Public Accounts Committee
Oral evidence: DCMS Recall: Broadband, Gambling and Unboxed, HC 1052
Monday 23 January 2023
Ordered by the House of Commons to be published on 23 January 2023.
Members present: Dame Meg Hillier (Chair); Olivia Blake; Sir Geoffrey CliftonBrown; Mrs Flick Drummond; Mr Louie French; Peter Grant; Sarah Olney; Nick Smith.
Justice Committee member also present: Sir Robert Neill.
APPG on Gambling Related Harm member also present: Carolyn Harris.
Marius Gallaher, Alternate Treasury Officer of Accounts, was in attendance.
Questions 1 - 109
Witnesses
I: Sarah Healey, Permanent Secretary, DCMS; Susannah Storey, Director General for Digital and Media, DCMS; Polly Payne, Director General for Culture, Sport and Civil Society, DCMS; and Paul Norris, Chief Executive, Building Digital UK.
Examination of Witnesses
Witnesses: Sarah Healey, Susannah Storey, Polly Payne and Paul Norris.
Chair: Welcome to the Public Accounts Committee on Monday 23 January 2023. Today, we have called two Government Departments back for what we call recall sessions. These are sessions where we go back to Departments on issues that we have raised with them before through work, thanks to the National Audit Office major Reports, but sometimes these issues are ones that we just need to go back to more regularly than the National Audit Office looks at them to see whether the progress that has been promised is being made.
We are starting off with the Department for Digital, Culture, Media and Sport. We are going to cover areas that include, although not exclusively, the roll-out of gigabit broadband, which we have looked at in detail, the gambling review, which is a regular topic of ours, and the Unboxed festival.
I would like to welcome our witnesses from DCMS. We have Sarah Healey, the Permanent Secretary, Susannah Storey, who is the director general for digital and media, and Polly Payne, who is the director general for culture, sport and civil society. These titles do get longer every year; I do not know if you get a pay rise for every word that is added. From Building Digital UK, usually known as BDUK, we have Paul Norris, who is the chief executive.
I would especially like to welcome, guesting on our Committee today from other Select Committees, Sir Bob Neill, the chair of the Justice Committee. We also have Carolyn Harris with us as well. They will be coming in on their areas of specialist interest and knowledge. Does any Member have any declarations of interest that they would like to record? If not, I am going to ask Sir Bob Neill to kick off.
Q1 Sir Robert Neill: I ought to mention my interest as chair of the All-Party Parliamentary Group for Opera. I am going to ask you about Arts Council funding decisions, if I may, because they have attracted some attention, it is fair to say, Ms Healey. Arts Council England is an arm’s length body, but it would be fair to say that, as the sponsoring Department, you have a duty and a responsibility to ensure that your arm’s length bodies follow due process.
Sarah Healey: Yes.
Sir Robert Neill: What do you do to monitor that?
Sarah Healey: We have regular discussions with the Arts Council. We have a team that acts as the sponsoring team for Arts Council England. They come in and speak directly to Ministers to go through what they have done. We also appoint members of a board in order to oversee the decisions of the Arts Council.
Sir Robert Neill: If funding decisions made by an arm’s length body such as Arts Council England are likely to have some national impact, for example, affecting their national portfolio, would you expect there to be some discussion with the Department about that, or some advance notice?
Q2
| Sir Robert Neill: It is also fair to say that the Secretary of State and Ministers have power to give strategic instructions. |
| Sarah Healey: That is correct and, indeed, they did so recently. |
Q3 Q4 | Sir Robert Neill: Yes, in relation to the latest round of Arts Council funding decisions. What happens if a Minister is not satisfied that the arm’s length body has acted in accordance with their instructions or believes it has departed from their intention in some way? Sarah Healey: Just to be clear, I do not think that we are in that position with the Arts Council. Sir Robert Neill: But that is what the former Secretary of State thinks. Sarah Healey: Yes, but, in everything I have seen, the Arts Council has followed the process and the criteria that it normally follows. There are a number of actions that could be taken with an arm’s length body, depending on what the particular issue was that had arisen. Individual recipients of funding could make a complaint against that body; they are perfectly legitimately able to do that and, indeed, to bring legal action, if they feel that it has not followed due process in the right way. Those options are always available to funding recipients, or those who have not received funding, who feel that the decision has been unfair or unreasonable. If evidence came to light of wrongdoing or not following due process within an organisation, there are a number of steps that we could take. We could ask our internal audit to look at it, and then, if anything more serious was discovered, we could ask others to look at it, including the National Audit Office. There are a number of escalating steps that we would be able to take, if evidence came to light. |
Sarah Healey: We quite specifically try to keep those specific funding decisions of the Arts Council very much at arm’s length from the Department. While the Secretary of State might be briefed on them, they are not decisions that the Department attempts to influence, because that would not be proper within the arm’s length principle.
