Posts Tagged ‘Margaret Hodge’
Under pressure from the Public Accounts Committee to show value for money for the £1.7bn it is receiving for BDUK contracts, BT is fighting back.
Bill Broadband has just retweeted a Guido Fawkes tweet that it will “revisit” PAC chair Margaret Hodge’s tax affairs.
Bill Broadband is one of the names used by BT’s astroturf community to defend BT’s NGA roll-out and intimidate would-be competitors.
Hodge is away and unavailable for comment.
A government report into private contractors who deliver public services has suggested the government is to blame for the lack of transparency that has led to serious shortcomings in value for money for taxpayers.
“These failures have exposed serious weaknesses in the government’s ability to negotiate and manage contracts with private companies on our behalf,” public accounts committee chairman Margaret Hodge said at the release of the PAC’s report on private contractors and public spending. The report may have implications for contracts worth £1.4bn BT has signed with county councils to deliver next generation broadband.
The PAC report looked at contracts with G4S, Atos, Serco and Capita. Some, such as the G4S and Serco contracts to tag prisoners electronically, and G4S to supply security to the 2012 Olympics, have become notorious for their abuse of the spirit of partnership, in particular for over-charging.
“There is a lack of transparency and openness around government’s contracts with private providers, with ‘commercial confidentiality’ frequently invoked as an excuse to withhold information,” Hodge said.
The PAC earlier identified these traits in the BT contracts, all of which are subject to non-disclosure clauses and restrictions on speed and coverage details and financial information.
“These failures have also exposed serious weaknesses in the government’s ability to negotiate and manage contracts with private companies on our behalf,” Hodge said.
“It is vital that parliament and the public are able to follow the taxpayers’ pound to ensure value for money. So, today we are calling for three basic transparency measures:
- the extension of Freedom of Information to public contracts with private providers;
- access rights for the National Audit Office; and
- a requirement for contractors to open their books up to scrutiny by officials
“The four private contractors we met – G4S, Atos, Serco and Capita – all told us they were prepared to accept these measures. It therefore appears that the main barriers to greater transparency lie within government itself.”
Hodge said an absence of real competition had led to privately-owned public monopolies that had become “too big to fail”.
Small and medium enterprises (SMEs) had been crowded out by the complexity of the contracting process, excessive bureaucracy and high bidding costs.
Contracting had led to the evolution of privately-owned public monopolies, who largely, or in some cases wholly, relied on taxpayers’ money for their income. “The state is then constrained in finding alternatives where a big private company fails,” she said.
“We intend to return to this issue. Government is clearly failing to manage performance across the board, and to achieve the best for citizens out of the contracts into which they have entered. Government needs a far more professional and skilled approach to managing contracts and contractors, and contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs,” Hodge said.
“With the government choosing to contract out more and more public services to the private sector, these issues become ever more important. This report is intended as a recipe for better services, better governance and greater openness. We hope the government will take heed of our recommendations.”
So, what did we learn from Round 2 of the Public Accounts Committee (PAC) v BT/BDUK (rural broadband division)?
Hopefully not as much as we shall learn in the promised Round 3, but it had better come soon before we all lose interest and find better things to do with our lives, like learning macramé.
What did emerge were clearer reasons for BT’s secrecy. Former Ofcom official Sean Williams, who spoke for BT, said that the equipment BT is installing in the BDUK intervention areas is exactly the same as that which it is installing in its commercial roll-out. Therefore revealing the price it pays for equipment in the BDUK areas would help its competitors in the rest of the country.
This is disingenuous, perhaps delusional. No-one wants to duplicate BT’s copper network, so the price of a DSLAM and its path is irrelevant to competitors. The few firms that do want to provide connectivity in rural areas want to run fibre to the home or to a distribution point (call it a digital village pump if you will), and from there use high speed wireless to the home.
They would find it helpful if they could use BT’s ducts and poles and cabinets to do some of it, but as they would be able to offer faster speeds than BT’s copper, BT wants to keep them off its passive infrastructure at all costs.
Most would also like BT to backhaul their local traffic, but few can afford to pay the charges BT is asking to build (or light) the connecting fibres.
