The government’s Broadband Delivery UK (BDUK) framework has been slammed by MPs for failing to create competition or secure value for money in yet another stinging criticism of the programme.
The Public Accounts Committee (PAC) gathered evidence on the situation earlier this year in heated sessions in parliament and in its subsequent report said the Department for Culture, Media and Sport (DCMS) had “mismanaged” the programme and failed to secure value for money.
“The sole provider BT has been placed in a quasi-monopolistic position, which it is exploiting by restricting access to cost and rollout information,” she said.
“The consumer is failing to get the benefits of healthy competition and BT will end up owning assets created from £1.2bn of public money.”
The report also criticised the lack of transparency over pricing that the DCMS had secured due the fact BT is the only bidder to have won any contracts. To date BT has won over 25 contracts with local authorities after its only serious rival, Fujitsu, pulled out of the bidding process.
“The lack of transparency over BT’s costs is a serious risk to value for money, particularly as BT is the Department’s single supplier,” the report said.
“The Department’s reliance on self-certification by BT (that its prices are comparable with those in its commercial rollout of superfast broadband) does not represent an adequate control.”
The report said it means local authorities’ negotiating positions are “weakened by a lack of comparable cost data against which to assess BT’s bid”.
BT hit back with a strongly worded statement, saying it was “disturbed” by the report. The firm said it was “simply wrong” and ignored evidence submitted by BT after the parliament sessions.
“We have been transparent from the start and willing to invest when others have not. It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy – terms which drove others away,” the company said.
“The taxpayer is undoubtedly getting value for money. BT faces a payback period of around 15 years on its rural broadband investments in spite of the subsidies available.”
The DCMS also said it disagreed with the PAC report, claiming it was “at odds” with a report by the National Audit Office (NAO) produced earlier this year.
“They [the NAO] found our approach reduced the cost to the taxpayer and reduced risk. We put in place a fair commercial process and encouraged different suppliers to bid,” it said.
“We are disappointed that the PAC fails to recognise that thousands of rural premises that 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.”
However, this is a strange stance as the NAO report was highly critical of many of the same areas cited by the PAC, such as a lack of transparency over pricing and failing to generate competition over pricing.
“The DCMS has secured only limited transparency over the costs in BT’s bids. It does not have strong assurance that costs, take-up assumptions and the extent of contingency contained in BT’s bids are reasonable,” the NAO said at the time.
However, the report has been welcomed by the Independent Networks Co-operative Association (INCA) with chief executive Malcolm Corbett claiming the findings in the report were accurate and necessary after the issues the BDUK setup has created.
"The PAC has performed a hugely valuable service in highlighting the problems in this programme," he said. "INCA members are keen to help the government solve some of the problems uncovered, promoting greater competition, investment and value for money for the taxpayer."
TalkTalk, a rival of BT, also welcomed the report from the PAC, arguing that it proved its concerns raised with BDUK were well founded.
"Large sums of public money are going into building a public asset that millions of homes and businesses will rely on. Without proper regulation they will end up paying over the odds for acces," it said.
"Competition has given us the world-leading broadband market we have today and we should not take that for granted."
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