Q5
| Sir Robert Neill: Would you expect the arm’s length principle to follow the same standards that you would expect yourselves as a Department to follow in relation to consultation? Sarah Healey: Consultation is appropriate in some circumstances, but not necessarily in all. I know that there has been some question raised about why the specific set of funding distributional decisions that the Arts Council made in regard to the most recent national portfolio organisation round were not subject to consultation. We would not normally expect that individual funding decisions between organisations would be subject to consultation. That would not be part of a normal process. Instead, the thing |
| that has been subject to consultation is the overall Arts Council Let’s Create strategy that it was pursuing in making its funding decisions in this instance, as well as the direction of the former Secretary of State. |
Q6 | Sir Robert Neill: Would you expect it , therefore, to adhere to its own criteria and its own strategy? For example, if an organisation adheres to and meets all the criteria under the Let’s Create strategy, you would imagine that it would not be a candidate for being removed from the national portfolio. Sarah Healey: We rely on the Arts Council to make decisions on the basis of its own criteria, assessing them against those criteria. That is what we expect it to do. |
Q7 | Sir Robert Neill: Who holds it to account? Sarah Healey: As I say, there are a series of things that you can do, if anybody has any doubt that it has followed that process properly. We hold the chair and the chief executive to account for that. Individual funding organisations would be able to bring action and, if we had evidence that they had not been followed, we could raise issues. Polly Payne: It is just worth saying that, in this particular round, it was heavily oversubscribed. We had over 1,700 applicants. ACE has been clear that it was not, in any way, that the ENO in particular failed to meet criteria. There were many good fundable applications that had met the criteria and that ACE had to choose between, because it had a finite budget. I just wanted to make that clear. |
Q8 | Sir Robert Neill: That is pretty well established, but you would expect any decisions by you directly as a Department, or any other, to be based upon a rigorous analysis of evidence. |
Sarah Healey: Yes.
Q9
Sir Robert Neill: Would you expect, therefore, there to be economic impact assessments?
Sarah Healey: I would expect that they would go through whatever process they had set out and assess the impact of what they were doing. Of course, they have a range of things that they are assessing and, in this particular instance, they were also specifically instructed on the distribution of funding around the country.
Q10 Sir Robert Neill: Therefore, you would particularly expect them to do some regional impact assessments, given that they were talking about distribution.
Sarah Healey: Yes. I am not familiar with the detail of exactly what process the Arts Council goes through, because it operates that at arm’s length, but it makes those decisions through its councils, and I would expect it to look at a range of analysis in making that decision.
Q11 Sir Robert Neill: Are you surprised to know that a freedom of information request revealed that they did not carry out either an economic or a regional distribution impact assessment?
Sarah Healey: I would be surprised if they did not do any analysis, because we would expect that they had been through quite a rigorous process in deciding how they distributed that funding. I know that they involve their councils, who have a series of members appointed, to understand the regional impacts in doing so.
Q12
Sir Robert Neill: Would you regard 24 hours’ notice as adequate consultation, if you were taking the decision to remove funding from an organisation that you deal with directly?
Sarah Healey: It depends entirely on the circumstances as to how much notice is given of funding decisions. I do not want to comment on that particular instance, because that was a decision made by the Arts Council.
Sir Robert Neill: And because it is embarrassing.
Sarah Healey: No, because that was a decision made by the Arts Council.
Q13
Sir Robert Neill: Would you take the step to remove funding that might cause some hundreds of redundancies without more than 24 hours’ notice?
Sarah Healey: In the instance that you are talking about, which is the ENO decision taken by the Arts Council, it is worth reflecting that the way the national portfolio organisation round works is that each round is done afresh, so no organisation is necessarily guaranteed funding from round to round. There is a fixed period for which each round operates, and that organisation is guaranteed funding for that particular period, not necessarily on an ongoing basis.
In this instance, while I am in no way suggesting that we are blasé at all about the situation of the English National Opera, as Polly pointed out, there were a number of organisations that were disappointed because this round was so oversubscribed. As you will be aware, the Arts Council has been in discussion with English National Opera for the last few weeks and, as a result of those conversations, has confirmed funding for this financial year upcoming, in order for it to be able to sustain its programme as planned and continue to consider plans for moving its base outside of London.
Q14 Sir Robert Neill: Just on that point, there was £17 million originally, which was transition funding over three years. There is £11 million and a bit in funding for next year, as you say, Ms Healey; is that out of the £17 million package or is there any new money?
