The Public Accounts Committee (PAC) has released a report slamming the Department for Culture, Media and Sport (DCMS) for failing to make the process of winning broadband contracts in the BDUK project competitive.
The parliamentary select committee claimed the design of the tenders for rolling out broadband across the UK had ensured BT was the only winning provider and “overly generous terms” within the contracts meant the taxpayer was not getting value for money.
“[The] design of the rural broadband programme has… failed to deliver the intended competition for contracts, with the result that BT has strengthened its already strong position in the market,” said the report.
The MPs highlighted where they considered the department to have failed, in a 64-page document. The issues included:
- Getting the figures wrong around how much BT and local authorities would contribute – the telecoms giant put up £207m less than expected, while councils contributed an extra £236m.
- The lack of transparency around the cost of contracts, as councils were forced to not share the numbers with their counterparts.
- The absence of government checks on how much BT was charging
- Insufficient transparency over where the roll-out will and will not take place
- A possibility BT was charging over the odds for wholesale access to its network
Chair of PAC and Labour MP Margaret Hodge, said: “This, together with the department admitting the programme will be delivered in 2017 – two years later than planned – means that consumers are getting a raw deal despite the generous public subsidy.”
PAC made a list of recommendations to DCMS, mostly regarding the additional £250m funding allocated to the scheme earlier this year, to ensure it is spent more wisely than previous monies.
“The department should not spend any of the further £250m of public money until it has developed approaches to secure proper competition and value for money for improving superfast broadband after 2015,” said the report.
“The department should improve its modelling work and, when negotiating levels of private sector investment, the department should push for contributions that take account of the long-term value of the assets to the supplier.”
More specific recommendations included removing a clause that prevents councils sharing details of the pricing of their contracts with other local authorities going through the same process. The committee wants publication of detailed roll-out plans “as a matter of urgency,” enabling local competitors to know which areas will not be served by BT.
It has also instructed Ofcom to look again at the firm’s wholesale pricing.
DCMS defended itself against the report, claiming it was at odds with recent findings by the National Audit Office (NAO) which, although it had its own criticisms towards the BDUK approach, admitted it was saving the taxpayer money.
“We put in place a fair commercial process and encouraged different suppliers to bid,” said a spokesman for the department.
“We are disappointed that the PAC fails to recognise that thousands of rural premises who have never had a decent broadband supply are now getting one, something that is vital for farmers, rural businesses and all those who live outside major cities.
“The government is absolutely confident that our programme will deliver projects that are real value for money and result in a transformation of broadband in the UK.”
However, industry representatives have sided with PAC. John Allan, national chairman of the Federation of Small Businesses (FSB), claimed the report echoed concerns that small rural businesses were failing to benefit from competition in the broadband sector.
“The lack of fit-for-purpose connectivity in rural areas is something that must be addressed, as rural firms are already at a disadvantage to their urban counterparts,” he said.
“With the government’s ‘digital by default’ policy firmly in place, the roll-out of rural broadband needs to be a much bigger priority, and a range of providers should be enabled to fill the gaps in the current programme.
“Increased competition will lead to increased provision of broadband, and the end goal must be to get the entire UK universally connected.”
So far 39 of the 44 local authority contracts have been awarded, but little information has been made public around their terms or the coverage areas. Computer Weekly has been pressing the councils for their data, which DCMS secretary of state, Maria Miller, told the organisations they must publish, but many councils refuse, sometimes citing a need to protect BT’s commercial interests.
For more details, read our investigation into BDUK roll-out here.