'Britain is being ripped off over rural broadband': BT handed £1.2bn ‘subsidy’ from the taxpayer

 

British Telecom has been handed a taxpayer “subsidy” of almost £1.2bn because the Government “mismanaged” its superfast broadband.

Figures reveal that the company, which was run at the time by the new trade minister Lord Livingston, is only expected to invest £356m rolling-out fast internet access to rural areas. But in return BT will be handed assets paid for by the taxpayer worth £1.2bn.

In a scathing report, Parliament’s Public Accounts Committee (PAC)  accused ministers of placing BT in a “quasi-monopolistic position” that the company “exploited”, resulting in consumers getting a “raw deal”.

It pointed out that the project is running two years behind schedule and even when completed will still not provide fast broadband to around 10 per cent of rural areas in England.

“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,” said Margaret Hodge, the committee’s chair. “The taxpayer is getting a raw deal despite the generous public subsidy.”

BT hit back, saying it was “disturbed” by the report which it described as “simply wrong”. A spokesman disputed the committee’s findings and said it was “mystifying” that it was being criticised for accepting “onerous terms in exchange for public subsidy” which drove other companies away.

Under the Government’s original plans, private firms were to bid for the right to install superfast broadband across 44 rural areas by 2015. In its business case the Department for Culture, Media and Sport estimated that suppliers would contribute £563m to the capital costs of the programme, while local authorities and central government would each contribute around £500m. But the PAC said the department had structured the scheme in such a way that “reduced competition”, with BT now the sole company “bidding” for contracts.

The Department now estimates that BT’s capital contribution to the scheme will only be £356m – with the rest of the bill being picked up by the taxpayer and local authorities. However BT’s balance sheet will benefit from the £1.2bn of public funding in infrastructure. “The Department accepted contract terms that were overly generous to BT and do not promote value for money,” the report concludes. “It also failed to negotiate the full access it needed to BT’s cost information to validate that bids from BT were reasonably priced.”

A DCMS spokesman said: “We disagree with the views expressed by the PAC, which are at odds with the findings of the National Audit Office.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

Recruitment Genius: Production Operative

£13000 - £17000 per annum: Recruitment Genius: Due to a period of sustained an...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there