Sarah Healey: Those discussions continue between the Arts Council and ENO. This is an Arts Council budget question, so I cannot answer exactly.
Q15 Sir Robert Neill: So you do not know whether they have taken it from there or not.
Polly Payne: The £17 million was ringfenced, which was announced in November, and this £11.4 million comes out of that £17 million.
Chair: It is front-loaded, basically.
Polly Payne: It is front-loaded, but it is also worth saying, just so that everyone understands, that all the organisations that are leaving the portfolio are getting the opportunity to apply for transition funding. Playing back to your 24 hours’ notice, they are all getting up to seven months’ funding, which they have to apply for. That is for the next financial year, and the announcement was made in November, so they have had a year’s notice before the funding runs out. It is not that the Arts Council is making announcements and then, 24 hours later, the funding stops. They do get this year of transition money.
Q16 Sir Robert Neill: Do you set any standards for your arm’s length bodies around publication of board minutes and papers, and levels of transparency?
Sarah Healey: I cannot answer that specifically. We expect a degree of transparency from our arm’s length bodies. It would be inappropriate for them to publish details that are potentially commercially sensitive for those that they fund.
Q17
Sir Robert Neill: Otherwise, you would expect them, since it is public money, to be as transparent as a Government Department would be.
Sarah Healey: As transparent as possible, yes.
Q18
Sir Robert Neill: Would you expect them to maintain the model publication scheme under Freedom of Information Act requests in the same way as you would?
Sarah Healey: I am not super familiar with the model publications aspect of the Freedom of Information Act, I am afraid, but we would generally expect all of our public bodies to follow all of the things that they are supposed to follow.
Q19 Sir Robert Neill: So you will be disappointed to know that they do not, according to the Information Commissioner’s Office.
Sarah Healey: It would be excellent if you could follow up by just giving us some more details of that.
Sir Robert Neill: Of course, we will happily do that.
Q20 Chair: Perhaps we need to have the Sir Bob Neill inquiry into governance of arts organisations, maybe as a retirement prospect. Just to raise this point about the short notice, one of my constituents is in the chorus of
the English National Opera. It is such a well-established institution that you cannot just create a chorus out of new people overnight. It is not as simple as that with something that is so well established. There was 24 hours’ notice for people to learn about their future livelihoods. For people who may have to make a decision about leaving their job or relocating, this is very short notice, and you seem to be defending that 24-hour notice, Ms Healey.
Sarah Healey: I said that I was not going to comment on it. Also, the point that Polly made is a very relevant one, which is that, in fact, while the funding decision over the long term was announced 24 hours before it was made public, for a whole host of reasons to do with fairness to all of those organisations that had applied to the portfolio and treating everybody evenly, the impact of that funding decision does not take effect for some time.
Q21 Chair: It depends on whether you are having to think about moving house or moving your family, potentially, because your whole livelihood is at stake.
Sarah Healey: That was the purpose of the transition funding that was announced by the Arts Council alongside, which it has been in discussion with the English National Opera about.
Chair: Sir Bob has covered the economics, and this is something that will be explored further. Sir Bob and other Members have been particularly persistent on this, and we will be continuing to work on that.
Q22 Nick Smith: Hello, everybody. I am not an opera buff, but I am interested in regional distribution of arts activities. I understand that the Welsh National Opera has had a cut of just over £2 million. It used to do a fantastic tour up the western side of England, doing great stuff, particularly in Liverpool, I hear. Can you tell me if you have done a regional analysis of this cut and how it would impact those places up the western side of England?
Sarah Healey: I am really sorry about this, but the individual funding decisions are the responsibility of the Arts Council, so DCMS would not undertake that kind of analysis.
Q23 Nick Smith: Do you look at the regional impact of your spending across your arts organisations?
Sarah Healey: Of all spending that we do?
Nick Smith: Yes. Do you have you a big picture of where your money is spent across the country and how well you are doing?
Polly Payne: In terms of ACE funding, we had, as you know, an instruction at the beginning of this NPO round, which is about redistributing some money out of London. That was taken partly on the basis of us looking at the regional distribution, and £21 per capita was being spent by ACE in London and only £6 per capita in the regions.
There are good reasons for some variation, but that seemed a very strong variation. That was part of the analysis behind the instruction that the previous Secretary of State made in February 2022, which was linked to the levelling-up White Paper, and that is why the instruction came. We do look at regional distribution in big terms.
Q24 Nick Smith: At face value, that is a very powerful case. I am just wondering if there has been an unintended consequence, in that good stuff that was going on in the western side of the English regions has been cut along the way. I was just wondering if you have noticed and if it might be worth looking at again.
