Government recovers £645m for BDUK broadband roll-out

The government has recovered £645m of funding to be reinvested in future broadband roll-out through a mix of clauses in its BDUK contracts with BT and project savings

Clawback clauses in the government’s Broadband Delivery UK (BDUK) contracts with BT have now recovered £645m of money to be reinvested in extending the national roll-out of “superfast” broadband services to remote rural areas of the UK.

The gain share clauses stipulated that BT – which controversially won every Phase 1 BDUK contract – would pay money back into the pot if take-up of broadband services delivered through BDUK reached over 20%. This mechanism was first activated in July 2015 with the return of £129m.

According to digital minister Matt Hancock BT has now set aside £465m through the gain share mechanism, and furthermore, project efficiencies resulting from “successful management” at BDUK have also saved a further £180m, taking the total to £645m.

This cash will now be recycled to allow the various local authority BDUK programmes around the country to re-invest and extend their BT-led roll-outs further than originally planned. It is understood that £200m of the money has already been committed in this way.

The BDUK scheme already passed 4.5 million properties around the UK which were left out of the commercial broadband roll-out, and the government appears to be set to meet its target of 95% of the UK being able to access a 24Mbps or higher broadband service by the end of 2017.

“The money that is now being returned to the programme for reinvestment will help us reach that final %, and is all part of our commitment to make sure that 100% of the UK can get affordable, fast and reliable broadband by 2020,” said Hancock.

According to independent broadband analysts at Thinkbroadband.com, 93% of UK premises are now able to access “superfast” services, and according to Ofcom, 31% of them have chosen to do so, although this figure varies from region to region, and is highest in more affluent areas such as the South East and East of England, where more than 40% have upgraded.

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The second and third phases of the BDUK programme, which are now underway around the country, have seen more contracts being awarded to providers other than BT, notably fibre-to-the-premises (FTTP) suppliers such as Gigaclear, and a number of small local providers, known as altnets, although these will not benefit directly from the reinvestment.

The government is making progress on introducing legislation to incentivise FTTP providers to roll-out their networks more widely – it plans to cut business rates on new infrastructure for a five year period, and a consultation on the small print began at the end of August 2017.

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Notes that it is the Local Authorities, not Central Government which have "recovered" the money - and they can only spend it with BT, or reclaim their share when the relevant contracts come to an and/
 
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