House of Commons Culture, Media and Sport Committee Broadband Delivery UK Oral evidence Tuesday 3 July 2012 Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, Robert Sullivan, Chief Executive, Broadband Delivery UK, and Simon Towler, Deputy Director, Department for Culture, Media and Sport Ordered by The House of Commons to be printed 3 July 2012 HC 474-i Published on 28 August 2012 by authority of the House of Commons London: The Stationery Office Limited £5.50 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Louise Mensch MP (Conservative, Corby) Steve Rotheram MP (Labour, Liverpool, Walton) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South) Mr Tom Watson MP (Labour, West Bromwich East) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/cmscom. Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Sarah Heath (Second Clerk), Victoria Butt (Senior Committee Assistant), Keely Bishop/Alison Pratt (Committee Assistants) and Jessica Bridges-Palmer (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected] List of witnesses Tuesday 3 July 2012 Page Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, Robert Sullivan, Chief Executive, Broadband Delivery UK, and Simon Towler, Deputy Director, Department for Culture, Media and Sport Ev 1 Culture, Media and Sport Committee: Evidence Ev 1 Oral evidence Taken before the Culture, Media and Sport Committee on Tuesday 3 July 2012 Members present: Mr John Whittingdale (Chair) Dr Thérèse Coffey Steve Rotheram Damian Collins Mr Adrian Sanders Philip Davies Jim Sheridan Paul Farrelly Mr Gerry Sutcliffe Louise Mensch ________________ Examination of Witnesses Witnesses: Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, Robert Sullivan, Chief Executive, Broadband Delivery UK, and Simon Towler, Deputy Director, Department for Culture, Media and Sport, gave evidence. Q1 Chair: Good morning. This is a special one-off about that. We have negotiated hard and we think we session of the Committee looking at Broadband have made very real progress, virtually to the point Delivery UK, and I would like to welcome this where we are very close to getting state aid clearance. morning Ed Vaizey, the Minister for Culture, It has been a very frustrating process and, frankly, one Communications and Creative Industries, Robert wishes it could have been quicker, but DG Comp took Sullivan, the Chief Executive of BDUK, and Simon a particular view about how state aid should be Towler, the Head of Spectrum and Broadband at applied. It was unfortunate as well that, as we were DCMS. Dr Coffey has an adjournment debate at 11.00 coming to the point where we needed agreement on am but has a particular interest in this area, so I am state aid, DG Comp was already reviewing and going to invite her to begin. changing its own approach to state aid. Those two Dr Coffey: Thank you, Mr Chairman. I am very issues met in the middle and, I think, added some grateful to you all for coming. In line with the additional complexity and delay, which has been Government’s ambition to be ultra fast in terms of unfortunate. broadband, I am going to be ultra fast in terms of questions and hopefully in response. There is a great Q2 Dr Coffey: Could I just ask a supplementary concern around different projects at the moment that before Mr Towler responds. I believe one of the state aid is basically holding up projects, whether it is perceived risks is if BT ends up being the only the £17,000 required to complete a project in Cumbria supplier selected by various bids because the number that has been going on for a long time, officials poring of suppliers in this competitive market seems to have over it, probably costing £250,000 or £500,000 in shrunk to two. Is that a major barrier to agreeing officials’ time, and we can’t hold that up—in other state aid? areas the framework has not been accepted, DG Comp Ed Vaizey: No, I don’t think it is a barrier to agreeing is rattling the cage. Can you tell us more about when state aid. I think BT and DG Comp have made their are we going to get state aid clearance? own compromises in terms of the interpretation of Ed Vaizey: Thank you very much, Mr Chairman, for how state aid should be applied. In terms of who are your kind introduction and I am, as you indicated, the main organisations available to bid for these funds, flanked by two experts on this subject who will I think it is great that we have BT and Fujitsu, both answer the Committee’s questions when I fall down. of whom have signed the framework document, so Thank you, Dr Coffey. I gather it was your initiative they are in play to bid for these funds going forward. that we are having this one-off session, so it is A lot of people argue about how we should have particularly sad to see you depart in half an hour, but applied the broadband funds. Should they have been I will try to answer. relatively local, which is the route we have gone Dr Coffey: I have a rail debate. down, or should it be national? If it had been national, Ed Vaizey: It is a rail debate? we would have only had one bidder succeed for that Dr Coffey: So I have to be there on time. national contract. I think the fact that we have two Ed Vaizey: Always focused on infrastructure, Dr companies competing is a good thing. Obviously, we Coffey—very important. We share your frustrations can’t force private companies to compete for these on state aid. We have negotiated hard with the funds if it does not fit with their own strategy for how European Commission. They have a certain they want to roll out their broadband networks, but perspective on how state aid rules should be applied. we are delighted to have BT and Fujitsu in the frame. We have a different perspective. The Secretary of Certainly, we don’t think that if BT wins the majority State met with Commissioner Almunia last month in of contracts—and obviously I am not going to predict London. I think he may have gone out to Brussels that would be the case—that it would cause a problem again, but Mr Towler will correct me if I am wrong with state aid. Ev 2 Culture, Media and Sport Committee: Evidence 3 July 2012 Ed Vaizey MP, Robert Sullivan and Simon Towler Q3 Dr Coffey: If I take up the issue in Cumbria, in have copper lines. Some of those areas do not have European terms £17,000 is an accounting error for an even have backhaul to take it back to the main organisation that has not had its accounts signed off. exchange centre. That is a very expensive process and I appreciate the meetings that have been held by the that, to a certain extent, encapsulates why public Secretary of State with the Vice-President, but can you money is needed. To dig up the roads in the Highlands tell us more about a realistic timeframe? People want and Islands is an enormously expensive process and to start digging in the ground and they feel they no commercial company would ever really get a cannot. return on their investments, so there is a lot of money Ed Vaizey: I think we are very close to an agreement. there. But we have gone round the whole country, so I do not want to put a particular date on it because I Devon, Somerset, Herefordshire have also received an think that would be obviously a hostage to fortune, uplift in their funding following the same exercise. It but I certainly do not expect to be here next year on is also important to emphasise that Scotland is going state aid approval, and I certainly do not expect to be to match the additional money that it is receiving from here in six months. We are very close. The Secretary BDUK. It is not as if the Scots are simply taking a of State is going to Brussels again tomorrow, although handout and running away with the money. They are there will be other issues that he will discuss with matching it pound for pound. That is good news, I Commissioner Almunia. I do appreciate the think. frustration. Although £17,000 may well be an accounting error in some people’s eyes, it is still Q5 Dr Coffey: What led to the 6% error on the first public money and state aid rules still apply.