Polly Payne: It is worth saying, as I said before, that this round was heavily oversubscribed. Overall, we have given out money to more organisations than ever before. There are 990 bodies receiving funding from ACE in this NPO round, which is 276 new organisations, of which 215 are outside London. Overall, there is a good picture for organisations outside London and for culture outside London.
Q25 Chair: We want to move on to gigabit broadband. When we last met with you, there had been an increase in coverage, but we put that down largely to Virgin Media’s upgrades—because of the pace at which it had happened, it had been down to them. Coverage seems to have slowed since. Ms Healey, what has happened?
Sarah Healey: As we discussed at the last hearing, the Virgin switchover was going to account for a certain amount of the percentage of rollout and is a rapid process in comparison to building completely new connections. What has happened is entirely as we would have expected it to have happened, considering where those connections are coming from.
It is probably worth saying that 1.5 million households have been passed through the gigabit connection since the last time that we were before you, in June 2022. That is 250,000 homes and businesses a month. Indeed, BDUK, specifically in terms of the connections that it has been responsible for in the mix of vouchers, superfast and so on, has exceeded the target that it had for the last period. It is true that the rate of increase has slowed as we would have expected it to do, considering the source of those new connections.
Q26 Chair: Mr Norris, you have four new contracts signed. Is that right?
Paul Norris: We have six new contracts signed.
Q27
Chair: When will you see delivery on those new contracts begin?
Paul Norris: The first two are already in delivery.
Q28 Chair: When you say “in delivery”, just talk through what that means for people who might be getting their gigabit broadband.
Paul Norris: These are Fibrus in Cumbria and Wessex in north Dorset. Those suppliers are already digging and are passing their first hundreds of premises. We have discussed before that there is a lag. These companies
have to get the essential infrastructure and the spine of the fibre network out there.
Q29 Chair: What about the other four? Where are they at in the pipeline? They have been agreed.
Paul Norris: The other four are all suppliers that have chosen to do additional on-the-ground survey work before they put spades in the ground. There are two arrangements for us: one is where suppliers get digging immediately and, in the other, they opt for the further survey.
Q30 Chair: Is that their choice? How do you negotiate that?
Paul Norris: It is their choice when they bid for one of our contracts at auction. That is one of the things we assess for.
Q31
Chair: When will the last of those six see spades in the ground?
Paul Norris: The survey is for up to six months. Q32 Chair: So it is still some time.
Paul Norris: It is. For context, we have now launched 18 procurements in total, of which the first six have been signed. Last time we were sitting here in June, we had launched 10 contracts in total and were yet to sign our first contract, which we did in August as planned. Those 18 contracts represent a book of business worth about £1 billion. You will have seen from our quarterly updates and the procurement timetable that we published that there is a steady stream expected, so you will continue to see, more or less weekly or monthly, a stream of new procurement launches.
Q33 Chair: Whether they do a survey or not must affect the price that they bid for it. How do you work that through?
Paul Norris: It changes the risk profile slightly from a supplier’s perspective. Where suppliers have chosen not to do the full on-theground survey, they have sufficient local knowledge to feel that they can price the contract precisely and get moving.
Q34
Chair: They take on all the risk; if they pick the wrong place, they have to fix that.
Paul Norris: They take on all the risk.
Q35 Peter Grant: Good afternoon. How effectively does the relationship work? My understanding is that the funding is reserved, but that parts of the implementation are within the remit of the Scottish Government. How effectively does that work in practice?
Paul Norris: The partnership works very well. We offer strong support to Scotland, Northern Ireland and Wales. Those devolveds lead the process. In Scotland, the Scottish Government are leading that process, with our support. DCMS Ministers are in close contact with their counterparts. It is Ivan McKee in Scotland. We now stand behind, in the case of Scotland, a completed open market review, and are taking that to public review in March. We will then be considering their intervention area strategy later this year. Scotland, as you will know, has been very focused on the Reaching 100% programme, and that has now started to deliver in decent volume.
Q36 Peter Grant: Are there still outstanding issues with regard to funding, or have they all been agreed on both sides?
Paul Norris: I am not aware that there were outstanding issues on funding. The funding decision is all about which premises need our subsidy. Step 1 is to complete open market, public review, to determine which premises in Scotland are likely to be non-commercial and needing our subsidy, and then to determine intervention areas, price those up and lay them out for supplier competition. That is ultimately the way that the funding will be determined.
Q37 Peter Grant: If I am understanding what you are saying, it is a process that will be used to identify which areas in Scotland are never going to be profitable for the private sector just to go in itself, so there needs to be public sector intervention. If they are remote and very sparsely populated areas, they are never going to be attractive for private sector investment on their own. Is that what you are saying?
