to connect up to superfast broadband. We could do a rough, back-of-the-envelope calculation of that cost, and we might end up with a figure of £1 billion or even £2 billion. We do not want to do such a calculation; we want to try out different technologies and see what will be effective. We have set up a £10 million fund, for which we have asked people to bid, to trial the latest and newest technologies that might bring down the cost of reaching the final 5% in the hardest-to-reach areas.

[Jason McCartney (Colne Valley) (Con)]

I think the Minister is describing my constituency. Milnsbridge and Slaithwaite have already benefited from the BT fibre broadband roll-out, which is fantastic. Villages such as Hade Edge, Marsden and Holme, which have been isolated by heavy snowfalls in recent years, are, we hope, on track to get the broadband that they need. The Minister’s statistics are absolutely right. We have a broadband take-up of 83%—one of the highest in Europe. I believe that we are on the right track, and it is great to hear his plans for our rural communities.

[Mr Vaizey]

I thank my hon. Friend for that intervention. Although some of us may disagree about the detail of the Government’s plans, we are all united in understanding the importance of broadband, and we are doing our very best. Believe me, if I could wave a magic wand tomorrow and deliver superfast broadband to every home in the country, I would, but it is an engineering project and cannot be done overnight.

We are hitting our targets. Let me explain that we measure superfast broadband homes passed on the basis of those who actually receive it. So it is not about simply putting up a cabinet and saying, “That is delivering superfast broadband to 2,000 homes,” because some of the homes in that cabinet area might be 1 km away and not get such speeds. We audit every quarter, and we estimate that by the end of February we had passed 370,000 homes with superfast broadband. We are well on track to get into seven figures some time this year. We were passing 10,000 homes a week and we are now on track to pass 40,000 homes a week, so the programme is accelerating all the time.

North Yorkshire is a brilliant example of how well a programme can be run when there is a go-ahead local council with a real appetite for it and it works very well. As I understand it, there are now 118 live cabinets in the constituency of my hon. Friend the Member for Harrogate and Knaresborough, which serve almost 34,000 premises. In North Yorkshire, we have met all seven of our time and deployment target milestones. We have deployed 462 cabinets out of an overall programme of 673, and more than 120,000 premises have been passed, 100,000 of which receive superfast broadband. We also have significant take-up. My understanding is that the average take-up is some 20%, with two cabinets exceeding 30% take- up. In the next phase, we expect to reach another 17,000 premises under the superfast extension programme. Those programmes are going well.

Another area that has been mentioned is Lancashire, which is receiving £10 million under the broadband delivery UK programme. We are aiming for 95% superfast coverage under the existing programme. In North and North-East Lincolnshire, we are aiming for 90% coverage and targeting almost 40,000 premises. It would be a travesty to say that we have forgotten the north of England; nothing could be further from the truth.

The hon. Member for Bishop Auckland (Helen Goodman) mentioned the super-connected cities programme, which is separate from our rural broadband programme. It is perfectly possible for the Government to run two programmes at the same time. We set aside £150 million for the super-connected cities programme, which is designed to help our small and medium-sized enterprises to connect to superfast broadband. At the most recent party conference in Manchester, I was lucky enough to visit a local business that had received superfast broadband through the scheme, and to visit a business broadband provider that had benefited from selling connection vouchers to businesses and developing an ongoing relationship with them. We estimate that up to 30,000 small businesses will benefit from the programme, and it is well on track. Another important aspect of the programme is the support it provides for public and community wi-fi, which we are installing in 21 areas and which will benefit, for example, libraries, museums and art galleries.

[Helen Goodman]

Before the Minister moves on, would he care to tell us how much of the £150 million set aside for the super-connected cities programme he expects to have been spent by this time next year?

[Mr Vaizey]

We expect to spend a substantial proportion of it. We want cities and councils to work with local businesses and encourage them to take up the money. I am not one to oppose underspend in a Government programme, but the money is available if businesses want to use it. We will not spend money for the sake of it, however.

My hon. Friend the Member for Lancaster and Fleetwood raised B4RN and asked whether he could get a map of Lancashire. We strongly support rural community broadband schemes. At the outset of the programme, we put aside £10 million from the BDUK money and £10 million from the Department for Environment, Food and Rural Affairs to create a £20 million fund to support community broadband schemes. There is a reason why it can be difficult to get such schemes off the ground, because we are dealing with state aid and a complicated process for accessing public money in compliance with Commission guidelines. I am confident that we are ready to help when problems arise, however.

My understanding is that Superfast Lancashire, which is responsible for delivering the programme, is in discussions with B4RN about the footprint where it wants to bring its community network. Superfast Lancashire is also in discussions with BT about how BT can accommodate B4RN’s commercial desires. Nobody is trying to stop B4RN doing what it is doing. My understanding—my hon. Friend may correct me if I am wrong—is that Dolphinholme, the village that he mentioned, was part of the contract with Lancashire when it was signed, and Lancashire county council decided where that broadband should go.

[Eric Ollerenshaw]

Will the Minister give way?

[Mr Vaizey]

Before my hon. Friend responds to that point, if that is what he wants to do, it is important to stress as a matter of principle that the broadband roll-out is dictated by the county council. Obviously, it is done in association with BT, because BT will make recommendations to the county council about where it is cheapest to go and where it will get more effective spend for its money, but the county council is in charge. It is also in charge of the map, and there is one on the Superfast Lancashire site that shows, broadly speaking, where broadband is due to be delivered.

[Eric Ollerenshaw]

I thank my hon. Friend for giving way. He is right to say “broadly speaking”, because the map does not tell me which villages are in or out. I said that there was some confusion right at the beginning, on both sides, about Dolphinholme’s position in the original agreements, but it has only 181 inhabitants. It is right in the hills between the villages that B4RN is covering.

