Less than a quarter of projects will be ready by 2015 target date and scheme will cost taxpayers an extra £207m
Much-trumpeted plans to introduce superfast broadband to rural areas will be delivered nearly two years late, with taxpayers footing a greater proportion of the £1.2bn bill, the government’s official auditors have said.
Fewer than a quarter of the projects will be ready by May 2015, the expected delivery date, and the scheme will cost the public purse an extra £207m, according to a report from the National Audit Office.
The government has already announced that superfast broadband will reach 95% of the population by 2017, two years after the original date for reaching that target.
Just nine out of 44 local projects are expected to reach the original target of 2015, according to the report, with the delay partly attributed to the EU state aid process taking six months longer than expected.
Auditors also said competition among suppliers had been limited, leaving BT as the only active participant. It is expected to win all 44 local projects.
The worst affected areas include Merseyside, Oxfordshire and Derbyshire, which are among those councils that have yet to sign a contract with BT. Residents in these areas have no idea when their broadband will be upgraded.
The findings will make uncomfortable reading for David Cameron, who in 2011 announced the latest stage of the scheme and said it would be “absolutely vital in driving the creation of the small businesses and growing businesses that will be so important to keep the growth of employment in our country”.
Helen Goodman, the shadow media minister, said many in the countryside were being left without access to the internet at a time when the government was shifting essential services online.
“We are not a ‘one nation’ country with this digital divide, and that divide is being deepened by [the culture secretary] Maria Miller,” she said.
The report has been seized upon by Tory opponents of the HS2 rail scheme as proof that the government has got its priorities wrong. The former cabinet minister Cheryl Gillan said: “This is disappointing and an example of how putting more resources into this type of operation would yield more immediate benefits to the wider economy rather than spending money on HS2.”
Superfast broadband will be accessible to nearly two-thirds of the UK by next spring. Government support is needed to supply the final third in difficult-to-reach areas where telecoms operators will struggle to make a profit on their investment.
Significantly, the auditors said the government had “secured only limited transparency” over the costs in BT’s bids. For reasons of commercial confidentiality, BT has told councils they cannot share information with each other to ensure they are getting a fair deal. Last year a whistleblower was dismissed by Broadband Delivery UK, the national broadband funding programme, after drawing up a spreadsheet to help councils share information.
His research suggested big disparities between contracts, and auditors have now confirmed this. Their checks showed the cost of connecting fibre to BT’s green street cabinets, which link homes to telephone exchanges, varied between £19,600 and £51,000. The cost of cabinets is a major element in contracts, accounting for more than a third of costs.
Some areas, where cabinets are a long way from the nearest exchange or fibre trunk route, are clearly more expensive to connect than others. But the average cost in England is 12% higher than in Northern Ireland, where BT has already completed its work.
Checks made by civil servants have already identified over-charging. In one area BT was found to have inflated project management costs by £3m. BT refused to let civil servants inspect its books to confirm that the costs it charges to the public purse were the same as on its own commercial projects, the report said.
Margaret Hodge, chair of the public accounts committee, said she remained concerned about whether BT was being transparent enough to allow parliament to follow the public pound. “Opaque data and limited benchmarks for comparison mean the [DCMS] has no idea if BT is being reasonable or adding in big mark ups,” she said.
A BT spokesman said: “We have been very transparent from the outset and have invested hundreds of millions of pounds when others decided to ignore rural Britain.”
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