Paul Norris: That is exactly right. The gigabit rollout in Scotland is moving ahead at pace, as it is in the rest of the UK. Scotland has 67% total penetration as of today for gigabit. That is again significant progress since we last met.
Q38
Peter Grant: Is that 67% of premises?
Paul Norris: Of total premises, yes. For Scotland, as for the rest of the UK, we are expecting that commercial proportion to push still higher.
Q39 Nick Smith: Mr Norris, it is nice to see you again. Thank you for coming to Blaenau Gwent last year; it was kind of you.
Chair: This is how to schmooze the Public Accounts Committee. There is a series of invitations to follow.
Nick Smith: Mr Norris saw how badly we needed gigabit investment in Blaenau Gwent for our tech industries, and it was terrific that you came, Mr Norris. It really helped the local college, so thank you.
Blaenau Gwent still has just over 10% gigabit coverage. This pales in comparison with the 70% UK national average. Tell us more about how you are going to prioritise those rural areas and get this suppliercompetition element of your work to really make an impact for areas like mine.
Paul Norris: I would be delighted to. Thanks so much for hosting me for a day, especially the Cyber Hub in Ebbw Vale and the digital skills centre. My numbers are probably a little different to yours, but the story for Blaenau Gwent is still the same. We have you at 13% total gigabit currently. That is nine percentage points higher than it was at the last Public Accounts Committee in June, so you can see that it is starting to happen.
I will have mentioned that Openreach, just over a year ago, first laid out its plans for your part of the world, and the evidence is that it is starting to build. As we have mapped this area, there are two others—Netomnia and Ogi—that are also very active. We are supporting the Welsh Government, who have completed their public review. For your constituency, in total, it is about 5,000 premises that we and the Welsh Government believe are going to require a subsidy and are not going to be commercial. That is in the context of some 32,000 premises in your constituency that we think will be commercial.
Those 5,000 premises will be part of the Welsh Government’s procurement strategy. The Welsh Government, with our support, are just at the final stages of the supplier conversations leading up to that procurement. They are likely to select four regions, which they are consulting on with suppliers. You would be in the south-east of Wales, and we expect that procurement from the Welsh Government to be roughly in the springtime. I hope that is a strong message. The procurement and the preparations are well under way and we think we have a good grasp on what is going on in your constituency.
Q40 Mrs Drummond: Mr Norris, as you know, I also have some pockets of people who do not have it at all and are getting very frustrated. Thank you for your letter of the 20th, but it is not until April or June 2023 that we are going to hear what is going on. We also hear frustration from residents who see it going past their house to somebody else’s house, but cannot tap into it.
I know that there are technical things about that, but what I really want to ask you about is the workforce pressures. Openreach and others say that they cannot find enough staff and that that is what is holding them back. What evaluation have you made of the workforce pressures in the industry in order to enable you to deliver your targets on time?
Paul Norris: We share that concern about capacity pressures generally in the industry. That has always been an issue for us. On the DCMS side— Susannah might want to comment—there have been numerous studies. There has been significant job creation in this industry in recent years, with about 20,000 jobs in total. I would say that, just in recent months, the industry on the ground is saying that some of those pressures have now alleviated, so there is less pressure on the supply chain today than there was six or 12 months ago.
You are probably aware—and you have mentioned it—that we are not far now from awarding the contract for Hampshire. We are also just a few weeks away from awarding a local contract for the New Forest. Your constituency falls into the Hampshire piece and it is some 2,000 premises in total. Again, we expect that to be a positive outcome for Hampshire and for your area.
Q41 Sir Geoffrey Clifton-Brown: Mr Norris, following Mr Smith’s example, you are, very kindly, coming to my constituency in a month or so. We will give you an equally informative visit, and I hope to get equally informative results from that visit as Mr Smith has had.
I want to ask you one or two things. First, and probably most importantly, Ofcom had its wholesale fixed telecoms market review. Everybody’s bills will rise in April by 11.1%; this is a huge increase. It was set when, in March 2021, inflation was 1.5%, so they have a total windfall gain. Ofcom has scope, I gather, to enforce a reasonable adjustment. Have you any plans to ask Ofcom to review this? On top of everybody else struggling to pay their bills, this is a huge increase.
Susannah Storey: You are absolutely right. We and our Ministers are very focused on the cost of living and what inflation means. Ofcom regulates the industry, particularly Openreach at the wholesale level. It has the ability to intervene in retail pricing, if it determines consumer harm. I note today that Ofcom has announced an investigation into BT in relation to terms and conditions. That is a matter for Ofcom.