Someone should be checking these costs, because Ofcom has allowed BT to set its own prices for wholesale fibre access. In consequence Ofcom is now having to investigate a TalkTalk complaint that BT has run a margin squeeze on the product.
More to the point, in many cases BT fibre already goes to rural villages and towns, but only to schools and other public sector enterprises like hospitals and clinics. It would have been extraordinarily short-sighted of BT to run only a single fibre pair to each of these places, so there are likely to be spare unlit fibres in the neighbourhood. These could be put into service in short order at marginal cost. If someone was paying attention.
Even if BT was that myopic, there is likely to be spare capacity on the fibre pair due to different peak times for business and recreational traffic. Even if this got congested, well, BT now knows how to make ordinary fibre carry 1.4Tbps over distances of more than 400km. That should be enough for most rural communities, at least in the short term.
The other thing we discovered is BT’s employment of Catch-22 with respect to post codes. Williams said BT’s policy is that local councils are free to publish maps that contain BT’s proposed speed and coverage data down to seven-digit post code level. This is precise enough to say what upload and download speeds each and every premises in the country will be able to get. Two, Northamptonshire and Dorset have apparently done so. But it’s up to councils to decide.
Most other councils have published speed and coverage maps down to five-digit post code granularity. This is because, Williams said, the finer details revealed in the seven-digit post cost templates are secret and covered by the non-disclosure covenants in the contracts councils have signed with BT. Publishing them would break the contract and theoretically open them to legal action from BT.
Catch-22, or as Dirty Harry said, “You have to ask yourself a question – Do I feel lucky? Well, do you?”
Unfortunately none of the MPs on the PAC sought an assurance from Williams that BT will not exercise its rights if councils publish the speed and coverage details at the seven-digit resolution. Hopefully they will do so in Round 3.
One bit of good news that almost got lost in the noise is that BDUK’s analysis of early roll-out invoices suggest that BT has over-estimated by about one-third the associated management overhead costs.
It’s early days yet, and as the BT installation teams gain experience, those savings should grow. One hopes that they will not be used to finance the new £50m expansion of BT’s city fibre networks.
See the Round 2 video here starting at 16.53.20.
Anyone who watched the Public Accounts Committee hearing on the value for money likely to be achieved by the government’s next generation rural broadband programme would have had no doubt that the department of culture, media and sport (DCMS), its agency Broadband Delivery UK (BDUK), and BT were in for a roasting.
In its report published today, PAC chairman Margaret Hodge MP said, “The programme to extend superfast broadband to rural areas has been mismanaged by the DCMS. The sole provider BT has been placed in a quasi-monopolistic position which it is exploiting by restricting access to cost and roll-out information. 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.”
None of this is new to regular readers of this blog, who have been following the BDUK money with a growing sense of dismay. What is new is that the political establishment can no longer ignore the fact that BT has run rings around them.
Despite the evidence collected by the National Audit Office and the PAC, it continues to protest its innocence. “We are disturbed by today’s report, which we believe is simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago,” it told the BBC.
The broadcaster said BT denied that it had failed to deliver value for money for the taxpayer and said that, even with the public subsidies, it would take it 15 years to pay back its investment in rural broadband.
That’s three years longer than Bill Murphy, MD of BT’s Next Generation project, has said publicly, more than once.
“Rolling out fibre is an expensive and complex business,” BT told the broadcaster, ignoring the fact that farmers and housewives are doing a fair job of it, self-funded and self-taught, in rural Lancashire, with the B4RN project, despite BT’s efforts to undermine them.
Responding to the report, Malcolm Corbett, the CEO of the Independent Networks Co-operative Association, (Inca)who gave evidence to the PAC,said “The PAC expressed real concern about the lack of competition in the programme, BT’s lack of transparency over costs, its deployment plans, the overall level of state aid, the reduction in BT’s financial contribution and delays to the programme.”
On behalf of Inca members he called for
- transparency over BT’s costs and deployment plans
- competition where alternative providers and communities are willing to invest in fibre and high speed wireless networks, BT should not be allowed to roll over them with state subsidy
- full, unfettered access for alternative providers to all of BT’s publicly-funded infrastructure to promote genuine competition and choice, and
- new investment models to promote investment, innovation and better value for money for the next £250m the government is committing to rural broadband.