BT Broadband Provision: Local Businesses

Lord Vaizey of Didcot Excerpts

Thursday 10th March 2016 Westminster Hall

[Chris Davies (Brecon and Radnorshire) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing such an important debate. Broadband is an essential component of modern business life.

As we are all aware, a connected business is a competitive business. Those who cannot connect are left behind in the global race, and we must not let our excellent local businesses fall into that trap. The hon. Lady’s constituency is in many ways similar to my own. Beautiful rolling countryside and rural communities litter the local area and, like me, she has many excellent rural businesses crying out for better broadband. I am delighted that she mentioned a local firm of auctioneers that is suffering. I spent 20 years in that profession before entering this place, so I sympathise enormously with those auctioneers and understand what they are going through.

As a rural constituency, Brecon and Radnorshire faces many challenges, to which I will return later. However, I feel that it is only right to begin by commending the Government for their commitment to the 10 megabits per second universal service obligation. We are often quick to criticise, but that commitment was welcomed across my constituency and will be a great comfort to local people.

I have spoken in many debates on broadband during my short time here in Parliament—

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

So have I.

[Chris Davies]

And when I have spoken, the Minister has always answered at the end with a cheery smile and a great further commitment to rural broadband. However, I believe he would agree that even though he has always spoken well, there is still much more to do.

There are three main issues involved in providing adequate broadband to our rural businesses. The first is information. It is vital that our businesses have access to all the information they need to make an informed decision about their broadband needs. Many businesses that I speak to in my constituency tell me that they cannot get access to the speeds that they need, yet they are unaware of many of the options available to them. Often, few are aware of the possibility of ethernet connections, and many are put off by the extra costs involved, as might be expected. Others are still oblivious to the promise of satellite and wireless broadband, which could satisfy their requirements.

Businesses face a lot of noise about off-the-shelf products that hides alternative options that might benefit them. I therefore recommend that the Government do all that they can to ensure that our businesses are properly informed of all the options available. BT and other providers offer alternative services that might fulfil the needs of those local businesses.

--- Later in debate ---

[Clive Efford (Eltham) (Lab)]

It is a pleasure to serve under your chairmanship for the first time, Ms Ryan. I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing yet another debate on broadband. I am sure that the Minister needs no notes to respond to these debates.

We heard from a number of Members about the problems in their constituencies. In an intervention, the right hon. Member for Ashford (Damian Green) read out a response that suggested BT was trying to distance itself from Openreach, which is incredible. The hon. Member for South Suffolk (James Cartlidge) said that his constituents had dug their own channel in an effort to expedite the situation themselves. That is taking things to an extraordinary degree, but it shows the lack of service, particularly for people in rural areas, although I stress that the problems are not just in rural areas.

The hon. Member for Bury St Edmunds (Jo Churchill) illustrated very eloquently the chaos suffered by one business in her constituency. When the line was reallocated, the business lost its BT broadband connection. When it came back, the speed was reduced and the gentleman was forced to travel 25 miles to another office. The impact of something like that on a small business is difficult to measure.

The hon. Member for Sittingbourne and Sheppey (Gordon Henderson) read out a catalogue of failures over a long timeline. It is difficult to understand how BT can be so incompetent and fail in its duties so frequently. The hon. Member for Brecon and Radnorshire (Chris Davies) highlighted the problems for rural people and called for a truly national roll-out. The hon. Member for Tiverton and Honiton (Neil Parish) said that by definition the hardest-to-reach areas are rural, and underlined that by discussing the ignominy of companies having to pay BT to get an explanation of BT’s failure so that they can get compensation. That is hard to stomach for small businesses.

The hon. Member for Filton and Bradley Stoke (Jack Lopresti) intervened to underline how arrogant and aloof BT is when it comes to the needs of people who are not receiving broadband, especially to businesses. That was also underlined by the hon. Member for Angus (Mike Weir), who discussed BT’s failure to carry out repairs. Because BT has a monopoly in his area, it does not respond readily to his constituents’ concerns.