As we have discussed before at this Committee, our Ministers have been very actively engaged with all of the telcos, both fixed and mobile, in relation to social tariffs. They want to make sure that as many as possible of the operators are providing those social tariffs, so that those individuals and families who find it hardest to afford telecoms can have affordable tariffs. I am pleased to say that, since we were last here, when 10 operators were providing them, 17 operators are now providing them. As a Department, we have really worked hard to increase the communications around those social tariffs, because we want to make sure that those who are eligible are aware of them. More needs to be done, and our Ministers remain very focused on that.
Q42 Chair: Do you know what the take-up is?
Susannah Storey: The awareness is at around 30% of those eligible. The take-up, unfortunately, is at 3.6% of those eligible, so it is still a very low number. It has increased from around 1.5%, or 55,000, when we were last here, and it is now 136,000, but we would still like all those who are eligible to be able to take them up. Ofcom is also very focused on this and is looking at whether it is awareness or perception. Ofcom has a good part of its website that promotes the social tariffs. Some publications have been really great. There is a publication called Quids in! that helps people understand. There are a lot of different routes.
Q43 Chair: But if you are poor, you are still poor. It might be a luxury too far for some people.
Susannah Storey: We want to make sure that those who are eligible feel that they can, and we want to encourage all of the telcos to offer them. Some of the companies are doing interesting things with free data. There is a lot happening in the market but, to your point, we do want to make sure that those social tariffs are available and then are taken up.
Q44 Sir Geoffrey Clifton-Brown: You read my mind. I was going to come on to social tariffs. Should all companies and providers not be required to provide them?
Susannah Storey: Both our previous Secretary of State and our Minister of State did a roundtable in November. They have been encouraging them to bring forward social tariffs.
Q45 Sir Geoffrey Clifton-Brown: Encouraging is one thing; compulsion is another.
Susannah Storey: At this stage, they feel that it is a very competitive market. We want the companies to invest in the infrastructure that Mr Norris has described. There are quite competitive prices in the UK, but we do feel that they should be prepared to think about the most vulnerable in society.
Sarah Healey: That would be a policy change, so would be something to raise with Ministers.
Q46 Sir Geoffrey Clifton-Brown: I understand that, Ms Healey, but I am sure you would admit that Ms Storey’s answer to the Chair of 3% take-up is pathetically low. I am wondering whether Government could not do more in an information campaign.
Sarah Healey: That is precisely what Susannah just mentioned.
Susannah Storey: That is exactly what we have been doing. We have partnered with 15 providers. We have information in libraries and with charities. DCMS communications is promoting these products on social media. There has been a very active campaign to increase the information but, to your point, this is exactly what our Ministers have been talking to the telcos about.
Q47 Sir Geoffrey Clifton-Brown: We have an awful lot to cover today. I do not know whether you have seen it, but we have had a note from TalkTalk saying that the Frontier Economics central forecast, which it commissioned, is that, by 2030, 25% of all households that were passed by full fibre to the cabinet network could still be using copper. That is still a staggering number. I come across this a lot in my rural areas. People either do not realise the benefits of full fibre or cannot afford it. Is there anything more, again, perhaps via an information campaign, that the Government could do to encourage people to want to connect up to the fibre that is outside their door?
Susannah Storey: We have always been clear that with this programme of infrastructure build, we are trying to build ahead of demand. We want to make sure that the infrastructure is there, so that people can use it as digital infrastructure in the UK advances. Take-up at the moment of superfast is over 70%. You are absolutely right that the numbers on full fibre are lower. The companies do quite a lot of promotion. We have worked with industry to make sure that people are aware of the benefits but, in a competitive market, there are a lot of different products that people will take. Sometimes there might be price reasons why people go for a lower speed. We want to make sure that the infrastructure is there, and that is the approach we have taken.
Q48 Sir Geoffrey Clifton-Brown: In a highly rural area like mine, it is going to be much higher than the national average of those properties that are not going to benefit from the 85% by 2025. Do you have any data on that? Are you specifically targeting any other methods for those very hardtoreach properties, of which I have a significant number?
Susannah Storey: As we have discussed before, the idea of our programme is to promote the commercial build in the commercial areas and to remove all the barriers to do that. Paul and his team are very focused on what we call the hard-to-reach areas—the uncommercial bits of the market. We do expect that there will be some very hard-to-reach areas, although it may be only about 100,000 premises in the end. When I was last here, we talked a bit about that. In December, we announced that we were running an alpha trial in relation to satellite technology. We do not want to wait to find out what technologies might work for those most remote places.
Chair: We are going to come to that in a minute.
