Stephen Timms
Main Page: Stephen Timms (Labour - East Ham)
Matt Warman
I absolutely sympathise with those problems.
It is unfashionable for Members of Parliament to admit that there are things they do not know, but as someone who covered broadband’s roll-out as a journalist for 10 years or so, I admit that I do not know whether the roll-out would be better if BT were to be split up as a company. I am certain, though, that regulation needs to be simpler and more rigorous however the company ends up, because we must promote more competition. I am also certain that Ofcom’s assessment of what is best must be absolutely robust so that whatever decision is reached is not a matter of perpetual debate. I urge the regulator to consider all possible options now.
Stephen Timms (East Ham) (Lab)
I agree with the hon. Gentleman about the importance of greater competition. Whatever the future for BT, does he not agree that it is extraordinary that so far all the public subsidies for superfast broadband roll-out have been handed to a single company? How can that promote competition?
Matt Warman
The money that has been handed to BT occurred after a tendering process. We should not forget that.
Some argue that splitting up BT would delay this vital roll-out unnecessarily. I would say that we should not put our principles before a vital national infrastructure project, and that if any delay would harm businesses and families, Ofcom should assess what the impact of breaking up BT might be in the short term.
Stephen Timms (East Ham) (Lab)
I, too, would like to congratulate the hon. Member for Boston and Skegness (Matt Warman) on securing and opening the debate. The question I want to address is why, as we are hearing from the debate across the Chamber, this roll-out is proving so disappointing. [Interruption.] The Minister says it is not, but one simply has to listen to the contributions made from Members from rural and urban areas to realise that there is deep disappointment about what is happening.
I think that the essential problem—the Minister knows my view—is that Ministers have lost sight of the lesson that competition needs to be at the heart of telecommunications policy. We have heard lip service paid to competition since 2010, but have seen no serious attempt to drive forward competition in telecommunications —and now we are paying the price, as seen in the complaints aired in this debate.
Earlier this month, there was a very interesting leading article in The Financial Times, pointing to the willingness of the Conservative party
“to cosy up to corporate champions and established business interests.”
It continued by saying—Conservative Members should listen—that the Conservatives’
“penchant for protecting corporate interests is not healthy. With productivity still the UK’s biggest economic challenge, their instinct should be to promote competition. Politicians of the Thatcher generation must be astonished that the lesson still needs to be learnt.”
I think The Financial Times is absolutely right.
Richard Drax (South Dorset) (Con)
I am delighted to hear an Opposition Member talking about competition. If the right hon. Gentleman’s new leader has anything to do with it, there will be no competition—there will just be the state.
Stephen Timms
I simply refer the hon. Gentleman to the many examples of the effectiveness of competition in telecommunications policy—perhaps most strikingly in the design of the 3G spectrum auction in 2000. That auction was structured to make absolutely sure that there was a new entrant, and one of the licences was taken up by a company that had not previously been in the market. I think we would all agree that over the last 12 years that new entrant has had a dramatic impact on reducing prices, improving quality, extending coverage and promoting innovation. There is no shortage of examples of the beneficial impacts of competition.
As I said in my intervention, it remains astonishing to me—I raised the issue with Ministers at the time—that no effort was made to ensure that there was at least some diversity of provision in the publicly funded roll-out of superfast broadband. Instead, all the money has gone to BT. The consequence today is that BT has Ministers over a barrel. Ministers have no levers whatever to address the problems we are hearing about from Members of all parties—and they are getting progressively worse—relating to our disappointing position on superfast broadband roll-out.
I make no criticism of BT, which has simply done what any effective company would do when presented with a gift horse—it has accepted it. It is now recognised that BT was overpaid for the infrastructure it provided, so it has to start paying back some of the handout it received. Usage of the infrastructure has been a good deal higher than predicted, so BT is paying back some of the windfall it has enjoyed, but I believe only half of it. As with the 3G spectrum auction, this exercise should have been structured to make sure that there was at least some diversity of provision. Other companies bid; BT beats all of them every time. We therefore have nobody else with which to compare BT’s performance, no alternative approaches to consider and no levers at all through which the Minister could try to promote better services in the future.
In a few minutes, the Minister will do his duty and assure us that everything is fine with the roll-out of superfast broadband, but the reality, as this debate is making clear, is otherwise. What Ministers need to do even at this very late stage is to relearn the lessons embraced by their Conservative predecessors and to find ways to inject some competition into this market—a market that, as we are rightly being reminded, is very important for the productivity and prosperity of Britain.
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
It gives me great pleasure to respond to this important Back-Bench debate and I congratulate my hon. Friend the Member for Boston and Skegness (Matt Warman) on securing it.
