Following the broadband money

Government broadband projects face disaster

with 23 comments

The Cabinet Office’s Major Projects report classifies the two main BDUK projects, for next generation access and for “super-connected cities” as Amber/Red, meaning they risk running out of control.

Amber/red means that “successful delivery of the project is in doubt, with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible”.

The report reveals the “whole life” cost of the NGA roll-out is now £1.8bn. Another £150m for putting in 100Mbps backbone networks in cities is tied up because BT and Virgin Media have questioned the use of state aid to do it.

“As of 25/03/13 the (NGA) 12/13 budget is now £12m and the forecast is £10m. Projected spend in 12/13 is less then originally forecast owing to the delays in gaining State aid. DCMS has agreed a budget re-profile with HMT which has brought the budget profile into line with forecast expenditure,” the report said.

Written by Br0kenTeleph0n3

2013/05/25 at 07:22

Posted in Broadband, Finance, News

Tagged with , , , ,

23 Responses

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  1. Why the word ‘disaster’? At least they are happening, one problem was starting later then planned.


    2013/05/25 at 07:47

    • I agree disaster is relative. For BT managers, shareholders and pensioners like you, the likely transfer of 1.8bn of taxpayers money for doing very little beyond maintaining its network and so consolidating its monopoly is an unmitigated triumph; for taxpayers, businesses, and people with only BT to supply them, it is a looming disaster. Ed Vaizey and Maria Miller may be reminded of this in 2015.


      2013/05/25 at 10:50

      • You have lost the argument if you resort to personal comments, correct or not. Discuss facts.

        Please explain what this ‘disaster’ will look like.

        There is a difference between infrastructure and services available over it. Look at the many companies can supply services over FTTC/P and describe what ‘very little’ is being done. Access to high speeds where, for many, it is very unlikely anyone else would choose to go.

        Does the equivalent apply with gas, electric, water, drainage? Why don’t other companies want to install another power network?


        2013/05/25 at 11:10

      • What argument? You haven’t disputed anything.


        2013/05/25 at 12:22

      • ‘As of 25/03/2013 the whole life cost is approximately £1.8 bn. Cost figure is an estimate based on expected public and private sector contributions. ‘

        Facts – ‘expected….. and private sector contributions. How much is that?


        2013/05/25 at 11:13

      • Let’s look at the facts. NGA projects were sold to us as being “matched funded”. Most people would take that to mean a 50:50 split between the buyer and the contractor. In fact, this is not the case. From the European Commission’s letter on state aid in the BDUK context there is this paragraph “Aid intensity: The aid intensity will depend on the outcome of the open tender processes and thus will vary from project to project. BDUK estimates that aid intensities for local broadband projects may vary from 53% to 89%, with an average of 71% across the country. “In the specific case of community broadband projects, the Department for Environment, Food and Rural Affairs (‘Defra’) will provide up to a maximum of 50% of the eligible costs. “In case of very rural areas with difficult topology (for instance, Wales and the Highlands and Islands of Scotland), the UK expects that aid intensities could even go higher than 89%. “Generally, BDUK aims to achieve one third BDUK programme funding, one third local body/other public sector or EU funding and one third private sector investment.” Does an average of 71% look like “matched funding”? We also have Mike Kiely’s evidence that BT is overcharging for NGA roll-outs, which BT has disputed but not refuted. The National Audit Office believes there is enough evidence that shows taxpayers may not get value for money from the BDUK projects to investigate the charges. The Cabinet Office believes the BDUK’s NGA and Superconnected Cities projects are at risk.


        2013/05/25 at 13:11

      • The Openreach pension fund is guaranteed by the taxpayer. BDUK was as good a way as any of getting some taxpayers’ cash into that fund without causing political upset.

        DCMS, etc, are quite aware of all this and some local authorities have a considerable amount of money from their pension funds invested in BT, hence why they are pushing back so hard on attempts by the TPA and others to get some measure of the value for money the programme is delivering.

        Following the money usually gives the solution.


        2013/05/25 at 12:27

      • “Following the money usually gives the solution.”
        Hence this blog’s tag line 😉


        2013/05/25 at 13:17

      • Please explain this ‘looming disaster’.


