Broadband

Iain Wright Excerpts

Wednesday 4th March 2015 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve again under your chairmanship, Mr Meale. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing the debate. The roll-out of superfast broadband has been a priority of his since his election to the House in 2010, and it is to his credit that he has been pushing it on behalf of his constituents, and businesses in his area—and talking about the national issue as well.

The debate has been excellent and is very important. We have heard that broadband roll-out is an issue that affects not only Devon and Somerset, and rural areas, but urban areas, too. We have heard about problems in Edinburgh, Hackney and Huddersfield. However, I want to mention the most important place of all—Hartlepool. I live in the town of Hartlepool, and not in an outlying village. Given that Hartlepool is the centre of the universe, it strikes me as odd that it takes me 10 minutes to download something from iTunes. The idea of watching the new series of “House of Cards” on Netflix is a pipe dream that I could not possibly think about. BT has said it is because my neighbours and I are too far away from the cabinet—therefore it is not acceptable for us to have superfast broadband. That cannot be right for constituents and households in an urban area. However, things can be even worse than that: this morning I was speaking to my hon. Friend the Member for Stretford and Urmston (Kate Green) about this debate, and she said that businesses in Trafford Park, the largest industrial estate in Europe, are still waiting for superfast broadband. Someone from one of the businesses there told her that they were paying 10 times the price, for a fifth of the average speed.

That cannot be the right approach, because broadband is essential for the future competitiveness of the country. We are in the midst of a third industrial revolution based on digital technology. The digital revolution is already transforming the way commerce is transacted, social interaction conducted, and public services provided to citizens. It will continue to do that—indeed, its impact on society and the economy will accelerate. It will affect skills, employment and other things. It is not sufficient for firms to say, “We will have an add-on digital strategy.” Digitisation and technology will be intrinsic to everything that the economy, Government and society do. If we in this country are to enjoy rising living standards and improved productivity, and to maintain and enhance competitiveness in the global economy, we must have the ambition of being the leading digital nation, both in skills and in hard infrastructure, which is crucial.

In many respects the UK is well placed to achieve that. We are presently ranked ninth among the leading global digital economies by the World Economic Forum’s global competitiveness index. We have a culture of innovation and invention, and we have a digitally savvy population, in many respects, but we must go further, and we could do more. It seems to me that in 2015 the country is at a tipping point with respect to what we need to do to enhance our competitiveness in the digital world. The countries that rank higher than the UK are Switzerland, Singapore, the US, Finland, Germany, Japan, Hong Kong and the Netherlands. All of those are our competitors.

In a telling speech, the hon. Member for Wells (Tessa Munt) mentioned South Korea. As my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) mentioned, too, it announced last year that it would deliver a national 5G wireless network offering speeds of 1 gigabit per second by 2020. It is striking that the nations I mentioned have all invested in digital skills as a priority, but have also prioritised digital infrastructure, with a particular emphasis on driving universal access and usage. We have heard time and again that digital businesses can locate anywhere in the world, and that they will often go where connectivity is amenable; but we have also heard that 10 million UK premises are unable to access superfast broadband.

For all the much-vaunted notion of London as a tech hub and Shoreditch as tech city, as my hon. Friend the Member for Hackney South and Shoreditch said in her excellent and knowledgeable contribution, there are connectivity problems in a place that is often seen as the national centre of the digital economy. The city’s average broadband speed ranked 26th out of 33 European capitals. London has an average speed of 25.44 megabits per second, whereas Bucharest, at No. 1 in Europe, has speeds of 80.14 megabits per second. As we have heard in the debate, and as I have mentioned, the UK suffers from internet not spots, in which businesses cannot connect and therefore cannot compete and grow.

The country suffers far too much from patchy coverage. I think my hon. Friend the Member for Hackney South and Shoreditch has already mentioned last month’s excellent report of the Digital Skills Committee in the other place, but it is worth referring again to such an excellent report and recommendation. It made it clear that the pace of universal internet coverage and the delivery of superfast broadband should be a matter of concern; universal coverage and the UK’s international competitiveness are being hampered. Yet as the National Audit Office set out, the Government’s rural broadband project will be delivered 22 months late. Only nine local projects will, it is estimated, meet the programme’s target of supplying 90% of premises with superfast broadband by May 2015. The Government now say that the date could be December 2017, but BT has stated that the programme may

“end up being in 2018”.

Why has that been allowed to happen?

That question was also asked by the hon. Member for South Norfolk (Mr Bacon) who, like my hon. Friend the Member for Hackney South and Shoreditch, is an excellent member of the Public Accounts Committee. Why have the Government structured the policy and the institutional architecture in that particular way? What did the Government do to ensure that the targets were achieved? Why was action not taken sooner to ensure that delivery times were met?

On phase 2 of the rural broadband roll-out, why did the Government not prepare a comprehensive and separate business case, based on the findings of phase 1? The Minister will be aware of the NAO’s progress update on the delivery of the programme, which was published some five weeks ago. Is he concerned about the NAO’s comments that phase 2, currently at the procurement stage, will face limited competition, given that BT is the only participant in the BDUK procurement framework?

We have heard time and again about BT’s role in the process. The Minister will be aware of the remarks by the Chair of the Public Accounts Committee following the publication of the Committee’s report on the roll-out of the rural broadband programme:

“The Government has failed to deliver meaningful competition in the procurement of its £1.2 billion rural broadband programme, leaving BT effectively in a monopoly…BT’s monopoly position should have been a red flag for the Department. But we see the lack of transparency on costs and BT’s insistence on non-disclosure agreements as symptomatic of BT’s exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas.”

On that basis, and given the comments made by hon. Members this afternoon, does the Minister really think that we have a healthy, competitive market that promotes good competition and encourages new entrants, who will drive down costs, drive up quality and access, and improve our country’s competitiveness?

Given the structure of BDUK, and given the structure of the process introduced by the Government, why were options other than that monopoly position not considered? Is the Minister concerned that the Government’s handling of the process means that a single private company will be able to reinforce its already strong position in the market, to the detriment of new competition? What will he do to ensure that the excellent local initiatives that we have heard about—the City of York council and TalkTalk initiative being a particularly good example—are encouraged as much as possible? We need local, innovative solutions that address specific local circumstances.

I am interested in the important question of who owns national infrastructure assets. What happens to the £1.7 billion public sector investment, in terms of BT’s assets and infrastructure? Is the Minister content that, in this case, vast amounts of taxpayers’ money has been used to improve a company’s balance sheet? We have heard about the importance of transparency. What is he doing to improve the transparency of data, access and cost base? I fully respect “commercial in confidence” agreements, but why are non-disclosure requirements allowed? How do they promote competition? What will he do to change that?

I have specific points about individual funds established by the Government. How much of the £20 million rural community broadband fund has been spent, and what has it achieved? Similarly, what proportion of the super-connected cities programme has been allocated, and what take-up has resulted from that programme?

This has been an important debate, because connectivity for our businesses and homes will be crucial in the 21st century economy, which will be led by a digital revolution. We should see broadband as a national utility, just as electricity, water and transport were in previous decades. Does the Minister need to think in a wider and more co-ordinated way across Whitehall to ensure that happens? Do planning and access to land also need to be altered to ensure that we can highlight and prioritise this important function of future competitiveness? Other countries are speeding ahead with connectivity, at the cost of our own competitiveness, prosperity and social inclusion.

Time and again, we have heard questions from hon. Members about value for money, accessibility, connectivity, availability and the services that businesses and constituents have received. I hope that the Minister will take on board the serious questions that have been asked today, and I hope he will be able to address them in the time remaining.