A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:
The Department for Culture, Media and Sport has not had a good enough grip on its rural broadband programme. Only 9 of 44 locally managed programmes are expected to meet the 90% super-fast broadband coverage target by the May 2015 deadline. The programme won’t now be delivered until March 2017, nearly 2 years late. The Department wanted the private sector to foot 36% of the bill for the £1.2 billion rural broadband programme, but it is now expected to contribute just 23%, leaving the public sector purse to cover the rest.
In an attempt to reduce public costs and risk, the Department has ended up stifling competition. BT has won all 26 contracts let so far from the Department’s framework contract. It is not much of a competition when you end up with only 1 supplier actively bidding in a framework, despite 9 organisations being interested at the start.
BT has been very cagey about its costs. Available comparisons raise potential concerns. For example, BT’s bids for the cost of street cabinets are on average 12% higher than the actual costs of similar work carried out in Northern Ireland. Average project management costs are also more than double the Northern Ireland scheme. Opaque data and limited benchmarks for comparison mean the Department has no idea if BT is being reasonable or adding in big mark ups. Private sector organisations need to be 100% transparent about their figures when spending public money. It is not acceptable to hide behind arguments about commercial sensitivity.
Ofcom needs to up its game and ensure BT does not make super profits out of its dominance of the wholesale broadband market. DCMS must take more control of the programme to ensure people in rural areas get the super-fast broadband they were promised, at a reasonable cost to the taxpayer.