Does the Minister agree that it seems remarkably odd that a company as large as BT should suddenly move into that village in the hills, when it is saying that other villages—Glasson Dock, for example—and other parts of the Lancaster urban area are still waiting for connectivity? Why should BT suddenly concentrate on that particular area? That is what questions are being asked about. I will repeat myself: I would prefer a much more detailed map.

[Eric Ollerenshaw]

Sorry, Mr Sanders.

[Mr Vaizey]

I must say to my hon. Friend that my understanding was that Lancashire county council decided that Dolphinholme should get superfast broadband, so that is a matter for Lancashire county council. If I am wrong about that, I will apologise. I will double-check that with the county council and get back to my hon. Friend, but that is my understanding.

As far as the map is concerned, we are dealing with expectation management, if I can put it that way. I do not think that BT has made any attempt to stay under the radar to ambush local community providers. The local authority is in charge of the map, and there is nothing to stop it publishing a map, however detailed. It is also in charge of expectation management. When on the ground delivering broadband, circumstances can change. When the van and tools arrive in a particular area, it might turn out that it is going to be three times more expensive than expected. Another area might turn out to be twice as easy as expected.

If someone told a Mr Ollerenshaw, for example, that he was going to get superfast broadband in September 2014, but they then discovered either that that was not going to be economical and they were going to go somewhere else or that he was not going to get it until March 2015, they would have to manage his expectations. It is true that the Superfast Lancashire map gives some details, saying, “We are currently mapping this area and looking to come here”, but it does not give every single address, and it allows people to know when they are going to get superfast broadband only once the roll-out has been started in a particular area. I understand that people can type in their postcode or telephone number.

[Helen Goodman]

Is the Minister saying that he is going to ignore the Public Accounts Committee’s recommendation in its March 2014 report and just hand responsibility for maps over to local authorities?

[Mr Vaizey]

It is not a question of handing over responsibility for the maps to local authorities; they are our partners in delivery and we respect their right to manage their local broadband roll-out plans. We provided the framework contract, which means that local authorities do not have to reinvent the wheel when negotiating a contract with a broadband provider. We provide the money, which they use in partnership with us, and they are the ones on the ground delivering broadband. Although I would like to take a lot of the credit for the success of the broadband programme, it is important that North Yorkshire, Lancashire and other county councils across the north of England also take credit for the excellent job that they have done on delivery.

The hon. Member for Bishop Auckland keeps saying that the north is forgotten, but I well remember my recent visit to Durham, where Digital Durham is showing that that is a fantastic local authority with a huge hunger to deliver superfast broadband to its residents.

[Eric Ollerenshaw]

I thank my hon. Friend for giving way a second time. No one is questioning BT having won all these contracts, but I do not think that there is another historical example in local government of one company winning every single contract in every single local authority. Does that not suggest that we might need a new mechanism for comparing BT’s performance in one area with its performance in another? It is currently impossible to make such a comparison. The Minister says that the maps are the responsibility of the local authority, but the local authority has a contract with BT, as does the neighbouring local authority and the one after that. Who is going to manage BT’s performance? It seems to be becoming a sole provider.

[Mr Vaizey]

We are managing BT’s performance in the sense that BDUK audits what it is doing. It is important to stress that, for example, BT has already effectively delivered a Government-enabled programme in both Northern Ireland and Cornwall. I cannot swear to the exact figures because they are not in my briefing, but from memory BT was originally planning to reach about 80% of homes in Cornwall. However, because of the success of the programme—the costs on the ground were lower and take-up was higher than expected—my understanding is that BT will now probably reach about 90%, if not 95%, of homes in Cornwall under the same programme with the same money.

We audit everything that BT does, and local authorities do not pay the company until they get a receipt for work done. BT has already spent money, up-front, for which it has not yet been remunerated. The National Audit Office said that our plans were good value for taxpayers and reduced risk. I went on the record and did the media rounds with the Chair of the Public Accounts Committee, the right hon. Member for Barking (Margaret Hodge), when her original report was published. I challenged every finding of the Public Accounts Committee and continue to do so. I did not appear in the media the most recent time around because the BBC did not invite me to challenge the right hon. Lady’s views and she was given a free ride to put across her point of view about our broadband programme. I will go on any television or radio programme with her, at any time, to debate the issue, because I am utterly confident that our programme is complete value for money.

This ill behoves the Labour party, given that we had to write off £50 million from the programme put in place in South Yorkshire under the previous Government. We had to write off that money because they built an infrastructure but did not get any customers. Under the current programme, we have passed almost 400,000 homes and will soon pass 40,000 homes every single week.

I do not resile from praising BT as a great British company doing a great job for Britain. I do not think that we praise our home-grown companies enough. By the way, it is interesting that the BT trade unions did not agree with the Public Accounts Committee report—that is worth noting. I have been told about BT engineers, up to their shoulders in water over the winter, still trying to get the job done as the floods were coming in. It is testament to the BT engineers delivering the programme on the ground that although the floods have had an impact—you will know about that from your local knowledge, Mr Sanders—they have not knocked the programme off course.

Everyone in the House agrees about the importance of broadband and superfast broadband. The figures speak for themselves: the programme is well under way, all the contracts are signed and the issue is now about delivery. There will always be concerns about value for money, about where broadband is going and about community programmes, which deserve their opportunity to deliver broadband. We continue to address all such concerns, but no one can deny that we are now delivering one of the best broadband programmes in the developed world. In the weeks when we have overtaken Germany in availability of broadband, we should, as I said at the beginning, be looking at a glass that is very much half full, rather than half empty.