The Federation of Small Businesses has referred to broadband as the fourth utility, as have many Members today. As broadband becomes ubiquitous and ever more vital for doing business, it becomes more important that businesses can access broadband. It is vital for all businesses, not just those in the digital economy. It is ludicrous that the Government have not been able to provide what has become the fourth utility for so many people.

The Government’s own broadband impact assessment states:

“It is now widely accepted that the availability and adoption of affordable broadband plays an important role in increasing productivity”,

and that access to faster broadband is worth £17 billion to the economy. It goes on to explain how better infrastructure increases productivity by

“supporting the development of new, more efficient, business models, enabling business process re-engineering to improve the efficiency and management of labour intensive jobs, and enabling increased international trade and collaborative innovation”.

Broadband also allows more people to work, or to work in different ways.

The failure to roll out broadband is increasing the problems for inner cities in the face of demands for public services and more infrastructure. A fully rolled out broadband infrastructure would mean that businesses could relocate, or more readily remain in rural areas to conduct their business. If, as the impact assessment shows, something is worth £17 billion to the economy, surely it is a false economy for the Government not to ensure that it is rolled out properly.

The European Commission set a target of universal broadband by 2013, yet we are still not there. When the Labour Government left office in 2010, they left behind a fully funded plan for basic broadband to be delivered to all within two years, and superfast broadband to 90% by 2017. The remaining 10% would have been covered by mobile broadband. We are falling further and further behind our competitors. Australia, a huge landmass, is aiming for 100 megabits per second for 93% of premises by 2021; South Korea will have 1 gigabit by 2017; and Ireland has recently increased its average broadband speed by 10%. Yet in the last quarter, the average speed in the UK has fallen by 3.7%.

The coalition Government designed a fragmented and monopolistic superfast broadband roll-out that handed £1.7 billion of taxpayers’ money to one company to roll out broadband: BT. Four years later, many homes are still waiting. Incredibly, the Government have missed their targets on several occasions. In a Westminster Hall debate yesterday, the Minister raised several of his own frustrations with the service. We have debated broadband on 45 occasions in the past five years. The Minister has answered questions on the subject at every Culture, Media and Sport questions I can recall—a total of 63 times in the past five years. There has been a constant barrage of attacks from Members on both sides of the House about the quality of the service.

The Minister said in yesterday’s debate: “Openreach must do better.”

[Mr Vaizey]

Yes, it must.

[Clive Efford]

He continued:

“As the Minister responsible, I find it particularly frustrating that I have to step in to sort out these problems.”

[Mr Vaizey]

I do.

[Clive Efford]

Well, there must be an enormous number of problems because quite a few have been mentioned today that he has not got around to. He went on:

“Why has Openreach not put in place a hit squad to deal with some of the more prominent complaints that come from MPs?”—

[Mr Vaizey]

Yes, absolutely.

[Joan Ryan (in the Chair)]

Order. Minister, will you address these points in a few moments when the hon. Gentleman sits down?

--- Later in debate ---

[Clive Efford]

Again, the hon. Lady very eloquently illustrates one of the problems that we have with Openreach.

The Minister gave his own example:

“I dealt with a factory that had been built to be ready to open specifically on the basis of when Openreach was going to connect it, but Openreach was already a year behind schedule. That cost that factory many tens of thousands of pounds. It continues to baffle me why it cannot get its act together and sort out these prominent problems.”

It is beginning to baffle us why he cannot sort out these problems with Openreach.

“I had to intervene on new builds. When a housing development is being put together, one would have thought it was the most obvious thing in the world that the people buying the houses are likely to be relatively young and likely to have children, and therefore likely to want, in this day and age, fast broadband connections. However, it took me a year to 18 months to bang together the heads of BT and the house builders to get an agreement.”

[Mr Vaizey]

I will explain in a minute.

[Clive Efford]

I sincerely hope you will. If it takes the Minister 18 months, imagine what it is like for constituency MPs.

The Minister was obviously in full flow, because he threw in one or two other items:

“I, for one, would love them to get rid of this landline rental charge that they put on our bills. They put on their adverts a nice, big, juicy low price for broadband, and then an asterisk and a line saying, ‘By the way, you’ll have to pay £25 a month for landline rental.’”