        2013/05/25 at 13:07

  2. There’s a surprise, Ian! You could add the £20 million RCBF budget (not included) which is in danger of being ‘trashed’ since, as I understand it, few Local Authorities are in a position to be able to clearly define the ‘missing’ 10% postcodes in their NGA white areas, this being a key necessity for successful RCBF bids. It was a major hurdle in my application last winter, and DEFRA mumbled about some ‘suitable form of words from the LA would do’ (impressive or what?). I am not sure whether such ‘mumbling’ is still acceptable, and since the (now ‘extended’) latest (already extended) RCBF bid window now closes on 17th June, it is most unlikely that anything finite can be determined in time for the applicants to finalise their bids, especially since many of the newly signed ‘rash’ of BT contracts have yet to go to survey. Chuck in the requirement to have open competition, bids in place, signed and spent by Summer 2014 and completed by March 2015…………………

    Do we know of any successful RCBF bids out of waves 1 and 2? Were the successful bids confined to areas that were not being ‘assisted’ by BDUK at significant cost to the taxpayer? How on earth will LAs be able to inform RCBF applicants of the ‘missing’ 10% when BT have sewn up all the data under ridiculous NDAs? Indeed, why, with only one bidder, is an NDA required at all? What will happen to the BT contracts when the ?successful? RCBF bidder provides 40mb to an area BT were going to ‘upgrade’ to 2mb+? Will ‘Broadband Bill’ throw his cabinets out of the cot? Will this delay seriously delay the completion of the delayed BDUK scheme as BT contracts have to be ‘re-negotiated’? The farce grows daily. It is obvious that this policy has been thoroughly thought through (not!) by the well-paid BDUK ‘consultants’ and our inestimable politicians. Was James Naughtie right about Jeremy Hunt? Peter Cochrane, where are you? Health Service beware.

    mike phillips

    2013/05/25 at 08:09

    • There is only one RCBF project which has reached the contract stage


      2013/05/26 at 13:37

      • Yes, John – and who is it with? They (BT) must be laughing all the way to the bank.

        mike phillips

        2013/05/26 at 14:25

      • Why was Rothbury not going to be covered by the BDUK scheme?


        2013/05/26 at 14:49

      • More puzzling are the dates – the RCBF announcement was about 1 month BEFORE the contract with BT was signed under the BDUK scheme. Normal sequencing is contract signed and then a ‘survey’ by BT to establish the roll-out cabinets. To have ‘finalised’ the 10% BEFORE this is strange and I suspect only came about because the £460,000 was mostly going to BT thus ‘reducing’ their costs under the BDUK scheme, so a mutually agreed 10% area could easily be established. I think you will find that where any RCBF bidders are NOT BT the 10% will take a little longer to find.

        mike phillips

        2013/05/26 at 15:24

  3. Ian. Do not feed the troll! you were warned, but I suppose it gave you a chance to set the record straight and record this for posterity. I do wonder if this government will ever realise how silly they are being and get themselves sorted out. The previous government was no better. Perhaps its the civil servants who are the root of the problem? Suffice it to say that one will blame the other when it all comes out into the open. As indeed it will. Digital Britain becomes ever more distant.


    2013/05/26 at 14:11

    • Chris, we would like to know what you mean by saying that digital Britain becomes more distant, Does it have to be FTTP to every property, because if that is not practical/affordable etc. then why isn’t FTTC a realistic alternative for many? The idea that only a few will benefit is clearly untrue.

      If the BT pension fund explanation is true why has it only just surfaced here?

      If people make statements like ‘looming disaster’ it would help if they would please explain what they mean in more detail.


      2013/05/26 at 14:43

  4. […] More puzzling are the dates – the RCBF announcement was about 1 month BEFORE the contract with BT was signed under the BDUK scheme. Normal sequencing is contract signed and then a ‘survey’ by BT to establish the roll-out cabinets.  […]

  5. […] The Cabinet Office’s Major Projects report classifies the two main BDUK projects, for next generation access and for “super-connected cities” as Amber/Red, meaning they risk running out of control.  […]

  6. It’s government expenditure, of course it’ll go wrong. Simpler to leave more of the money in the hands of the people and companies that make it rather than take it off them as tax in order to waste it. Twenty years ago a London Business School course told me that “it seems to be the role of the State to stand in the marketplace throwing money away” so one can hardly blame BT just for being effective at catching it.


    2013/06/11 at 06:25

  7. […] government’s recent review of major projects warned that both the UBF and the Next Generation Access projects are amber/red-lighted, ie. in […]

  8. […] was expected to be critical; the Cabinet Office National Project report recently judged the BDUK project amber/red, meaning it is in danger of missing its targets. Few will have guessed how bad things […]

  9. […] The scheme was red-lighted (deemed in imminent danger of failing) in a Cabinet Office report last May. […]

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