I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) on becoming the Opposition spokesman. I have always regarded her as, in effect, the shadow spokesman on this matter. Rather like the new leader of the Labour party and shadow Chancellor, I have left some very unhelpful quotations over the past five years in which I have praised her knowledge and expertise. I obviously resile from them all now that she is the official Opposition spokesman.
I was asked earlier whether this debate felt like groundhog day. I have to say that I have welcomed every single speech from those on the Government Benches—they have been brilliant, original and effective, and have displayed yet again the huge range of talent that exists on our Benches in representing our constituents and putting their issues on the agenda. The point when I thought it was groundhog day was when the hon. Member for Newcastle upon Tyne Central gave her speech. It is 2015 and the Labour party is still talking about a policy that it came up with in 2009. That policy was uncosted, required a tax that did not exist and contained no plans, yet it would have brought only 2 megabits to the country. Quite rightly, when the first Conservative Secretary of State came in, those plans were torn up because we knew that the country wanted 24 megabits. It wanted superfast broadband, which is what we have delivered.
While we have heard a lot of fine speeches from Government Members, I have to mark out the speech by the right hon. Member for East Ham (Stephen Timms) for sheer brass neck. It is astonishing that he talks about BT’s failure, when it was his Government that presided over the digital region project in south Yorkshire, which went bust, resulting in £50 million of taxpayers’ money being written off. The only superfast broadband project that started under his Government was the one in Cornwall, which relied on European money and involved BT. Cornwall is now one of the best connected regions in Europe.
The right hon. Gentleman accused me, because I happened to say that I might be mildly sceptical about the break-up of BT, of cosying up to corporate interests. Of course, those who are calling for the break-up of BT include such small businesses run out of a back bedroom as Sky, Vodafone and TalkTalk. It is absolutely astonishing.
Stephen Timms
The accusation about cosying up to corporate interests came from the Financial Times, not me. Does the Minister not accept, with the benefit of hindsight, that he should have ensured that some of the public subsidy went to a provider other than BT?
Mr Vaizey
The right hon. Gentleman cannot say that BT has me over a barrel when it has just paid back £129 million seven years early, thanks to the contracts we negotiated.
Let us look at those contracts. We said that we would deliver superfast broadband to 90% of homes and businesses in the country by the end of 2015. That is exactly what we will do. Three contracts have finished and 38 are ahead of schedule. I remind hon. Members that the reason BT bid for the contracts and that Virgin, for example, did not was that the state aid conditions required open access. Therefore, only companies that were prepared to see their networks used by their competitors were going to bid for the contracts. That is why BT was the only bidder in town.
Many of my hon. Friends have talked about Connecting Devon and Somerset, which did not sign a phase 2 contract with BT. I have sat in a room with hon. Friends and listened to officials from Devon and Somerset telling me that BT was not delivering. I now hear from my hon. Friends that BT is delivering.
As I have said, we have got £129 million back, thanks to the contracts. We are now going further. We have said that we will get to 95% of homes and businesses by the end of 2017. I am confident that we will deliver that as well. New technology and competition will help. Virgin has announced £3 billion of investment to compete with BT’s roll-out. It will get to 3 million to 4 million homes. Sky and TalkTalk are building a network in York to see how it can roll out fibre to premises.
That is a good example of how councils have to partner with telecoms providers, because they have to help with the planning. It is important that we keep the costs down. I hear people complain about the lack of broadband in central London, but Kensington and Chelsea refused to give planning permission to a single green box of BT’s for two years because it did not like the design. Councils have to get with it. As my hon. Friend the Member for South Suffolk (James Cartlidge) said, when we want to put up a mobile mast, we can suddenly find that the landowner has withdrawn their permission because of local objections. If we are going to build this infrastructure, there has to be a bit of give and take. Councils and local communities have to accept that the infrastructure has to be built. We might need to have taller masts and some structures in rural settings.
Now that BT has announced the roll-out of its G.fast technology, I am confident that 10 million homes will get speeds of 300 megabits or more over the next five years. We have the fastest roll-out and take-up of 4G in the world. We inherited a stalled auction programme from the last Labour Government that we had to resurrect and we are now back on track.
It was appalling to hear the hon. Member for Newcastle upon Tyne Central say that we should have a policy like Australia’s, which is massively over budget and involved a huge legal battle over many years effectively to nationalise the main telecoms operator. That pretty much cost the last Labour Government in Australia the election. We will not go down that road—that is for sure.
My hon. Friends are, of course, interested in the remaining 5%. I have written to all hon. Members setting out where broadband has got to in their constituencies in the last quarter, how many homes are being connected and, importantly, how many homes are not being connected. I am prepared to sit down with all my hon. Friends and visit their constituencies over the next six months to discuss areas that are not getting broadband, so that we can work together to deliver it.