Q49 Sir Geoffrey Clifton-Brown: I was just going to ask exactly that. How are you getting on with these new technologies—Elon Musk’s satellites and the alpha trial?
Susannah Storey: It launched only in December, so it is early days, and it will run for up to two years. We are going to have trials at 15 sites. We have started with four so far—one in Yorkshire, one in the Lake District, and two in Snowdonia. The idea is to test this low-earth orbit satellite technology to see how it works and how reliable it is. At the moment, as we have discussed before, it is relatively expensive. It is a £460 upfront cost for the dish, and then £75 a month for the service, although that price is coming down. Really, what we are testing is the technical capability, just to see if it could be a solution for those very hard-to-reach areas. We will continue to monitor that for up to two years of this trial and then come forward, I am sure, with further policy thinking in that space.
Sir Geoffrey Clifton-Brown: I would love to offer the Cotswolds as a trial.
Q50 Chair: There is an issue about second homes in rural areas— Sir Geoffrey Clifton-Brown: Like mine.
Chair: They could be anywhere, but particularly in rural areas where, if a property is not being used regularly, it cannot get a voucher. On one level, that makes sense but, on the other hand, that can leave some smaller communities that have large second-home ownership with orphan properties. I do not know if that is something that you are looking at, Mr Norris. Can we take that offline?
Paul Norris: Perhaps we can look at that and come back to you. It does not ring bells as being a big issue.
Q51 Chair: The right hon. Anne-Marie Trevelyan, who is the Member for Berwick, has raised this with us very specifically and given us some very detailed information, so perhaps we could pass that on to you and she may want to then talk to you about it.
Paul Norris: Yes, it would be nice to look at.
Chair: Second home owners may not be in need of broadband as much as first-time homeowners, and we could have a long debate about that, but if it leaves orphan properties, that could be quite challenging.
Sarah Healey: Paul will book his ticket to Berwick.
Chair: There you go. Anne-Marie Trevelyan will be a very happy woman if you do that.
Sir Geoffrey Clifton-Brown: The Cotswolds first.
Q52
Nick Smith: Ms Storey, you are the best person to help me with these questions. I am interested in satellite connectivity. We all remember back in 2020-21, when you, as a Government, bought a share in OneWeb, which cost $500 million. I understand that there were some governance changes, but it seems to be stopped now, because its launches were based in Russiaallied Kazakhstan, and that is now redundant. What is going on? Is our $500 million down the drain? Is this system going to work in the future?
Susannah Storey: I cannot comment on the detail of that situation, because it is a BEIS situation. All I can comment on is our trial, where we have, so far, used Starlink, because it operates business-to-consumer services. As I understand it, OneWeb offers business-to-business services at this point, so I am afraid that I cannot give you more information on the background and specifics of the OneWeb acquisition or its operations in different geographies.
Q53
Nick Smith: I can see that you are responsible for a part of it, but it is an important part of it, and it was a very chunky investment of $500 million.
Susannah Storey: We are not responsible.
Sarah Healey: I am really sorry, but we are not responsible for OneWeb. It was a BEIS transaction.
Nick Smith: But you have an interest in it.
Sarah Healey: We do have an interest in it, but we just cannot give you very much information about the specific point that you raise.
Q54 Nick Smith: Can you write back to us?
Susannah Storey: We can talk to our colleagues in BEIS.
Chair: We need to raise it with BEIS.
Q55 Nick Smith: We need to dig at this. It cost an awful lot of money back then. It was not so long ago, and now this system looks not to be working at all. I can see why you have a relationship with the system, but we need to understand what is going on here.
Susannah Storey: We can certainly take it offline and talk to BEIS. It is a matter for them, not for us. We, in this situation of the alpha trial, have looked in the market to see which satellite companies could offer potential technical solutions to consumers. At the moment, Starlink offers services to consumers. My understanding is that OneWeb offers services to businesses and, therefore, would not work. The team is working to see if it could, in the future, use OneWeb, potentially in an islands trial, but at this stage we do not have any specifics on that.
Nick Smith: Did you say an islands trial?
Susannah Storey: Yes, the Scottish islands, so the most remote areas.
Q56 Nick Smith: How is the Starlink stuff going then?
Susannah Storey: As I was just saying to your colleague, it was launched in December. We are now in January, so it is relatively early days in a twoyear trial, but the team is gathering information and we are more than happy to give more information further into that trial. One month’s data is perhaps not quite enough to give a good picture.
Chair: We will tuck that one behind our ear for the future.
Q57
Mrs Drummond: Just going back to the satellites, I can see why you are looking at them, because they are the provider of last resort, but they are very expensive and there are no economies of scale like there are with the fibre or terrestrial wireless. Would it not be better to do the 5G connectivity to fill in the gaps and start to focus on that rather than going down the satellite route?