Is that a statement of policy, or just the Minister throwing something into the air?

[Mr Vaizey]

Ms Ryan, you quite rightly admonished me for trying to respond to the Opposition spokesman from a sedentary position, but it is frustrating. Yesterday, I joked that, because of the lack of an Opposition policy, I would give an Opposition speech, but I did not expect the Opposition spokesman literally to read it out word for word the next day. Can we perhaps hear what the Opposition propose?

[Clive Efford]

The hon. Gentleman is the Minister. If he wants to dodge the arguments by posing as an Opposition Member, fine, but that is to run up the white flag and admit defeat.

The Minister said:

“I hope that the Advertising Standards Authority will crack down on how providers advertise their speeds. At the moment, if only 10% of customers are receiving the advertised speed, in the eyes of the ASA that is supposed to be okay. I totally accept that the ASA does a good job—it is a great example of self-regulation—but it really needs to go further on that. In my humble opinion, at least 75% of people should be getting the speeds that the broadband providers are advertising.”—[Official Report, 9 March 2016; Vol. 607, c. 139-140WH.]

Is that another policy statement? He is the Minister, so he really should not put such things into speeches if he does not intend to deliver them.

The Minister derided the previous Labour Government’s commitment to provide 2 megabits per second by 2012, but the Government are not delivering that minimum standard. Superfast broadband is 24 megabits per second, but the Government have moved the goalposts several times on it. It was 90% by the end of 2015; then it was 90% by the end of 2016; then it was 95% by the end of 2016; and now it is 95% by the end of 2017. When the Select Committee on Environment, Food and Rural Affairs was conducting an investigation into rural broadband, BT told it:

“it is there or thereabouts. It may end up being in 2018”.

The Committee pointed out in its 2015 report on rural broadband that it is by no means certain that the Government will even meet the phase 2 target. BT let the cat out of the bag: the Government are really behind the times.

Let me finish by asking the Minister a few questions. Two weeks ago, we cautiously welcomed Ofcom’s strategic review of digital communications—a plan for sorting out the mess created by six years of failed policy—as a step in the right direction. It mainly proposed two things: allowing rivals to access BT’s ducts and poles to increase competition, and addressing the issues relating to service standards. Ofcom will introduce automatic compensation for customers and businesses when things go wrong. It is good news that broadband, landline and mobile customers will automatically receive refunds for any loss or reduction in service, which hon. Members have spoken about today. Openreach will be subject to tougher minimum requirements to repair those faults and install new lines more quickly. As hon. Members indicated, that is very welcome indeed.

What will the Minister do if those proposals are not met? How will he ensure that those targets are achieved? For example, Openreach might decide to fix easier and quicker faults at the expense of some of the ones that have been described today. Ofcom will introduce performance tables on quality of service to identify the best and worst operators on a range of performance measures so customers can shop around in confidence. Will the Minister tell us how he intends to ensure that that is achieved? How long does he think it will take for the market to become more competitive? What will he do if it does not work? Are all the measures still subject to further consultation and debate? Ofcom will need the Government’s political cover to make that happen, but the Secretary of State’s mind is currently elsewhere. Will the Minister assure us that addressing the issues that hon. Members raised this afternoon is a priority for him and his Department?

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

I am grateful for the opportunity to respond to this important debate under your chairmanship, Ms Ryan. I thank the hon. Member for Bishop Auckland (Helen Goodman) for securing it.

Halfway through the debate, I began to wonder whether we were taking part in a kind of Sport Relief charity function, because we had exactly the same debate yesterday. To deal with all hon. Members’ complaints about Openreach, I propose a 24-hour debateathon. I am particularly pleased that I am the last man standing.

Yesterday, we had the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), who is not the Scottish National party’s Culture, Media and Sport spokesman, but its Environment, Food and Rural Affairs spokesman: he worked for a telecoms company for 20 years so the SNP sent him along. He has not made it today. We also had the official Opposition spokesman, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah). She has not made it today; she sent the sports spokesman instead. But I am still here, still standing and happy to take questions.

