Headlines: September 26th, 2013

The Public Accounts Committee has criticized the management of the programme intended to give super fast broadband to 90 per cent of homes by 2015. They claim it has been badly run.

The Committee found that the programme is costing households an extra £20 in council tax because it was structured to give British Telecom, Britain’s biggest telecommunications provider, a quasi monopolistic position.

Competition was meant to bring down costs. But only two service providers, BT and Fujitsu, were named as bidders, with Fujitsu eventually dropping out.

Margaret Hodge, the chair of the committee, said: “The department’s approach to procurement failed to deliver any meaningful competition to drive down prices and maximise coverage.” Her committee had found that BT had won every one of the 26 local broadband contracts let until June 2013. It is also likely that the remaining 18 contracts were also likely to go to BT.

Officials had failed to check whether BT’s bids were “reasonably priced”. She said the scheme was now costing councils an additional £230million which is the equivalent of nearly £20 per household in the countryside.

The mis-management of the programme included placing BT in a quasi-monopolistic position which it is exploiting by restricting access to cost and roll-out information. The result is that the consumer is failing to get the benefits of healthy competition and BT will end up owning assets created from £1.2billion of public money.

The Government has already revised its initial target of 90 per cent of the UK having super-fast connections by 2015 to 95 per cent by 2017.

A BT spokesman said it was “disturbed” by the report, adding that it believed it was “simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago”.

He added: “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.