Susannah Storey: We have always, in a sense, been technology agnostic in our programme. We want to get the fibre built as far and as fast as possible in the country, which is what Mr Norris has been referring to. In addition, for the hardest-to-reach premises, we are looking at satellites as a possible opportunity. In parallel, of course, the market is delivering 5G, and we have our shared rural network programme, which is continuing to deliver further 4G. You are absolutely right: we want to make sure that there are a multitude of solutions for consumers across the country.
Q58
Mrs Drummond: It seems to me that it is a much quicker way of doing it. You put up a 5G mast, so that they can get instant access. Sarah Healey: The challenge is that it may not work in all locations. In some very hard-to-reach premises and areas, 5G masts might be a really good solution. In other areas, just because of the geographical nature of it, you might need to use something like satellites. That is why it is sensible, as Susannah says, to be technology agnostic and to do everything that we can to trial different options, so that we can get as far as possible with coverage. Susannah Storey: We are certainly supporting the deployment of 5G. We have made some planning changes to make sure that we can get the coverage. We are absolutely trying to progress on all fronts in this area. Q59 Sarah Olney: I would like to pick up on that point. I have a development | |
| of flats in my constituency, and the residents contacted me recently. A telecoms company wants to put a 5G mast on their roof. They are not very keen, but they have been told that there is no option, because if they do not agree consensually to have the mast on the roof of their flats, the courts will just impose that. Is that right? Do property owners not really have any rights to refuse a 5G mast on their roof? Susannah Storey: I would probably need to know a bit more about the specifics. I would be more than happy to pick that up offline. |
Q60 | Sarah Olney: I would be really grateful. The bit that they are more concerned about is that this is a development of three blocks of flats, with mostly elderly, vulnerable residents, who choose to live there because it is a very secure development. Now they are being told that anybody can come in and maintain that mast once it is on their roof, and they have no control. Under the telecommunications code, they can install and keep, which implies maintenance, and they really have no control over anyone at all coming on to their property. Again, is that correct? Is that what you have intended? Susannah Storey: What would be helpful is if we could come back offline with the specifics of your local situation. I am more than happy to come back on the detail. |
Q61 Sarah Olney: I will write to you. I would be really grateful for a response on that. | |
Sarah Healey: It is true that access for maintenance has been a challenge in the past in sustaining the quality of connections, so there have been some changes there, but we would need to understand the specific situation in order to answer your question.
Chair: If Ms Olney can take that offline with your office, Ms Healey, that would be fantastic.
Q62 Sir Geoffrey Clifton-Brown: I have a very quick last question on the issue of market competition and Virgin. You make great play of the upgrade of the Virgin contract, so that its networks are able to provide gigabit broadband. It is a lot easier to upgrade a cable than it is fibre, I understand. Whereas Openreach, which is one of the biggest providers of fibre, has to have an agreement where it lets out some of its capacity to
providers like TalkTalk, Virgin does not. It seems to me that it almost has a monopoly position. Is there any thought that Virgin should have to let out some of its capacity to outside providers?
Sarah Healey: I will ask Susannah to pick up on more here, but fundamentally that is a competition issue in the market. We would expect Ofcom to pick that up if it felt that there was a monopolistic presence in the market that was making things difficult and not competitive for consumers. As you know, our statement of strategic priorities for Ofcom balances investment against consumer choice and reasonable cost.
Q63 Sir Geoffrey Clifton-Brown: If the taxpayer is contributing to a monopoly situation by allowing Virgin to upgrade its cable as opposed to— Sarah Healey: We are not funding Virgin to upgrade its cable.
Q64 Sir Geoffrey Clifton-Brown: At all? Is there no taxpayer money going to Virgin?
Paul Norris: No, we are not. It might be worth saying that, for the BDUK contracts, where we are offering a subsidy, there is a requirement for the supplier to offer what is called a wholesale service.
Q65 Sir Geoffrey Clifton-Brown: But Virgin does not, does it?
Paul Norris: We are not subsidising Virgin.
Sir Geoffrey Clifton-Brown: At all?
Paul Norris: At all. We have done a handful of vouchers with Virgin. The vouchers product has different requirements. For the volume business and the contracts that we are doing, there is a requirement that the supplier offers wholesale as Openreach does.
Q66
Chair: In the last week, we have heard a lot about the appointment of the chair of the BBC. Of course, your Department was overseeing that appointment. The public appointments process is well crafted or long in the tooth, but would you have had officials from the Department on that appointment panel?
Sarah Healey: I chaired it.