This may not be a Sport Relief event, but it is a mass therapy session. Many hon. Friends and hon. Members came here to relieve themselves of the sheer frustration of having to deal with Openreach on behalf of their constituents. As I have said on many occasions—well, certainly yesterday—as a constituency MP, I also have to deal with that frustration.

The hon. Member for Eltham (Clive Efford) mentioned the example of a factory that I cited. I was, in fact, talking about a factory in the constituency of the hon. Member for Bishop Auckland—I had forgotten that she would be leading this debate. As she knows full well, I have been closely involved in trying to sort out that problem. There is no defending what happened to that factory. I am not here to defend it, because I do not work for Openreach. It is absolutely astonishing that a business would spend £30,000 up front with a supplier such as Openreach, build its warehouse based entirely on the belief that it was dealing with a reputable company that would deliver what had been contracted for, and then find—

[Neil Parish]

Will the Minister give way?

[Mr Vaizey]

No, I will not give way. My hon. Friend spoke at length on the issues and I am not giving way to him.

The company built a factory based entirely on the expectation that the service would be delivered, only to find that it was not delivered—Openreach said that it had a problem with blocked ducts. If people are paid £30,000 to deliver a business line, the least they can do is to get out there and look at the ducts, in particular if the order has come in six months before they are meant to deliver it. There is no defence.

I freely admit that it is frustrating to deal with such issues. I wonder sometimes how I could distract attention from them. In fact, I asked the Prime Minister the other day, “Can we have a referendum on something? I am suffering all these attacks from my colleagues, please can we have a referendum on something like our European membership as that might distract them for a few months before they come back to the issue?” But it has not distracted them—we are still debating Openreach’s failures.

The Opposition have contributed a great deal to telecoms and telecoms policy. I read this morning that one Opposition Member was fined £5,000 by the Information Commissioner for making 35,000 recorded calls urging people to nominate him as the London mayoral candidate, which he failed to achieve. But he has added to BT’s coffers!

We are still waiting for a broadband roll-out policy from Labour, but I am grateful to the hon. Member for Eltham for reminding us that Labour’s target was 90% superfast broadband by 2017, which we achieved by the end of 2015. So we are two years ahead of what Labour promised with its unfunded commitment when it was in government and before it left us with a wrecked economy and such long-term plans. I sometimes dream that Labour won the 2010 general election and that a Labour MP might now be having to stand in my place and explain why his Government had still not got to 90% and why they were still going to wait for two years to do so. We have never changed our targets; we will reach 95% by the end of 2017.

I sometimes dream, too, of the SNP being the official Opposition—I know I should not say that, because it is almost blasphemous, but the hon. Member for Berwickshire, Roxburgh and Selkirk yesterday was entirely reasonable in pointing out the complexities and difficulties of the programme. I also commend the hon. Member for Angus (Mike Weir) for the reasonable points he made today about the problem not necessarily being wholly a Government one.

I want to revise slightly what I said yesterday, because it is important to make two points. First, when I complain about Openreach’s customer service, I should also praise the thousands of people who work for Openreach. They do an extremely good job in difficult circumstances. They are probably dealing with quite antiquated systems, which have not been modernised, and certainly the engineers who do the work on the ground are formidable people—I have met a few of them, when they have been enabling cabinets in my constituency. They work in all weathers and often unpleasant conditions. I want to put on record my gratitude to the thousands of men and women who work for Openreach in delivering roll-out.

Secondly, there is a distinction between poor customer service by Openreach and the roll-out of superfast broadband. The roll-out is an engineering project. We like to give Openreach a hard time, but it was the only one that stepped up to the plate to bid properly for the contracts—it might well be thinking that it made a rod for its own back—and, in terms of the roll-out, Openreach has hit every target. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) wondered earlier whether it was value for money: as he well knows, thanks to the clawback mechanisms in the contract, we have achieved £130 million. In fact, there is considerable underspend on the contract as well, so we will probably be able to use existing money to go further than 95%.

As far as I am concerned, Openreach is full of very good people doing a very good job, and the roll-out of infrastructure is going extremely well. In this debate, we are dealing with issues that I will not say are beyond my control, but that should be laid squarely at the door of Openreach. In yesterday’s debate I said that Openreach has the lowest levels of customer satisfaction, just below TalkTalk, according to Ofcom surveys. It is important to remember that no communications provider is perfect. I am sure that if we looked in our inboxes we would all find complaints from our constituents possibly about TalkTalk, Virgin, Sky or even some smaller companies providing business broadband. No company is perfect.

[James Cartlidge]

BT has a monopoly on that front. I have never had a complaint about any other company apart from BT.

[Mr Vaizey]

Well, I have, but perhaps I live in a different world.

Having said that, I find it frustrating that I am sometimes doing the job of the chief executive or directors of Openreach. I find it frustrating that I have to broker a deal between Openreach and house builders to provide what should be provided in any common sense view—when building a brand-new housing development, surely that is the time to lay brand-new technology that people will expect over the next 20 years. I find it frustrating that I have to deal with a legion of complaints that are the result, frankly, of bad management and bad customer service. I sometimes feel that someone in Openreach loathes me so much that they sent out a memo saying, “Please give me the address of every single MP’s office, so we can make sure that every time they try to get a phone line, it will take three months.” At least four MPs have complained about that to me.

[Clive Efford]

Given that the Government have provided so much money to BT Openreach, will the Minister accept that the proper checks and balances were not put in place to ensure that it delivered on its contractual obligations?

[Mr Vaizey]

No, I will not accept that, because the hon. Gentleman is missing the point I made earlier about the distinction to be made. The physical roll-out of infrastructure is going well, and more than 4 million homes that would not otherwise have got superfast broadband now have it. That job has been done extremely well. What frustrates me is the poor customer service, which I hear about again and again from my colleagues. That is why we have had two debates in two days. I am really trying to get the message to Openreach to sort that out.

[Damian Green]

I spent several years as the front person for the UK Border Agency, so I have every sympathy with the Minister having to be the front person for Openreach. Has he reflected on the policy implication? Even though the roll-out, in effect, of fibre to the cabinet has been a success—as he said—that is still not providing an adequate service for millions of households and businesses throughout the country. Therefore, at some stage, a Government will have to bite the bullet and say, “We actually need fibre to the premises, however expensive it will be.”

[Mr Vaizey]

My right hon. Friend is moving me on to the next stage of infrastructure roll-out of broadband, but I agree, whether that is fibre to premises or new technology such as G.fast. I have talked about the need for a gigabit Britain and, as far as I am concerned, we are reaching the end of the superfast broadband roll-out programme and now we need to look ahead. We are not complacent: we need to go for a gigabit Britain.

To make things easier for people to build such networks, we will reform the electronic communications code, so that laying fibre across land becomes cheaper; we will reform planning so that mobile operators—as mentioned by one of my hon. Friends—may build bigger masts to get better signals; and we will work with Ofcom on a digital communications review, which will open up BT’s poles and ducts. I completely agree with those who say that it is important to follow up and to ensure that the practical implementation of the regulations actually happens. The Secretary of State for Business, Innovation and Skills also announced a review of business broadband, which is at the very heart of what colleagues have been talking about.

[Jo Churchill]

Will the Minister bring domestic and business sides together, where possible? As he knows, the Home Builders Federation rolled out its programme in my constituency, in Woolpit. Businesses in that village cannot get adequate supply, which is crazy.

[Mr Vaizey]

I agree with my hon. Friend. That should form part of our business broadband review—that we need to put in place proper procedures to ensure, in particular when business parks are being built or extended, that communications providers know that and therefore use the opportunity to put in place the new technology that everyone wants to see. The infrastructure programme, however, is going well.

I should also mention that, in the digital communications review, Ofcom has proposals for automatic compensation to householders and businesses where communications providers fall down in what they are providing. I am extremely keen to see that implemented as soon as possible. So we will make it easier to build infrastructure and to use Openreach’s network, and we will bring in provisions to ensure that when Openreach and other communications providers fall down with consumers, consumers get compensated.

Question put and agreed to.

Resolved,

That this House has considered BT broadband provision for local businesses.